The votes are in, the decisions made, and this week Rob & Rob dive into the election results and what the new housing minister could mean for the property market. Plus, what never-before-discussed data have they uncovered that’s got them so excited? Press play to find out!
• (0:40) Election news
• (2:48) The latest data on house prices
• (7:45) Holiday lets – is the boom over?
• (10:30) Rental news that caught Rob’s eye
• (11:45) Some innovation in the mortgage market
• (14:45) Hub Extra
Links mentioned:
House prices:
• Zoopla price index (https://www.zoopla.co.uk/discover/property-news/house-price-index/)
• Nationwide price index (https://www.nationwidehousepriceindex.co.uk/reports/house-price-growth-broadly-stable-in-june)
• Halifax (https://www.halifax.co.uk/assets/pdf/june-2024-halifax-house-price-index.pdf)
Holiday lets:
• Is the short-let boom over? Declining occupancy rates drive a reduction in revenues (https://www.benhams.com/press-release/london-property-market/is-the-short-let-boom-over-declining-occupancy-rates-drive-a-reduction-in-revenues/)
Rentals:
• 17% of deposits ‘don’t cover rent arrears or damage by tenants (https://www.landlordzone.co.uk/news/17-of-deposits-dont-cover-rent-arrears-or-damage-by-tenants)
Mortgages:
• Mortgage lender encourages landlords to sell to tenants at cut price (https://www.landlordtoday.co.uk/breaking-news/2024/7/mortgage-lender-encourages-landlords-to-sell-to-tenants-at-cut-price)
• Yet more lenders slash Buy To Let rates to woo landlords (https://www.landlordtoday.co.uk/breaking-news/2024/7/yet-more-lenders-slash-buy-to-let-rates-to-woo-landlords)
Hub Extra: Aer backpack (https://aersf.co.uk/search?q=day+pack&type=product&options%5Bprefix%5D=last)
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[Music] hey everyone it’s Robie here with Rob D and you are listening to the property podcast the election is done we’ve got some coverage there but also we’ve dug out some really interesting data we’ve gone beyond the headlines and when we’ve looked at house prices we’ve discovered a chart that we’ve never talked about before it’s going to be a great [Music] episode welcome to the property podcast thank you for joining us in case you don’t know we buy more than1 Million worth of property every year for our clients you can find out about that at property hub.net invest and this is the show where we bring you for free what we’ve learned along the way okay it’s time for the market update and lots of stories coming up but we have to start with the election because that along with the football has dominated everyone’s attention for the past few weeks but we have good news the good news is it’s over we don’t have to think about it anymore and the other good news maybe Rob I don’t know you can tell me if it’s good news is we have a new housing Minister what can you tell us about our new housing Minister that the early signs are promising Rob now the new government has been in power less than a week so there isn’t loads of policy news to bring you but we do have positive news as Rob said about the housing Minister because the reason why I say it’s positive is Matthew Penny cook our new housing Minister has actually been involved in housing policy with labor since 2021 why is that important well we’ve had so many housing ministers under the Tory government that I honestly couldn’t tell you the last five I stopped taking notice because it was like a revolving door it was a bit of a joke position it’s like the job that nobody wanted or nobody stuck with but the fact we have an MP that’s been involved so heavily with property for so long is a positive sign now it could just be business as normal and 9 months we’ll have another one but hopefully that’s not the case and let’s go in with optimism because if you’re going to truly change something within housing you need stability in the leadership and hopefully that’s what we’re getting here early days Rob no promises of course we don’t speak for the labor government but at least it’s a positive sign that it’s somebody who’s got experience in property and has been consistently involved with property for a number of years now that’s right I think a lot of people listening won’t necessarily like a lot of what the new government has said in the past around the private rented sector and what they may plan to do in the future but I think you’re right that ultimately having someone in that role with experience who understands the issues even if they have a different perspective on those issues from your own is better than having someone parachuted into that role who really doesn’t have a clue what any of it means because they would probably just listen to whoever shouts the loudest but for now the election is done it was nothing if not decisive and that’s likely to be good news for the housing market because now everyone can crack on knowing what they’re dealing with so that brings us on to house prices we’ve got our three regular house price indices zler Nationwide and Halifax Rob I will read you out the numbers from each for the last month then you can give us some analysis so may in the housing market zuper says said prices are flat Nationwide say prices are up by 0.2% Halifax says prices are down by 0.2% Rob