Only 54,122 Council Houses in the Headingley and Leeds area left – opportunity or problem?

The ‘Right to Buy’ scheme was a policy introduced by Maggie Thatcher in 1980 which gave secure council tenants the legal right to buy the Council home they were living in with huge discounts. The heyday of Council ‘Right To Buys’ was in the 80’s and 90’s, when 1,719,368 homes in the country were sold in this manner between October 1980 and April 1998. However, in 1997, Tony Blair reduced the discount available to tenants of council houses and the numbers of properties being bought under the Right to Buy declined.

So what does this mean for Headingley homeowners and landlords? Well quite a lot in fact!

Looking at the figures for our local authority, whilst the number of ‘Right to Buys’ have dwindled over the last few years to an average of only 217 ‘Right to Buy’ sales per year, one must look further back in time. Looking at the overall figures, 20,476 Council properties were bought by council tenants in the Leeds City Council area between 1980 and 1998. Big numbers by any measure and even more important to the whole Headingley property market (i.e. every Headingley homeowner, Headingley landlord and even Headingley aspiring first time buyers) when you consider these 20,476 properties make up a colossal 10.9% of all the privately owned properties in our area (because in local authority area, there are only 186,467 privately owned properties).

Headingley first time buyers and landlords can now buy these ex-council properties second hand (or the PC brigade like to call them ‘pre-loved ex–local authority dwellings’) as those original 80’s and 90’s tenants (now homeowners) have more than passed the time of any claw back of the discount they received (council discount was repayable if the first owner sold within a stipulated time period - usually 5 years).

Now let us all be honest, some (not all), but some ex-council properties lack the vital KSA that some landlords crave. The new homes builders know all about KSA (or Kerb-Side-Appeal) as they dress up the exteriors of their new homes to make them more appealing to buyers ... and if you don’t believe me ... why do Show homes exist? Going on the exterior looks of a modern property might be a theoretically good way of choosing a Headingley buy-to-let property, but in a challenging market, some Headingley investors are finding a more no-nonsense down to earth approach brings the largest returns.

Yes, the modern stuff being built in Headingley is lovely, but too many landlords purchase buy to let property solely based on where they would choose to live themselves, instead of choosing with a business head and choosing where a tenant would want to live ... because remember the first rule of buy to let property … you aren’t going to live the property yourself. What an ex-council property lack in terms of KSA, they more than make up for in other ways.  Tenants more worried about how close the property is to a particular school or family members for child care matter to them far more than the look of a property.

Whilst ex-council properties tend to increase in value at a slower rate than more modern properties, that is more than made up in the much higher yields – and those built between the wars or just after are really well built. Tenant demand for such properties is good since Headingley property values are so expensive, a lot of people can’t get mortgages to buy, so they will reconcile themselves to renting, meaning there is a good demand for that sort of property to rent. Also, the very fact the council were forced to sell these Headingley properties in the 80’s and 90’s, means that today’s younger generation who would have normally got a council house to live in themselves, now can’t as many were sold ten or twenty years ago.

So to Headingley landlords I say this … don’t dismiss ex-council houses and apartments – but remember the 1^st rule of buy to let (see above). However, those very same Headingley landlords should go in with their eyes open and take lots of advice. Not all ex-council properties are the same and even though they have good demand and high yields, they can also give you other headaches and issues when it comes to the running of the rental property. 

One source of advice is the Headingley Property Blog... that just leaves the 54,122 council houses still owned by the local authority to be sold to their tenants in the coming years!

Has owning a home become an unattainable dream for the 9,887 Leeds 28 year olds

My parents bought their first house in the early 1980’s, they were in their early 20’s. Interestingly, looking at some research by the Post Office from a few years ago, in the 1960’s the average age people bought their first house was 23. By the early 1970s, it had reached 27, rising to 28 in the early 1980’s.

This year alone, 9,887 people in Leeds will turn 28 and 11,236 in 2017... and dare I say 13,191 in 2018... year in year out the conveyor belt carries on... where are the Headingley youngsters going to live?

Ask a Headingley ‘twenty something’ and they will say they do not expect to buy until they are in their mid thirties - seven years later than the 1980’s. Some people even say they will never be able to buy a property and the newspapers have labelled them ‘Generation Rent’ as they are people born in the 1980s who have no hope of getting on the property ladder. One of the major problems facing young Headingley people is the large deposit needed to get a mortgage... or is it?

The average price paid for an apartment in Headingley over the last 12 months has been £124,500 meaning our first time buyer would need to save £6,225 as a deposit (as 95% mortgages have been available to first time buyers since 2010) plus a couple of thousand for solicitors and survey costs. A lot of money, but people don’t think anything today of spending a couple of thousand pounds to go on holiday; the latest iPhone upgrade or the latest 4K HD television. That amount could soon be saved if these ‘luxuries’ were withheld over a couple of years but attitudes have changed.

