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 Bathand 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 inthe 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.
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.
The energy bills of every Bath resident will rise in April as the price cap increases to account for the global increase in the cost of gas. Those not on the gas mains will still be hit as the UK uses gas to make 45% of its electricity.
So, what can Bath residents do to reduce their energy consumption and ultimately save money?
First, let’s look at the scale of the costs.
Considering the increase in energy prices from April, the combined energy bills for the whole of Bath come to…
£63,677,830 for central heating
£12,767,780 for hot water
£6,938,619 for lighting
There are extra energy costs for washing, fridges, etc., yet I wanted to focus just on the home as this is a property blog.
Everyone’s bills will be around 50% more expensive in 2022 than in 2021, but it’s not too late for Bathonians to take some quick steps to cut their energy bills and, at the same time, cut our carbon footprint.
Just over a quarter of the UK’s carbon comes from heating and lighting our 27.6 million homes, and each UK home produces4.39 tonnes of carbon dioxide a year.
Upgrading the energy efficiency of UK homes is seen as a vital step to attempting to mitigate the issues of climate change, fuel poverty and our nation’s energy security.
So, what are some quick wins for Bath residents to reduce the energy bills on their homes, and how will energy efficiency play a more significant part in the value of Bath homes in the future?
By turning down the thermostat by 1 degree, the average annual saving would be £105.91 per home and each homes carbon dioxide would be reduced by an eighth of a tonne (it all adds up!).
Replacing your bulbs when you can with energy-efficient bulbs will, on average, reduce your lighting costs from £172 per year to £103 per year.
What time does your heating come on and off? Could it come on later and go off earlier?
Smart meters (which are installed for free) are estimated to help lower UK homes electricity use by nearly 3% and gas use by 2% … again it’s all margin gains.
These are just a handful of ideas. Check out the internet for others as it’s fascinating how much energy we use for overfull kettles, chargers left on and tech on standby etc.
Yet, these things will only scratch the surface… many of us will need to go further, especially Bath landlords, to retrofit our properties to make them more energy-efficient.
This is particularly important as in June the Government announced they would make the country carbon neutral by 2050, meaning Britain’s homes need some enormous retro-fitting to meet these ambitious climate targets.
In 2018, the Government required private landlords to improve the energy rating of their rental properties by prohibiting the rental of any property with an Energy Performance Certificate (EPC) rating of F and G (the lowest ratings). Yet from 2025, it is proposed that will be increased to C for all new tenancies and 2028 for all existing tenancies (more on these EPCs below).
I don’t believe there is an appetite to mandate private homeowners to do this work, though you never know in the future.
So, how do you find out about yourBath home’s eco-credentials?
Since 2007, every new home that has been built, rented out or put on to the market in Bath has had to have an EPC, giving it a rating between A and G (rather like those stickers you see on fridges and washing machines).
A is the highest rating (i.e., best energy efficient and greener), and G is the worst efficiency rating.
38% of Bath homes are in that eco-friendly A to C energy performance band rating, compared to the national average of 40.1%
So, what next? Well, the Government will attempt to make the green revolution as painless as possible with technology.
In the future, we might have hydrogen central heating instead of mains gas; or have solar panels for electricity, all triple glazed windows and even ground source heating – sounds fanciful? Well, who would have thought some of the most wanted cars would be electric 20 years ago?
There is no doubt that the energy efficiency of our homes will rise in the coming years as the cost of fuel increases and people’s opinion on going green changes.
You don’t need to spend thousands of pounds to find out what you can do to make your property greener and cost less. Look at your EPC and it will tell you what small changes you can make to improve your Bath home’s energy efficiency rating and ultimately save yourself money. If you want to find the EPC rating of your Bath home, go to epcregister.com. If you need an EPC, drop me a line as I know some great local energy assessors that can easily do an EPC on your property at a price that won’t cost the earth!
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.
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 thelast 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.
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:
It must meet the current statutory minimum standard for housing
It must be in a reasonable state of repair
It must have reasonably modern facilities and services
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.
Everything you need to know about the Bath rental market in January 2022. This month: just how bad is the Bath property shortage?
Tenant demand has far exceeded property supply for the last 12 months, but just what is the extent of this property shortage? As Reside’s Toby Martin discusses in the above video, the number of rental properties on the market at any one time is currently 35-40% below the average for the last decade.
This month’s round-up also includes news of upcoming smoke and carbon monoxide alarm regulations that landlords should be aware of. Be sure to watch the video for full details.
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.
