Post lockdown, the need for Hayes families who want bigger homes has meant Hayes homebuyers must now pay considerably more to trade up to that larger home…

One thing that has come out of lockdown has been the inexorable movement of Hayes households wanting to upsize to a larger home. Often considered to be first time buyer properties, the smaller 1^st step on the property ladder one bedroom properties are selling quite well, yet demand for those properties on the 2^nd and 3^rd step rungs on the Hayes property ladder (i.e. the two or three bedroom homes) has been even greater.

This demand has been driven by Hayes buyers looking for more living space, especially those looking for an area or room to work from home (be that a bedroom, reception room or even an outbuilding converted into a study).

The average asking price of a 2 bed Hayes home is £343,200, whilst for a 3 bed Hayes home it stands at £447,700

As you can see, quite a jump for an extra bedroom! The heightened contest for 2^nd and 3^rd step Hayes homes for that extra bedroom has pushed demand to a record in October for those looking to take the next step up the ladder. Historically, as a family and its household income grow, the need for more space has permanently been the No.1 reason for moving home, yet now there is a new need for additional space to facilitate people working from home. This means not only do we have growing families wanting larger Hayes homes, there are also the people needing the same larger homes for space for a home office. Therefore, looking at the current stats, as you can see, the Hayes property market is doing quite well…

40.8% of all 2 bed and 60.0% of all 3 bed homes in Hayes are sold (subject to contract)

Roll the clock back to pre-Covid and ask any Hayes homeowner who had enough bedrooms for their children if they wanted an additional bedroom, and most homeowners would say that was very much a ‘nice to have’, yet not a ‘must have’. With us all being cooped-up over the spring this year, demand for additional rooms is at a high, with those presently looking for their next larger Hayes home are probably going to find that only offers close to (if not sometimes over) the asking price will be accepted.

Even though no properties sold during lockdown, putting the Hayes (and UK) property market on hold for many months, many more people buying their next Hayes home will have more than made up for it since lockdown was lifted as the portals have stated if the UK property market remains at its existing trajectory, then the number of properties sold YTD by the end of October 2020 will be greater than YTD October 2019.

Yet all these properties sold are causing another issue. Just because a property becomes Sold Subject to Contract (SSTC) doesn’t mean the property is actually “sold”. Before going into Covid, it was taking approximately 19 weeks between agreeing a sale price (and instructing lawyers) to completing the sale. Yet, because we are nationally running at 140% to 150% of properties SSTC (than where we normally are at this time of year), many of my estate agents colleagues are having to manage expectations with buyers and sellers, and tell them that the date they are going to move will take a little longer.

The elephant in the room is that the temporary stamp duty holiday ends on the 31^st March 2021

It sounds an age away, yet trust me, nothing could be further from the truth.  Adding an extra month for the additional homes in the bottleneck means even if the sale of your Hayes home was agreed today, that would take us to the 3^rd week in March … that’s cutting it very close for the stamp duty holiday.

It is so fundamental for buyers and sellers of Hayes homes to work meticulously with their estate agent, solicitor and mortgage lender. For example, there are less staff in the local authorities to do the local searches, bank staff are working from home meaning mortgages are taking much longer to get approved, and conveyancer/solicitors are snowed under with work. Therefore, if you get a document that needs filling in, are asked to provide documents, pay disbursements or questions need answering, do it immediately and without delay. A day here and day there will snowball and could mean you miss the stamp Duty holiday … and that could cost you thousands and thousands of pounds.

The bottom line is that we haven’t seen this sort of pressure on the UK property market since 1987, when dual-MIRAS was abolished. Now, as we are slowly starting to come out of Covid, with many legal and banking staff working remotely or still on furlough, the perfect storm has occurred with unprecedented demand from buyers looking to move post lockdown. The best advice I can give is, as soon as you put your property onto the market, find a solicitor that has the capacity to work with you, then instruct that solicitor to start work immediately to prepare the paperwork, so once you have a buyer, things can move more smoothly and quickly. The last thing you want is to lose out on saving thousands of pounds by missing the stamp duty holiday by a whisker.

