Peterborough Property Market Improved by 21.8% Over Pre-Pandemic Levels

Has there ever been a better time for Peterborough home sellers?

The Peterborough property market, for people looking to sell, is at its sturdiest for at least the last five years with home buyers jumping onto the Peterborough property ladder with abandon.

Peterborough house prices are anticipated to rise throughout 2021 after the Stamp Duty cut (and subsequent extension until the summer/autumn) and the newly revealed 95% mortgages for Peterborough first-time buyers (and Peterborough homeowners with minimal equity).

In addition, the continued low interest rates and the demand for larger homes because of lockdown, means the Peterborough property market should remain bullish for a while. There is a surge in potential buyers putting themselves on mailing lists with Peterborough estate agents, making the biggest disparity between supply and demand for Peterborough property for many years.

Fears of a cliff edge for the Peterborough housing market at the end of March have dispersed, somewhat due to the Stamp Duty tax deadline extensions, but also because the elevated level of buyer demand caused by the three lockdowns has continued to swell since the start of 2021 meaning that today …

52% of Peterborough properties on the market are Sold (STC)

Interesting, when utilising data from theadvisory.co.uk website, the Peterborough average for the last five years has only been 43%, meaning there has been an uplift of 21.8% in the proportion of Peterborough properties sold (STC) compared to that five year average.

Yet what can’t be forgotten is that 9 out of 20 Peterborough house sellers are also Peterborough house buyers as well, so whilst they do indeed achieve a higher price for their Peterborough property, they also have to pay more for the Peterborough property they want to buy.

So, how much will Peterborough house prices rise by? 

Like all things in life, it’s all about demand and supply. I have discussed the demand, yet what about the supply of properties for sale?

There are 41% fewer Peterborough properties for sale today compared to 6 years ago

Whilst February saw a lower than normal level of new properties coming onto to the Peterborough property market, the easing of lockdown road map and faster rollout of the vaccine is also persuading more Peterborough homeowners (especially those older Peterborough homeowners who have had their jabs) to start making the first steps towards moving home in 2021.

This will mean there will be more Peterborough properties available for sale in the conventionally busier post Easter market in the coming weeks and months which should cause more equilibrium and help keep Peterborough property prices in check.

These are interesting times for the Peterborough property market. If you are a Peterborough homeowner or Peterborough landlord looking to buy or let your Peterborough property in the coming weeks or months, don’t hesitate to drop me a line to discuss what all the points raised in this article mean to you.

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.

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. 

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.

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.

Each Peterborough landlord could be hit by a £23,829 bill

…and the 5 ways on how all Peterborough landlords can escape the worst of the coronavirus downturn on their Peterborough rental property.

With the second lockdown starting on the 5th November 2020, does this mean Peterborough landlords can wave goodbye to their Peterborough buy-to-let investment and see it go up in smoke on the bonfire of buy-to-let dreams, like a Guy Fawkes puppet?

With many Peterborough tenants at risk of losing their jobs after the furlough scheme ends next March and as the reverberations of the coronavirus recession hit this winter, what does this all mean for Peterborough landlords and what can they do to mitigate the risks?

Since the spring, most Peterborough tenants and buy-to-let landlords have been protected from the coronavirus crisis thanks to the banks with their mortgage payment holidays and job support schemes.

Before the second lockdown was announced on the 31st October, it was expected, that as the furlough and mortgage payment holidays were due to finish on Halloween, there would be some serious fallout from those schemes finishing. One silver lining from the lockdown (if you can call it that) is that mortgage payment holidays and furlough have been extended, yet does all that just kick the can down the road?

The question is, what can Peterborough landlords do to mitigate the financial risk on their Peterborough buy-to-let investment?

  1. Help Your Peterborough Tenants Get the Financial Support They Are Entitled To 

Billions of pounds are being spent by the Government to help those people whose income has been hit by coronavirus. The better Peterborough letting agents and self-managing landlords are supporting, guiding and helping those Peterborough tenants in financial difficulty to gain a better understanding of the Universal Credit (UC) processes, systems and payment levels, to enable their tenants to pay the rent and ultimately indirectly, help their Peterborough landlord. Also, if you are a Peterborough tenant, and that support isn’t given when you ask, don’t forget Peterborough City Council do hold special cash reserves for discretionary housing payments, which can be utilised to close the gap in rent between what UC pays and your current rental commitments. Also, the Government’s Money Advice Service and Citizens Advice are a good online resource for you to find out what you are entitled to.