The average house price in Bath has increased by 195.9% to £535,700 in the last 20 years, a profit of £354,650
That means, when adjusted for inflation in those two decades, Bath house prices have risen in real terms by 123.8%
What does this mean for existing Bath homeowners and first-time buyers trying to get on the Bath property ladder?
Since 2001, average UK house prices have risen by an astonishing 187.2% across the UK, while in London the figure is 247.6%.
Looking back at the people that bought in those first few years of the new Millennium, few of those buying or selling property in 2001 could have forecast the massive financial impact that their decision then would have on the rest of their lives.
In those years, there have been winners and losers, where some Bath buyers have made hundreds of thousands of pounds and Bath renters have paid out tens of thousands of pounds and yet been unable to buy their first home – but life is often not as simple as that, so in this article I wanted to discuss the matter further.
The average house price in Bath has increased by 195.9% to £535,700 in the last 20 years, a profit of £354,650.
Now of course these are average prices and don’t take inflation into consideration.
Yet even when adjusted for inflation, Bath house prices have still risen by 123.8% in the last 20 years.
Characteristically, the longer a homeowner has owned their property, the larger the gain when they sell. Yet most of these profits are never seen by Bath homeowners. It has never been money in the bank unless you sell up and downsize or move somewhere cheaper. Instead, these gains are re-invested back into the housing market when they buy their next home.
So, whether the gains are banked or tied up in their bricks and mortar, it looks like all the Bath homeowners are in the driving seat.
What about all the first-time buyers, priced out of the market and unable to get on to the property ladder?
Are the young of Bath losing out again?
Reading the newspapers you would think so, yet nothing could be further from the truth. In fact…
It’s 26.8% cheaper today to buy a housein Bath compared to 2007
(That isn’t a typo!)
In 2002, 28.3% of a first-time buyer’s household income went on the mortgage payments. Today, that figure stands at 37.3%, yet in 2007, it was 51%… hence why it’s cheaper today!
Of course, for most young potential first-time buyers, the other largest barrier to home ownership is the matter of raising an adequate deposit.
Rising rents (and future energy prices) won’t help and will in fact make this problem worse, giving ambitious first-time buyers not much left at the end of the month to save a deposit for their first home.
With soaring Bath house prices, this means the amount Bath renters need to save for their deposit is growing year on year.
For these annoyed renters, there is the unpleasant irony that if they could only get on the Bath housing ladder, they would find themselves better off. They would spend a lower proportion of their monthly take home pay on keeping a roof over their heads.
Some people in the press have suggested the older generation, with all the equity tied up in their homes over the last 20 years, should release some of the money and give it to their children or grandchildren to help them on the ladder.
Reports in the press have also said that many homeowners aged 60+ have changed their plans to move home. Many were planning to downsize to release the tied-up equity in their home. That equity would either be used to invest in the bank to produce an income for them and/or to help their children (sometimes even grandchildren) on to the property ladder.
Yet with the interest paid by banks and building societies on any lump sum being very low, to many mature homeowners it hardly seems worthwhile making the move to downsize. This means many younger would-be first-time buyers are missing out on help from the Bank of Mum and Dad (or the Bank of Grandma and Grandpa) with their deposit.
However, the problems caused by low interest rates could also be their saviour.
Many older homeowners have turned to Equity Release, thus allowing them to get hold of a share of the equity amassed in their property, in exchange for a tax-free lump sum of cash.
Cash that could be used to help withdeposits for their children/grandchildren?
The mature homeowner then stays in their larger family home and helps their family buy a property.
Whilst I am not a mortgage adviser (and you must take proper advice from a qualified mortgage broker), equity release mortgages don’t have end dates and the interest payments are rolled up (until you pass away). This means that there aren’t any monthly payments.
The interest rate you pay is normally fixed for the mortgage and because interest rates are so low, that means the debt shouldn’t balloon up. And should you decide to sell in a few years’ time, you just pay back the capital, redemption fee and the small amount of interest accrued.
Now of course, that does mean there will be less foryour offspring to inherit when you pass away.
Equity release mortgages though have had some bad press recently. In the past they were unregulated and pricey. Yet today, there is more protection for borrowers.
One answer to the growing interest debt is to pay part or all of the monthly mortgage interest charged, yet you must have the income for that.
You also need to take advice on how the equity release will affect your liability for nursing home fees and inheritance tax. Also, if only one person in your home is the owner of the property, if that homeowner dies, the partner who is not on the mortgage (because only owners can go on a mortgage) won’t have any rights to stay in the family home.
Finally, if you are planning to move, don’t just compare the interest rate, but the redemption charge for early repayment – some of them can be very high.