The Hayes property market is an enigma and chock-full of contradictions.

Notwithstanding an economic recession and forecasts of property values dropping, nobody seems to have informed the Hayes homeowners selling their homes and those Hayes people looking to buy them. As I have discussed in many recent articles on the locality, the Hayes property market is booming and property values in some sections of the market are rising, yet amidst enthusiastic reports of gazumping, there are disgruntled and malcontent grumbles about mortgage company surveyors down valuing property on survey.

However, before we talk about the banks and surveyors, let’s look at what is happening in the Hayes property market now.

Land Registry figures published last week showed unyielding evidence for what everyone in the property industry had been saying since the market reopened after a seven-week lockdown on May 13: property prices are rising.

The average value of a Hayes home rose by 3.6% in the year to June to £371,300

Many expect the statistics to show more rises following the Stamp Duty Holiday announced in July, which unbridled a burst of buying activity in the Hayes property market. In many (not all) sectors some properties have been going for over the asking price whilst some have been going to sealed bids.

Some newspapers have even suggested a small minority of homeowners are ‘backdoor-gazumping’, which is genteelly being referred to by estate agents as ‘retuning the asking price’ — as in, the homeowner removing the property from the market, ‘retuning the asking price’ in an upward direction, then placing it back onto the market.

Conceivably enthused by these stories, some house sellers and estate agents might be getting a little carried away and placing overambitious asking prices on homes they are selling. Customarily a property with too high an asking price wouldn’t sell — yet some over-enthusiastic Hayes buyers are paying over the odds for certain types of properties.

So, let’s look at what is happening to the Hayes property market by house type and the number of bedrooms …

	Number of Hayes properties on the market	..and of those – how many are Sold STC	% Sold STC compared to those for sale
Detached House	21	10	47.6%
Semi Det House	222	128	57.7%
Terraced/ Town House	156	85	54.5%
Apartment	295	78	26.4%
Bungalows	12	10	83.3%

And when we look at the number of bedrooms ..

	Number of Hayes properties on the market	..and of those – how many are Sold STC	% Sold STC compared to those for sale
Studio/1 bed	155	36	23.2%
2 beds	211	86	40.8%
3 beds	255	153	60.0%
4 beds	66	27	40.9%
5+ beds	23	11	47.8%

As you can see, the best performing type of property in Hayes is the semi-detached house and the best-selling properties when it comes to bedrooms are 3 beds.

These are quite impressive figures for the Hayes property market, yet some of the banks are having none of it

They are looking apprehensively into 2021 when furlough/the new job support scheme ends, meaning it’s quite tough for all buyers borrowing high percentage mortgages (i.e. more than 80% to 85% of the value of the property in a mortgage). 

It is even tougher for self-employed buyers (whose income is less than assured) to get those high percentage mortgages — and finally, the banks are most certainly concerned with high percentage mortgage buyers who pay over-inflated prices for property using the bank’s money… hence the down valuing (Definition of Down valuing : the buyer and seller agree a sale price, then the mortgage is applied for with the buyer’s bank and the bank’s surveyor states the purchase price the buyer is paying is too much).

One small note to Hayes landlords: I am also hearing that some overzealous Hayes buy to let landlords who are over-egging the potential rental figures on their buy to let purchase in order to obtain the mortgage, are also being reined in by the banks.

 Now this is not a huge issue (e.Surv – a nationwide surveying firm only reported a 4% increase in surveyors having to down value property in Q2 2020 compared to Q1), yet should you be lucky enough to have multiple offers on your home, ask the agent what the overall buying position of the buyers are. You need to specifically ask what percentage loan the buyer is taking on and the position of the buyer in the chain (they have to find this out anyway by law and you have a right to know that information as the property seller if you ask).

The bottom line is the highest bidder might not be the best buyer for you. It’s true, average property prices are rising nationally, yet this does not mean you should pay over the odds for your next Hayes property.

