Half of Peterborough Homeowners Move Again Within 7 Years and 41 Weeks – Why?

In Britain, there are 27,071,500 households, of which 17,044,450 are owned, which are worth a total of £3,925,865,212,950 (£3.92 trillion). Over the last 5 years, an average of 86,096 properties sell each month, meaning just over a million UK households move home per year. Therefore, the average British homeowner moves every 16 years 5 months.

These statistics refute a common hypothesis that British neighbourhoods are becoming more fleeting and transitory. On the face of it, they appear to show that, once you have succeeded to buy a property you can call home, there isn’t much motivation to move again.

So, aren’t people moving home so much?

Could it be put down to a certain sense of complacency or apathy to moving home? Whereas we might love our home in Peterborough, most of you (including myself) still want to ‘better our lives’ with a bigger house, better area etc, which typically requires us to climb up the Peterborough property ladder.

Yet with Peterborough house prices having risen by 178.8% in the last 20 years, the cost of going up the next rung on the Peterborough property ladder is prohibitive.

Everyone harks back to the 1980’s, when we had an upbeat booming property market as a backcloth, Brits moved home every eight years; so now with the average at just over 16 years this equates to each British homeowner moving around three to four times in their adult lifetime. Maybe we should all call our homes ‘Dunroamin’ and be done with it!

Or does it? 

We have all heard the phrase ‘lies, damn lies and statistics’ … well the stats mentioned above hide some amazing features of the British property market. When homeowners get into their 50’s and 60’s, their tendency to move home drops like a stone. The average length of time a homeowner without a mortgage moves home is 24 years and 7 months (and just under 7 out of ten outright homeowners i.e. without a mortgage are 65 years old or older). 

Yet, homeowners with a mortgage move on average every 10 years and 11 weeks.

So, whilst I cannot determine who has a mortgage and who doesn’t, I can look at how quickly people move home in Peterborough.  I have looked at the last 50 property sales in Peterborough, and I have found some interesting findings.

On average Peterborough homeowner only move every 14 years and 44 weeks.

Nothing interesting about that you might say, when compared to the national average … yet the devil is in the detail.

There appears to be a two-speed Peterborough property market … look at the top 25% of Peterborough home movers, and then the next slice … these Peterborough people are moving home really quickly, yet the gap for the next two slices widens tremendously.

  • Top 25% quickest Peterborough home movers move every 4 years & 4 weeks
  • The next 25% quickest Peterborough home movers move every 11 years & 12 weeks
  • The next 25% quickest Peterborough home movers move every 18 years & 30 weeks
  • Whilst top 25% slowest Peterborough home movers only move every 25 years

When looking at the properties that fall into the later bands (i.e. the ones that don’t move/sell so often), they tend to be the larger properties where the homeowners have lived for 25/30 years plus.

The lesson we all should learn is that once people get into their 50’s and 60’s, their propensity to move home drops considerably. This means the properties on the lower rungs of the Peterborough property ladder do appear to sell quickly (as they are occupied by younger homeowners) yet once Peterborough people get older, their tendency to move diminishes. This puts a roadblock on the younger generation wanting to buy the larger Peterborough properties these mature homeowners live in.

What is holding the older generation back from selling and downsizing to free up homes for families that desperately need them? Some of it will be apathy, some of it will be holding on to the home that they brought their family up in, yet the bottom line is…

46.5% of the homes owned in Britain have two or more spare bedrooms.

As a nation, we need to rethink how we can encourage older homeowners to sell their large homes to release them to the younger families that desperately need them. Some suggest tax breaks, yet the Government won’t be in the mood to give huge tax breaks as the measures to protect the economy over the last 12 months will ultimately need to be paid back.

One thing I do know, we as a Country have seen (and will continue to see) a lot of demographic change together with an increasing elderly population, so it’s not just about how many homes we build, but whether we are building the right kind of homes the older generation will want to move into.

Interesting times ahead for the Peterborough property market!

If you have a Peterborough property to sell or let in the coming weeks, months or years and would like to know how this and other factors will affect you and your property … without obligation, don’t hesitate to give me a call or drop me line.

13% Drop in Peterborough Homes ‘For Sale’ in Last 4 Months

What does this mean for Peterborough property owners?

With most Peterborough families home schooling their children in lockdown and the forthcoming Stamp Duty Holiday deadline on the 31st March 2021, less Peterborough properties have been coming onto the Peterborough property market since the new year. This has prompted a 13% drop in the supply of Peterborough homes for sale compared to October 2020.

For the past couple of decades, like clockwork, Peterborough estate agents’ busiest times for putting property onto the market is the new year to Easter rush, with a smaller flurry of new properties coming onto the market in the mid/late summer. Yet, since the ending of lockdown 1.0 in the late spring 2020, nothing has been normal about the Peterborough property market.

Throughout the summer, the number of properties coming onto the market in Peterborough steadily rose to its peak in October and the number of properties then becoming sold subject to contract (stc) rose even higher (and whilst statistics don’t exist for the properties sold stc, anecdotal evidence suggests there were just under 50% more Peterborough properties sold stc in the last six months of 2020, compared to the same 6 months in 2019).

However, back to the number of properties for sale…

the peak of the number of Peterborough properties on the market in autumn was 1,654 –  that now stands at 1,439.

The first lockdown caused many Peterborough homeowners to want to move with the need for extra space to work from home and in some cases larger gardens. This was further exacerbated by Peterborough home movers also trying to take advantage of the Stamp Duty Holiday to save themselves money on this tax.

This meant many more Peterborough properties came onto the market (more than a “normal” year) in the last 6 months of 2020. However, those Peterborough home movers motivated to move for the extra space/save money on the tax, did so in the summer/autumn and have already placed their home on the market (and are probably by now sold stc rushing to get their house purchases through before the deadline on the tax savings).