My advice – take professional advice and speak to your family and involve them. Yes, we have all built up some amazing equity in our Bath homes, and yes, there is potential to help the younger generations with that wealth. Just go in with eyes open and know all the facts, all the pros and all the cons – then decide what is best for you with all that information to hand.
What are your thoughts, as a mature Bath homeowner or a first-time buyer, on this? It would be good to hear from you.
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 landlords helped by ultra-low mortgage rates and a stamp duty holiday
Yet, some landlords anxious about a possible end to no fault evictions
New EPC rules could cost landlords £10,000+ per property
In this article, I will look at what happened in 2021 in the Bath buy-to-let property market and give you my opinion as to what lies ahead for Bath landlords in 2022 and beyond.
On a positive note, Bath house prices have rocketed, rents have risen faster than inflation, at the start of the year we had the benefit of a stamp duty holiday and finally, ultra-low mortgage rates, meaning Bath landlords had lots to be happy about in 2021.
On a more cautious note, the laws regarding renting are currently being debated in Parliament which will see the end of no-fault tenant evictions, and changes in regulations will require landlords to make their buy-to-let rental properties more eco-friendly at a cost of up to £10,000+ each.
So, let’s have a look at these points …
Bath Rents will Continue to Rise in 2022
Bath buy-to-let landlords have seen the average rent of a Bath rental property rise by 6.5% in the last 12 months.
The number of Bath properties available to rent on the property portals (e.g. Rightmove, etc.) at any one time is roughly 35% to 40% below the last decade’s average, meaning there is greater competition for each rental property.
Demand has increased for several reasons.
Firstly, some homeowners cashed in on the high prices, sold up and moved into rented property.
Secondly, some Bath buy-to-let landlords have also cashed in on the buoyant property market and sold their rental property when their existing tenant handed in their notice.
Finally, the rental sector has an inverse relationship to the state of the general British economy, meaning with the uncertainty in the British economy in the early part of 2021, this meant more people decided to rent rather than tie themselves into a mortgage.
Looking at the supply side of the Bath rental market, in the short term, rents will continue to grow as some Bath landlords are abandoning the rental market – some because of the impending regulation changes which I will talk about later, and others with the natural flow of people cashing in their investments on retirement.
With increased demand and restricted supply, this will only lead to competition becoming more severe between renters, thus making Bath rents continue to rise.
Bath House Price Growth Will Slow
Bath house prices grew by 15.3% in 2021, but slower growth is anticipated during 2022
For those that own property, the way house prices grew in 2021 surprised most people.
Bath house prices, according to the Land Registry, grew by 15.3% in 2021, with the typical Bath home reaching £425,500.
Many local landlords have been helped by this increase in Bath house prices and will be in a place to cash in on those capital gains by either selling their buy-to-let property (as mentioned in the previous section) or releasing some equity by re-mortgaging.
Whether Bath house price rises carry on at such a rate in 2022 will mainly depend on whether the imbalance between the number of properties that come on to the market (supply) is by the number of buyers (demand).
Most commentators believe that nationally house prices will be between 3% and 5% higher by the end of 2022 and I can see no reason why Bath house prices won’t be in that range by the end of the year either.
Mortgage Rates Will Rise
The reduction in tax relief for Bath buy-to-let landlords with mortgages in the last five years hit some landlords hard, yet this has been tempered by the inexpensive ultra-low mortgages available to buy-to-let landlords.
Yet even with the Bank of England increase in base rates, landlords with big deposits of 40% or more can benefit from low rates. For example, at the time of writing, you can get a BTL mortgage at 1.49% fixed for 5 years with a 40% deposit (meaning borrowing £180,000 on a £300,000 purchase would only cost you £719 per month on a 25-year mortgage – or £224 per month on interest only).
However, those with only a 25% deposit must pay slightly more, but only at a mortgage rate of 1.64%… Who can remember mortgage rates of 14% to 15% in 1992?
With inflation rising, the Bank of England has already indicated further interest rate rises are on the cards. I suspect they will be around the 1% mark by Christmas 2022. Therefore, if you are one of the one in five landlords on a variable rate mortgage, your margins will be squeezed as your variable rate mortgage will rise in line with the Bank of England interest rate rise.
Maybe it’s time to consider fixing your mortgage?
The End of No-fault Evictions?
The Renters’ Reform Bill in England and The Renting Homes Act in Wales are both set to abolish Section 21 (no fault eviction). Section 21 laws allow landlords to take back possession of their rental properties without having to prove fault by the tenant.