If you would like a chat about any aspect of the Hayes property market – please do send me a message or pick up the phone.

… and the six reasons that will make you want to become one

The buy-to-let market in Hayes is about to enter a challenging 12 to 24 months. Yet by looking back at the last recession and what is happening now, there are vital lessons all Hayes landlords can learn to protect themselves, and in fact create opportunities for themselves both in the short term and ultimately the longer term. For the purposes of this article, I would like to split these and look at the challenges and then the opportunities.

So, let’s consider the challenges ahead for Hayes landlords…

Overall, the impending rise in unemployment stands to encumber tenants’ ability to pay their rent, the rents being achieved and the possible Capital Gains Tax changes might mean an increase in tax paid by Hayes landlords when they come to sell their Hayes buy-to-let properties.

Let’s look at these three points in greater detail. Firstly looking at your Hayes tenants ability to pay the rent; the Furlough Scheme certainly did help soften the blow, helping out 8.9 million people in May (out of 30.5 million who were eligible for it) and at the last count in early August, this thankfully had reduced to 5.3 million people (meaning 15.86% of workers are still on furlough). However, it cannot be denied the economic fallout from Coronavirus has already placed some tenants under economic strain. As the Furlough Scheme finishes at the end of October, commentators are suggesting the number of tenants either incapable of paying their rent, or requesting a reduction in their rent, is predicted to increase as we go into autumn and early winter.

The ultimate sanction against non-payment of rent is legal proceedings although guidance from the Government has recommended that landlords and tenants should work together and deplete all possible options before starting eviction proceedings. Yet many Hayes landlords are feeling the pressure as many mortgage payment holidays will be coming to a close at the end of September. Some Hayes landlords can indisputably see that their tenants are finding it tough and they are willing to work with them, but they can only make allowances go so far.  Landlords aren’t running a charity and I would stress to any tenant that finds themselves being made unemployed in the months to come to apply for Universal Credit as soon as possible, which should help with their rental payments. With regard to the eviction process, the Government have changed the rules a number of times in the last few months, so if you want an update, don’t hesitate to contact me, whether you are client or not – I am just happy to help.

Secondly, it’s interesting in central London, there has been a glut of Airbnb properties coming onto the market because of a lack of tourists to rent them on a short-term let. A greater supply of rental properties has meant a downward pressure on rents in London of 2.1%.

Thirdly, there is talk that the Chancellor, Rishi Sunak, is looking at changing the Capital Gains Taxation rules.  As property is the biggest asset that most people own, this is also reason for concern for Hayes buy-to-let landlords. Currently, Capital Gains Tax on sales of buy-to-let property is levied at 18% for basic income tax rate payers and 28% for higher rate income taxpayers. There is talk the capital gains made on the landlord selling their buy-to-let property could be taxed at the landlord’s income tax rate.

Yet before you all start selling your Hayes portfolios before November’s budget, any changes in Capital Gains Tax would be immediate. That means to ensure you didn’t come foul of the potential rise in the tax, you would have to have to sell your Hayes portfolio at a ‘fire sale price’ in days and have a solicitor that could do the conveyancing in 3 weeks (whilst it is taking 19 weeks on average for buyers to sort their legal work out) and the buyer be a cash buyer because banks are taking months, not weeks to sort finance. This is just something we are going to have to take on the chin!

Let us now consider the opportunities ahead for you Hayes landlords…

As the country officially entered its first recession since 2009, uncertainty in any markets (be it property or stocks and shares, etc.) causes investors to vacillate over whether or not to take the jump. Nevertheless, there are numerous indicators that appear to show this is, indeed, a good time to either become a buy-to-let Hayes landlord or expand one’s property empire and buy more property … let me explain.

Firstly, assets (such as gold and stocks and shares) are great, yet if they aren’t producing income and cash – that doesn’t pay for your day-to-day living. Gold doesn’t create any income and many FTSE companies won’t be paying dividends for a while. Government Bonds are currently earning their investors 0.2% (no – that isn’t a typo) and the best savings accounts are achieving 1.1% with a 120-day notice period, so where are you going to invest your hard-earned money?

