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The 6 Reasons Bath Rental Properties Could Inflation-Proof Your Savings

Posted on by prateek

  • Inflation (and recessions) can be nerve racking for people and their hard-earned savings and wealth.
  • Yet there are six reasons which make investing in private rental properties a potentially wise investment in these changeable times.
  • This article looks at how investing in Bath property could help you ‘hedge’ against inflation and protect your savings and wealth against the possible recession.

The cost-of-living predicament is threatening the budgets of many Bath households.

Inflation is running at 7.8%, yet the best savings rates in the market are only 2.75% (because of low Bank of England interest rates). This means that the value of people’s savings is falling fast.

To add insult to injury, the possibility of a recession on the horizon could add another nail in the coffin of people’s wealth and savings.

Looking back at the last recession (ignoring the 2020 Covid recession), the Stock Market (FTSE index) dropped 40.1% during the Credit Crunch (2008/9) — scarcely a soothing thought if you worry about a recession looming in the next couple of years.

A recession can have a catastrophic impact on household budgets, as a weaker economy characteristically means that salaries drop, and people get made redundant.

So, why do I suggest Bath rental properties will help to protect your wealth and hedge against inflation?

Bath rentals aren’t perfect, yet in many ways, they go a long way to help – let me tell you why.

1. One of the most significant benefits of investing in residential property is to hedge against inflation. An ‘inflation hedge’ is an investment that defends against the decreased purchasing power of your money that results from the loss of its worth/value due to inflation.

The last time the UK suffered high and persistent inflation was the 1970s.

In 1973, the average British house was worth £9,942. In 1980, that same house was worth £23,287. If the same £9,942 had been invested instead in the stock market in 1973, it would have been worth £19,384 in 1980.

So how did that compare to inflation?

Neither property nor the stock market beat inflation in those seven years (as the goods and services of that £9,942 in 1973 had risen to £25,897 by 1980).

But investing in the stock market between 1973 and 1980, that stock market investor would have lost 25.2% of their investment in ‘real terms’, compared with only 10.1% for property investors.

However, there was the bonus of seven years’ worth of rent!

To give you some idea of what that would be worth in today’s figures (even if the rent didn’t go up during that time frame) …

The average Bath landlord will earn £136,332 in rent over seven years.

2. Rental properties have repetitive, regular monthly income, whilst dividends from the stock market are dependent on there being profits which, in a recession, can be hit and miss.

3. Existing Bath landlords know that the rents their rental properties achieve don’t historically decline during recessions in the medium term.

In 2008, Bath rents dipped by 5.2%, yet they soon bounced back a year later.

And even if average rents do go down, every rent is fixed at the start of the tenancy. Also, it is infrequent for a tenant to negotiate a reduction in rent mid-tenancy even if average rents did drop.

4. Property prices sometimes fall during recessions.

In the 2008 Credit Crunch recession, Bath and North East Somerset property values dropped 19.34%.

Dropping from £253,777 at the peak in September 2007 to £204,700 in May 2009 (before they started to rise again).

Yet as I stated above, the Stock Market dropped 40.1% with the Credit Crunch. Also previously, the Stock Market dropped 36% on Black Monday before the early 1990’s recession and 55.3% in 1974.

Which sort of drop would you prefer?

5. (Almost) guaranteed rental payments. Insurance can be taken out for rental payments (you can’t get that on stocks and shares). Also, the government will cover most (or all) of the rent when someone is made redundant and needs to apply for social security.

6. For those Bath landlords who take a mortgage, inflation can be a benefit. The first is the effect of inflation on mortgage debt. As Bath house prices rise over time, it reduces the loan to value percentage of your mortgage debt and increases your equity. You will receive a lower interest rate when you re-mortgage in the future because of the lower loan to value percentage.

Also, as the equity in your Bath rental property increases, assuming you fix your mortgage, your payments stay the same.

Finally, inflation also helps Bath buy-to-let landlords because rents tend to increase with inflation. So as rents go up, your fixed-rate buy-to-let mortgage payments stay the same, creating the prospect of more significant profit from your buy-to-let investment.

Yet, there are downsides to renting.

Rent arrears can be a worry. However, during 2021, landlords who used a letting agent were, according to an investigation from Denton House Research, 272.5% less likely to be in arrears of two months or more.