Official figures, from the Office for National Statistics, show the average male in Leeds with a full-time job earns £536.60 per week whilst the average female salary is £445.20 a week, meaning, even if one of them worked part time, they would still comfortably be able to get a mortgage for an apartment.

I was reading a report/survey commissioned by Paragon Mortgages from the autumn of last year. The thing that struck me was that when tenants were asked about their long term housing plans, some 35% of participating tenants intend to remain within the rental sector and 24% intended to buy a house in the future, with the proportion of respondents citing the “unaffordability” of housing as the reason for renting privately increasing from 69% to 74%.

However, time and time again, in the starter home category of property (ie apartments), nine times out of ten the mortgage payments to buy a Headingley property are cheaper than having to rent in Headingley. It is the tenant’s perception that they believe they can’t buy, so choose not to. Renting is now a choice. Tenants can upgrade to bigger and better properties and move up the property ladder quicker than their parents or grand parents (albeit they don’t own the property). Over the last decade, culturally in the UK, there has been a change in the attitude to renting so, unless that attitude changes, I expect that the private rental sector in Headingley (and the UK as a whole) is likely to remain a popular choice for the next twenty plus years. With demand for Headingley rental property unlikely to slow and newly formed households continuing to choose the rental market instead of purchasing a property. 

I also forecast that renting will continue to offer good value for money for tenants and recommend landlords pursue professional advice and adopt a realistic approach to rental increases to ensure that they are in line with inflation and any void periods are curtailed. One such place for advice, comment and opinion is the Headingley Property Blog 

3.0% rise in Headingley Property Values adds weight to the suburb’s Housing Crisis

Headingley’s continuing housing shortage is putting the suburb’s (and the Country’s) repute as a nation of homeowners ‘under threat’, as the number of houses being built continues to be woefully inadequate in meeting the ever demanding needs of the growing population in the suburb. In fact, I was talking to my parents the other day at a family get together; the subject of the Headingley Property market came up. My parents said it used to be that if you went out to work and did the right thing, you would expect that relatively quickly over the course of your career you would be buying a house, you would go on holiday every year, & you would save for a pension. Now things seem to have changed.

Back in the Autumn, George Osborne, used the Autumn Statement to double the housing budget to £2bn a year from April 2018 in an attempt to increase supply and deliver 100,000 new homes each year until 2020.  The Chancellor also introduced a series of initiatives to help get first time buyers on the housing ladder, including the contentious Help to Buy Scheme and extending Right to Buy from not just Council tenants, but to Housing Association tenants as well.

Now that does all sound rather good, but the Country is only building 137,490 properties a year (split down 114,250 built by private builders, 21,560 built by Housing Associations and a paltry 1,680 council houses). If you look at the graph (courtesy of ONS), you will see nationally, the last time the country was building 230,000 houses a year was in the 1960’s.

How George is going to almost double house building overnight, I don’t know, because using the analogy of a greengrocers; if people want to buy more apples (i.e. houses) in a greengrocers’, giving them more money (i.e. with the Help to Buy scheme) when there's not enough apples in the first place doesn't really help.

Looking at the Headingley house building figures, in the local authority area as a whole, only 1,510 properties were built in the last 12 months, split down into 1,350 privately built properties and 140 housing association with only 20 council houses being built.   This is simply not enough and the shortage of supply has meant Headingley property values have continued to rise, meaning they are 3.0% higher than 12 months ago, rising 0.2% in the last month alone.

I was taught at school that it’s all about supply and demand, this economics game.   The demand for Headingley property has been particularly strong for properties in the good areas of the suburb and it is my considered opinion that it is likely to continue this year, driven by growing demand among buyers (both Headingley homebuyers and Headingley landlords alike). You see Headingley’s economy is quite varied, meaning activity is expected to remain relatively strong into the early Summer of 2016, especially as some Headingley buy to let landlords try to complete purchases ahead of the introduction of new stamp duty rules in April.

... and of supply, well we have spoken about the lack of new building in the suburb holding things back, but there is another issue relating to supply.   Of the existing properties already built, the concern is the number of properties on the market and for sale.   The number of properties for sale last month in Headingley was 253, whilst 18 months ago, that figure was 282 whilst three and a half years ago it stood at 337… quite a drop!

With demand for Headingley property rising, minimal new homes being built and less properties coming onto the market, that can only mean one thing ... now is a good time to be a homeowner or landlord in Headingley.