Whether you already have a property you’re looking to rent out in Rotherham or you’re thinking of investing in a buy-to-let, it’s vital that you know your legal responsibilities and requirements as a landlord, both to protect yourself and your tenants.

Here are our 10 top legal tips for landlords.

1. Take Out Landlord Insurance

It’s vital that you take out specialist landlord insurance, as your standard buildings and contents insurance won’t cover you and may be invalidated if you’re renting your property out.

The right landlord insurance policy will cover you for damage to the property, loss of rent and legal expenses, so it’s worth having.

2. Draw up a Tenancy Agreement

This document will set out the terms of the tenancy between you and the tenant and will help to protect both parties in the event of a dispute.

Ensure that a new agreement is drawn up with each new tenant, as tweaking an old agreement could mean you miss important legal changes that have occurred in the meantime.

3. Arrange Regular Inspections – But Don’t Just Drop in!

It’s important to check your property every so often to ensure it’s being looked after. However, you should be aware that it’s illegal to just enter the property without the tenant’s permission.

It’s advised to give them a minimum of 24 hours’ written notice. This should be stipulated in your tenancy agreement.

4. Obtain an Energy Performance Certificate (EPC)

Landlords have a legal responsibility to serve tenants with an EPC, which must have a minimum rating of E.

You can provide this along with the tenancy agreement and have the tenant sign to confirm receipt.

5. Obtain a Gas Safety Certificate

If your property has gas appliances, then you’re required to have them checked by a Gas Safe Registered engineer.

They’ll be able to provide you with a certificate that will need to be renewed annually. A copy of this should be given to your tenants along with their tenancy agreement.

6. Carry Out Electrical Safety Checks

You’ll need to have the electrical system checked every 5 years by a qualified electrician. It’s also a good idea to have any appliances in the property PAT tested, but this isn’t legally required.

Smoke alarms will also need to be fitted on each floor and these need to be tested on the first day of the tenancy.

It’s also strongly advised to have carbon monoxide detectors fitted and tested too.

7. Check if You Need a License

Some local authorities will require you to have a license before you can rent out a property, so you’ll need to check before proceeding.

This often applies to HMOs and student accommodation, so get in touch with your local council to find out if it applies to you.

8. Protect Your Tenants’ Deposit

If you’ve taken a deposit from your tenants then this will need to be protected in a Government authorised tenancy deposit protection scheme.

There are three to choose from:

• Deposit Protection Service (DPS)
• MyDeposits
• Tenancy Deposit Scheme (TDS)

You’ll need to protect the deposit within 30 days of receiving it and provide your tenants with a deposit protection certificate and prescribed information such as the amount of the deposit, address of the property and details of the tenancy deposit scheme where it’s held.

You will also need to provide your tenants with a copy of the Government’s How to Rent guide.

If you fail to take these steps, you won’t be able to evict your tenant and you could be fined up to three times the value of the deposit. It’s also unlikely that you will be able to make any deductions from your tenants deposit at the end of their tenancy if you need to claim any money back for damages to the property.

9. Carry Out Tenant Checks

You need to know who you’re renting your property out to, and by law you need to make sure that your prospective tenants have the right to rent property.

It’s also a good idea to carry out a referencing check. This will confirm important details, such as employment status and whether or not the tenants have had issues paying rent previously.

10. Keep the Property Maintained

While your tenants have a duty to keep the property in good condition, it is your responsibility to ensure that it’s well maintained, and any issues are fixed promptly.

It’s helpful to have a good relationship with your tenants, and if they contact you about a problem then you should make every effort to ensure it’s rectified as soon as possible.

Bricknells are your local property management experts for the Rotherham area. Landlords – call us on 01709 365584 or email enquiries@bricknells-rentals.co.uk to chat with a member of our friendly and experienced team.

Everyone should be doing their bit to help reduce the UK’s carbon footprint on the globe – yet the question is, is that burden being put too much on the shoulders of Rotherham landlords with potential bills of £7,600+ in the next four years?