2. Adopting, Adapting & Improving Your Peterborough Buy-to-Let Property

Demand for gardens or office space means Peterborough landlords will need to think outside the box. Those Peterborough homes with tenants sharing (e.g. HMO’s and shared houses) might need to price their pre-coronavirus 4 bed sharing house to say maybe a 3 bed sharing house plus a work/office room and, if you haven’t already, installing a top of the range, fast and dependable internet connection could be the thing that swings it. Outdoor space and gardens are really high on Peterborough housebound tenant’s wish lists, in fact I have come across some Peterborough tenants demanding that new rental properties have a landscaped garden or those that bought a dog or cat for company during the first lockdown, are looking for their Peterborough landlords to relax their ‘no pets policy’.

3. Hold On to Your Good Peterborough Tenants

Those Peterborough buy-to-let landlords with decent tenants, who find themselves in financial dire straits should consider attempting to keep them, even if their own monetary circumstances mean they have to decrease their rent somewhat over the short term. Now of course, I would expect tenants need to prove their circumstances, yet if their plight was real, surely it would be a wise choice to reduce the rent by perhaps £50 a month and support your tenants? You know they are taking great care of your Peterborough rental property and rather than risk the issue of advertising your empty buy-to-let property  – particularly when there is no assurance you will achieve your existing rent and ultimately risk drawn-out void periods with no rent coming in at all. What I would suggest therefore,  in such circumstances, is that you create a new Assured Shorthold Tenancy agreement with a longer term with your existing tenant at a lower rent – a temporary measure but with peace of mind for both parties which can then be reviewed once that tenancy is up for renewal

4. Carry out Firmer Checks on Your Prospective Peterborough Tenants 

Many private Peterborough landlords and a few slipshod Peterborough letting agents tenant checks are somewhat lacking in their depth. Trust me, there is tenant referencing … and then there is ‘proper’ forensic tenant referencing. As certain parts of the British economy have been hit harder than others, Peterborough landlords must consider when choosing their new tenants, the type of work they do or who their employer may be, to enable them to decide on their future capacity to meet their rental commitments

5. Rent Guarantee Insurance for Your Peterborough Rental 

There are still insurance companies offering landlord rent guarantee insurance if your tenants become unable to pay the rent. Many insurance firms removed these insurance products in the first lockdown, yet some have returned to the insurance market although insurance premiums have gone up in price. Remember to check the small print of the insurance, although you will get a lower insurance premium if you can show stringent tenant referencing (as per the previous point). 

6. The Nuclear Option – Eviction

Peterborough landlords need to be conscious that, should their tenancy run into trouble, the Government have changed the rules when it comes to eviction during the coronavirus pandemic. Going into the first lockdown, there was already a backlog in the courts and now, just before going into the second lockdown, bailiffs have been instructed not to enter rental properties in high risk Tier-2 and Tier-3 Covid-19 areas.

Eviction really does have to be the very last option. Negotiation or arbitration will nearly always deliver quicker and improved outcomes for both parties. Peterborough landlords who do come to mutually agreeable arrangements with their tenants by briefly reducing the rent, or allowing payment holidays with legally enforceable pay back schedules should ensure they get the agreed terms in writing and run by a solicitor or their agent (feel free to drop me a note if you need advice).

However, if eviction is required, it doesn’t mean the tenant gets off ‘scot free’. Evicted tenants, depending on their circumstances, will either be placed temporarily into an inexpensive B&B, asked to move in with family or given one of the local authorities temporary accommodation properties, with the goal to then move them into long term council accommodation (as the chances of obtaining private rented accommodation would be slim with agent’s heightened reference checks – more of that at the end).

The Potential Cost of Evicting a Problem Peterborough Tenant

The average rent for a Peterborough property currently stands at £692 per calendar month.

Thankfully, evictions are very rare. Last year before lockdown, tenants from 201.4 rental properties were evicted each working day in the UK … but if yours was one of those, that is still a potentially large cost.

Working on the basis that most evictions from the first rent not being paid, through to eviction, refurbishment of the kitchen, bathroom, carpets and décor (because often these do need sorting/replacing) were taking on average between eight to nine months before coronavirus hit, (plus the mortgage payments), this means a Peterborough landlord could be hit by a £23,829 bill, broken down as follows:

Missing rent (8½ months)£5,882
New kitchen£3,629
Bathroom£2,020
Carpets£2,405
Redecorate£1,834
Agents fees£618
Legal fees & court fees£3,500
Mortgage payments£3,941
Total£23,829

What that would be now is anyone’s guess – yet it could be a lot more.

