I’ve just done a big review of both property prices and rents, and interestingly, they rarely move in the same direction! Prices are on the up, while rents are pretty steady.
Nationally, according to the latest round of property price reports, prices are up year on year from around 5% through to 11%. For Lincolnshire, average house prices have just gone over the 1% stamp duty threshold of £125,000 and are now just over £126,000, according to the Land Registry.
Although this represents a 5% increase year on year, this measure doesn’t really help buyers or sellers as what’s important is whether your property price is more or less than when you bought it, especially if you bought at the height of the market back in 2007. At this time average prices reached £146,000 (Land Registry). So at £126,000, although up year on year, prices are great value as they are still around 13% less than six years ago.
The reality is even though prices are ‘on the up’, for some sellers they will still be in negative equity and find it tough to sell.
For those looking to buy though, prices now (on average) are still good value for money. Anyone looking to buy their first home, invest or trade up would be wise to consider it now, while prices are gently rising rather than getting carried away.
This good news for Lincolnshire. We don’t have this illusive and badly named “bubble” everyone is still talking about, and, if Mark Carney is right that rising house prices are a threat to economic recovery, again that’s not something which is likely to hold Lincoln back.
For many though, especially those under 30 years, renting is of more interest. According to most commentators, this is because of affordability problems. Although I agree with this to some extent, I fundamentally believe there is a cultural shift towards renting.
People are far more mobile than in the past. The idea of moving out of your home, getting married and having kids isn’t on every 20-something’s agenda. Plus with a very flexible job market, the ability to be able to move at a moment’s notice, compared to owning a home, as well as the hassle free nature of renting, it can be a much more attractive option than buying.
Unfortunately though, as the private rental market grows, it’s getting caught up in politics. Always dangerous in my view! As a result, there is an awful lot of quite frankly rubbish statements being made about the rental market.
Firstly, not all agents and landlords are “evil” which is how they can be portrayed. If you rent from a good landlord who is a member of the Resident Landlord Association or your agent is a member of NALs, ARLA or RICs, you are likely to have a good experience and rent a legally let property. Rent from anyone else and it’s a bit of a lottery.
Secondly, rents are not “spiralling out of control” as many claim. The reality is in Lincoln, according to the Belvoir Index, rents are around £530 a month and have hardly moved for some years. When looking back over time, rents were actually higher than this in 2008, when they rose to £544 per month. That means as a tenant you have avoided rent rises which would ideally keep up with inflation.
If the rent controls and other things that are being talked about had been in place over the last five years, then your rents could have been over £600 — that’s £70 extra a month you would be paying out. As mortgages have remained low, so landlords have kept down the cost of renting to good tenants.
So politicians who think they know the lettings market and how to “make it better” need to make sure they have the real facts and figures before meddling in the cost of putting a roof over people’s heads.
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Kate Faulkner is Managing Director of propertychecklists.co.uk. The site gives free advice to consumers on how to measure their local market and an understanding of how to buy their first home or trade up. Kate’s background stretches from self-build to part exchange to buy to let and renovation. She is the author of the Which? property books and regularly appears on local and national media.