One of the biggest reasons is the more stringent tenant referencing that letting agents tend to do compared to landlords who do it themselves. At our agency, we like to reference tenants carefully for job security, stability, and any history of non-payment on rents, always liaising with previous landlords/agents to see they were a good tenant.

That is why many tenants with a poor tenancy record are attracted to properties that are not through agents, as they know most (not all) DIY landlords don’t reference their tenants as thoroughly as letting agents do. Solid referencing is not a 100% guarantee you won’t get rent arrears or have your rental property trashed, yet it will go a long way to mitigate it.

One of the things about investing in Bath rental properties is that buy-to-let investors have more control over their returns than stock market investors do. Buy-to-let provides long-term stability and constant income to counterweight the massive swings seen in the FTSE stock market.

There is something reassuring about touching and feeling your investment – the ‘bricks and mortar’.

You must make your own decision when investing in the private rental market in Bath. If you’d like to chat over the phone for five or ten minutes to discuss where I would be investing in the Bath property market, don’t hesitate to send me a message or pick up the phone.

How are you planning for the spectre of a potential recession?

Reside is an award-winning independent letting agent in Bath. Please get in touch if you would like to discuss any aspect of letting or managing your property; we would love to hear from you.

Bath Rental Market Review: April 2022

Posted on by prateek

Everything you need to know about the Bath rental market in April 2022.

Reside General Manager Toby Martin summarises rental activity over the last month, with the latest facts and figures from the local market.

Reside is an award-winning independent letting agent in Bath. Please get in touch if you would like to discuss any aspect of letting or managing your property; we would love to hear from you.

Why does it take 112 days to get the keys when you buy a house in Bath?

Posted on by prateek

  • 1,467 properties have sold in the Bath area in the last 12 months.
  • It only takes 65 days to sell a Bath home, so why does it take 112 days from the sold board going up to the buyer getting the keys?
  • With a shortage of solicitors and a sub-standard conveyancing system, this article discusses what Bath house sellers (and buyers) can do to speed up the house buying process.

Nationally, the average length of time it takes from agreeing the sale of a property to the keys being handed over is 111 days (down from 117 days last year). In Bath, we are just above the national average at 112 days.

So why does it take 16 weeks, when all that is required is for lawyers to look at some paperwork and get a mortgage? Also, what can Bath homebuyers and sellers do to speed this up?

The legal process to buy and sell a UK property is called conveyancing. The conveyancing system itself hasn’t really changed in hundreds of years. After the housing market was reopened after the first lockdown in the spring of 2020, the property market returned with a bang, helped on by the stamp duty holiday.

In 2021, the number of properties selling in Bath skyrocketed, e.g. by 96% in June 2021 and by 65% in March 2021. Many conveyancers and solicitors had to sort the legal paperwork out for upwards of 120 to 150 properties each at any one time.

This glut of sold properties that needed legal work to be sorted exacerbated a problem already present in the conveyancing industry.

For years, conveyancers have complained of overwork and underpay. Conveyancing is seen as the Cinderella of the legal profession. This workload was the straw that broke the camel’s back, making many conveyancers leave the profession and go into better paid legal work, like corporate law.

Also, the legal process of conveyancing has built-in inefficiencies, and the conveyancing profession has been relatively slow to innovate. However, there are some excellent tech solutions that are being slowly rolled out across the industry to make the process more efficient and effective.

What can Bath home buyers and sellers do to speed up their property sale?

If you are buying or selling your Bath property as we speak, you won’t be able to wait for the conveyancing profession to be revamped, yet you can be as pre-emptive as possible to get your Bath house sale through earlier.

In a nutshell, make sure you have all the paperwork sorted on your home before you put it on the market. Next, get the ball rolling on your mortgage. If you receive some paperwork, read it, check it, sign it and send it back in a day; do not leave it a week. Finally, always communicate frequently with your estate agent and conveyancer.

When you instruct a solicitor, most will request money to start the ball rolling for searches and disbursements. They won’t lift a finger until that is paid.

You will have to prove who you are in the conveyancing process, so your conveyancer will ask you to show them proof of ID and address. If you are buying, they will need to prove you have the funds/deposit to buy the home (and if your deposit is coming from family/friends, then they are required to write a letter to that effect).