This is why it is so important to get the best tenant from day one. Many Peterborough tenants, who know they wouldn’t pass the references of letting agents, are attracted to those private landlords who don’t use a letting agency, as they know their referencing checks are not as strict and may be a softer touch. That’s not to say going with a letting agent is a guarantee you won’t need to evict; it just means the chances are much, much smaller. Like anything in life – it’s a choice. Whether you are a Peterborough landlord who uses a letting agent or not and feels their reference checks are not to the standard or level you might hope or if you want a chat

What’s Next for the Peterborough Property Market?

There is no doubt that Coronavirus will affect the Peterborough property market, but just how?

The ensuing economic challenges are going to impact the Peterborough (and UK) property market, yet no one knows the real answer. The newspapers eulogise different opinions, but that’s all they are – opinions and everybody’s got a different opinion. The truth of the matter is we don’t know and won’t know for another few months at least, if not more?

There have been some outstanding Government supportive measures both for tenants, landlords, home buyers and sellers (including a pause on evictions for tenants, and for landlords and homeowners, mortgage payment deferments and stamp duty reductions to make buying a home cheaper), and whilst these are only temporary, they have done their job, meaning there is a good level of activity in the Peterborough property market.

A lot of that is pent-up demand from a couple of years of uncertainty because of Brexit. Also, we had the General Election in late 2019, so there have been so many reasons for people to sit on their hands. At the beginning of 2020, it was like a water hose ready to burst with the Boris Bounce in January and February. Then, just as things were beginning to get going in the Peterborough property market, we had everything freeze up for months during lockdown. Since lockdown has been lifted …

the Peterborough property market is open once again for business and there is unquestionably some impressive activity both in the sales and rental market

So, back to the original question and where are we going? I think what we will see is a subtle change to where people want to live because of the pandemic. People working from home has shown that the need to be in the big cities has reduced and as employees have realised, they can work very efficiently from home, plus they are happier and have a better work/life balance. Their employers are also happy as they get more work out of their staff and can reduce their costly office footprint in the cities. The same goes for Peterborough tenants as they are wanting more from their rental homes. Three trends we have noticed is there is greater demand for properties with gardens, greater demand for Peterborough landlords who will accept pets (as they now can have them as they work from home) and finally, tenants willingness to pay top dollar for ‘top of the range’ properties, whilst more basic and uncared for properties without all the ‘bells and whistles’ need to go for a discount. There certainly has been a flight to quality.

Yet, what worries me is the fundamental future uncertainty in 2021 and beyond. What will things look like, say in spring 2021, when the Stamp Duty reductions are phased out? Any property sold needs to have completed by the end of March 2021 to take advantage of the tax holiday, meaning you need to have sold your Peterborough property by November 2020 at the very latest to ensure your property purchase and sale deal goes through in time (as it is taking on average up to 17 weeks between sale agreed and completion). This is where the difference between a great solicitor, brilliant estate agent and awesome mortgage broker compared to average ones will show. Good ones, when all three are working together for you, can get the sale through in 6 to 8 weeks, not the national average of 17 weeks, meaning if you are cutting it fine, you might not be able to take advantage of the tax savings in the spring. Give me a call if you want to know who the best of the best in Peterborough are to ensure you don’t lose out on those tax savings. 

The value of the average Peterborough home currently stands at £204,900

So, what is going to happen to the Peterborough property market? It really depends on the economy as a whole and of course the property market is a large part of that. I know one thing that buy to let landlords and home buyers don’t like is ambiguity and the British housing market has always lived and breathed on emotion and sentiment. People will only buy and sell property (and borrow the money to make those transactions happen) when they feel good. Are all these things like Stamp Duty holidays just putting off the inevitable? Are we heading for the mother of all property crashes?

Well, let me put sentiment and opinion aside for a second and look at the simple facts.

We have an increasing population, yet we don’t build enough houses.

Since 1995, we have built on average 150,200 properties per year. The Barker Report said 2004 the country needed 240,000 per year to satisfy annual demand for new homes and whilst the number of new homes built in the UK last year rose 1% to a 13-year high, only 161,000 homes were built. That means over the last 25 years with the difference between actual homes built and the targets set out in the Barker Report, we have an inbuilt shortage of 2,245,000 homes, meaning …

since the Millennium, property values in Peterborough have increased by 167.1%

Other factors have contributed to that. The average age of a person leaving their parents’ home in the UK is 24.4 years and that has been dropping for a few years meaning more homes are required. People are also living longer (in 2000 the average person lived until 77.7 years and now it’s 81.1 years – doesn’t sound a lot until one considers for each additional year the average person lives in the UK, we need an additional 356,500 homes). Finally, we have got immigration. In the year ending March 2019, 612,000 people moved to the UK (immigration) and 385,000 people left the UK (emigration) – meaning a net increase of 227,000 people (or a requirement of 100,000 homes to house them in one year alone). All those factors in themselves mean…

we have more demand for Peterborough property than we have supply and that’s not going to change any time soon.

