Labour Party’s U-turn on the £257,334,970 grab on Banbury landlord’s wallets

Well, with the General Election just over the horizon and having been asked by a number of Banbury homeowners and Banbury buy to let landlords what the different main parties would do to the local property market, in this week’s article we focus on Labour’s contentious Right to Buy proposal for private tenants. Launched in September, the plan was designed to force landlords to sell their buy to let investments to their tenants who wished to buy them…. at a substantial discount.

Shadow Chancellor John McDonnell told the FT in September that, under a new Labour government, tenants would be given the Right to Buy their tenanted home with a hefty discount - just like the Tory Right to Buy policy for Council house renters that came into force after the 1979 General Election.

Yet it was not certain who would have been expected to pay for discounts on buy to let homes sold to tenants. Four years ago, Jeremy Corbyn advocated using the £14bn of tax allowances that UK landlords had at the time to pay for these discounts, allowing tenants to buy their tenanted home at the same discount as they would a local authority home without leaving the landlord out of pocket.

However, these tax allowances have been substantially reduced with the changes in the way mortgage interest relief on landlords’ mortgages is calculated, meaning that this method of funding would no longer be feasible. In fact, bankrolling a project at a modest 20% discount for the whole of the UK would cost £177.84bn; a lot more than the £14billion quoted by Mr Corbyn. So, what would that policy cost Banbury landlords?


Labours policy of 20% Right to Buy discount could cost Banbury landlords £257,334,970

… and if Banbury tenants got the maximum discount of 35% that Council tenants have with the Right to Buy scheme that would cost Banbury landlords £450,336,200.

However, it appears Mr McDonnell has re-considered the original suggestion and done a (slight) U-turn, stating it should apply only to the richest landlords and not those who only own a couple of rental properties. He was quoted in The Times as saying, “There’s a large number of individuals or families who have bought another property as an asset for the future and we wouldn’t want to endanger that”.

Yet, even this somewhat watered-down account still creates threats to the private rental sector and Banbury’s overall stock of private rented homes. John McDonnell seems to have altered his initial thought to permit all private tenants the right to buy from their landlords to apply only to those with more than a couple of buy to let properties. The shift appears to be aimed at pacifying middle England small time landlords who are probably swing voters with smaller property investments and instead, Labour’s focus is on the larger scale buy to let investors. Looking at the stats, and being generous that we are only looking at landlords with 6 or more (not the couple that Mr McConnell suggested) ……

Of the 3,922 rental properties in Banbury, 1,071 are owned by Banbury landlords with 6 or more properties in their portfolio

To target these larger scale landlords, who would unquestionably leave the property market in their hordes if their buy to let investments could be so easily destabilised. There would be mass sell offs before the legislation became law, thus making the tenants homeless (and who would house them??) ..and even if that didn’t happen, it would be very damaging and someone (probably landlords) would have to stump up the £48.54bn national bill (£70,271,740 in Banbury alone).

If Labour want to fix the property market, it needs long term certainty and confidence, yet even these revised policies would instantly challenge this

And don’t think I am just Labour bashing here as the Tory 2014 Help to Buy scheme hasn’t really helped either as their scheme which gave first time buyers (FTB) a 20% interest free loan, if they put down a 5% deposit, has been a boon for new home builders.

The Tory’s announced recently another £10bn of taxpayer’s money will be pumped into a scheme which, quite frankly, wasn’t needed to boost an already decent property market. The banks were already giving 95% first time buyer (FTB) mortgages from 2010 and the Help to Buy scheme was only allowed on new homes purchases, meaning it didn’t help the larger second-hand market. That £10bn could have been better spent building Council houses, not helping the large plc builders line their pockets with Government cash.

