Should the 3,493 home owning OAP’s of Falmouth be forced to downsize?

 

The above was a question posed to me on social media recently, after my article about our mature members of Falmouth society and the fact many retirees feel 'trapped' in their homes. After working hard for many years and buying a home for themselves and their family, the children have subsequently flown the nest and now they are left to rattle round in a big house. Many feel trapped in their big homes. Hence I dubbed these Falmouth home owning mature members of our society, ‘Generation Trapped’.

 

So, should we force OAP Falmouth homeowners to downsize?

 

In the original article, I suggested that we as a society should encourage, through building, tax breaks and social acceptance that it’s a good thing to downsize. But should the Government force OAP’s?

 

Well, one of the biggest reasons OAP’s move home is health related.

 

Looking at the statistics for Falmouth, of the 3,493 Homeowners who are 65 years and older, 1,941 of them described themselves in good or very good health; 1,117 home owning OAPs described themselves as in fair health and 435 in poor health.

 

12.45% of Falmouth home owning OAP’s are in poor health

 

But if you look at the figures for the whole of Cornwall Council (not just Falmouth), there are only 1,142 specific retirement homes that one could buy (if they were in fact for sale) and 2,174 homes available to rent from the Council and other specialist providers (again- you would be waiting for dead man’s shoes to get your foot in the door) and many older homeowners wouldn’t feel comfortable with the idea of renting a retirement property after enjoying the security of owning their own home for most of their adult lives.

 

My intuition tells me the majority ‘would be’ Falmouth downsizers could certainly afford to move but are staying put in bigger family homes because they can't find a suitable smaller property. The fact is there simply aren’t enough bungalows for the healthy older members of the Falmouth population and specialist retirement properties for the ones who aren’t in such good health. We have pleaded for the umpteenth time we need to build more appropriate houses in Falmouth!!

 

The Government's Housing White Paper, published a few months ago, could have solved so many problems with the UK housing market, including the issue of homing our aging population. Instead, it ended up feeling annoyingly ambiguous. Forcing our older generation to move with such measures as a punitive taxation (say a tax on wasted bedrooms for people who are retired) would be the wrong thing to do. Instead of the stick – maybe the Government could use the carrot tactics and offered tax breaks for downsizers. Who knows – but something has to happen?

 

.. and come to think about it, isn’t the word ‘downsize’ such an awful word?  I prefer to use the word ‘decent-size’ instead of ‘down-size’- as the other phrase feels like they are lowering themselves, as though they are having to downgrade themselves in their retirement (and let’s be frank – no one likes to be downgraded).

The simple fact is we are living longer as a population and constantly growing with increased birth rates and immigration. So, what I would say to all the homeowners and property owning public of Falmouth is ... more houses and decent sized apartments need to be built in the Falmouth area, particularly more specialist retirement properties and bungalows. The Government had a golden opportunity with the White Paper – and were sadly found lacking.

 

And a message to my Falmouth property investor readers whilst this issue gets sorted in the coming decade(s)  – maybe seriously consider refurbishing older bungalows – people will pay handsomely for them – whether that it is for sale or rent? Just a thought..

Look after the older generation after all we will be there one day.......soon!

 

 

Notes

 

Numbers on OAP’s /Homeowner ship taken from the census statistics

 

Numbers on Number of Retirement Property from the Housing Care Trust – a charity that looks after the interests of the older generation. Latest set of figures 2015/16

 

 

The Age of the Train

 

It might surprise you that it isn’t always the poshest villages around Falmouth or the swankiest Falmouth streets where properties sell and let the quickest. Quite often, it’s the ones that have the best transport links. After all, there is a reason why one of the most popular property programmes on television is called Location, Location, Location!

As an agent in Falmouth, I am frequently confronted with queries about the Falmouth property market, and most days I am asked, “What is the best part of Falmouth and its villages to live in these days?”, chiefly from new-comers.  The answer is different for each person – a lot depends on the demographics of their family. By this I mean their age, schooling requirements and interests. Nonetheless, one of the principal necessities for most tenants and buyers is ease of access to transport links, including public transport – of which the railways are very important.

 

Official figures recently released indicated that over 1200 people jump on a train each and every day to and from Falmouth. The convenience of location near a train station is reckoned to add 1 to 2% on property values and probably more than this for rental values.

 

Of greater significance is the future. Rail is becoming increasingly important as the costs associated with car travel continue to rise and roads are becoming more and more congested. A standard season ticket between Falmouth and Truro is little over £500 per year. Relatively cheap if you are travelling more than 250 commutes a year!

 

For those of you old enough to remember the 70’s slogan ‘This is the age of the train’ will be comforted to know that this is set to continue. Overall usage of the stations at Falmouth has increased over the last 20 years. In 1997, a total of 149,091 people went through the barriers or connected with another train at the 3 stations in that 12-month period. However, in 2016, that figure had risen to....