How can the house buying and selling process be improved?

A couple of years ago, the Government set up the Home Buying and Selling Group to find the answer to this problem. Chaired by the well-known property guru Kate Faulkner, it is looking at an amalgamated Seller’s Information Pack (SIPs) and an IT-based single platform to share and communicate that SIP between buyers, sellers, their conveyancers, the estate agent, mortgage providers and brokers and finally surveyors.

The advantage of the SIP is that it can be created before the buyer has been found, meaning property buyers would be more knowledgeable when making an offer. Also, once the sale has been agreed upon, the SIP could be sent straightaway electronically to the buyer’s legal team (from the seller’s legal team) to start the procedure of asking for searches and raising inquiries.

The bottom line is the conveyancing process is not fit for purpose in the 21st Century and change is on the horizon.

So, before the SIP becomes mandatory, there are things everyone can do to ensure they secure the home of their dreams quicker.

I recommend that the seller, the agent and the conveyancer start to liaise with each other to get the key information on the property being sold as quickly as possible. Then once a buyer is found, I believe it is vital that the agent regularly communicates with all the stakeholders in the chain to ensure everyone is playing their part to expedite the sale.

In the future, utilising technology and every agent/conveyancer preparing information upfront with the SIP will drastically reduce the time it takes between agreeing a sale and the keys/monies handed over.

The conveyancing process will have to change to meet the needs of the 21st Century, but how long that will take is the big question.

Reside is an award-winning independent letting agent in Bath. Please get in touch if you would like to discuss any aspect of letting or managing your property; we would love to hear from you.

Bath Rental Market Review: March 2022

Posted on by prateek

Everything you need to know about the Bath rental market in March 2022.

Reside General Manager Toby Martin summarises rental activity over the last month, with the latest facts and figures from the local market.

Reside is an award-winning independent letting agent in Bath. Please get in touch if you would like to discuss any aspect of letting or managing your property; we would love to hear from you.

How Will Rising Inflation Affect the Bath Property Market in 2022?

Posted on by prateek

The UK is currently experiencing its highest inflation rate since the early 1990s. This increase in prices has primarily come about by the combination of an increase in demand for goods and services from consumers following lockdown last year together with global supply chain disruptions.

Most economists weren’t too concerned about this increase in the inflation rate as the very same thing happened in the early 1990s following the Credit Crunch with a similar rise in demand and supply chain issues. Thankfully, back in the early 1990s, inflation returned to lower levels quite quickly. However, the situation in Eastern Europe now could change matters.

So, let’s look at all the factors and what it means for the Bath property market.

The crisis in Eastern Europe has sparked even further rises in crude oil (which diesel and petrol are made from), gas and grain prices as pressure on supply chains around the world increases.

In my previous articles, I suggested UK inflation would rise to around 7% in the spring and drop back to 5% in the autumn and as we entered 2023, be approximately 3% to 4%.

Yet, with these issues, inflation could rise to 8% to 9% by late spring and still be around 6% to 7% in autumn, well above the Bank of England’s target of 2%.

With Bath wages rising at only 3% to 4% and inflation at 7%+, Bath household incomes, in real terms, will fall.

This is because ‘real’ UK household incomes characteristically have been the most consistent lead indicator of growth (or a drop) in house prices. This is because growing inflation erodes the value of money you earn, which reduces its buying power. When the cash in your pocket has a lower spending power, people tend to spend less when they buy or rent a home (and vice versa).

Next month, Income Tax thresholds will be frozen, and National Insurance contributions are increasing. Collectively, all these issues will create a drop of around 2% to 2.5% in the real disposable income of Britain’s households in 2022 (real disposable income – i.e. somebody’s take-home wages after tax and the effects of inflation are considered).

Will Bathonians be more anxious about spending their money?

With less money in people’s pockets, their inclination to spend the money they do have could also be curtailed. Whilst savings are at an all-time high, many will decide to sit on the cash instead of spending it, especially as consumer confidence has dropped to minus 26 on the GfK index (whatever that means! But in all seriousness… more on that below).

All this can only mean… there is going to be a house price crash.

It’s all doom and gloom! …or is it?

My heart goes out to people caught up in the awful humanitarian crisis in Eastern Europe. For the purposes of this article, however, I need to respectfully put that to one side for just a moment.