The background – the UK has obligated itself to a legally binding target to be carbon neutral by 2050. One of the biggest producers of greenhouse gasses is residential homes.

To hit that carbon-neutral target (as one-fifth of the UK’s carbon output comes from residential property), every UK home will need to achieve a minimum grade of ‘C’ on their Energy Performance Certificate (EPC) by 2035. Each EPC has a rating between ‘A’ and ‘G’ – ‘A’ being the best energy rating and ‘G’ the worst – like an energy rating on a fridge or washing machine.

All UK rental properties have required an EPC. Yet, from April 2020, the Minimum Energy Efficiency Standards (MEES) regulations have required all private rental properties (including rental renewals) to have a minimum EPC rating of ‘E’ or above.

Yet new legislation being discussed by the Government’s Climate Change Committee has suggested that landlords should play their part and increase the energy efficiency of their private rented homes. Sounds fair until you dive into the details.

The Government is muting the idea that all new tenancies (i.e. when a new tenant moves in) in private rented properties should be at an EPC rating of ‘C’ or above by 2025 (and all existing tenancies by 2028). The issue is …

69.82% of all private rented properties in Rotherham

have an EPC rating of ‘D’ or below.

The problem is some Rotherham landlords will find it very expensive, neigh impossible, to improve the energy efficiency of their Rotherham rented properties, especially those Rotherham landlords who hold older housing stock such as terraced properties built in the 1800s. These Victorian terraced houses never perform well on EPC ratings as they have solid walls.

Now, of course, you can improve the EPC rating of a terraced house by improving roof insulation, boiler replacement, solar heating, and high-grade uPVC windows. Yet, with some terraced houses, there will come the point where you will be unable to get to the haloed ‘C’ rating without installing external or internal wall insulation, sometimes even floor insulation.

With wall insulation costing between £5k and £15k and floor insulation around £5k …

the bill to improve all Rotherham’s private rented

properties will be a minimum of £52,242,320.

But before I talk about what the options are for Rotherham landlords, here’s the weird part of EPC’s. An EPC rating is calculated on the cost of running a property and not the carbon output or energy efficiency, despite its name.

My advice to Rotherham landlords – although it’s correct to create a future strategy, all I can say at this point is ‘more haste less speed’. These rule changes are only a discussion paper, and it remains open for consultation by any member of the British public until 30^th December 2021. That means the Government’s strategies and tactics may change.

Given that 57% of private rented properties are below a ‘C’ EPC grade, it is hard to believe the Government could achieve this without making big cash grants available.

For example, there is presently a cap of £3,500 for energy improvements that Rotherham landlords have to spend to get it to the existing EPC ‘E’ target grade on private rented homes (i.e. if you have a privately rented home at an ‘F’ or ‘G’ EPC rating, you only need to spend a maximum of £3,500 as a landlord on improving your EPC rating and still being legal even if those £3,500 don’t get you to the current ‘E’ rating minimum). So, if the current rules allow an exemption to the EPC renting rules, if a Rotherham landlord can’t improve their Rotherham property enough, conceivably, could this be extended?

So, what are Rotherham landlord’s options?

One thing you could do is put your head in the sand and hope it all goes away!

Another thing some savvy Rotherham landlords do (be they my client, clients of other letting agents in Rotherham or even self-managing landlords) is to sit down and plan a strategy for their Rotherham rental portfolio. I print off all the EPC’s of their rental portfolio, look at the recommendations, then discuss a plan to ensure they are covered whatever the Government decides to make the new EPC rules. Like all things in life, plan for the worse and hope for the best.

If your agent isn’t offering that service, please drop me a line because I would hate for you to miss out on the advice and opinion that so many Rotherham landlords have already had from me. The choice is yours.

The Government’s scheduled publication of their White Paper for the Renter’s Reform Bill, which incorporates proposals to forbid Section 21 evictions and introduce ‘Lifetime Deposits’, has been suspended until 2022.

The additional time is required to give a chance to create a level playing field to reforms for both landlords and tenants in the private rented sector in England.