some big numbers in there can you bring us the story behind that data I think I’m struggling here there’s been lots to talk about over the last few weeks at the election and the house prices over the last few weeks is not giving us a lot of work of here it’s flat that’s the story I think it’s the data within the data that’s interesting so if you look at the information from SU there’s a really interesting index which I’ll be honest I’ve not come across before is where they have an index for how property is priced and is it priced fairly and they say at the moment that UK property and remember that’s a very broad property Market you’ve got London in there you’ve got Scotland anywhere in the UK basically is in there but that’s a real mix of a property sector however even when taking that into account it says it’s 8% overvalued at the moment against what they say is fair value and by the end of the year it will be fair value again but what was interesting when I looked at the chart is actually they’ve said that since 2009 all the way till very very recently property has been undervalued and that’s really interesting and the way they’ve done this is they take the average household income and they look at mortgage rates and then they look at how much income people have to put towards those mortgages and then they make an assessment on affordability so when looking at this you can see spikes in 07 and 889 but since 2009 until very recently it said that property has been undervalued and property prices have urged recently it’s just that interest rates have gone up but you can see where the chart is moving and where it predicts to move in future is that property is undervalued again I don’t think this is the best method of assessing value for property but it’s a method and I think it’s interesting the reason why I don’t think it’s the best is because not everybody uses a mortgage people have different amounts of Leverage and London as a market and let’s say the Northeast as a market are so different they may as well be in different countries but even with all that said I think it’s interesting Rob to look at that chart we’ll link to it in the show notes so people can see for themselves and just assess oh okay well actually people have said property prices have been overvalued but when you look at this chart at times they really really have but more recently they are more affordable now if people are on the property Market that may annoy them a little but you you look at this chart it’s suggesting that basically since the end of the 70s to the the early ’90s property was overvalued then the late ’90s it was kind of fair value 2000s it was overvalued and since 09 as have said it’s been undervalued don’t think many people would have said that Rob all you hear is properties’s overvalued yeah which is because people are looking at nominal prices rather than inflation adjusted prices and what you’ve just said fits in really nicely with the chart that Nationwide regularly publishes of property prices in real terms I.E adjusted for inflation and that shows a giant runup in the late ’90s early 2000s and then a decline and then a flat line for a very very long time so both those charts with different methodologies have identified the same thing which is that there was this one period where property prices really were going nuts and the rest of the time not so much and that ties into an episode about the 18-year property cycle where we’re going to be revisiting our thoughts on that and where we are in the cycle and if there even is a cycle that’s going to be coming up in the next couple of weeks something else that caught my eye within the house price data which really is the story of this year is the regional variation in performance and specifically within that the north south divide we said back in January that this would be something we’d see throughout this year and it is indeed playing out and Nationwide has published in their report a map showing where prices are falling versus rising and it just makes it incredibly Stark basically everywhere south of Birmingham prices are falling and everywhere else they’re Rising so that flat as a pancake performance that you’re seeing at a national level is the result of two opposite patterns played out at Regional level and the final thing that caught my eye from the zupa report specifically is that they’ve said that although prices are flat they now expect prices to rise by 1 and a half% by the end of the year this is something we’ve seen with lots of forecasts if you remember back to the start of this year the consensus was probably down about 4% was what everyone was saying I’ve not seen anyone predicting falls for the rest of this year recently and this dupla data is the latest case of them now anticipating prices rising which is good news for the market but bad news for me if it does go up by 1 and a half% because that will mean that my forecast for this year was completely wrong and I think Rob from memory yours will be much closer to being correct well Rob there’s a long way to go so I’m not going to get cocky or smug and another group of property investors that won’t be feeling cocky or smug at the moment are people who adopt the holiday let strategy