So, how does Peterborough compare to other property markets, and what does this reduction in Peterborough properties on the market mean to Peterborough homeowners and landlords?

There are 9% less properties on the market today in Peterborough, compared to 12 months ago.

When I compared that to the national picture, according to Zoopla, there are 12% less properties on the market today (compared to a year ago).

However, the complete opposite is taking place in London. There are currently 47,900 apartments for sale in London compared to January 2020, when there were only 32,600 – a massive rise of 46.9% … all the more interesting when there are only 15.1% more London semi-detached houses for sale and 1.8% more London detached homes over the same 12-month period. The jump in London apartments for sale is being pushed by an upsurge of London up-sizers eager to trade their city living apartment up to suburban houses, and a small handful of panicky London buy to let investors who are wanting to exit the London property market following falling rents for apartments. Looking closer to home, there are…

1% more semi-detached for sale in Peterborough than a year ago, whilst there are 25% less terraced homes.

So, whilst there are some differences between the supply of individual types of property in Peterborough (e.g. semi-detached vs terraced), the overall reduction in the number (i.e. supply) of properties for sale can only mean one thing, when there is a reduction in the supply of anything and demand remains stable, this will mean continued upward pressure on Peterborough house prices in the short term (although I suspect there will be some downward pressure on Peterborough semi-detached with that level of increase in supply – maybe some interesting ‘opportunities’ for all you Peterborough landlords?).

Will overall demand for Peterborough property continue to be stable?

Lockdown 3.0 will probably cause another wave of Peterborough people who want to move home (thus increasing demand). The last property crash (the Credit Crunch in 2009) was caused by a huge increase in the supply of properties for sale when people lost their jobs and interest rates were much higher. People couldn’t afford their mortgages and so dumped their homes onto the market all at the same time – causing an oversupply of property for sale and hence house prices dropped.

Compared to the 1,439 properties for sale in Peterborough today, at the height of the Credit Crunch in January 2009, there were an eyewatering 3,098 properties for sale in Peterborough.

It was this increase in the level of property for sale in Peterborough (mirrored across the whole of the UK) that caused property prices to drop between 16% and 19% (depending on the type of property) in Peterborough over the 12 to 14 months of the Credit Crunch. So, as long as there is no sudden change in the demand or supply of properties and interest rates remain at their current ultra-low level – the medium-term prospects for the Peterborough property market look good.

If you are a Peterborough homeowner or a Peterborough buy to let landlord and want to chat about the future of the Peterborough property market – do drop me a line.

Peterborough Property Market: Is it Time to Stamp Out Stamp Duty?

Most people pay Stamp Duty Tax when they buy a property, house, apartment or other land and buildings over a particular price in the UK. The Chancellor, Rishi Sunak (quickly followed suit by the Welsh and Scottish Governments), announced last July that Stamp Duty was partially being suspended on all English property transactions up to £500,000 (£250,000 in Wales and Scotland) – a Stamp Duty Holiday.

That meant only 1 in 8 English buyers would pay any Stamp Duty Tax on their home purchase (if it was over £500,000), saving any buyer up to £15,000 in tax on the purchase. The problem is the property needs to have been purchased and bought by the 31st March 2021. Complete the transaction a day later, and those buyers will have to pay Stamp Duty.

The issue is local authorities are snowed under with local search requests, mortgage companies and conveyancing staff are working from home, so property transactions are taking much, much longer. This means many Peterborough (and UK) buyers who have currently sold (subject to contract) will miss out on the stamp duty saving.

Most (not all) estate agents have been warning the buyers and sellers in their property chains that some deals might not make the 31st March 2021 deadline and pleasingly, most people aren’t moving because of the Stamp Duty Holiday (they are moving because they need extra space because of the pandemic). However, it only takes one person in the chain not to be ‘singing off the same hymn sheet’ for the whole chain to collapse … so keep in touch with your estate agent.

A campaign by one of the national newspapers and an online petition to extend the stamp duty holiday has meant the topic could be debated in Parliament in the next few weeks, after 100,000 home buyers and sellers signed that petition, asking for an additional six-month Stamp Duty Holiday. The home buyers and sellers are worried the property market will collapse after March 31st when the Stamp Duty Holiday is removed.

The last time British home buyers were conscious of upcoming Stamp Duty changes, it distorted the number of properties sold. The bigger question though is, did it change the overall number of people moving home?

In November 2015, the then Chancellor, George Osborne, announced in his Autumn Statement that buy to let landlords would have to pay an additional 3% in Stamp Duty (over and above owner occupiers) for all property bought after the 1st April 2016. As shown in the graph below, this caused a surge in property buying (which we have seen since this summer with the Stamp Duty Holiday), with many Peterborough buy to let landlords completing their property purchase in March 2016, as they dashed to complete their property purchase before the tax increase.

In the 3 years of 2015/6/7, the average number of Peterborough properties sold (transactions) per month was 281 per month, yet in the month before stamp duty was changed in March 2016, transactions rose to 537, an uplift of 91.3% from the average or an extra 256 transactions in that month alone. Yet, look at the months of April and May, the property transactions numbers slumped, meaning in those two months combined, there were 144 less transactions.

So, if the Stamp Duty Holiday isn’t extended, what will that mean for the UK and Peterborough property market?

London and the South East seem to be particularly exposed to the removal of the Stamp Duty Tax break because it has such a high proportion of property priced between £300,000 and £500,000. These areas benefit from the highest tax savings relative to house price.