This blog is about the Bath property market, and Bathonians want to know what will happen to the Bath property market.

In the first half of the article, I looked at the impending 2 to 2.5% fall in real disposable incomes during 2022. I appreciate it’s going to be tough for many families in Bath. Yet, it is always important to consider what has happened in times gone by:

1982 – a drop of 2.3% in real disposable income
1992 – a drop of 3.7% in real disposable income
2008 – a drop of 5.8% in real disposable income

Yes, it’s going to be tough, but we got through 1982, 1992 and 2008 – and so we shall in 2022/23.

Next: the price of petrol is very high compared to a year ago.

The average price of unleaded petrol is £1.51/litre today, quite a jump from the £1.21/litre a year ago. But here is an interesting fact, petrol was a lot more expensive (in real terms) in 2011 than today. In TODAY’s money, a litre of unleaded petrol in 2011 would be the equivalent of £1.79/litre. We have some way to go before we get to those levels – and again, the Bath economy (and property market) kicked on quite nicely after 2011.

What are Bath people spending on their rent and mortgages?

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In 2015, owner occupiers were spending on average 17.3% of their household income on mortgages, yet in 2021 this had risen, albeit to 17.7% – not a huge increase.

Council (social) tenants have seen a drop in their rent from 29.2% of their household income in 2015 to 26.7% in 2021, whilst for private tenants it has dropped from from 36.4% in 2015 to 31.2% in 2021.

Interestingly, private tenants are proportionally 14.29% better off in 2021 than in 2015.

The average UK home spent 4.2% of their household income on energy in 2021, and that is due to rise to 6.3% after April (and probably 7% in October). Yet, as a country, we spend 9% of our income on restaurants and hotels and 8% on recreation and culture. As with all aspects of life, it will mean choices, and maybe we will have to forego some luxuries.

Just before I move on from this aspect of the article, again I appreciate I am talking in averages. Many people with low incomes suffer from fuel poverty and they will find the increases in energy prices hard.

Higher inflation is generally brought under control using higher interest rates, meaning mortgage payments will be higher.

79% of homeowners with a mortgage are on a fixed rate, so any rise won’t be instantaneous. But there will be a bizarre side effect from the issues in Eastern Europe. Surprisingly, though the current situation in Eastern Europe by its very nature will bring greater UK inflation, it will also probably defer the Bank of England raising interest rates. This means mortgage rates won’t increase as much, as the bank won’t want to exacerbate any pressures to the UK economy in 2023/24 caused by the conflict.

The stock market had priced an interest rate rise to 2% by the end of 2022. I suspect this will now be no more than 1% to 1.25% by Christmas, slowly going up in quarters of one per cent every few months. The crisis in Eastern Europe might even come to be seen as a defence for higher inflation throughout 2022, all meaning everyone’s mortgage increases will be marginal for now.

Next, let’s look at Consumer Confidence Indexes – these indexes are fickle things. I prefer to look at the Organisation for Economic Co-operation and Development Consumer Confidence Index as it has a larger sample range and a longer time frame to compare against. Looking at the data from the mid 1970s, the drop in consumer confidence is big, yet nothing like the drops seen in the Oil Crisis of the mid 1970s, Recession of the early 1980s, ERM crisis of 1992 and the Global Financial Crisis of 2008/09. Also, when compared to the other main economies of the world (G7), the UK has always bounced back much more quickly from recessions when it comes to consumer confidence.

Click to view full-size image

What about house prices in Bath in 2022/23?

Increasing energy prices, rising inflation, an increase of sanctions, and a probable drop in consumer confidence and spending in the aftermath of the conflict will knock the post-pandemic recovery globally, which will lead to a recession around the world, including the UK.

A recession is when a country’s GDP drops in two consecutive quarters. For the last 300 years, there has been a direct link between British house prices and GDP (i.e. when GDP drops, UK house prices fall). Yet in 2020, the British GDP dropped by nearly 12%, but house prices went the other way.

Let’s look at what would happen if Bath house prices did drop by the same extent they did in the Global Financial Crisis of 2008/09.

House prices in Bath dropped by 17.2% in the Global Financial Crisis, the biggest drop in house prices over 16 months ever recorded in the UK.

The average value of a property in Bath and North East Somerset today is £399,981.