I mean the weather that we’ve had this summer has not helped and I feel very sorry for people who operate holiday lets because let’s face it if we are lucky enough to get out the UK and see it there some at the moment we’re all working hard to do that now it’s not to say there aren’t beautiful places in the UK there certainly are and there are lots and lots of listings because there’s lots of beautiful places in the UK and research from the London state agent Benham and Reeves has said that across most of the nation the amount of short-term lets available compared to last year is up which is really interesting that even more people have come to the market and it’s not just one area Manchester London both up significantly Manchester at 29% London at 22% % the Lake District up by 15% CWS up by 10% Somerset Dorset Devon colell all up in fact the only notable area with a reduction in Holiday letters Edinburgh and this combined with the weather has meant that annual revenues have declined for the people in this market dors and Cals are down 14% year onye in Revenue received Devon down 16% so when you have more Supply and a decreasing demand occupancy rates fall which this data also reflects and then of course revenues fall as well so it’s not a great picture at the moment Rob we don’t have a holiday lets agenda we’re just reporting the news the news isn’t good I suppose if you tried to find silver lining to this is that you would expect people to start exiting the market because it is a tough Market to operate and then the supply will diminish although property isn’t a liquid so you can’t just press a button and your bite left disappears that will take time so it’s not a quick fix but possibly that’s the direction of travel in the future I was really surprised to see that there was more listings compared to last year that out of all this data is the one that I wasn’t exped to see here decline in revenues and occupancy rates down yes but not an increase in the amount of stock available no it seems like some people are slow to get the memo that the market is out of balance at the moment I think that will correct itself over time we had a bit of an HMO bubble a few years ago if you remember that where everyone was turning everything into an HMO and we ended up with an over Supply in many areas and it wasn’t necessar the newest ones that struggled so if you have got into holiday lets recently then don’t worry it doesn’t mean you’re doomed with hmos it was the poorest quality ones or the least well-located ones that ended up struggling and eventually those people sold off or they converted them back into family homes and the market corrected itself it came back into balance so I imagine over the coming years we’ll see the same pattern play out in the world of holiday lets perhaps hurried along with a bit of legislation as well we will see let’s move on to talking about a little bit of rental news around deposits which caught my eye this week which I thought was interesting and the headline is 177% of deposits don’t cover rent are reers or damage by tenants and that’s up from 133% last year but we’ve only got two years of data and I don’t know what’s normal you can’t say that’s a trend but in any case the number that caught my eye more than that one is that half of tency ended without any costs being incurred by the tenant so the deposit was returned in full and that’s actually higher than I expected I was trying to think back over my own portfolio and I’ve not been tracking it so I’m is going off the top of my head and say yeah maybe is about half where the deposit gets returned in full because there aren’t any issues at all but I assume that at a national level by the time you take into account properties at the lower end of the market I thought there’d be more deductions than that so I take this is a good news story you hear a lot about evictions and tenants refusing to move out you hear a lot about damage be hear about those things because they are exciting and they grab your emotions but this is a nice reminder that most of the time in most cases especially if you do the right checks up front everything turns out okay yes it’s not really a great story to tell that you let a property out tenant was great they left you return deposit it’s not one that’s going to have people on the edge of the seed so that story doesn’t get told that much but the data tells us that is the story more often than not which is great as you said what it’s also great is to see some Innovation within the mortgage market and we don’t often talk about individual products on this show we save that for our mortgage Market updates but tsp have recently launched a product where if you are a landlord you can sell to your tenant and if you sell with a 10% discount they don’t need to put a single penny towards a deposit so that discount that you’re giving is seen as the deposit instead now you may be listening to this why on Earth would I want to do that but if you’ve got a property that you’ve got a tenant sitting in there right now you want to move it on maybe you’re doing a monopoly strategy and you’re trying to sell some off and buy some new ones whatever your motivation may be the time it might take for that tenant to