Are the Tory’s Selling Off the Final Part of the Family Silver? 4,455 Oxford Housing Association Households & the Right to Buy Their Homes

In 1979, Margaret Thatcher was voted in on a Tory landslide with the ‘right to buy your own council house’ being a mainstay of Conservative policy. She encouraged people to buy their own their own council flats and houses, although it might interest you to know, that the council tenant right to buy idea was first proposed in the late 1950s and formed part of the manifesto of the Labour party. Yet Maggie’s version was based on massive discounts for tenants and 100% mortgages (i.e. no deposit). However, the real bugbear was that half the monies raised form the house sales went to central Government and the other half to the local authorities … but that money had to be used to reduce the local authorities debt rather than building new houses - so houses were being sold and not replaced.

4,084 council homes in the Oxford area have been

bought in the last 40 years (an average 102 per year)

Interestingly, the Tories relaxed the rules in 2012 for right to buy and raised the highest discount on a property to £75,000 (it has subsequently increased further, to £100,000, in some parts of the UK) meaning 184 council houses have been sold locally since the rule change, raising £35,648,887 since 2012 alone.

The issue, stated by many existing council house tenants, is that those tenants turned homeowners subsequently sell on their ex-council homes at a huge a huge profit, meaning the demographics of those areas has become ever more transient, more specifically, properties that were once council homes are now owned by buy-to-let landlords who rent them out on a short-term basis.

Yet up to this point in time, nothing has been said about ‘other’ type of social housing - housing association properties. Whilst council houses are properties owned by the local authority providing low cost social housing, housing associations also provide lower-cost social housing for people in need of a home, yet they are private, non-profit making organisations.

The Tory’s state one of the biggest divides in our British society is between those who can and cannot afford their own home, so plan to establish a new national model for shared ownership which allows people in new housing association properties to buy a proportion of their home while paying a lower/subsidised rent on the remain part - helping thousands of lower income earners get a step onto the housing ladder. 

So, what for the tenants of the existing 4,455 housing association households in Oxford? The Conservatives have said they will work with housing associations on a voluntary basis to determine what right to buy offer could be made to those Oxford tenants, although there are already existing rules which give most housing association tenants the right to buy their home, yet with only modest discounts of £9,000 to £16,000 depending on where you live. So, what does all this mean for the current homeowners and landlords of Oxford properties?

The Tory’s sold off 3,020 council houses in Oxford whilst in power between 1979 and 1997

This really created waves in the housing market in the 1980’s and was a contributary factor to the housing crash of 1987 when Dual-MIRAS tax relief was removed by Nigel Lawson. By the selling off of council housing in those years they were accused of selling off the family silver cheaply, thus created the foundation of the buy-to-let boom of the early to mid 2000’s, because of major shortage of affordable housing being sold in the previous two decades.

Yet this time round, note the Tory’s state it is just for new housing association properties, not existing. Also, that tenants will have the right to go into shared ownership - NOT OUTRIGHT OWNERSHIP. This means this policy will have hardly any effect … unlike the Thatcher policies of 1979. 

Tristan Batory

Fine & Country Oxford 
267 Banbury Road, Summertown, Oxford, OX2 7HT 


E: tristan.batory@fineandcountry.com
T:   +44 (0) 1865 953243

M:  +44 (0) 7879 407697

Oxford Property Values 4.3% Lower Year-on-Year

It seems that quite a few Oxford homeowners and Oxford landlords have become acclimatised to living with the uncertainty of Brexit throughout most of 2019, as figures show many of them decided to get on with living life, started reinvesting their money into Oxford property and buying and selling their Oxford homes and BTL investments. Land Registry stats confirm that. Current data shows that... 

Oxford property values are 4.3% lower than 12 months ago

Whilst the newspapers were stating prime central London property values were now 17% below the levels being achieved a couple of years, that message seems not to have been heard by certain sectors of the Oxford property market!

Speaking with other property professionals in Oxford, many weren’t expecting the usual autumn rebound after the summer holidays. Many were anticipating a dormant Oxford property market on the run up to Christmas believing many Oxford home-movers would put off the their home moving activities until the new year, yet in many sectors of the local property market, I have seen (and the stats back this up) that those Oxford property buyers who are able to hold their nerve (whereas others were hesitant) have found themselves in a better negotiating position to get a great property deal. Putting aside the fluff of newspaper headlines, the real foundations of Oxford housing market remain sound with record low unemployment, ultra-low interest rates and low inflation.