 

 

522,606 people using Falmouth stations annually.

 

The juxtaposition of properties and the train station has an important effect on the value and saleability and rentability of a Falmouth property. It is also significant for tenants - so if you are a Falmouth buy to let investor looking for a property - the distance to and from the railway station can be extremely significant.

 

One of the first things house buyers and tenants do when surfing the web for somewhere to live is find out the proximity of a property to the train station. That is why Rightmove displays the distance to the railway station alongside each and every property on their website.

Only 131 Properties for Sale in Falmouth

This article is relevant from statistics to the end of last year since we are working from Land Registry statistics in arrears.

2017 started with some positive interest in the Falmouth property market.  Taking a snap shot of the Falmouth property market for the first quarter of 2017, the picture suggests some interesting trends when it comes to the number of properties available to buy, their asking prices and what prices properties are actually selling for.

 Let us first consider the number of properties for sale, compared to 12 months ago:

 

Type of Falmouth Property	Number of Properties on the Market 12 months ago	Number of Properties on the Market now	% change
Detached	51	37	-27%
Semi	35	31	-11%
Terraced	32	12	-63%
Flat	41	33	-20%

 

So when we add in building plots and other types of properties that don’t fit into the four main categories, that means there are 131 properties for sale towards the end of the first quarter compared with 176 a year ago, a drop of 26%.

 

Next, Falmouth asking prices, compared

to the same as a year ago, are 10% higher.

 

With that in mind, I wanted to look at what property was actually selling for in Falmouth. Taking  information from the Land Registry, the last available six months property transactions for TR11 show an interesting picture (note the Land Registry data is always a few months behind due to the nature of the house buying process and so November 2016 is latest set of data). The price shown is the average price paid and the number in brackets is the number of properties actually sold.

 

	Jun-16	Jul-16	Aug-16	Sep-16	Oct-16	Nov-16
Detached	£400,465 (13)	£424,877 (13)	£382,938 (17)	£502,585 (23)	£406,042 (12)	£450,163 (16)
Semi Detached	£241,497 (11)	£240,370 (9)	£305,786 (7)	£293,981 (13)	£306,778 (9)	£291,278 (9)
Terraced	£255,033 (13)	£290,000 (9)	£308,945 (11)	£287,650 (10)	£206,222 (9)	£247,000 (15)
Flat	£175,486 (9)	£233,208 (12)	£232,712 (13)	£237,300 (10)	£223,628 (9)	£164,694 (9)
All	£277,332 (46)	£304,540 (43)	£314,043 (48)	£368,405 (56)	£294,927 (39)	£306,354 (49)

 

So what does all this mean for the property owning folk of Falmouth?

Well, with less property on the market than a year ago and asking prices 10% higher, those trying to sell their property need to be mindful that buyers, be they first timers, buy to let landlords or people moving up the Falmouth property ladder, have much more price information about the Falmouth property market at their fingertips than ever before.

Those Falmouth people who are looking to sell their property in 2017, need to be aware of the risks of over pricing their property when initially placing it on the market. Over the last 12 months, I have noticed the approach of a few Falmouth estate agents is to suggest an inflated asking price to encourage the homeowner and secure the property to sell on their books. The down side to this is that when offered to the market for the first time, buyers will realise it is overpriced and wont waste their time asking for a brochure. They won’t even view the property, let alone make an offer. So when the price is reduced a few months later, the property has become market stale and continues to be ignored.

 

Whilst the Falmouth property-market has an unassailable demand for property – there is one saying that always rings true - as long as the property is being marketed at the right price it will sell.

 

If you want to know if your Falmouth property is being marketed at the right price, send me a web link and we will give you my honest opinion.

Investment Spot

Investment Spot

We are departing from our normal blog article by presenting a versatile investment opportunity to our readers.

 

As a Directorship, we have had a link with this one bedroom property since it was built approximately 12 years ago. The current owners have decided to emigrate to Australia and are reluctant to sell what has been their permanent home and long-term investment let.

 

It is well cared for throughout and comprises hallway, double bedroom, bathroom and open plan living, dining room and kitchen. Slide doors from the dining area lead to a rather neat concealed balcony which has been ‘cut’ into the roof. It is south facing and offers immediate 180 degree views up river towards old Penryn and down river to Penryn Bridge and the main estuary.

 

Kitchen 10' 2" x 7' 3" (3.1m x 2.21m)

Lounge / Dining Area 14' 1" x 11' 4" (4.30m x 3.47m)

Bedroom 12' 5" x 11' 7" (3.80m x 3.55m) 

 

It currently returns £625 per calendar month to a professional long-term tenant.