Meaning that if Bath’s house prices dropped by the same percentage in the next 16 months, an average home locally would only be worth £331,184.

On the face of it, not good… until you realise that it would only take us back to Bath house prices being achieved in February 2020 – and nobody was complaining about those.

Yes, that means if they do drop in price, the 5.7% of Bath homeowners who moved home since February 2020 would lose out if they sold after that price crash. But how many people move home after only being in their home for a few years? Not many!

The simple fact is that 94.3% of Bath homeowners will still be better off when they move if house prices crash.

And all this assumes there will be a crash.

The circumstances of 2009 that caused the property crash are entirely different to 2022 (no lending by the banks, higher interest rates and increasing unemployment compared to today’s increased lending, ultra-low interest rates and low unemployment).

I do believe with all that’s happening in the world we might see a rebalancing of the Bath property market later in 2022, and could see the odd month with little negative growth in house prices… But it will be nothing like 2009.

The expected fall in household spending could be counterbalanced by UK businesses’ plans to invest more in their businesses (with last year’s tax breaks on investing), which will create even more jobs.

Who knows what the future holds? These are just my opinions – what are yours?

Reside is an award-winning independent letting agent in Bath. Please get in touch if you would like to discuss any aspect of letting or managing your property; we would love to hear from you.

1 in 53 Bath Homes Are Sitting Empty

Posted on by prateek

  • 1,613 homes in the Bath and North East Somerset area are empty, which represents 1 in 53 homes.
  • 833 of those have been empty for more than six months and are worth £333 million.
  • Why are those properties standing empty and deteriorating and why could that become an issue for the whole of Bath?

A couple of weeks ago was National Empty Homes Week, so I thought I would find out how many homes are empty in the Bath area – the numbers surprised me, so I wanted to share my thoughts about them with you.

The latest Government statistics show that 833 properties in Bath and North East Somerset have been empty for more than six months.

Homes that are left empty for an extended period can affect our locality and occasionally invite anti-social behaviour.

With a shortage of housing in the Bath area, these empty homes must be brought back into use to generate much-needed housing for local people.

As you can see in the first bullet point, some homes are only empty for a short period of time. Yet, those local properties that stand empty for more than six months and then deteriorate become a problem for our local community.

I appreciate there can be many genuine explanations why a property may be left empty for a long time. However, with council house waiting lists at high levels and the shortage of both properties to buy and rent in Bath, we must ask what is being done about this at Government level and how this could affect the Bath property market?

The collective value of these 833 long-term (6 months or more) empty houses in Bath and North East Somerset are worth £333 million.

This impacts the Bath housing market with a lack of properties coming onto the market for sale and rent. This results in house prices being pushed up, making it less affordable for first-time buyers to get on the first step of the housing ladder.

It’s a real shame that many local properties are empty for over six months when there is an increasing demand for accommodation, at a time when there’s such a competitive housing market.

So, one might ask if this issue of long-term empty properties is a new problem? Well, not really.

There were 480 homes long-term empty in Bath and North East Somerset in 2010.

I know our local authority likes to work with property owners of empty homes to bring them back into housing stock as it helps with the housing shortage, even with the help of grants if improvement work is needed for the empty home. Yet, they could use enforcement action where a homeowner is incapable or unwilling to bring their property back into use.

So, what is the Government doing nationally? Homeowners are charged a 50% premium on top of their Council Tax if their home has been empty for two years or more. This can rise to a 300% premium if the property has been empty for ten years or more.

However, the bigger question is, why are all these homes in the Bath and North East Somerset area being left empty?

The real answer is – they are not.

A handful of the properties belong to the local authority and are in poor condition because the tenant trashed the property.

Probate (where the person’s estate is put in order and passed onto the beneficiaries of the will) takes between six and twelve months. Most of these long-term properties are being modernised and renovated, whilst other Bath properties are part of a deceased estate. In other circumstances, some Bath homes have been left empty after the owner has been placed into a care home, yet there is no Power of Attorney to put the home onto the market.

There is no magic solution to the empty home syndrome in Bath.

Empty properties in Bath is not an issue that will sort the housing crisis we are suffering from.

The simple fact is the population is growing faster than the number of houses being built. We need to build more homes.

Whether that means council properties, housing association homes, private landlords or even owner-occupation housing the masses – that’s a massive question we could all talk about, day in day out until the cows come home.