Yet, with the average value of a Peterborough home at £215,700, the stamp duty cost if the sale is delayed after the 31st March 2021 is £1,814 – a figure that shouldn’t break the bank

So, if the Stamp Duty Holiday isn’t extended – it might not be such the nightmare scenario as some people believe.

My advice to all buyers and sellers is to be constantly talking to your estate agent, your solicitor and your mortgage broker. With your estate agent to ascertain if they have asked every person (or asked the other agents in the chain to ask the question), “What if we don’t meet the stamp duty deadline?” With your mortgage broker and solicitor to give them all the information they need to ensure there are no delays with any information they request from you.

One final thought, some mortgage providers allow insurance policies to be purchased by your solicitor in case your searches (from the local authority aren’t back in time) … the cost of those will be much lower than the cost of the stamp duty … again, speak with your solicitor. Irrespective of whether you are a client of mine or not, if you would like a chat about anything mentioned in this article, don’t hesitate to contact me.

5,090 Peterborough Homeowners to be ‘Unchained’ From Toxic Leasehold Agreements in Biggest Shake-up of Property Law in Decades

When William the Conqueror invaded our fair shores in 1066, like all good kings, he needed to buy loyalty and raise cash to build his castles and armies. He did this by feudal law system and granted all the faithful nobles and aristocrats with land. In return, the nobles and aristocrats would give the King money and the promise of men for his army (this payment of money and men was called a ‘Fief’ in Latin, which when translated into English it becomes the word ‘Fee’… as in ‘to pay’).

These nobles and aristocrats would then rent the land to peasants in return for more money (making sure they made a profit of course) and the promise to enlist themselves and their peasants into the Kings Army (when requested during times of war). The more entrepreneurial peasants would then ‘sublet’ some of their land to poorer peasants to farm and so on and so forth.

The nobles and aristocrats owned the land, which could be passed on to their family (free from a fee i.e. freehold), while the peasants had the leasehold because, whilst they paid to use the land (i.e. they ‘leased it’ which is French for ‘paid for it’), they could never own it. Thus, Freehold and Leasehold were born (you will be pleased to know that in 1660 the Tenures Abolition Act removed the need of Freeholders to provide Armies for the Crown!).

4.3 million properties in the UK are leasehold

… and 5,090 properties in Peterborough are leasehold. By definition, even when you have the leasehold, you don’t own the property (the freeholder does). Leasehold simply grants the leaseholder the right to live in a property for 99 to 999 years. Apart from a handful of properties in the USA and Australia, England and Wales are the only countries of the world adhering to this feudal system style tenure. In Europe you own your apartment/flat by using a different type of tenure called Commonhold.

The average price paid for leasehold properties in Peterborough over the last year is £135,780.

The two biggest issues with leasehold are firstly, as each year goes by and the length of lease dwindles, so does the value of the property (particularly when it gets below 80 years). The second is the payment of ‘ground rent’ – an annual payment to the freeholder.

Looking at the first point on the length of lease, the Government brought in the Leasehold Reform Act 1967, which allowed tenants of such leasehold property to extend their lease by upwards of 50 years. However, this was very expensive and as such only kicked the can down the road for half a century (when the owner would have to negotiate again to extend another 50 years – costing them more money, time and effort).

Ground rents on most older apartments are quite minimal and unobtrusive. The reason it has become an issue recently was the fact some (not all) new homes builders in the last decade started selling houses as leasehold with ground rents. The issue wasn’t the fact the property was sold as leasehold nor that it had a ground rent, it was that the ground rent increased at astronomical rates.

Many Peterborough homeowners of leasehold houses are presently subject to ground rents that double every 10 years.

That’s okay if the ground rent is £200 a year today, yet by 2121, that would be £204,800 a year in ground rent, meaning the value of their property would almost be worthless in 100 years’ time.  One might say it allows for inflation, yet to give you an example to compare this against, if a Peterborough leasehold property in 1921 had a ground rent of £200 per annum, and it increased in line with inflation over the last 100 years, today that ground rent would be £9,864 a year.

This is important because the majority of leasehold properties sold in Peterborough during the last 12 months were apartments, selling for an average price of £135,638.

So, without reforms, the value of these Peterborough homes will slowly dwindle over the coming decades. That is why the Government reforms announced recently will tackle the problem in two parts.

Firstly, ground rents for new property will effectively stop under new plans to overhaul British Property Law. Under the new regulations, it will be made easier (and cheaper) for leaseholders to buy the freehold of their property and take control by allowing them the right to extend the lease of their property to a maximum term of 990 years with no ground rent.

Secondly, in the summer, the Government will create a working group to prepare the property market for the transition to a different type of tenure. Last summer the Law Commission urged Westminster to adopt and adapt a better system of leasehold ownership – Commonhold. Commonhold rules allow residents in a block of apartments to own their own apartment, whilst jointly owning the land the block is sitting on plus the communal areas with the other apartment owners.

These potential leasehold rule changes will make no difference to those buying and selling second-hand Peterborough leasehold property.

Yet, if you are buying a brand-new leasehold property, most builders are not selling them with ground rent (although do check with your solicitor). The only people that need to take any action on this now are people who are extending their lease. If you are thinking of extending the lease of your Peterborough property before you sell to protect its value, your purchaser may prefer to buy on the existing terms and extend under the new (and better) ones later (meaning you lose out).

Like all things – it’s all about talking to your agent and negotiating the best deal for all parties. Should you have any questions or concerns, feel free to pick up the phone, message me or email me and let’s chat things through.

How Will the Brexit Deal Affect Peterborough House Prices and Your Mortgage Payments?

Christmas Eve brought the news that Boris Johnson had conclusively agreed on a Brexit deal for the UK with the European Union. This gave optimism that the economic turmoil of leaving the EU would be radically reduced, yet what will this ‘trade deal’ do to the value of your Peterborough home and the mortgage payments you will have to make?