 

If re-marketed for rent in our opinion it would return £650-675 PCM.

 

The management fees which include block insurance are £ TBC.

 

We can thoroughly recommend this investment for its rental potential and also historical capital growth. If this property appeals to you please give us a call!

 

How the rented sector has transformed the Falmouth Property Market

The Falmouth housing market has gone through a sea change in the past decades with the Buy-to-Let (B-T-L) sector evolving as a key trend, for both Falmouth tenants and Falmouth landlords.

 

A few months ago, the Government released a White Paper on housing. I have had a chance now to digest the report and wish to offer my thoughts on the topic. It was interesting that the private rental sector played a major part in the future plans for housing. This is especially important for our growing Falmouth population.

 

In 1981, the population of Cornwall stood at 424,500

and today it stands at 549,400.

 

Currently, the private rented (B-T-L) sector accounts for 20.8% of households in the town.  The Government wants to assist people living in the houses and help the economy by encouraging the provision of quality homes for those unable to buy their own property. Interestingly, when we look at the 1981 figures for homeownership, a different story is told.

 

67.45% Falmouth people owned their own home in 1981

19.56% Falmouth people rented from the Council or Housing Association in 1981

and 13.0% Falmouth rented from a Private Landlord    

 

The significance of a suitable housing policy is vital to ensure suitable economic activity and create a vibrant place where people want to live. The population of Cornwall is estimated to grow to 636,000 by 2037. It is imperative that Cornwall County Council and Central Government all work actively together to ensure the residential property market encourages the provision of quality homes for all types of residents.

 

One idea the Government has proclaimed is a variety of measures aimed at encouraging the Build-to-Rent (B-T-R) sector (instead of the B-T-L sector). These include allowing local authorities to proactively plan for B-T-R schemes, and making it simpler for B-T-R developers to offer inexpensive private rented homes.

 

To do this, the government will invent a distinct affordable housing class for B-T-R, called ‘Affordable Private Rent’, which will oblige new homes builders to provide at least 1 in 5 of a new home developments at a 20% discount on open-market rents and three year tenancies for tenants. In return, the new homebuilders will get better planning assurances.

Private landlords will not be expected to offer discounts, nor offer 3 year tenancies. however it is something that Falmouth landlords need to be aware of as there could be greater competition for tenants. 

Over the last ten years, home ownership has not been a primary goal for young adults as the world has changed. These youngsters expect ‘on demand’ services from click and collect, Amazon, Dating Apps and TV with the likes of Netflix. Many Falmouth youngsters see that renting more than meets their accommodation needs, as it combines the freedom from a lifetime of property maintenance and financial obligations, making it an attractive lifestyle option.

 

Private rented housing in Falmouth and Cornwall, whether it is B-T-L or B-T-R, has the potential to play a very positive role.

 

References

 

1981, 2017 and 2037 population figures are from the Office of national Statistics.

 

1981 Tenure figures are from the Census. 

 

 

 

 

What will the General Election do to 6,180 Falmouth Home Owners?

 

There are 9895 households in Falmouth. Of these 3,585 homes are owned without a mortgage and 2,595 homes have a mortgage on them.

Many homeowners have made contact asking what the General Election will do to the Falmouth property market?  The best way to tell the future is to look at the past.

 I have looked over the last five general elections and analysed in detail what happened to the property market on the lead up to and after each one. Some very interesting information came to light.

 Of the last five general elections (1997, 2001, 2005, 2010 and 2015), the two elections that weren’t certain were the last two (2010 with the coalition and 2015 with the largely unexpected Tory majority).

Therefore, I wanted to compare what happened in 1997, 2001 and 2005 when Tony Blair was almost guaranteed to be elected/re-elected against the last more close-run elections of 2010 and 2015 ... in terms of the number of houses sold and the prices achieved.

Look at the first graph below comparing the number of properties sold and the dates of the general elections

 

It is clear, looking at the number of monthly transactions (the blue line), that there is a certain rhythm or seasonality to the housing market. That rhythm/seasonality has not changed since 1995 (seasonality meaning the periodic fluctuations that occur regularly based on a season) For instance you can see how the number of properties sold dips around Christmas, rises in Spring and Summer and drops again at the end of the year.

To remove that seasonality, I have introduced the red line. The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers.

The yellow arrows denote the times of the general elections.

It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in the number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (i.e. number of properties sold).

In plain English, it seems to follow that a landslide or clear election result, tends to translate to a more confident market and one where properties sell quicker and in greater volume. Anything less than a clear victory appears to result in a less confident post-election sales environment.

