22 Feb

Liverpool’s ‘Millennials’ set to inherit £132,735 each in property!

That got your attention … didn’t it!

But before we start, what is Generation X, let alone Generation Z, Millennials, Baby Boomers  … these are phrases banded around about the different life stages (or subcomponents) of our society. But when terminologies like this are used as often and habitually as these phrases (i.e. Gen X this, Millennial that etc.), it appears particularly vital we have some practical idea of what these terms actually mean. The fact is that everyone uses these phrases, but often, like myself, they are not exactly sure where the lines are drawn …until now…

So, for clarity …

Generation Z:              Born after 1996

Millennials:                 Born 1977 to 1995

Generation X:              Born 1965 to 1976

Baby Boomers:            Born 1946 to 1964

Silent Generation:      Born 1945 and before

My research shows there are 51,245 households in Liverpool owned by Liverpool Baby Boomers (born 1946 to 1964) and Liverpool’s Silent Generation (born 1945 and before). It also shows there are 107,448 Generation X’s of Liverpool (Liverpool people born between 1965 to 1976). Looking at demographics, homeownership statistics and current life expectancy, around two-thirds of those Liverpool 107,448 Generation X’s have parents and grandparents who own those 51,245 Liverpool properties.

… and they will profit from one of the biggest inheritance explosions of any post-war generation to the tune of £8.664bn of Liverpool property or £120,887 each but they will have to wait until their early 60’s to get it!

However, it’s the Millennials that are in line for an even bigger inheritance windfall.

There are 122,206 Millennials in Liverpool and my research shows around two thirds of them are set to inherit the 63,996 Liverpool Generation X’s properties. Those Generation X’s Liverpool homes are worth £10.819bn meaning, on average, each Millennial will inherit £132,735; but not until at least 2040 to 2060!

While the Liverpool Millennials have done far less well in amassing their own savings and assets, they are more likely to take advantage of an inheritance boom in the years to come. This will probably be very welcome news for those Liverpool Millennials, including some from poorer upbringings who in the past would have been unlikely to receive gifts and legacies.

However, inheritance is not the magic weapon that will get the Millennials on to the Liverpool housing ladder or tackle growing wealth cracks in UK society, as the inheritance is unlikely to be made available when they are trying to buy their first home…but before all you Liverpool Millennials start running up debts, over 50% of females and around 35% of men are going to have to pay for nursing home care. Interestingly, I read recently that a quarter of people who have to pay for their care, run out of money.

So, if you are a Liverpool Millennial there potentially will be nothing left for you.

Of course, most parents want to give their children an inheritance, the consideration that what you have worked genuinely hard for over your working life won’t go to your children to help them through their lives is a really awful one … maybe that is why I am seeing a lot of Liverpool grandparents doing something meaningful, and helping their grandchildren, the Millennials, with the deposit for their first house.

One solution to the housing crisis in Liverpool (and the UK as a whole) is if grandparents, where they are able to, help financially with the deposit for a house. Buying is cheaper than renting – we have proved it many times in these articles … so, it’s not a case of not affording the mortgage, the issue is raising the 5% to 10% mortgage deposit for these Millennials.

Maybe families should be distributing a part of the family wealth now (in the form of helping with house deposits) as opposed to waiting to the end… it will make so much more of a difference to everyone in the long run.

Just a thought?

21 Feb

1 Bedroom Apartment in One Park West – Tenant in Situ!

Check out this 1 bedroom apartment in the popular development, One Park West!!

This property briefly comprises of an; entrance hallway, bathroom, storage cupboard, one double bedroom, and a spacious open plan lounge/ diner. At the back of the lounge there are double patio doors, leading out to a private terrace!

This property is a development which is highly sought after from tenants, whether these be professionals needing easy access to Liverpool City Centre, or students studying in the local universities!

The property is walking distance from Liverpool’s universities, Liverpool One Shops, Albert Dock, and Liverpool’s Waterfront.

The property is currently available with Belvoir for £165,000, including a car parking space!

The property is currently let to a long standing tenant who is paying an attractive £725 per calendar month, and the car parking space has been let for an additional £125 per calendar month, resulting in an impressive annual income of £10,200! This figure will secure you a fantastic 6.2% gross yield, with a very high chance of capital growth as Liverpool City Centre continues to grow at its current fast pace.

Click here to view the property

If you would like any advice on this property or any other properties that you have may have seen in Liverpool, then contact me on adamr@liverpoolpropertyblog.com

15 Feb

Liverpool’s £1,213,292,160 “Rentirement” Property Market Time Bomb

Yes, I said ‘rentirement’, not retirement … rentirement and it relates to the 5,693 (and growing) Liverpool people, who don’t own their own Liverpool home but rent their home, privately from a buy to let landlord and who are currently in their 50’s and early to mid-60’s.

The truth is that these Liverpool people are prospectively soon to retire with little more than their state pension of £155.95 per week, probably with a small private pension of a couple of hundred pounds a month, meaning the average Liverpool retiree can expect to retire on about £200 a week once they retire at 67.