Since the summer, the Peterborough property market has been booming, yet many commentators have cautioned that the momentum cannot last. With unemployment and the end of Stamp Duty Holiday on 31st March, the Halifax reported last week that they believed UK house prices would drop by at least 2% (and in some areas 5%) in 2021.

I find it fascinating the Peterborough property market has defied the doom and gloom swamping the wider British economy in the last seven months. The Peterborough property market has profited from the large swell in demand from better-off existing Peterborough households trying to buy larger Peterborough houses (as they are required to work from home) together with the added benefit of saving money from the Stamp Duty Holiday.

Peterborough house prices are 0.3% higher than a year ago, making our local authority area the 363rd best performing (of the 396 local authorities) in the UK.

With the Brexit deal being voted through in the Commons on the 30th December, many say this will boost the property market just as the Government-backed measures supporting the property market come to an end. Yet, in the face of rising unemployment due to the pandemic, the Brexit deal may do little more than avoid uncertainty for the Peterborough housing market.

What will happen to Peterborough house prices?

The Peterborough property market in 2019 was held back because of the uncertainty of the Brexit deal. In January 2020, we saw the demand released in the fabled ‘Boris Bounce’, only for buyer and seller activity to fall off a cliff in March during the first lockdown. It then took off like a rocket once lockdown was lifted. UK house prices are 4.19% higher today, year on year (although some areas are breaking the mould, like Aberdeen whose house prices have dropped by 5.1% and at the other end of the scale, Worcester’s house prices have increased by 11.9% year on year). A lot of that growth in UK property prices has been fuelled by buyers spending their stamp duty savings on the purchase price of their new home. Yet, it cannot be ignored.

Of the 103,800 workers in Peterborough, 5,700 are still on furlough (although roughly 40% of those people are still only on part-time furlough).

When the furlough scheme ends in April 2021, unemployment is likely to rise to in excess of 11%, whilst the protection for the homeowners utilising mortgage holidays will finish. 

Piloting the rocky shoreline of the recession is more important than any Brexit deal for Peterborough homeowners, buy-to-let landlords, buyers and sellers.

In April, the market will also be dealing with the end of the Stamp Duty Holiday, which is due to come to an abrupt halt on the 1st April 2021. Consequently, we will continue to see the house price index’s show growth in the first half of 2021. They will then recede as the  prices of Peterborough homes purchased after the 1st April 2021 reflect the lower price paid (because buyers would have had to pay for their stamp duty again). Therefore, probably by the end of 2021, the Halifax may be correct, and Peterborough house prices will be 2% to 5% lower than they are today, simply because of the stamp duty.

What will happen to mortgage rates?

The real benefit from the Brexit deal is that there will be no tariffs on most goods coming into the UK. 52% of all goods imported into the UK are from the EU (totalling £374bn per annum). The UK Government were planning to add between 2% and 10% tariffs under World Trade Organisation rules on the vast majority of those goods. Price increases because of those tariffs would have fuelled inflation, meaning the Bank of England would have to increase interest rates. Although 77.2% of British mortgages are on fixed rates (paying an average of 2.16%), eventually those increased Bank of England rates would have fed through into higher mortgage payments. To show you how vital low interest rates are …

the average Peterborough homeowners’ mortgage is £327.26 pm, owing an average of £133,424.

Yet if interest rates rose only 1.5%, Peterborough homeowners’ monthly mortgage payments would rise to £494.04pm, and if interest rates were at their 50-year average, then the mortgages payments would be an eye-watering £962.13pm (note all mortgage payment figures mentioned above are only for the interest element of the mortgage- the capital repayment element would be additional and variable depending on the length of mortgage).

As I have mentioned many times in the articles I have written about the Peterborough property market, low interest rates are vital to ensure we don’t have a property market crash. That’s not to say just because they are at an all-time low of 0.1% to aid the economy that there won’t be some form of realignment of property prices later in the year (as mentioned above). Yet low interest rates mean people can still pay their mortgages, so there won’t be panic selling. That would mean there won’t be a flood of property come to the market (like there was in the 1988 and 2008 property crashes when interest rates were much higher), suggesting property prices should remain a lot more stable.

As Unemployment Hits 7.6% in Peterborough, What Effect Will This Have on the Peterborough Property Market in 2021?

12 months ago, the unemployment rate in Peterborough stood at 3.4% of the working population, yet with Coronavirus hitting the UK, what impact will this rise in unemployment have on the Peterborough property market?

As I have discussed a number of times in my articles on the Peterborough property market, this summer saw the Peterborough property market do exactly the opposite of what was expected when Covid hit.

The Stamp Duty holiday added fuel to pent up demand for people to move to property with extra rooms (to work from home) and gardens. This prompted a brief hiatus in the number of people selling and buying their home in Peterborough over the last summer and autumn.

Yet, insecurity around rising unemployment, led to many mortgage companies becoming more cautious in the later months of summer, predominantly when lending to the self-employed or first-time buyers borrowing more than 85% of the value of the home (as they wouldn’t want to lend money to someone that could not afford a mortgage due to an insecure income or not having a job).

Back in the late spring, economists were predicting that UK unemployment would rise to a peak of 6.5% in Q3 2020, returning back to the 2019 levels (3.4%) by 2022.

As we speak (Christmas 2020), nationally the unemployment rate stands at 6.3%. The toll Covid has had on people’s livelihoods has been massive, with an additional 1,434,515 people out of work, although it is important to note this unemployment rate is still lower than the five years following the Credit Crunch years – 2008 to 2013.