Next, I wanted to consider what happened to property prices. In the graph below, I have used that same 12-month average, housing transactions numbers (in red) and yellow arrows for the dates of the general elections but this time compared that to what happened to property values (pink line).

 

There is no discernible pattern of increasing house prices in the 12 months following an election. In 1997 and 2001 they did. In 2005 they plateaued. In 2010 they fell away. In 2017 they raced away. The wider economics are more at play perhaps than the politics.

What one can read into both graphs is that while an election might help you sell (more transactions taking place), it does not necessarily mean you will sell for more. 

So finally, what does this mean for the landlords of the 2,054 private rented properties in Falmouth?

Well, as I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Falmouth will be a little more subdued in the next few years for reasons other than the general election.

The growth of rents has taken a very slight hit in the last few months as there has been a slight over supply of some types of rental property in Falmouth. Much of this is due to the seasonal nature of the rental market in Falmouth particularly between November and the beginning of March. During those times Falmouth landlords need to be realistic with their market rents.  Once the winter let season finishes and holidaymakers arrive for Easter those displaced tenants fuel the demand and upward rental cycle until the reverse happens at the end of the season. Twas ever thus here in this part of Cornwall

In the long term, as the younger generation still choose to rent rather than buy ... the prospects, even with the changes in taxation, mean investing in buy-to-let still looks a good bet. Look at the pink line since 1995. At the risk of sounding like a broken record.. where else are you going to place your money – stock, shares, savings accounts or bricks and mortar? Naturally you can gauge our response to that as Landlords ourselves!

 

If you want to read more about the Falmouth property market – then please visit the Falmouth Property Guru for informed comment and articles not about us or our business but issues and items that we believe are relevant for our fellow Landlords.

Should you still be investing in Falmouth Buy To Let?

If I were a buy to let Landlord in Falmouth today, I might feel a little bruised by the assault made on my wallet after being ransacked (and continuing to be so) over the last 12 months by HM Treasury’s tax changes on buy to let. To add insult to injury, Brexit has caused a tempering of the Falmouth property market with property prices not increasing at the levels we have seen in the last few years.

 

Could we indeed see a very slight drop in property prices this year?

 

Falmouth Town Councils bid to introduce (after mid-June) licencing of properties without an existing history of HMO letting in Falmouth is surely likely to have an impact on values of student let properties for example. This is because new Landlords will be cautious over buying a property that does not have a history of HMO letting. It is not a given that they will be granted a licence and will therefore hold off buying properties for HMO letting. Conversely a property with a history of letting might appear to be an even more valuable asset, if the granting of licences is restricted. Watch this space! 

 

https://www.cornwall.gov.uk/housing/private-sector-housing/house-in-multiple-occupation/article-4-directive/

 

There are some positives of falling house prices.

 

If Falmouth property prices do drop, this might encourage first time buyers back into the market. This will help the development of sales chains. After all property sales are reliant on new entrants at the bottom end of the market to feed the chain above. Putting it simply for many, we cannot buy unless we sell first.

If prices cool, yields will rise. This in turn will also make it easier to obtain a buy to let mortgage. If property values come down enough, that might persuade landlords to add to their portfolio. These are likely to be marginal things for landlords but nonetheless positive.

Rental demand in Falmouth will remain solid. This is reinforced by a growing sense of the way many young people view their ‘property futures’.

 I have just come back from a visit to my relations after a family get together. I was speaking to a young couple, both are in their mid/late twenties, both have decent jobs, and they rent. They are perhaps typical of ‘generation rent’. Conversations about the possibility of one day being able to buy their own homes bores them. Not because they don’t harbour a desire to be a homeowner but because they see the dream as a hopeless one too distant to contemplate.

 Firstly, they don’t want to put cash into property, they would rather spend it on living and socialising, by going on nice holidays and buying the latest tech and gadgets. They want the flexibility to live where they choose and finally, they don’t like the idea of paying for repairs. All their friends feel the same. Looking through the lenses of a forty something should I be surprised that buying a house is just not top of the list for these youngsters?

Falmouth - Accommodation Type and the Number of Occupiers
Owned outright - Falmouth	Owned with a mortgage - Falmouth	Shared ownership (part owned and part rented) - Falmouth	Social rented (aka Council Housing) -  Falmouth	Private rented - Falmouth	Living rent free - Falmouth
6,628	7,227	137	3,237	5,171	284
29.2%	31.9%	0.6%	14.3%	22.8%	1.3%

 

With nearly 23% of Falmouth people already in rented accommodation (and set to grow) now might just be a good time to buy property in Falmouth. After all what else are you going to invest in?  Give your money to the stock market run by sharp suited city whizz kids? A holiday of a lifetime in North Korea perhaps?  Maybe a donation to your favourite political party?

 

Nothing out there is as good as bricks and mortar!