In this article, I want to look at these lifetime deposits. How could the Lifetime Deposit Scheme work, and how could they benefit both Rotherham landlords and tenants?

When a tenant moves between rented homes, they need the deposit for their new home before being released from their old home.

The average deposit for a Rotherham rented

home stands at £693.

This means finding that amount of money at the time of moving home can be difficult for many tenants; thus, they become stuck in their existing rental.

Therefore, Westminster wants to propose in this White Paper a new deposit choice for tenants. A deposit is transferred from the old landlord (letting agent) to the new landlord (letting agent), thus making life simpler as the tenant doesn’t need to save for an additional new deposit every time they move home.

Now, of course, it’s vital that any new ‘deposit scheme’ does not dissuade Rotherham landlords from making valid claims for damage to properties. Landlords cannot be expected to give up their right of recourse to a security deposit until such time that they are satisfied there will be no need to claim it.

So how would Lifetime Deposits work?

There would need to be some form of system safeguarding that the new Rotherham landlord is protected by a whole deposit, even if the deposit on the old Rotherham home comes into dispute.

This will be critical and central to Rotherham landlords having conviction in the Lifetime Deposit Scheme. That could be something like an interest-free loan for the tenant on the crossover between the properties.

Another advantage to the scheme is that ‘lifetime deposits’ could be used for tenants to build a deposit for a house for the future.

What about the existing system of deposits?

The rules regarding the amount of deposit held by a Rotherham landlord were changed a couple of years ago, where only five weeks’ worth of rent can be held as a deposit.

The deposits Rotherham tenants have had to save for certainly raises the cost of renting a home.

Some say this extra burden puts another nail in the coffin of the dream of homeownership for many Rotherham renters. To give you an idea of the level of deposits held for Rotherham rental properties …

The total of all the tenants’

deposits in Rotherham is £3,750,580.

Yet the other side of the argument contends that if the Rotherham tenant misses more than one month’s worth of rent, the landlord is immediately out of pocket, even before they’ve got the costs of solicitors and any improvement works from the tenant trashing the place.

Does a deposit of just over one month provide Rotherham landlords with a decent level of protection against unpaid rent or damage to the property? When you consider …

The total value of all the privately rented properties

in Rotherham is £869,397,984.

Before I conclude my thoughts to the initial question of ‘lifetime deposits’, the need for decent landlord insurance to ensure you are adequately covered as a Rotherham landlord is vital.

So, what are my thoughts on ‘Lifetime Deposits’?

It is my opinion the common need for Rotherham tenants to stump up a ‘two-fold deposit’ is not helping many Rotherham renters when moving home. It’s clear the standard cash down deposit is not fit for purpose for the 21^st Century.

One might suggest the Government’s quest for the ‘lifetime deposit’ could open the door to other deposit alternatives that have come onto the market for tenants in the last few years.

Some landlords don’t require a deposit yet are compensated by asking the tenant to pay a higher rent to cover the risk. Also, there are companies that offer insurance backed deposits where the tenant pays one week’s rent to an insurance firm, and the insurance firm pays out if a loss is incurred by the landlord.

Interestingly, other countries are already offering deposit loans and guarantee schemes. Could this be something for the British Government to contemplate?

We must wait until at least the spring of 2022 for the Renter’s Reform White Paper to be published. Then every stakeholder involved (tenants, landlords and agents, et cetera) can look at it in the cold light of day and decide how this will affect the way they view the landlord/tenant/agent relationship.

Many will say the bigger issue isn’t ‘Lifetime Deposits’ in the White Paper, but the removal of no-fault Section 21 evictions. The removal of Section 21 is something the current Government have pledged to bring in during this parliamentary cycle (i.e. before Q4 2024).

I am not concerned about removing no-fault Section 21 evictions, but what will replace it to ensure there is suitable redress for landlords if the tenant doesn’t pay the rent?

Of course, a handful of Rotherham landlords will decide to sell their rental portfolio because of the White Paper. The same happened in 2016 when the increase in landlord taxes were announced.