Interestingly, there are 2% more homes for sale in Oxford compared to two years ago, meaning more choice for buyers

However, there are still parts of the Oxford property market that remain stagnant, with some homeowners being slightly unrealistic with their marketing pricing. To them, the property market appears to be slow, as they stare at their ‘for sale’ board for months on end, yet nothing could be further from the truth.

The key to a balanced (and healthy) property market is realistic pricing by the homeowners when they place the property on the market, mortgage affordability for buyers (which was discussed a couple of weeks ago in the Oxford Property Blog) and buy to let landlord activity which creates and maintains forward momentum. One measure of momentum is how long a property remains on the market, and interestingly…

The current average length of time an Oxford property remains on the market is 106 days, up slightly from 82 days two years ago

Now the number of properties sold locally is slightly down year on year (even though we had a burst of property sales in the summer locally) and interestingly, Rightmove reported recently that nationally, the number of properties sold in the UK was only just over 3% less year on year, so a similar picture nationally.

So, what does all this mean for Oxford homeowners and Oxford landlords?

We have always had issues that were game changers for the housing market; for the last few years it’s been Brexit, 10 years ago the credit crunch, 18 years ago the dot com crash, the ERM and 15% interest rates issue 27 years ago, dual MIRAS 32 years ago, hyper-inflation 40 years ago, the 3 day week 45 years ago – the list goes on. Everyone needs a home to live in, the local authority just has not got the money to build council houses, so buy to let will continue to grow for the foreseeable future which in turn creates a stable foundation for all homeowners. Maybe you should use this time, like many are in Oxford to take advantage of the property deals to be had in Oxford.

Tristan Batory | Associate 

Fine & Country Oxford 
267 Banbury Road, Summertown, Oxford, OX2 7HT 


E: tristan.batory@fineandcountry.com
T:   +44 (0) 1865 953243
M:  +44 (0) 7879 407697

www.fineandcountry.com

Banbury Property Values 1.8% Lower Year-on-Year

It seems that quite a few Banbury homeowners and Banbury landlords have become acclimatised to living with the uncertainty of Brexit throughout most of 2019, as figures show many of them decided to get on with living life, started reinvesting their money into Banbury property and buying and selling their Banbury homes and BTL investments. Land Registry stats confirm that. Current data shows that... 

Banbury property values are 1.8% lower than 12 months ago

Whilst the newspapers were stating prime central London property values were now 17% below the levels being achieved a couple of years, that message seems not to have been heard by certain sectors of the Banbury property market!


Speaking with other property professionals in Banbury, many weren’t expecting the usual autumn rebound after the summer holidays. Many were anticipating a dormant Banbury property market on the run up to Christmas believing many Banbury home-movers would put off the their home moving activities until the new year, yet in many sectors of the local property market, I have seen (and the stats back this up) that those Banbury property buyers who are able to hold their nerve (whereas others were hesitant) have found themselves in a better negotiating position to get a great property deal. Putting aside the fluff of newspaper headlines, the real foundations of Banbury housing market remain sound with record low unemployment, ultra-low interest rates and low inflation.

Interestingly, there are 27% more homes for sale in Banbury compared to two years ago, meaning more choice for buyers.

However, there are still parts of the Banbury property market that remain stagnant, with some homeowners being slightly unrealistic with their marketing pricing. To them, the property market appears to be slow, as they stare at their ‘for sale’ board for months on end, yet nothing could be further from the truth.

The key to a balanced (and healthy) property market is realistic pricing by the homeowners when they place the property on the market, mortgage affordability for buyers (which was discussed a couple of weeks ago in the Banbury Property Blog) and buy to let landlord activity which creates and maintains forward momentum. One measure of momentum is how long a property remains on the market, and interestingly…

The current average length of time a Banbury property remains on the market is 86 days, up slightly from 65 days two years ago

Now the number of properties sold locally is slightly down year on year (even though we had a burst of property sales in the summer locally) and interestingly, Rightmove reported recently that nationally, the number of properties sold in the UK was only just over 3% less year on year, so a similar picture nationally.