So, with such a growth in unemployment and the spectre of a ‘No Deal Brexit’, this may hold back the enthusiasm of many companies to take on more staff, reducing any rebound in employment. If unemployment remains high, this will influence perceptions of employment and personal/household financial security, which are the ultimate drivers for both house prices and whether people buy and sell.

4,275 Peterborough people were unemployed a year ago and today that stands at 9,475.

Looking at all the study papers on the topic, there is a link between unemployment and house prices, yet it’s not as strong as you would think. The larger factors are the demand and supply of property on the market and interest rates. Interestingly, in the past two recessions, the comparatively richer regions of London and South East house prices have been more sensitive to unemployment and house price changes than the rest of the UK, yet London and the South East also bounced back quicker and higher after the two recessions. 

The concept behind this is that more expensive house prices in the South drop more than lower priced houses in the rest of the UK. Why? Because those more expensive regions have, by definition, more expensive house prices meaning the homeowners have higher mortgages, so if they become unemployed, their homes are more likely to be repossessed (because of the high mortgages), and consequently that reduces house prices in that area quicker because repossessed houses tend to sell much more cheaply compared to normal house sales.

The health of the Peterborough property market in 2021 and beyond really depends on what happens to the economy as a whole and more specifically what is happening in the Peterborough economy.

When we drill down though, unemployment has hit different sectors of the economy to a lesser or greater extent. For example, for office workers, people who work in tech & sciences and the professional services, the impact on jobs has been comparatively mild, with many personnel able to work from home. Yet for others, such as those who work in the hospitality, leisure, retail, entertainment and catering industry, remote working is simply not an option, and these have been hit the hardest.

Unfortunately, the industries mentioned above are the ones that tend to employ the younger generation, who invariably live in private rented accommodation, rather than own their own home. Being made redundant puts their dream of buying their first home back even further as they try and get themselves back on their feet by initially finding a job (let alone save for a deposit).

Housing markets will recover quickest in towns and cities, where jobs are in more resilient employment sectors.

For example, in London, unemployment jumped really quickly (and high) in 2009 with the Credit Crunch, yet came down just as quick in 2011, just as the property market in London started to take off, whilst in Peterborough, it took a lot longer for unemployment to drop and the Peterborough property market didn’t really start to get going until 2013.

If we have a determined economic contraction, with a lengthier and leisurely economic recovery, impeded by financial stress, that will lead to much higher unemployment in the 10% to 12% range in the summer of 2021. However, before I get to the initial question, I need to highlight another interesting fact, because…

What is particularly interesting is the increase in unemployment in Peterborough amongst men has been higher than women, with a growth of 5.0 percentage points for men compared to 3.3 percentage points with women.

So, what is the prediction for the Peterborough property market under the cloud of this growth in unemployment?

One massive redeeming factor that could just save the Peterborough property market is low interest rates. This will keep mortgage payments low, meaning repossessions should be kept to a minimum (therefore, there shouldn’t be a flood of cheaply priced Peterborough properties coming onto the market all at the same time and dragging Peterborough house prices down with it, as it did in the previous two recessions of 2009 and 1989).  

Yet, irrespective of the ultra-low interest rates, I still consider property prices in Peterborough at Christmas 2021 won’t be much different from today, and in fact could be slightly lower.

This is because people have been paying top dollar in the last six months to secure their dream Peterborough home, quite often spending the money they saved on Stamp Duty on the purchase price. When Stamp Duty Tax returns in April 2021, there will be less money to pay for the property … thus Peterborough property values will be, by implication, lower in a year’s time.

What about Peterborough landlords and the rents?

Nationally, rents fell just over 2.3% between 2008 and 2010, following the Credit Crunch, while national house prices fell 15.9%. I anticipate Peterborough rents will also remain comparatively robust in the coming months and years.

Rents are very much tied to the rise and fall of wage growth and I can’t see why this relationship shouldn’t continue. Rents will rise in Peterborough by between 13% and 15% in the next five years, yet if property prices do rise in 2023/24, that means future rental yields will be marginally lower in 2023/4 comparative to today, especially as ultra-low interest rate expectations (according to the money markets) seem to be here to stay for a long time.

Therefore, something tells me there could be some interesting Peterborough buy-to-let investment opportunities for Peterborough investors willing to play the Peterborough buy-to-Let market for the long term.

To conclude, these are just my personal opinions. If you are a Peterborough landlord looking for advice and an opinion on what to buy to maximise your returns, please don’t hesitate to contact me. If you are a Peterborough homeowner, looking to buy or sell and need any advice or an opinion on where the market is and where your Peterborough home sits in the bigger Peterborough property market picture – again feel free to drop me a line. 

No Deal Brexit – The Prediction For Peterborough House Prices

Roll the clock back to April 2020, and major financial economists and property market commenters were sounding the alarm. The very best-case scenario was a 5% drop in property values by the end of the year, and most were in the 10% to 15% range. They forewarned the Covid-19 stimulated recession would trim tens of thousands of pounds off the value of Peterborough homes.

Yet the Peterborough property market seemed not to get the memo on that, and now as we find ourselves at the end of 2020 and the worst of lockdown restrictions appear to be passed, vaccinations on the way and economy starting to grow, Peterborough property prices seem to be doing quite well.

What happened to the Peterborough house price crash that wasn’t?

Before I answer that, it reminded me of what the Treasury said in 2016 about a leave vote on the Brexit referendum. The considered opinion of the Treasury was house prices would drop by 18% if the Country voted to leave the EU, so let us see what that would have done to Peterborough house prices if that had taken place and then what exactly has happened in the last four and half years …

 Average Value
2016
Predicted Drop By The Treasury because
of Brexit
Average Value
Today
Uplift in Value
in Last 4.5 Years
% Increase Since
Brexit Vote
Peterborough
Detached
£282,400£231,600£313,500£31,10012.0%
Peterborough
Semi
£179,000£146,800£196,900£17,9009.0%
Peterborough
Terraced/ Town House
£145,200£119,100£155,700£10,5008.2%
Peterborough
Apartments
£108,100£88,600£120,300£12,20010.3%

So why has the Peterborough property market not matched the

property pundits twice in the last five years or so?