However, this will reduce the supply and availability of Rotherham rental properties, meaning rents will rise (classic textbook supply and demand), thus, landlords return and yields will rise.

Yet, because tenants still can’t afford to save the deposit for a home and we are all living longer, the demand for rental properties across Rotherham will continue to grow in the next twenty to thirty years. The reason being we are still not building enough homes to accommodate our growing and ageing population. This means we will turn to more European ways where the norm is to rent rather than buy in their 20s and 30s.

This means new buy-to-let landlords will be attracted into the market, buy properties for the rental market in Rotherham and enjoy those higher yields and returns. Isn’t it interesting that things mostly always go full circle?

With Rotherham Tenants Deposits Totalling £3,750,580, How Will ‘Lifetime Deposits’ Change the Rotherham Rental Market?

The Government’s scheduled publication of their White Paper for the Renter’s Reform Bill, which incorporates proposals to forbid Section 21 evictions and introduce ‘Lifetime Deposits’, has been suspended until 2022.

The additional time is required to give a chance to create a level playing field to reforms for both landlords and tenants in the private rented sector in England.

In this article, I want to look at these lifetime deposits. How could the Lifetime Deposit Scheme work, and how could they benefit both Rotherham landlords and tenants?

When a tenant moves between rented homes, they need the deposit for their new home before being released from their old home.

The average deposit for a Rotherham rented home stands at £693.

This means finding that amount of money at the time of moving home can be difficult for many tenants; thus, they become stuck in their existing rental.

Therefore, Westminster wants to propose in this White Paper a new deposit choice for tenants. A deposit is transferred from the old landlord (letting agent) to the new landlord (letting agent), thus making life simpler as the tenant doesn’t need to save for an additional new deposit every time they move home.

Now, of course, it’s vital that any new ‘deposit scheme’ does not dissuade Rotherham landlords from making valid claims for damage to properties. Landlords cannot be expected to give up their right of recourse to a security deposit until such time that they are satisfied there will be no need to claim it.

So how would Lifetime Deposits work?

There would need to be some form of system safeguarding that the new Rotherham landlord is protected by a whole deposit, even if the deposit on the old Rotherham home comes into dispute.

This will be critical and central to Rotherham landlords having conviction in the Lifetime Deposit Scheme. That could be something like an interest-free loan for the tenant on the crossover between the properties.

Another advantage to the scheme is that ‘lifetime deposits’ could be used for tenants to build a deposit for a house for the future.

What about the existing system of deposits?

The rules regarding the amount of deposit held by a Rotherham landlord were changed a couple of years ago, where only five weeks’ worth of rent can be held as a deposit.

The deposits Rotherham tenants have had to save for certainly raises the cost of renting a home.

Some say this extra burden puts another nail in the coffin of the dream of homeownership for many Rotherham renters. To give you an idea of the level of deposits held for Rotherham rental properties … The total of all the tenants’

deposits in Rotherham is £3,750,580.

Yet the other side of the argument contends that if the Rotherham tenant misses more than one month’s worth of rent, the landlord is immediately out of pocket, even before they’ve got the costs of solicitors and any improvement works from the tenant trashing the place.

Does a deposit of just over one month provide Rotherham landlords with a decent level of protection against unpaid rent or damage to the property? When you consider … The total value of all the privately rented properties in Rotherham is £869,397,984.

Before I conclude my thoughts to the initial question of ‘lifetime deposits’, the need for decent landlord insurance to ensure you are adequately covered as a Rotherham landlord is vital.

So, what are my thoughts on ‘Lifetime Deposits’?

It is my opinion the common need for Rotherham tenants to stump up a ‘two-fold deposit’ is not helping many Rotherham renters when moving home. It’s clear the standard cash down deposit is not fit for purpose for the 21st Century.

One might suggest the Government’s quest for the ‘lifetime deposit’ could open the door to other deposit alternatives that have come onto the market for tenants in the last few years.