exit get it ready to sell and then have it sold can take a fair bit of time but you can continue to receive income while you go through this process with your tenants and then achieve a sale with no agents fees as well so there’s some savings there I’ve not known anybody to use it yet to be fair I’ve only just found out about this product but I just love Rob that there’s some different types of products com into the market some Innovation there’s obviously been a bit of thought put into this product and I just think it’s great to see yeah it’s pretty cool and it’s something that’s going to be increasingly more demand and in fact we get a fair few questions coming into our Sunday Times column about people asking about selling to their tenants so if someone is looking to exit they’re looking to do so after a long time so absolutely maximizing the price isn’t their main consideration and given what a giant pain selling a property actually is if you can sell it to the people who already live there that’s a great result so a product that makes that easier I’m all for it I’m also all for rate Cuts in general I’m in favor of mortgages being cheaper and that’s something we’ve seen a lot of over the past couple of weeks as well so Accord lend invest West one and the mortgage works all reducing their buy toet rates and I believe by the time of our next market update we will have had the bank of England’s next rate setting meeting their first one post election and given that inflation has actually come back to Target now it’s probably more likely or not that they will make the first cut that we’ve seen to the base rate for a long time so we’ll have to keep an eye on how that affects mortgage pricing over the next couple of months I’ve got some other news for you as well the news is that there are people who’ve listened to this podcast this far in and they still haven’t signed up for property pulse which is just bunkers to me property pulse is written by our wonderful Rob D it’s absolutely free it’s a brilliant newsletter in my opinion melt bias but I do believe this it is the best newsletter on property investment that you can find and I’ve subscribed to others it is the best you get it each and every Friday and to get it all you need to do is go to property hub.net for/ pulse sign up it’s an absolute no-brainer if you’ve got any interest in property it’s a must so do that now okay just before we wrap up it is time for Hub extra that part of the show where we bring you something that’s going to enrich your life in some kind of way whether that’s a book a tip a tool something we’ve been enjoying and Rob I think you’ve got this week’s in the bag love it yes this week I am bringing you a bag it’s better than that though stick with me because I am a geek I can’t just go online and say oh that’s a nice bag and buy it I have to do research and I have to watch YouTube videos and I have to make sure I pick the best bag now last time I did this I got myself a norface bag probably 10 years ago and I still use it today it was research well done and it’s been an amazing bag I’ve been so happy with it and I’ve had other bags in between s where I didn’t put as much time in but for some reason I wanted to go down the rabbit hole of finding the best backpack I could and my assessment of what’s best is best value for money so you can go and spend £400 on a backpack and that might be the best backpack but what I wanted is the most bang for my book what could I get that every pound spent means I’m getting the most quality possible and the bag I landed on is a bag by air which is a are I’ve gone for the day pack because I wanted a day-to-day bag but you’ve got so many different options there so many different scenarios so if you need something a little bigger you can go for the day pack xack which is a little bigger but they’ve got the tech pack they’ve got flight bags there’s loads there but the reason I’m happy to recommend them and there’s no affiliate scheme here there’s no endorsement I had to pay for this bag it’s just that I’ve been really happy with it the quality is superb so my bag was 15 £59 but really well made and I’ve been really really happy with the quality you can pay similar and just get a very very average bag so take advantage of my geekiness the time I bought for the research if you are after a new bag check out that brand if you’re after a day-to-day commuter bag then the day pack I can highly recommend but I’ve just been very happy with the quality so I’m bringing this to the podcast and sharing it with you all I’m looking at it now does look lovely and lots and lots of those little interior organizing e poets I’m a sucker for those little pockets so that looks great and we will link to it in the show notes of course just before we finish a quick shout out to listener to here who says I’ve learned a lot through your content and it’s made me a more confident investor since we started listening we purchased two properties in 2023 and the search for more continues well done for taking action to here and I hope 2024 is a buying year for you as well so that is US done you can consider yourself updated and we’ll see you back here for the property podcast again next week until then bye-bye bye-bye