Yet in 2022, Westminster will issue plans for a change of this law which will probably incorporate the eradication of Section 21, which would signify a major change in the balance of power between the landlord and tenant.
Some doom mongers are worried that with the abolition of Section 21, landlords may be unenthusiastic about renting and therefore sell up and leave the rental sector altogether. Yet these people said the same when tax relief for landlords was changed five years ago.
The Scottish equivalent of Section 21 was abolished at the end of 2017.
At the time, there was some anxiety about how this would affect the Scottish rental market, as anxious landlords and letting agents felt that they could lose control of their rental properties under this new law. Nonetheless, just over four years later, the rental sector has not collapsed in Scotland. The buy-to-let market remains upbeat, and there are signs that a Scottish landlord’s right to evict their tenant has been reinforced by these changes in the law.
The reason the Scottish changes worked was because the new grounds for repossessing rental properties was clear and wide-ranging. The Scots sped up the slow and unwieldy eviction process where the landlord had a legal and genuine reason to re-claim their property.
All I hope is the same changes to court procedures are made south of the border.
New EPC Rules Could Cost Bath Landlords £10,000+ per Property
The law currently stands that landlords need an Energy Performance Certificate (EPC) with at least a rating of E.
Westminster is anticipated to increase the EPC requirement for private rental properties in England and Wales to an EPC rating of C for all new rental tenancies by 2025/6, and for all existing tenancies by 2028, whilst Scottish landlords are also expected to see energy efficiency measures in their new proposed Housing Bill.
The problem is 1,959,045 of the 2,965,455 registered rental properties on the EPC database have an energy rating of D or below.
To take a property from an EPC D rating to a C rating might only cost a few hundred pounds, yet the average for all rental D and E rated properties has been calculated at just over £10,000 per property.
My advice to every Bath landlord is to look at the full EPC report of their rental property (and if you haven’t got it, contact me and I will send it to you – whether you are a client or not) as that will tell you whether this will be a big or small job.
Renovating the UK’s rental stock to meet the Government’s carbon neutral targets will be a big trial for landlords. There is talk of exemptions, which may apply to a great many Listed buildings, as there currently is for the existing minimum EPC E rating – yet only time will tell on that front.
Maybe those landlords currently buying properties to add to their rental portfolio should reconsider their buying strategy? In the past, it has been normal for Bath buy-to-let investors to be attracted to the inexpensive older properties that need an overhaul. However, with the potential energy efficiency laws coming into the game, it’s rational to suggest that buy-to-let landlords will be more predisposed to buying slightly newer properties rather than have the cost for the upgrades to meet the potential energy targets.
Conclusion
Roll the clock back 20 years and making money from buy-to-let in Bath was as easy as falling off a log. Yet with increased legislation and regulation, together with the changing dynamics of the British economy and the requirements tenants want in a rental property, making money won’t be as easy over the next 20 years.
It amazes me that 11 out of 20 landlords do not use a letting agent to help them with their rental portfolio, considering the cost can be offset against your tax.
Moving forward, savvy landlords will increasingly utilise their letting agent not only to collect the rent and manage the property, but also build up their portfolio to withstand the regulatory and demographic changes on the horizon, and to ensure that their investment is fit for purpose in the medium to long-term.
If your existing letting agent does not offer such advice, or you are a self-managing landlord, let’s have a chat about the future of the Bath rental market.
Whether you are a Reside client or not, if you would like me to look at your rental portfolio and see where you stand, then drop me a line and maybe we can meet for a coffee (or we can meet virtually over Zoom) to discuss the matter – all at no charge.
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.
Finding your next Bath property, be that as a buy-to-let landlord or for yourself to live in, can sometimes be a scary task. You are possibly making one of the biggest purchases of your life, and you want to ensure you make the right choice.
Buying your next property is all about finding a Bath property with the features that match your requirements. However, what might be important to you as a homebuyer, might not be as important to other homebuyers.
Some features will be red line must haves, whilst other features might be more negotiable, yet understanding what your requirements need to be, will make it easier to find the home of your dreams.
Let’s look at my top 11 rules you need to consider when buying a property in Bath.
1. Location, Location, Location
You can change many things within a property, but location isn’t one. They say you should buy a property for the things you can change. From Lansdown to Combe Down, Newbridge to Larkhall, go and visit the different neighbourhoods of Bath. Don’t just drive through them, walk through them at different times of the day. Look at weekdays as well as weekends. Think about transport links with access to bus routes, arterial roads. If you have children (or your tenants may have), think about school catchment areas for primary / secondary schools.