So, tell me, what are your thoughts on the matter?

Reside is an award-winning independent letting agent in Bath. Please get in touch if you would like to discuss any aspect of letting or managing your property; we would love to hear from you.

Bath Rental Market Review: February 2022

Posted on by prateek

Everything you need to know about the Bath rental market in February 2022.

Reside General Manager Toby Martin summarises rental activity over the last month, with the latest facts and figures from the local market.

Reside is an award-winning independent letting agent in Bath. Please get in touch if you would like to discuss any aspect of letting or managing your property; we would love to hear from you.

Why Are There So Few Bath Homes For Sale?

Posted on by prateek

  • 52% drop in the number of properties for sale in Bath in the last 12 months.
  • 402 Bath homes have sold (stc) in the last three months alone, taking the time from the ‘for sale board’ going up to sale agreed to a median of 42 days.
  • The £200k to £300k price range in Bath is the most active, where it only takes 36 days to sale agreed, but the over £1m price range is taking 82 days.
  • Yet, what issues cause Bathonians to want to move home and what can people wanting to move in 2022 do to ensure they sell and find the home of their dreams?

There are 322 properties for sale today in Bath; roll the clock back exactly a year, and the figure was 676 – there’s been a drop of 52%. This drop is being dubbed the ‘for sale board crunch’.

The ‘for sale board crunch’ has left many prospective Bath home buyers stressing to find the right property as the number of properties available to buy has dropped significantly.

I am sure you know people looking for their next Bath home, but when they see it on the portals (Rightmove, Zoopla, Boomin, OnTheMarket, etc.) the properties are gone within days.

With demand at an all-time high, many home buyers are in a state of misery as Bath house prices have grown in the last few years, forcing many of them to review their plans.

They are victims of the ‘for sale board crunch’ in the Bath property market, the likes of which have not been seen since 2007.

Normally when there has been excess demand in the residential sales market, that frothiness has been taken care of by people moving into rented accommodation. However, the number of Bath properties available to rent is at a 15-year low.

So why is the Bath property market this way?

Demand for Bath homes has exceeded the number of properties for sale since the General Election in December 2019. After years of long drawn-out Brexit negotiations, homeowners and buyers were more confident about their move. Many Bath people who put their home move on hold in 2018/19 had more confidence to return to the market.

The first lockdown in the spring of 2020 did nothing to quell this pent-up urge, and since the late spring of 2020, the Bath property market has been on fire! The lockdown changed what homeowners are looking for in their Bath home. Proximity to public transport dropped down the wish list for buyers, and demand for apartments dropped. Whilst properties with larger gardens and rooms that could double up as home offices tended to be at the top of most Bath buyers’ wish lists.

Around 36% more Bath properties have sold in the last 18 months than the long-term 20-year average.

Looking at the supply side of the equation, in the last five years, an average of 204,410 new homes per year have been added to the number of properties available in the UK. Also, 239,600 properties came back into the market when they became available after their owners had sadly passed away. Yet still, that isn’t enough. The country needs at least 300,000 new dwellings to keep pace with demand.

There is also another problem that has come to light with the cladding issue of apartments. Just over ¾ of a million apartments have issues with cladding. Whilst these are being sorted out (which will take many years), they are essentially unsaleable unless a fire safety expert on these buildings signs them as safe.

These cladding issues prevent these apartments from coming onto the market (thus reducing the supply of properties to buy). It also precludes their owners from moving up the property ladder from their apartment to a house. Also, many first-time buyers who can save a bigger deposit or be gifted cash from the Bank of Mum and Dad are skipping the apartment as their first home and going straight for a house, thus intensifying the lack of larger properties for sale.

So, how long does it take to sell a Bath property now?

Bath Apartments – 80 days

Bath Terraced/Town House – 19 days

Bath Semi-Detached – 27 days

Bath Detached – 37 days

This means it is a seller’s market in Bath, empowering them to push up their asking prices in high demand areas. However, most sellers are also buyers, which means the advantage they have on selling their property is turned on its head when they come to buy.

Many Bath sellers prefer to find their future Bath home before putting their current home on the market. That is making the lack of properties on the market seem even harsher than it may otherwise be.