Some landlords don’t require a deposit yet are compensated by asking the tenant to pay a higher rent to cover the risk. Also, there are companies that offer insurance backed deposits where the tenant pays one week’s rent to an insurance firm, and the insurance firm pays out if a loss is incurred by the landlord.

Interestingly, other countries are already offering deposit loans and guarantee schemes. Could this be something for the British Government to contemplate?

We must wait until at least the spring of 2022 for the Renter’s Reform White Paper to be published. Then every stakeholder involved (tenants, landlords and agents, et cetera) can look at it in the cold light of day and decide how this will affect the way they view the landlord/tenant/agent relationship.

Many will say the bigger issue isn’t ‘Lifetime Deposits’ in the White Paper, but the removal of no-fault Section 21 evictions. The removal of Section 21 is something the current Government have pledged to bring in during this parliamentary cycle (i.e. before Q4 2024).

I am not concerned about removing no-fault Section 21 evictions, but what will replace it to ensure there is suitable redress for landlords if the tenant doesn’t pay the rent?

Of course, a handful of Rotherham landlords will decide to sell their rental portfolio because of the White Paper. The same happened in 2016 when the increase in landlord taxes were announced.

However, this will reduce the supply and availability of Rotherham rental properties, meaning rents will rise (classic textbook supply and demand), thus, landlords return and yields will rise.

Yet, because tenants still can’t afford to save the deposit for a home and we are all living longer, the demand for rental properties across Rotherham will continue to grow in the next twenty to thirty years. The reason being we are still not building enough homes to accommodate our growing and ageing population. This means we will turn to more European ways where the norm is to rent rather than buy in their 20s and 30s.

This means new buy-to-let landlords will be attracted into the market, buy properties for the rental market in Rotherham and enjoy those higher yields and returns. Isn’t it interesting that things mostly always go full circle?

With Rightmove announcing a national drop of 0.3% in average asking prices in August, some are asking if the steam has been let out of the property market. Yet with the gains we have seen in the last 12 months, is this just a minor bump in the road? Alarm bells normally ring when new homeowners coming to the market for the first time are having to lower their initial asking price when compared to the market as a whole.

So, what is actually happening in the national and local property market to asking prices and the number of properties for sale, and where does that leave Rotherham homeowners and Rotherham landlords?

1 in 7.4 homes already on the market today have reduced

their asking price in the last two weeks

That means new sellers bringing their property to the market for the first time, are having to curtail their initial asking price to remain competitive. Normally, this should ring alarm bells, particularly when this is the first time this has happened in 2021. Therefore, it’s vital to ‘look under the bonnet’ of the figures and see what, exactly, is happening locally.

Average asking prices for Rotherham homes

are 1% up compared to July

However, that figure hides some interesting anomalies – the average asking price of Rotherham semi-detached houses are 1% lower than in July (that doesn’t mean they have dropped in value by that much – just the headline asking prices) whilst apartments/flats have seen the average asking price rise by 6% in the last month.

So, if this is what is happening to Rotherham asking prices, what about the number of properties for sale. Looking nationally first…

there are currently just 285,970 properties for sale in the UK, which means 1 in 67 British homeowners are presently on the market – interesting when compared to 2005, it was 1 in 13.5 homeowners on the market.

With such little supply of properties for sale nationally, demand remains robust. Yet the property buyers in the market are being a little more reserved with the offers they are making compared to the Stamp Duty holiday frenzy times seen earlier in the year. They will pay handsomely, and yet top dollar won’t offer the ‘crazy price’ levels some Rotherham buyers were offering in the spring – hence the recent reduction in asking prices to a more realistic level.

Looking at the movement in the available properties for sale and to rent in Rotherham over the last few months, an interesting picture arises.

The number of Rotherham properties for sale (and rent) is still at record lows when compared to the 30-year long term average.

The choice for Rotherham tenants is limited as well, as many tenants aren’t moving home. With the additional increase in demand from 1 in 10 Rotherham homeowners choosing to go into rented accommodation (albeit temporarily) Rotherham landlords with exceptional properties are getting decent rents, as discussed in a recent article I wrote about the level of rents in Rotherham.