The average Hayes buy-to-let property will earn a monthly return of 3.76%

Of course, deciding on the right Hayes property is crucial to get a good rental income and return. I have seen so many Hayes first-time landlords buy with their heart and not their head. Buying your own home is more heart than head but buy-to-let is a completely different kettle of fish. There is the inverse relationship between income (rent) and capital growth (how much it will go up in value in the future) i.e. as one goes up, the other tends to go down – so getting the balance for your needs is vital. Again, I can advise on that for you.

Secondly, with the stamp duty holiday and the pent-up demand for people wanting to move home in Hayes (discussed many times recently in this blog), the Hayes property market is certainly very buoyant at the moment, yet even the most optimistic agents say it cannot last. Whether the market goes pop or has a slow and steady puncture, the market will cool in 2021. The recession will mean some people are less able to afford a mortgage. This means that if Hayes property values do ease off in 2021, you may be able to get a great buy-to-let deal if you are planning on becoming a Hayes landlord or expand your property empire as an existing landlord.

Also, if the property market does find property prices realign to a new normal in 2021/2, house sellers may find it difficult to get a good price on their Hayes home during a recession, meaning many house sellers may be more agreeable to sell their property at a lower price.

Third, if people aren’t buying, they still need a roof over their head and the council aren’t building any council houses, meaning the private sector will need to take up the slack.

Rightmove reported tenant demand grew by a third in May 2020 when compared to the same month in 2019

Therefore, if you are still unsure about becoming a Hayes landlord, knowing that more Hayes people want to rent should help you feel more comfortable as the risk of ‘running out’ of renters interested in your Hayes property is minimal. Yet again, please don’t go buying any old Hayes property, as it’s fundamental that you make a good investment from the start in order to see a good return on your investment.

If Hayes property values do fall in 2021 (as in 2009), tenant demand for Hayes property will only go up

Fourth, the Government reduced stamp duty with the sole aim to benefit the property market. The purchase needs to complete by the end of March 2021, which means you will need to have bought the property by November at the latest (as obtaining finance and legal work is taking at least 19 weeks). A word to the wise though, that whilst the saving in Stamp Duty delivers some up-front saving for those buying a buy a let property, don’t get carried away and use that saving in the purchase price you pay. Certain sectors of the Hayes property market are seeing some very inflated prices, meaning if you go into battle for a show home quality semi-detached house within a stone’s throw of the best school, you will be fighting against buyers who want it for themselves and are prepared to pay top dollar for it, meaning some landlords could end up paying more for a property. My advice, if you want to save on the Stamp Duty, there are bargains to be had – you just have to know what you are looking for (again, as mentioned in point 1 – I am here to help on that whether you are a client of mine or not). The other option would be ‘just hold back’ until after 31 March 2021, when Hayes property prices could ease.

Fifth, reports that the mortgage lenders are imposing stricter conditions are true, yet even during Covid, many lenders are seeing buy-to-let landlords as a safer option to lend their money to. In June alone, the number of buy-to-let mortgage products rose by 19.2% (to just over 1,700) meaning if you have a decent deposit of 30% upwards, you are likely to find something that fits your needs (at the time of writing this article, the Birmingham Midshires had a buy-to-let 5-year fixed rate mortgage at 1.94% and Santander at 2.04% … this is cheap money in anyone’s language). Mortgage rates are ever becoming more economical, which is a great motivation for anyone wanting to get a foot on the Hayes buy-to-let property ladder.

Finally, words cannot portray the feeling of being able to see and touch one’s investment like the sensation of bricks and mortar. Buy-to-let investment has to be seen as a long-term investment yet, for many, that is a source of financial security. Of course property values might go south next year (but they might not!), whereas there may be intervals where it’s more problematic to sell because property values will be too low, as is normally the situation throughout a recession, there will also be times where Hayes landlords will make a nice profit when selling their buy-to-let homes. Like all things in life – it’s all about the timing.