Well for most of us, owning a property is about having somewhere to live rather than an investment (an Englishman’s home is his castle??). Nevertheless, once a homeowner is on the proverbial ‘property ladder’, it cannot be denied that it is eternally beneficial to know, as a homeowner, that you have made a healthy investment in your home and that the value will rise to alleviate the ache of trading up market — or down market when you retire.

Those Peterborough homeowners who own detached homes would have made an average of £31,100 profit, a rise of 12.0% or a weekly profit of £119.62 — calculated between the price they would have paid in the summer of 2016 and the price they would sell for today. Looking at the weekly profit for all property types in Peterborough since the Brexit vote …

  1. Peterborough detached homes weekly profit of £119.62 per week
  2. Peterborough semi-detached homes weekly profit of £68.85 per week
  3. Peterborough terraced homes/town houses weekly profit of £40.38 per week
  4. Peterborough apartments weekly profit of £46.92 per week

Whilst it is no surprise the property market boom was inspired by the Chancellor’s Stamp Duty holiday, this is not exclusively the Chancellor’s achievement. The three ‘D’s have been with us throughout 2020, Covid or no Covid (Debt, Divorce and Death), together with a huge shift in the way Peterborough homeowners see their homes.  With us cooped up during the lockdown and working from our dining room tables, the want and need of Peterborough people to have a home with an extra bedroom to work from, together with a garden, has been one of the most challenging this year… hence the rise in demand.

So, what of 2021? It’s true that the country will have high unemployment, yet at the same time, we have ultra-low interest rates and for the last 20 years, on average we have only built 150,000 households per year as a nation, but needed 300,000 per year to keep up with immigration, people living longer and changes in the way households are made up (compared to the Millennium).

Many people can predict what will happen – yet none of us really know what will actually happen to the Peterborough property market in 2021.

Covid was a black swan event and the fallout from that, I believe, has changed Peterborough peoples’ lives and their lifestyles, especially how they see their home. Instead of making predictions, nothing can get away from property market fundamentals, which have driven price booms on the back of high demand for homes and low supply (i.e. properties coming onto the market) and price crashes on the back of over-supply and low demand. Only time will tell if, in 2021, the Peterborough property market will see a flood of properties coming to the market because of debt or the demand for larger homes continues to rise unabated.

Please let me know your thoughts on the matter.

Will the Peterborough Property Market Crash in 2021?

… and the three reasons why it will not be the catastrophic scenario some are predicting

In the last few months, the Peterborough (and UK) property market has resisted and flouted every economist’s prediction. With the economy a shadow of its former self, unemployment set to hit 11.9%, the Government on track to borrow nearly half a trillion pounds to pay for Coronavirus support packages etc., all of this has had no effect on Peterborough homeowner’s enthusiasm or capability to want to move home. It highlights the influence of both the emotional impact of lockdown and the enticing appeal of saving thousands of pounds on your Stamp Duty Tax bill.

For the last few months, the Peterborough property market has been akin to a surfer, riding an unexpectedly large wave. The question is, will the surfer crash down (i.e. the property market) onto the rocks or will it calmly arrive at the beach unscathed? Well looking at house prices firstly…

UK house prices are 4.7% higher than they were 12 months ago according to the Land Registry, whilst in Peterborough they are 1.9% lower

Looking at the data over the country, things overall are looking good for property prices. Yet it must be remembered the Land Registry data is on completed house sales and is always a couple of months behind, so this data is for house sales up to September that were agreed in the spring. Also, it does not take into account the prices being paid today on Peterborough homes (as they will only show in statistics the Spring and Summer of 2021 when the sale completes).

Peterborough house prices will inevitably ease in 2021

Anecdotal evidence over the last few months has suggested buyers are using their Stamp Duty savings on the price they are prepared to pay for the Peterborough home of their dreams, so when the Stamp Duty holiday finishes in Spring 2021, we will see a reduction in the price Peterborough properties sell for, as buyers will now have to hold back some of their cash to pay the Stamp Duty tax.

Mortgage approvals at a 13 year high

A better statistic to judge the property market is by the number of mortgage approvals. As the vast majority of house buyers need a mortgage, that is another good place to look at the numbers as they are much more up to date than the Land Registry figures. The Bank of England recently stated 97,500 mortgages were approved last month, up from the long-term average of just over 65,400 per month. This was the highest number of mortgage approvals since September 2007, and a whole third higher than mortgage approvals in February 2020 when we had the Boris Bounce in the property market.

As a country, we are due to smash through 2019’s 524,000 total number of mortgage approvals this month, despite the fact that the property market was closed for nearly three months in the spring. It’s vital to remember, that mortgage approvals do not equate to people moving home, as many of you reading this can attest to … property sales do fall through.

I do have apprehensions that many Peterborough people, buying and selling their Peterborough homes and in a chain, may not be able to realise the move before the Stamp Duty rules change at the end of March 2021, as there is a massive backlog with mortgage lenders, local authorities’ and the searches, chartered surveyors surveying the property and solicitors with the legal work, all combining to slow down the house selling and buying machine.

If you are in chain at the moment, you must constantly be talking to all the parties involved and ensuring everything is focused on getting the sale complete by the end of March. You have a responsibility to get information requested back in hours, not weeks … because if you don’t, you might not get your Peterborough home move through before the end of the Stamp Duty holiday, and without that discount, someone in your chain may pull out of the sale altogether and the chain will break. 