The average rent in Liverpool is £888 a month, so a lot of the retirement “income” will be taken up in rent, meaning the remainder will have to be paid for out their savings or the taxpayer will have to stump up the bill (and with life expectancy currently in the mid to late 80’s, that is quite a big bill …  a total of £1,213,292,160 over the next 20 years to be paid from the tenant’s savings or the taxpayers coffers to be precise!

You might say it’s not fair for Liverpool tax payers to pick up the bill and that these mature Liverpool renters should start saving thousands of pounds a year now to be able to afford their rent in retirement.  However, in many circumstances, the reason these people are privately renting in the first place is that they were never able to find the money for a mortgage deposit on their home in the first place, or didn’t earn enough to qualify for a mortgage …and now as they approach retirement with hope of a nice council bungalow, that hope is diminishing because of the council house sell off in the 1980’s!

For a change, the Liverpool 30 to 40 somethings will be better off, as their parents are more likely to be homeowners and cascade their equity down the line when their parents pass away.  For example, that is what is happening in Europe where renting is common, the majority of people rent in their 20’s, 30’s and 40’s, but by the time they hit 50’s and 60’s (and retirement), they will invest the money they have inherited from their parents passing away and buy their own home.

So, what does this all mean for buy to let landlords in Liverpool?

Have you noticed how the new homes builders don’t build bungalows anymore … in fact some would said the ‘bungalow storey’ is over.  The waning in the number of bungalows being built has more to do with supply than demand.  The fact is that for new homes builders there is more money in constructing houses than there is in constructing bungalows.  Bungalows are voracious when it comes to land they need as because bungalow has a larger footprint for the same amount of square meterage as a two/three storey house due to the fact they are on one level instead of two or three.

That means, as demand will continue to rise for bungalows supply will remain the same.  We all know what happens when demand outs strips supply … prices (i.e. rents) for bungalows will inevitably go up.

8 Feb

Liverpool Private Rents Hit £13.25 per sq. foot

As I am sure you are aware, one the best things about my job as an agent is helping Liverpool landlords with their strategic portfolio management. Gone are the days of making money by buying any old Liverpool property to rent out or sell on. Nowadays, property investment is both an art and science. The art is your gut reaction to a property, but with the power of the internet and the way the Liverpool property market has gone in the last 11 years, science must also play its part on a property’s future viability for investment.

Many metrics most property professionals (including myself) use when deciding the viability of a rental property is what properties are selling for, the average rent, the yield and an average value per square foot.

However, another metric I like to use is the average rent per square foot. The reason being is that is a great way to judge a property from the point of view of the tenant … what space they get for their money. Now of course, location (location, location in a Phil and Kirstie style) has a huge influencing factor when it comes to rents (and hence rent per square foot). Like people buying a property, tenants also have that balancing act between better/worse location, more vs. less money and size of accommodation (bigger and more rooms equalling more money) and where they live (location) verses making ends meet.

Interestingly, I know there are a lot of you in Liverpool who like to see my statistics on the Liverpool property market, so before I talk about the rental figures per square foot, I wanted to share the £ per square foot on the values. In Liverpool, the current AVERAGE figures are being achieved (and I must stress, these are average figures, so there will an enormous range in these figures), but on average, properties in Liverpool, split down by type are achieving …

  • Liverpool Detached Property – £226 / sq ft
  • Liverpool Semi Detached Property – £184 / sq ft
  • Liverpool Terraced Property – £137 / sq ft
  • Liverpool Apartments – £219 / sq ft

So, the rental figures:

The extent of space you get for your rent is replicated in the space you get for your money when buying a property. The average size of rental property in the Liverpool area is 803.8 sq ft (interesting when compared to the national average of 792.1 sq ft)

This means the average rent per square foot currently being

achieved on a Liverpool rental property is £13.25 per sq ft per annum

So, what we can deduce from this?  Well the devil is always in detail!

Whilst I was able to quote the average overall figure and the fact my research showed it was quite clear from data that there is relationship between the average £ per sq ft figures on property values and average £ per sq ft on rental figures as a property grows in size. However, something quite intriguing happens to those figures, in terms of what the property will sell for and what it will rent for, when we change and increase the size of the property.

My research showed that doubling the size of any Liverpool property doesn’t mean you will double the value of it … in either value or rent. This is because the marginal value increases diminish as the size of the property increases. In layman’s terms … Subject to a few assumptions, double the size of the house doesn’t mean double the value … what really happens is a doubling of the size gives only an approximately 40% to 65% uplift in value, but here comes the even more fascinating part … when it came to the rental figures, double the size of the house meant only 20% to 45% in increase in rent.

In a future article, I will be discussing the actual added value an extension can bring … but in the meantime, in an overall and sweeping statement, most of the time it makes sense to extend if you are going to live in the property as long as the extension is proportionate to the property, but if you are going to rent it out … possibly not.