With the current level of Rotherham properties for sale being around 40% to 50% below the long-term average (depending on the type of Rotherham property you own), it means when a Rotherham property is properly priced, given the intense competition, often it comes down to the position of the buyer and not the price they are prepared to pay.

When I say, “position of the buyer”, I mean, do they have a chain, do they have to sell their own property to buy another property?

Many Rotherham house sellers are selling their home before they buy. Selling before you buy can be a fruitful approach in a fast-moving property market. That does mean your own purchaser will have to demonstrate a certain amount of patience whilst you wait for the right home to come on to the housing market.

However, because it is currently taking on average 19 weeks between sale agreed and exchange of contracts, with mortgage providers and solicitors taking their time due to the backlog, this often allows you to potentially play catch-up if it takes a couple weeks to find the right property for you.

Many home sellers are going even further by selling their Rotherham home first and then going into transitional rented accommodation. This subsequently puts them in pole position when their forever home comes up for sale as they have no chain. Although this takes a lot of determination and resilience, it does mean you will be in the very best position when the property of your dreams comes up.

The choice they say, as always, is yours!

If you would like a chat about the Rotherham property market and the best thing for you and your personal circumstances, do drop me a line. In the meantime, what are your thoughts on the current Rotherham property market? Do share in the comments

Rotherham landlords are becoming progressively more self-assured about expanding their rental portfolios; as Rotherham rents rise, mortgage interest rates fall and demand for decent Rotherham rental properties outstrips supply.

A number of reports nationally would suggest around a third of UK ‘portfolio’ landlords (i.e. landlords with more than one rental property) are actively looking to expand their rental portfolios in the next 12 to 18 months, that would locally mean…

720 Rotherham ‘portfolio’ landlords are looking to add to

their rental portfolio by the end of 2022.

The pandemic has had a substantial change to what we want from a home. Many people think that relates just to homeowners, yet nothing could be further from the truth as it also applies to tenants.

Homeowner or tenant, many of us have spent a lot of time away from places of work. Many office workers face the outlook of the combination of working from home as well as at the office, meaning a change in what people look for in their home. People (including tenants) are looking for larger properties, with extra rooms for office space and decent sized gardens or to be closer to outside green space.

So, let’s look at the ‘scores on the doors’ as to why Rotherham landlords are on the up…

Rotherham house prices are 22.7% higher than 5 years ago.

Because some Rotherham first-time buyers are being priced out of the market due to these house price rises, they are being forced back into the rental market. Add the extra demand of the 1 in 10 Rotherham house sellers, who in the last 12 months have had to go into rented accommodation instead of buying, and this has created increased demand. Meaning…

Rents today in Rotherham are 6.1% higher than a year ago and 15.6% higher than 5 years ago.

The average rent of a Rotherham property today is £497 pcm.

In previous articles on the Rotherham property market, I was talking about the lack of properties to buy – yet that issue is also there in the British rental property market. Now let’s look at the supply of rental properties.

Would it surprise you that the number of private rented homes in the UK has fallen in the last 12 months by just over 2.5%?

Why? One reason has been many ‘accidental’ landlords have used this housing market to sell their property for a good price. That means the supply of available rental properties has decreased. The perfect storm of increased demand and lower supply, and with many Rotherham tenants competing for those larger Rotherham homes, they may find Rotherham rental prices pick up even more over the next year.

What about buy-to-let mortgages for Rotherham landlords?

The banks all but withdrew from buy-to-let lending in the first lockdown. Yet, since last summer, things have settled down and during 2021 there has been a mortgage price war.

Rotherham landlords can borrow 60% of the value of their BTL property on a two-year fixed rate of 1.18% from Platform and even those with a 20% deposit (that’s borrowing 80%) can borrow that money at 2.49% 2-year fixed rate from The Mortgage Works. Those looking to fix for a little longer can get 1.44% from The Mortgage Works and 1.79% at 75% loan to value from Santander.