Hayes property values are 204% higher than 20 years ago

If you’re looking to invest but are not interested in stocks and shares (and you understand that your money may be tied up for a while) then the Hayes buy-to-let market could be for you.

To conclude, buying the right Hayes property at the right price to start with, presenting the property in the best way to get the best tenant, fully checking out and referencing the tenant to ensure they have a good track record of being a good tenant that doesn’t trash the property and has always paid the rent on time in the past and then finally, managing the property to ensure your property complies with the 200+ legislations and regulations of rental property, so you can sleep well at night … all to ensure the property is returned at the end of the tenancy to you in good order is what nirvana looks like.

Of course, buy-to-let does come with some risks and challenges, but it’s all about mitigating those risks. Also, there is no denying that buy-to-let also comes with a lot of opportunities as well. If you are a landlord with another agent or even a Hayes landlord that manages the property themselves, feel free to drop me a message, email or pick up the phone and let’s chat about your personal goals when it comes to buy-to-let … because what have you got to lose? Surely 15/20 minutes of your time to get great insight and inside track is worth it?

Remember, the choice is yours!

With only around 1 in 7 Hayes house sellers actually selling their home in the last month, Hayes sellers and buyers will need to continue to be pragmatic if the surprisingly strong current levels of activity in the Hayes property market are to be sustained.

To start, we had the once in a lifetime event of the credit crunch in 2008, we then had another once in a lifetime event with the Brexit vote in 2016 and now the mother of all ‘once in a lifetime’ events, Coronavirus in 2020 – three once in a lifetime events in the space of 3 Olympic Games!

The doom-mongers forecast that the British property market would drop like a lead balloon  on the scale of the 1989 housing crash (where property values dropped by 30.87% in a couple of years) but would be nothing compared to the tsunami that was Covid. Yet in the first 100 days of the property market coming out of lockdown, behavioural and economic changes mean that many Hayes homebuyers are now even more dedicated to moving home and the Hayes property market is doing quite well.

Going into lockdown, the effect on activity in the Hayes property market during those two months was expectable and predictable as it was placed in suspended animation during April and May. When the Hayes property market re-opened in mid-May, nobody predicted what happened next. Of course, many of us in the property industry estimated some release of pent-up demand from the Boris Bounce, yet nobody anticipated such a ricochet in activity in the Hayes property market.

This is particularly interesting when one considers GDP dropped by 20.4% in Q2 2020 (fascinating when compared to notable historic times when it dropped by 13.8% in WW2 and 16.7% in WW1), yet amidst the largest contraction in the UK economy ever in a single quarter, what wasn’t expected was an increase of potential property buyers and sellers wanting to move post-lockdown.

Some have cited this boost to the property market on a number of factors. Firstly, we have had the Stamp Duty Holiday, others have pointed at the never seen before 0.1% Bank of England base rates making mortgages cheap, then we had the furlough scheme which protected so many jobs and finally, the pent-up demand from the Boris Bounce.

Yet, when one actually talks with Hayes buyers and sellers, whilst all of them cite one or two of the above reasons, all of them mention and talk about how the lockdown has made them re-evaluate and reconsider how they want to live, their work-life balance and where they want to live. This is also reflected with tenants changing their requirements when looking for a property to rent (so Hayes landlords – be aware of this).

Demand for apartments in the centre of Hayes has eased off, whilst demand for property with a good-sized garden or other outside space has increased. One question we get asked all the time is also the broadband speeds, although they are quite decent in Hayes (the average broadband in our local Council area being 53.0 Mbps download and 9.9 Mbps upload).

So, with record numbers of Hayes properties coming on to the market – is it boom time for Hayes homeowners?

Of the 223 properties that have come onto the market in Hayes over the last month, only 30 of them have agreed a sale (a percentage of 13.5%)

That means around 6 out of 7 Hayes people that have placed their property onto the market have not found a buyer yet.