The ‘for sale board crunch’ would be somewhat eased if Bath sellers put their property onto the market whilst they were hunting for their next ‘forever home’.

However, not all Bath homeowners are doing so, partially because they (wrongly) believe they will be made homeless if they find a buyer and can’t find another property to buy (remember, you are not legally committed to moving until exchange of contracts).

A big issue will be finding a suitable home in Bath. We very much have a chicken and egg scenario. Some homeowners are waiting for the right property to come onto the market before they put their home on the market. This will probably mean that their property will sell even before the photographs have been taken of your home.

Yet, many Bath homeowners are worried if they put their house on the market and it sells, they won’t be able to find another suitable home and thus be homeless.

Classic chicken and egg – so what do you do first?

There is another way of doing this. It’s a technique estate agents used to use before the internet, and it’s called ‘chain building’, which involves slowly building a group of people in a chain over many months. It requires a lot of patience to build a chain downwards and upwards around you.

There is no cost to this and no legal commitment to go through. It can take six, even twelve months to build a chain of people who are prepared to wait for the chain to form.

Yet, everyone normally gets their next ‘forever home’ by playing this long game.

Because if you don’t play the long game, build relationships with Bath estate agents (who can build these chains) and only rely on waiting for properties to appear on Rightmove, Boomin, OnTheMarket or Zoopla, you will be sorely disappointed.

According to national research from Denton House Research, 7 out of 8 people who viewed a house through an estate agent in 2021 were not on the mailing list of that agent before they viewed it.

That means all these Bath properties built on a chain builder (as above) will sell, yet won’t appear on Rightmove or Zoopla, meaning you will miss out.

You must get yourself on the mailing list of every estate agency so you don’t miss out on your next forever home in Bath.

If you would like a chat about anything mentioned in this article, feel free to drop me a message or call me.

Reside is an award-winning independent letting agent in Bath. Please get in touch if you would like to discuss any aspect of letting or managing your property; we would love to hear from you.

What Bath Landlords Need To Know About The Government’s ‘Levelling Up’ White Paper

Posted on by prateek

  • Some Bath landlords could face bills of between £11,000 to £14,000 as Michael Gove, the Housing Minister, declared an attack on poor quality private rental homes.
  • 2,114 Bath rental properties could require upgrading. The Government announced in their ‘Levelling Up’ White Paper last week, they plan to introduce a new minimum standard for private rental properties.
  • Also, the White Paper wants every landlord in Bath (9,075 of you) to go on a Landlord Register and proposes the removal of Section 21 no-fault evictions.

But despite what some might think, these proposed changes are not another nail in the buy-to-let coffin for Bath landlords. Here is why…

On the face of it, yes, it could be seen as another attack on the humble Bath landlord, having to spend money on their properties and get tangled up with red tape on a register and then having no-fault evictions removed.

Yet, as always, the devil is in the detail…

This ‘Levelling Up Bill’ is a White Paper. White Papers are policy documents created by the existing Government that set out their future proposals for legislation. Many White Papers don’t even make it to the House of Commons to be debated on, and even then, it needs to be voted on by both Houses of Parliament before becoming law. Any changes are at least two or three years away, and that’s assuming it gets debated and subsequently approved.

Many have said the White Paper is supposed to lay out how to resolve the problem of rebalancing the UK economy that is suffering from the highest level of regional inequality than any G8 country. This is a gargantuan challenge…

Yet the Levelling Up White Paper reads very much like a shopping list of great ideas without the means to pay for it.

One of the 12 points in the White Paper was focusing on housing, with a plan to introduce a new minimum standard for rental properties, a landlord register and the removal of no-fault evictions (as an aside, there was also a mention of a possible reintroduction of Home Information Packs – remember those from 2009!).

So, what does this mean for the landlords of the 9,075 private rental properties in Bath?

Sub Standard Rental Properties

The proposed changes will mean rental homes in the private sector will have to meet two specific standards that the existing 6,848 social housing homes in Bath currently need to meet.

The first is called the ‘Decent Homes Standard’ (DHS) and the second, the Housing, Health and Safety Rating System (HHSRS) evaluation.

Looking at data from the Government, there are 2,114 private rental properties in Bath that are considered substandard under these two measures and each one would cost between £11,000 and £14,000 to bring up to the prescribed standard. That means…

The estimated total cost to improve the 2,114 Bath properties, that are considered substandard, could be as high as £29,602,650.