So, what does all this mean for Banbury homeowners and Banbury landlords?

We have always had issues that were game changers for the housing market; for the last few years it’s been Brexit, 10 years ago the credit crunch, 18 years ago the dot com crash, the ERM and 15% interest rates issue 27 years ago, dual MIRAS 32 years ago, hyper-inflation 40 years ago, the 3 day week 45 years ago – the list goes on. Everyone needs a home to live in, the local authority just has not got the money to build council houses, so buy to let will continue to grow for the foreseeable future which in turn creates a stable foundation for all homeowners. Maybe you should use this time, like many are in Banbury to take advantage of the property deals to be had in Banbury.

How long is an average Oxford property on the market for?

If you are either selling or buying a property in Oxford, there are a few reasons why it may be taking some time to sell your Oxford home or find that perfect place to call your new home. It may be taking longer than you thought to find a buyer for your home because of the current state of the property market or finding that perfect Oxford home may be taking too long because of a lack of properties to buy.

So, taking everything into consideration, all of these factors invite an obvious question; how long is too long to persist in the Oxford property market?

If you are looking to sell your Oxford property, it may have become infuriating when your home has been on the market for longer than you anticipated. Perhaps the property market is purely in a position where it's challenging to get a property sold quickly, or sold at the price you want to achieve for it. If you do live in an Oxford home that is towards the upper reaches of the price band, you have to be open to the idea that because it's worth so much more than the average property in Oxford and so more than most individuals can afford, you will have to wait longer to get it sold.

Your Oxford home might be taking longer to sell because your asking price is simply too high. Even if you are prepared to take a realistic offer, if you have an unrealistic asking price your overpriced Oxford property will undoubtedly turn off potential buyers from even being inclined to book a viewing

Looking at the market in Oxford compared to a year ago makes very interesting reading…

When it comes to the average length of time on the market, it’s the detached, semi-detached and apartments in Oxford that appear to be taking longer to sell, yet the length of time Oxford terraced houses seem to be on the market has dropped.

The overall average length of time an Oxford property remains on the market has risen by 14.2%, from 86 days a year to 99 days today

The question that remains is, if you are having no luck selling should you leave your Oxford property on the market or not? This is basically down to your personal circumstances - a big decider has to be if you are moving up market or downsizing.

Buyers will compare your Oxford property to all the other homes on the market using the portals such as Rightmove, On the Market and Zoopla and even if your asking price is realistic, if your marketing (brochures, pictures, even video walk through) isn’t top dollar, they will dismiss your property.

Remember, the average buyer only views 4.5 properties before they buy and on average, each buyer will only spend just over 25 minutes viewing each home …

The more properties that are on the market, the greater the choice for buyers (yet more competition for house sellers), so we wanted to look at how many homes were for sale in Oxford now, compared to 12 months ago.

As you can see, there are some differences between the property types in Oxford.

As for buying an Oxford property, searching for that dream house can take time as you have to consider the needs of your spouse, children, schooling, etc., what you can realistically afford and whether your current location can accommodate you until you find that perfect Oxford home.

Don’t forget that upwards of 10% of homes do not make it to the portals (the portals are Rightmove, Zoopla and On the Market), so don’t just rely on the portals to let you know what is coming on the market. The number of times I speak to disappointed buyers who missed out because other buyers registered directly with the agent for property, whilst they relied on the portals.

When it comes to buying an Oxford home, and so you do not make any decisions you will regret later on, taking your time is always the more practical option. The amount of money that is involved in buying a home and all the costs connected with it means that you should not rush into buying or selling without due consideration.


Tristan Batory | Associate 

Fine & Country Oxford 
267 Banbury Road, Summertown, Oxford, OX2 7HT 


E: tristan.batory@fineandcountry.com
T:   +44 (0) 1865 953243
M:  +44 (0) 7879 407697

www.fineandcountry.com

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