I’m in a reflective mood today so I want to talk about the future of investing in property in Lancaster. We have become complacement with many people having mistaken the ever rising Lancaster (and in fact the whole of the UK) property market since the 1960’s as the eternal gift that kept giving as property prices constantly rose and doubled every five to seven years.
“The property market is no longer looking like a licence to make money”
Whilst George Osborne has decided now is the time to milk the ‘Golden Cow’ of UK’s private landlords, with changes in taxation for buy to let property, many pundits are predicting the end of buy to let as we know it. It is however still possible to make a reasonable, profitable and safe return on property with these changes. I have always seen investing in the buy to let market as I might see mother nature, creating some truly wonderful stunning warm weather but at the same time, she will bite, creating catastrophic situations such as snowstorms and hurricanes. You need to study the market, take advice and opinions from many people and then decide what the proverbial property weather will be. If you think about it, tenants will always want a roof over their head and I don’t see the HM Government building the millions of houses required to house them?
Nobody knows the future. People can predict but I wouldn’t be afraid of this change . A famous French proverb says, (I told you I was a reflective mood today), ‘the more things change, the more they stay the same’. Who could have predicted how the property market has changed in Lancaster over the last couple of decades?
Lets look specifically at what was the Lancaster and Wyre but is now the Lancaster and Fleetwood Parliamentary Constituency. Twenty years ago, 29,906 households ( 80.31% of property) was owned and only 3,075 households were privately rented (eg 8.26% of property was rented out by private landlords). Move on twenty years and the change has been huge. Now only 22,770 of properties in the Constituency are home-owners (this equates 66.42% being owner occupied) whilst the jump in private renting has been out of this world, as 6,727 properties are now privately rented ( proportionally 19.62%). Neighbouring Constituencies show similar changes as well
“Who would have predicted in 1995 the private rental sector in
Lancaster would have grown by 137.53% in the proceeding 20 years?”
If you had asked someone in 1995 to predict what would happen to property values over the proceeding 20 years (iebetween 1995 and 2015), they might have predicted similar growth to the growth experienced over the previous 20 years (ie between 1975 and 1995), which was a very impressive 351.55%. Yes, property values in Lancaster have increased over the last 20 years (between 1995 and 2015), but by a more modest 83.37% (and most of that can be attributed to house price growth between 2000 and 2006.)
The property market is constantly changing and buy to let for too long has been heavily dependent solely on house price growth, where yield has been almost forgotten. I see the changes in tax , landlord and tenant law in a different perspective to the doom-mongers and see it as bringing many opportunities. You might need to change your buy to let benchmarks, your approach to financing or even consider places other than Lancaster in which to invest your money, but this will shine a light on investing in properties with healthier yields and create more realistic long term buy to let opportunities, instead of short term growth bets and wagers.
The advice I give to all my landlords, and those of you who follow my blog is this. These changes will make some landlords panic, meaning competition for decent Lancaster buy to let bargains will reduce as fear of change kicks in and amateur investors flee the market. These opportunities will provide a more stable platform for knowledgeable and wise Lancaster buy to let landlords to thrive in.
If you want to learn more about the Lancaster Property Market, feel free to pop in for a coffee at our Lancaster office for a chat with me, or failing that keep on reading the Lancaster Property Blog, where you will find many more articles like this.
Thanks for reading