Yet both systems of standards (DHS & HHSRS) have been slated by many (even by the Government itself).

The DHS criteria for the standard are as follows:

  1. It must meet the current statutory minimum standard for housing
  2. It must be in a reasonable state of repair
  3. It must have reasonably modern facilities and services
  4. It must provide a reasonable degree of thermal comfort

Note how the word ‘reasonable’ is used in three of the four points of the DHS. Reasonable is an arbitrary and very much subjective point of view. It screams loopholes and get out clauses to me.

Looking at the HHSRS, the Government announced just before the pandemic in June 2019 that the HHSRS would be revamped after it was found to be ‘complicated and inefficient to use’.

Putting aside how one measures the standards, it is a simple fact that there are many Bath rental properties that are substandard. I believe it right the Government have an ambition to halve the number of sub-standard private rentals by 2030. However, would it surprise you that…

In 2006, 46.7% of private rented homes in the UK were classed as substandard and today that has reduced, without any legislation, to 23.3%. One must ask if new legislation is now required?

Also, if you recall in an article I wrote recently (drop me line if you would like me to send it to you), Bath landlords could be faced with bringing their properties up to an energy rating (EPC) of C between 2026 and 2028 in legislation already proposed.

Most of the works to meet that EPC rating requirement will be the same works to meet this new DHS and HHSRS. Also, in that article, I discussed how the Government have suggested that certain allowances will be made for landlords on rental properties that can’t be improved – such as Listed properties.

So, I think Bath landlords should sit tight and let the Government shine more light on this in the coming months before any knee jerk reactions are made.

Landlord Register

To be honest, there are several city/borough registers around the UK for landlords. Experience has shown they seem to add an extra level of bureaucracy and red tape. The register would be for every Bath buy-to-let landlord and rogue landlords would be struck off whilst allowing tenants new redress rights. Another reason to employ the services of a letting agent to sort!

End of No-fault Evictions

Again, I spoke about this a few weeks ago with the proposed removal of Section 21 to evict a tenant (again, if you want a copy, drop me a line). If you recall, I stated that no-fault evictions were removed in Scotland over four years ago and the apocalyptic suggestions it would kill the rental market for Scottish landlords was not forthcoming. Now of course, the Scots strengthened the other grounds to evict a tenant. If the Government strengthen the Section 8 legislation, again, I cannot see this being an issue south of the border. Time will tell once the Government put more meat on the bones of the White Paper.

Conclusion

Many of the announcements made in the Levelling Up White Paper are re-hashed proposed legislation that has been on the books for the last couple of years.

This White Paper is not another nail in the coffin of buy-to-let in Bath.

Yet, many commentators have cautioned that more landlords with substandard homes will sell up because of these proposed changes, warning the sell up would add to the private rental sector’s shortage of homes, thus pushing up rents.

If that was true, that would increase rental returns on Bath buy-to-let and attract more Bath landlords into the sector, wouldn’t it?

But if you don’t agree other Bath landlords will buy these rental properties that other landlords are selling, who will buy their Bath properties from them? It will be Bath renters, who are now able to buy because the price has come down, meaning equilibrium should return to the market.

This is all theoretical and there are shortages/gluts in specific locations. Let us not forget it was 12/18 months ago that rents were dropped by double digit percentage points in the space of a couple of months in the big cities. Those rent drops weren’t anything to do with landlords buying up City Centre rental properties, but demand plummeted with 20-something tenants moving back in with their parents during the first lockdown and the months that followed. Yet, now rents have bounced back to pre-pandemic levels (and more) with the return of tenants to the cities.

In a nutshell, if Bath landlords do end up selling in their droves (which they won’t), yet if they do, those Bath properties will still exist.

Few of them will be left empty because most of them will be bought by other Bath landlords as they will be attracted to the sector as inflation takes hold whilst others will be bought by first-time buyers.

What goes around, comes around. So, let’s see what happens in the coming months. In the meantime, if you’re a Bath landlord and you want to discuss anything in this article, please either drop me a line or send me an email.

Reside is an award-winning independent letting agent in Bath. Please get in touch if you would like to discuss any aspect of letting or managing your property; we would love to hear from you.