Property markets are driven (like all markets) by supply and demand so I believe Peterborough property values can only rise in the long term. The question is whether Peterborough people will have the sentiment and confidence to borrow money on a mortgage and invest in Peterborough property, yet at the moment with ultra-low interest rates, borrowing money to buy a home has never been so cheap and if you are in it for the long-term (which you should be with property) then I think it’s good news.

One piece of good news is that mortgage lenders are willing to lend up to 90 per cent loan to value mortgages for first time buyers (and in some rare cases 95 per cent), albeit with a lot of strings attached … yet this is a good sign as the banks and building societies wouldn’t be lending at these levels if they were too scared.

Investing in property, be it for yourself to live in or buy to let is a long-term game. We might see an uplift in prices in the short term because of the demand mentioned above, then again, we might see a dip in 2021 – yet again for the reasons mentioned above – until we start to build new homes to the scale of 300,000+ a year (something that has never been achieved since 1969), the long-term picture appears to be good. Be you a Peterborough landlord, Peterborough house seller or Peterborough buyer, you have to be a lot more strategic and thoughtful about what you are going to do. If you would like to pick my brains, drop me a message on social media or pick up the phone.

So, those are my thoughts, tell me your thoughts for the future of the Peterborough property market?

The Peterborough Property Market – The Last 10 Years

One of my Peterborough landlords contacted me last week from Eye, after he had spoken to a landlord friend of his from Glinton. He told me they were deliberating the Peterborough property market and neither of them could make their mind up if it was time to either sell or buy property following Covid-19. His friend said he would wait to see what would happen to property prices following Covid-19, yet my landlord wanted to pick my brain in order to help him decide what to do.

I said the press are aware bad news sells newspapers and the doom mongers are plying their trade on uncertainty in the world economic situation. Roll the clock back to the Credit Crunch of 2008/9, and there were quite a few landlords in Peterborough who had overexposed themselves with high percentage loan to value buy to let mortgages, backing the hope they would make their money on the capital growth, yet fell foul of a drop in rents. (but who could blame them when the property market was rising at 15% to 20% a year in the early 2000’s and banks like Northern Rock were giving mortgages out to anyone with a pulse and note from their Mum).

Thankfully the Bank of England changed the rules on all mortgages in 2014 banning self-certification mortgages, tightening the rules around interest-only mortgages and the requirement around affordability to be checked, plus a tough stress test if interest rates rose. It’s obvious we are going to enter into a recession because of Covid-19, yet this time the Peterborough property market is better placed to weather the storm.

However, gone are the days when you could buy any old house in Peterborough and it would make money. Yes, in the past, anything in Peterborough that had four walls and a roof would make you money because since World War 2, property prices doubled every seven years … it was like having a free cash machine.

If a landlord bought a Peterborough terraced / town house in the summer of 2000, he or she would have seen a profit of £91,400 to its current value of £146,100, a rise of 167.3%

Nonetheless, if that landlord had bought the same property in 2010, the Peterborough landlord would have only made £21,900 profit (a 17.6% increase). Yet since 2010, the country has experienced 31.5% inflation, meaning our Peterborough landlord has seen the ‘real’ value of their Peterborough property decrease by 13.9% (i.e. 17.6% less 31.5% inflation).

And this is my point. Nobody has been complaining about the property market in the last ten years, yet landlords are still worse off in real terms. If we do see a slight dip in property prices because of Covid-19 (looking at the market at the moment I haven’t seen any indication of its slowing down from its post lockdown takeoff), but if we do, Peterborough landlords need to realise property values aren’t the only indicator of whether the property market is good or not.

The reality is, since around the early 2000’s we haven’t seen anything like the capital growth in property we have seen in the past and it’s not predicted to grow at the rates it has previously done either. So, I believe it is high time for any Peterborough landlord, pondering investing in Peterborough property to stop believing the hype and do some serious research using independent investment expertise. You can still make money by buying the right Peterborough property at the right price and finding the right tenant.

Think about it, properties in real terms are 13.9% lower than a decade ago, so investing in Peterborough property is not only about capital growth, but also about the yield (the return from the rent). It’s also about having a balanced property portfolio that will match what you want from your investment – and what is a ‘balanced property portfolio’? Well we discuss such matters on The Peterborough Property Blog…if you haven’t seen the articles, then it might be worth a few minutes of your time.