2. Bath Bedrooms
Did you know there are 107,751 bedrooms in Bath?
Well, you do now! Anyway, the number of bedrooms is a very significant consideration when buying your new home. If you need bedrooms for your children, the location of the bedrooms could be an issue. Depending on the age of any children, you might not want them to be a long way from the master bedroom, or if the children are teenagers, the opposite could be true. Bedroom size is also important. Is there enough space for children to study or have wardrobes? Do you need bedrooms for an office? If office space is required, you might want to consider a property with one less bedroom and one more reception room – and it will probably be a little cheaper. All things to consider.
3. Potential Future House Price Growth
The type of house you buy will determine how it increases in value in the future. Now this shouldn’t be the main consideration, yet it’s important to consider.
Since 2001, the different types of property in Bath have risen by different percentages.
Bath detached properties have risen by 156.7%
Bath semi-detached properties have risen by 166.2%
Bath town houses / terraced properties have risen by 191.7%
Bath apartments / flats have risen by 148.4%
On a standalone point for Bath landlords, the level of rent and yield are important considerations for your Return on Investment (ROI). There tends to be an inverse relationship between capital growth and yield (i.e. Bath properties with higher capital growth tend to have lower rental yields).
I am regularly sent Rightmove links by Bath landlords, keen to know a prospective purchase’s rental worth so that they can calculate their yield. Please feel free to email me a link to the property you are thinking of purchasing; I will be able to give you a very quick estimate of its rental value, completely free of charge and obligation.
4. The Overall Interior Size of Your Future Property
On average a person only views five houses before they buy a house and only spends around 20 minutes in each on a viewing. Therefore, I would advise that you have a good idea about the size of home you require before you start your search. If you have a big family you are going to need a bigger house obviously, yet you still need the budget to afford to buy the bigger home.
One great idea is to calculate the square metreage of your potential home. Ask to view the full copy of the Energy Performance Certificate, as it has the size of the property in square metres.
Bigger houses tend to cost more money to run with utility bills and council tax.
A final thought on size is the question of whether your family is likely to grow in the next decade? Will you have more children or is a parent coming to live with you?
5. The Price You Will Have to Pay For Your Next Bath Home
In the last 12 months, the Bath property market has remained buoyant as Bathonians were forced to spend more time at home. Therefore, they looked for more space… but what did they have to pay for that privilege?
303 Bath detached properties have sold for an average £692,100
333 Bath semi-detached properties have sold for an average £420,400
503 Bath town house / terraced properties have sold for an average £447,700
211 Bath apartment / flats have sold for an average £343,300
Look at the property portals (e.g. Rightmove, Boomin, Zoopla and OnTheMarket) and search for Bath property that is both available and sold subject to contract. Get a feel for asking prices of the properties that are sold subject to contract as these will give you a good idea what they roughly sold for. Again, if you are not sure, pick up the phone or drop me a line.
6. Bathroom(s)
Check the bathroom for water leaks. Do the toilets flush OK, do the taps drip? Is there any mould? And do you need more than one?
7. The Lounge / Living Room
You will undoubtedly be spending a lot of time in the lounge / living room, so it needs to meet your requirements. Do you need a dining area? Does the design and arrangement of the room suit your lifestyle (or your tenant’s). Will you need new furniture? Are there enough electrical sockets? What are the carpets like? That goes for all rooms.
8. Central Heating for your Property
What type of central heating system is present, and does it meet the requirements of you and the home? The Energy Performance Certificate (EPC) will tell you how energy efficient the property is and how much it will cost to run. You would be amazed how few buyers ask to see the full copy of the EPC – yet you have the right to view it – always ask the estate agent for a copy or download it for free from the Government website.
9. The Outside
The outside space of your future Bath home is also something you need to reflect on before you start your search. What sort of back garden do you want? Do you want low maintenance? Do you want a bigger garden? You also need to ensure the outside of your next home is in great condition. Yet, if it’s a ‘do’er-upper’, does the price allow for those works to be done?
10. The Loft & Vault
Another aspect to consider when buying a property is the loft (or even the vault / basement if it has one). In both, look for water damage that could mean problems in the future whilst in vaults / basements, a musty smell could be poor ventilation meaning dry damp could be an issue. Also check for insulation in the loft (the Energy Performance Certificate will tell you if it’s up to standard).
11. Garage / Off Road Parking Space
How many cars do you have in your family? Can you park them all on your drive? Visit the property during the day, the evening, and weekends to see how the parking provision changes. If the property has a garage, can it be used for something else?
These are my top 11 rules – please let me know if you have others I haven’t considered.
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.