The number of people moving home in Peterborough is anticipated to drop sharply after the Stamp Duty holiday ends at the end of March 2021

And that is probably going to be the biggest impact on the Peterborough property market in 2021. Yes, there will be a slight readjustment in the prices paid after March 2021 (as mentioned above) yet, a reduction in the number of people selling their Peterborough home does not inevitably lead to a house price crash.

Yes, there will be a number of people who have to sell in 2021 because they have lost their jobs (i.e. ‘forced sales’). In the last two ‘Property Market Crashes’ of 1988 and 2008, there were a large number of forced sales in a short period of time (because business owners had to sell their home as their business had gone bankrupt because of the Credit Crunch, as well as people who had lost their job), increasing the supply of properties coming to the market in 1988 and 2008.

This in turn pushed Peterborough house prices down as the property market was flooded with lots of property to sell in a short period of time. Yet this time, we have had the cushion/parachute of Bounce Back Loans, Furlough and Mortgage Holidays over the last 9 months.

Also, another important factor about the last property market crashes were the levels of interest rates and the amount borrowed.  

Interest rates are the key to the future of the Peterborough property market

In 1988, mortgage interest rates were an eye watering 11.5% and 6% in 2008, meaning mortgages were much more expensive compared to the 0.1% rate we have today. Also, with 77.2% of mortgagees with fixed rate mortgages, and only 1 in 21 mortgages owing more than 90% of the value of their home (and 1 in 303 mortgagees owing more than 95% of the value of their home), negative equity should not be so much an issue like it was in 1988.

This means most Peterborough homeowners are in a much better place to weather the storm of 2021, than they were in 1988 and 2008

I foresee many Peterborough sellers will simply wait until activity in the Peterborough property market picks up again before placing their property on to the market. This means fewer properties will be placed onto the market for sale in the later part of 2021, meaning Peterborough house prices will tend to hold up. The people that will be affected by less properties coming onto the market will be estate agents, solicitors and home removals people.

I also believe there will be ‘interesting investment opportunities’ to be had for Peterborough buy to let in the latter half of 2021 with the potential changes in Capital Gains Tax regulations, although those won’t go on the open market, so do keep your ear to the ground and build relationships with all the letting agents in Peterborough so you get to hear of the property portfolios coming up for sale (as they tend to sell ‘off market’). Again, if that’s something that interests you – do drop me a line.

So, where is the Peterborough property market heading in 2021?

Well, the Peterborough property market (aka our “surfer”) has seen house price growth of 46.2% since 2009 … and this has been fuelled on the back of…

  1. Ultra-low interest rates mean money is cheap to borrow and so mortgage payments are low. With the Bank of England pumping £150bn into the economy in November with Quantitative Easing (QE) to add to the £725bn they already spent on QE since 2009 – interest rates will continue to stay low for some time.
  2. There has been an increase in the demand for housing with annual net migration of 214,400 since 2009 (meaning 96,700 additional households per year have been required since 2009 just to house those people – a total of 1,063,700 households).
  3. The average age of death has risen by 2.1 years since 2008 in the UK. People living longer, delays property from being released back onto the property ladder. For every extra year of life the average Brit lives, an extra 290,850 households are required in the UK.

None of these things have changed because of Covid.

As a country, we have only built on average 165,100 homes a year since 2009. Supply and demand show that whilst we will probably have a turbulent choppy ride on the 2021 wave (because of the economy) our surfer (aka the property market), with long term demand for housing outstripping supply since the 1980’s, will continue to ride the wave (probably not as large as it has been in 2020) as the ultimate long-term outlook for the property market in Peterborough looks good.

All this means demand for decent, private rented Peterborough property will be good as long as the property ticks all the boxes of the tenants. If you are a Peterborough landlord, whether you are a client of mine or not, feel free to drop me a line to pick my brain on the future of the buy to let market in Peterborough.

Peterborough Landlords and Second Homeowners Will Probably Save Money from the Proposed New Capital Gains Tax changes

If the proposals were adopted in full, some Peterborough landlords would pay £8,000 less Capital Gains Tax than they would currently

The government borrowed £394bn this financial year (April ‘20 to April ‘21). This figure does not include the cost of November lockdowns and support measures, which means the final bill will probably be over half a trillion pounds. Ultimately these billions will need to be paid back to cover the cost of Coronavirus.

The Office of Tax Simplification (OTS) published a report for tax reform and, as was predicted by many in the press, the Government Dept suggested the Chancellor contemplate readjusting current Capital Gains Taxation (CGT) rates with a person’s own Income Tax rates. This would mean increasing the rate of CGT for selling a buy to let property from 28% to 40% for high-rate taxpayers and 45% for additional rate taxpayers. To add salt to the wound, the OTS is suggesting cutting the £12,300 annual CGT allowance.

This has led to many Peterborough buy-to-let landlords contacting me in the last few weeks, wondering if this is the time to exit the Peterborough buy to let property market, especially as they have been hit by growing levels of rental legislation and higher taxes.

With tax bills about to go through the roof, is this the time to leave the Peterborough buy to let property market?

Yet, like all things, the devil is in the detail as Peterborough 2nd homeowners and Peterborough landlords may well finish up having lower CGT tax bills with these new taxation proposals, even though the CGT restructurings are being introduced to raise the much-needed cash for the Government.

Apart from the suggested cut of the annual CGT allowance and increase in the CGT percentage rates, the OTS report also proposed reintroducing rebasing and indexation. In layman’s terms, the OTS are suggesting all gains made before 2000 would not be taxable (rebasing) and any capital gains would be calibrated to account for inflation.