Yes, the Hayes property market is good, yet the number of people who have placed their property on the market has also gone up. Hayes estate agents have never been so busy putting property on the market and I feel sorry for the chap who is putting up all the for-sale boards – his wife hasn’t seen him in daylight for weeks!

But that does mean you are in competition with so many other properties on the market (the number of properties coming on to the market typically at this time of the year is about a third to half less). The Stamp Duty boost ends in March 2021, so that means you need to have found a buyer by November at the very latest. By overegging your asking price, to test the market, might mean you will lose out on this hiatus and could end up missing the boat!

The prices being achieved for the Hayes properties that have been selling have been fair and realistic and have stood up much better than many were originally predicting.

Yet as the country looks forward, given the ambiguous nature of the outlook for the British economy and the possibility that Covid-19 may be with us for a little while yet, I must implore Hayes property sellers to be realistic with their asking price so a greater number of you who want to make the move, are able to do so.

Roll the clock back 20 years and any self-respecting late 20/early 30 something would never say on their first date that they lived with their mum and dad. It was seen as a sign of immaturity being tied to your mother’s apron strings with as a failure to leave the family home. Yet over these last two decades, the age of leaving home has been increasing steadily from 20 years and 11 months in the late 1990’s to 22 years and 7 months today.

However, as with all the stats, the devil is in the detail. Although the age of leaving home has only risen by 8% between 1997 and today, those that didn’t leave home in their early 20’s tended to stay much, much longer.

In 1997, 11.26% of 25yo to 34yo still lived at home with their parents, yet last year that had risen to 15.74%, an increase of 391,000 ‘stay at home’ Millennials

However, before we deride these Millennials for still being tied to their mother’s apron strings, I would say those very same Millennials (the mid 20’s to 30-year olds) have been pragmatic, being attracted to sacrificing independence in order to achieve their long-term life goals as they have seen rents rise and an inability to save for the mortgage deposit. All of this has seen the first-time buyer levels in this millennial age range rise for the last three years … so good news for everyone!

However, is all that about to change?

Just as mum and dads in Hayes had thought their late 20 something/early 30 something offspring had flown the nest, Covid-19 has blown some Hayes ‘chickadees’ back into the nest. Back in March, the lockdown saw many Millennials flee the big UK cities, with their constrained and poky shared HMO’s and flat shares, swapping their city centre private rented home for their parents’ Hayes home.

Yet with lockdown lessening, it isn’t just remote workers who are unenthusiastic and disinclined to return to the big cities (fearful of a second lockdown) – many of these Coronavirus blow-ins are deciding to stay put too! A recent YouGov poll asked Millennials of private rented homes what their plans were and 1 in 6 tenants planned to hand their notice in on their rented home and fly back to the nest of mum and dad. The advantages are quite plain, especially as it could enable them to save for a deposit to buy their future home.

There are 15,923 households in Hayes (UB3), made up of 3,471 single person households and 9,578 family households

(the remainder being made up of shared houses etc.)

Yet how many of those Hayes family households had non-dependent children before Covid-19?

1,900 Hayes households have children that haven’t flown the nest

That’s 19.8% of Hayes families whose kids are still to leave home … and it’s only going to get worse!

So, what does this mean for Hayes homeowners and Hayes landlords?

It will mean that Hayes parents and their children will get to know each other better, build stronger relationships and it will enable their children, if they are wise, to save for their deposit for their first home purchase – who knows maybe in Hayes, as working from home could become the norm.

Also, with remote working, many tenants are looking for properties with bigger gardens which could translate into greater demand for property with bigger gardens? It will also change the property needs of those Hayes parents and potentially could mean instead of those parents moving down market, they could end up staying longer or moving up market?

Now of course these polls could be a load of hot air? What I do know is that this thing has not played out yet and only time will tell if this will make a concrete change to the way people live, rent and buy property.

These are interesting times and thank you for reading this. Do let me know your thoughts on this matter.