Loughborough house prices since the Millennium have risen by 128.12%,
whilst average salaries in Loughborough have only grown by 51.27% over the same
time frame. This has served to push homeownership further out of reach for many
Loughborough people as they have to battle against raising considerable deposits and meet sterner
lending criteria, as a result of new mortgage regulations introduced in 2014/5. The private rental market in Loughborough has grown throughout the last
twenty years with buy-to-let investors purchasing a high proportion of newly
built residential properties that were built and designed for the owner occupier
sales markets. For example, in the Loughborough
Constituency, roll the clock back 20 years and there were 32,494 properties in
the Constituency, whilst the most recent set of figures show there are 38,941
properties - a growth of 6,447 properties.
However, anecdotal evidence
suggests that a large majority of those 6,447 were bought by Loughborough
buy-to-let landlords, as over the same 20-year time frame, the number of rental
properties has grown from 1,341 to 6,537 in the Constituency
- a rise of 5,196 properties.
Nevertheless, some say this historic growth of the Loughborough rental
market might start to change with the new tax rules for landlords introduced by
Mr. Osborne over the last seven or eight months. Yet the numbers tell another
story. Across the board, mortgage borrowing climbed to a 9 year zenith in March this year as the
British property markets traditional Easter rush corresponded with landlords
hurrying to beat George Osborne’s new stamp duty changes – buy-to-let landlords
borrowed £7.1bn in March 2016 (the latest set of figures released) which was
163% up on the £2.7bn borrowed in the previous March.
You see,
from my point of view, I don’t think things will get worse in the buy-to-let market
in Loughborough and these are the reasons why I believe that:
Firstly, what
else are Loughborough landlords going to invest in if it isn’t property - the
stock market? Since the Millennium, the
stock market has risen by an unimpressive total of 5.54%, quite different to
the 128.12% rise in Loughborough property prices?
Secondly, its
true the 3% stamp duty is the first blow on top of a number of other tax changes to be phased
in between 2017 and 2021, such as landlords facing a constraint in their
ability to offset mortgage interest and, if sizeable
numbers of landlords do take the decision to sell their portfolios, this will
lead to a substantial amount of second hand properties being put up for sale. Yet
that might not be a bad thing, as I have mentioned in previous articles there
is a serous shortage of properties to buy at the moment in Loughborough: the
stock of property for sale being at a six year all time low.
.. Thirdly, if there are fewer
rental properties in Loughborough, as supply drops and demand remains the same
(although ask any letting agent in Loughborough and they will say demand is
constantly rising) this will create a squeeze in the Loughborough rental market
and as a result rents will rise. In fact, I predict even if landlords don’t
sell up, Loughborough rents will rise as Loughborough landlords seek to compensate
for increased costs, which means more landlords will be attracted back.
If you would like to discuss the Loughborough property market or chat about any potential investment please feel free to call me on 01509 260777 or email me james.loughborough@belvoir.co.uk
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