So, what would that actually look like for a Peterborough landlord? Let us assume we have a Peterborough landlord who bought a Peterborough buy to let property in 2000.

Under the current CGT rules

  1. The average value of a Peterborough property in 2000 was £74,100
  2. Today, that same Peterborough property has increased in value to £223,200
  3. Meaning a profit of £149,100
  4. As our Peterborough landlord is a high-rate taxpayer (earning £60,000 a year), their CGT bill after the annual allowance would be £38,304

Under the new proposed CGT rules

Under the new proposals, the CGT payable (assuming the CGT rate of 40% and a lower annual allowance of £5,000), the same Peterborough landlord would only pay £30,165 – a saving of over £8,000.

And the savings don’t stop there. Remember, under the new OTS proposals, all capital gains made before 2000 would also be tax-free.

However, let us not forget the responsibility of the OTS is to report on tax simplification opportunities, not to set Government taxation policy. None of us have a crystal ball on what Rishi Sunak will do with CGT on buy to let property or second homes. Although, as time has always taught us with investments, often the worse thing to do is to make impulsive decisions on what MAY happen.

You have to remember, CGT only gets charged when you sell or transfer your investments, and most people use their rental investments to provide their income. If you did sell up, the best 90-day building society accounts are obtaining 0.8% pa, the stock market is a rollercoaster (good luck with that) and Government 10-year bonds are paying a princely 0.324% pa … where else are you going to invest to get the income Peterborough property investments provide?

Property is an asset you can touch, feel and ultimately understand. Maybe, this is the time (if you haven’t already) to take portfolio advice on your Peterborough buy to let investments? Many Peterborough landlords do so, whether they use our agency, another Peterborough agency or you manage your property yourself. The service is free of charge, we don’t need to meet face to face as we can do it over Zoom and it’s all without obligation. I promise to tell you what you need to hear – not what you want to hear … what do you have to lose?

The 2020 Review of the Peterborough Property Market

Looking back at the Peterborough property market for 2020, it can certainly be seen as a frenetic game of two halves, albeit with a very long half time in the spring. Between the General Election in mid-December and Christmas, many Peterborough agents saw an unusually higher uplift in activity in the property market just as we were getting ready for Christmas 2019. Yet once the New Year festivities were out of the way, that pre-Christmas uplift in the local property market was nothing when compared to the bang on Monday 6th January 2020 with the fabled ‘Boris Bounce’ of the Peterborough property market. January, February and most of March were amazing months, with the pent up demand from people wanting to move from the Brexit uncertainty of 2018/9 being released in the first few months of 2020.

The pandemic hit mid-March, and the Peterborough property market was put on ice for nearly three months (as was almost everyone else’s lives). Yet at the end of spring, the property market was one of the first sectors of the economy to be re-opened. Every economist predicted house price drops in the order of 10% in the best-case scenario and 25% in the worst yet nothing could be further from the truth.

When the lockdown restrictions were lifted from the property market, those three months allowed Peterborough homeowners to re-evaluate their relationships with their homes. The true worth of an extra bedroom (for an office) became priceless, as people working from home were having to take calls and work from the dining room table. Peterborough properties with gardens and/or close to green spaces all of a sudden became even more desirable. More fuel was put on the fire of the Peterborough property market with the introduction of the Stamp Duty Holiday, meaning buyers could save thousands of pounds in tax if they moved before the end of March 2021. This stoked the local property market and now …

Property values in Peterborough are set at 0.8% higher today compared to a year ago.

The fallout of that increased demand for a new home meant those Peterborough properties on the market coming out of lockdown in early summer with those extra rooms and gardens were snapped up in days for ‘full’ price. Peterborough buyers were having to spend their Stamp Duty savings on paying top dollar for the home of their dreams. Yet the increased number of properties coming onto the market in the late Summer quenched a lot of that demand and the prices being achieved became a little more reasonable and realistic. This increased the number of properties sold (stc), so much so that, nationally, almost two thirds more homes have been sold (stc) than would be expected at this time of year!

However, as we all know, just because a property is sold (stc), it doesn’t mean the property is actually sold. The number of people who have moved home in the last 12 months in Peterborough, is as you would expect, much lower. Over the last 10 years, on average 3,539 Peterborough homes have changed hands per year, compared to only 1,511 Peterborough homes in the last 12 months.

So, what is a Peterborough property worth today? Drilling down to the four types of homes locally, some interesting numbers appear. Looking at the table, you can see what the average property types are worth locally, and within each type, the average price paid in the last 12 months. (So, if the average price paid for the last 12 months is higher than the overall average, that means more higher priced property in that type has sold in the last year compared to the overall average – and vice versa). 

 Average Overall Value TodayAverage Price Paid in the Last Year
Peterborough Detached£319,800£308,440
Peterborough Semi-Detached£194,990£207,290
Peterborough Town House/Terraced£151,000£160,670
Peterborough Apartments/Flats£122,080£117,760

Of course, these are overall average values. To give you an idea what Peterborough properties are selling for by their square footage, these are those averages …

Average Value per sq. ft. (internal)
Peterborough Detached£202.95
Peterborough Semi-Detached£195.70
Peterborough Town House/Terraced£173.63
Peterborough Apartments/Flats£155.80

So, what about 2021? Well normally when the country’s GDP drops like a stone (as it did in the Summer of 2020), the property market follows in unison. Yet as the economy went south, the house price growth and activity in the property market went north. This would appear to be a quite remarkable outcome given that economic framework, but it is gradually becoming clear that, as far as the Peterborough property market is concerned, people’s time in lockdown has been spent reflecting on what they really wanted from their home and has meant that the normal rules of the game simply do not apply…. for now.