(It must be noted there are some fees to these mortgages, and you must take advice from a qualified mortgage advisor before deciding which mortgage is best for you).

So, is now the best time to invest in Rotherham buy-to-let property?

If you are attracted to invest in Rotherham buy-to-let, it’s vital to do your homework first – particularly if you are new to the game.

When estimating the expected rental returns on investment, capital growth and yields, many Rotherham landlords look to what has happened with house prices and rental prices, yet past performance does not always deliver a future guaranteed return.

Smart Rotherham landlords will speak with agents like myself and others in Rotherham, prudently researching the Rotherham property market to discover what types of properties are in high demand (and short supply) from tenants.

Whether you are a landlord of ours or not, please feel free to drop me a line via email or social media for no nonsense advice on the important matters to look out for before investing in Rotherham buy-to-let.

Would it surprise you even more when I said the ratio of house prices to wages are still lower today when compared to 1871?  Yes, you read that correctly, as a proportion of average wages British house prices are 17.6% proportionally cheaper today than they were in 1871.

I wish to talk about the last 150 years of the British property market and later in the article, the Rotherham property market. I will also touch on why before the 1900s, buying a home in Rotherham was considerably more expensive than today and why that changed.

So, let’s look at some interesting stats to get us started:

• In 1871, each house was occupied by an average of 5.33 people (i.e. for every 100 houses, 533 people lived in them), whilst today that stands at 2.39 people per house
• In 1871, there were 4.5 million properties in the UK, whilst today that stands at 27.9 million
• In 1871, the weekly average wage was 13s 8½d (68p) and today £585.50
• In 1871, only 20% of people owned their own home, whilst today its stands at 65%

I stated in the first part of the article it was more expensive to buy in the latter parts of the 19th Century than today. It may only be of historical interest, but back in 1871, the ratio of average house prices to average wages was 10.5 to 1 (i.e. the average house was worth ten and half times the average person’s wage), whilst today it stands at 8.8 to 1.

Interestingly, for the next 45 years, that ratio went on a downward trend relative to wages and only stopped falling after WW1, where the average house was worth only 2.2 times the average wage. This made houses more affordable and set the foundations for the homeowning passion we Brits have today.

So why did this happen, what can we learn from it and what does it mean for Rotherham homeowners and Rotherham landlords?

There are three significant drivers that made property a lot more affordable between 1871 and 1911: the Victorians built more property, made them smaller and people’s wages rose significantly.

• In the 40 years between 1871 and 1911, the number of properties in the UK rose from 4.5 million to 8.9 million. To give you some perspective, there were 18 million properties in the UK in 1981. If the UK had grown by the same rate between 1981 and today that was experienced between 1871 and 1911, there would be 35.6 million households in the UK (and not the 27.9 million mentioned above).

• In 1871, the average plot size of a property was 0.23 acres, yet by 1911, that was down to 0.06 acres (or a plot of 72ft by 40ft). This came about from building smaller types of property (e. a change away from larger Georgian detached houses towards the infamous rows of Victorian terraces), and a downshift in the average size of houses within each category.

• The average value of property dropped by 26% between 1871 and 1911, whilst wages rose by 85% over the same time frame.

So, by 1911, the average Rotherham property had dropped

in value from £198 in 1871 to £147.

N.B. – you might have noticed I wrote £198 in a slightly different way in the title of the article. Up to 1971, a pound was split not into 100 pence but 240 pence. There were 12 pence in a shilling and 20 shillings (or 240 pence) in a pound. It was expressed in the form £sd and spoken as “pounds, shillings and pence”. I dropped that into the title as it’s the 50^th anniversary this year of when the UK decimalised its currency (younger readers – do google the story – it’s a fascinating topic).

So back to the property market, and at the end of WW1, four in five people still rented, virtually all from private landlords. Politicians were concerned about the poor living standards of people’s homes, and this led to the ‘homes fit for heroes’ 1919 Housing Act which delivered subsidies for local councils to build council houses. The average value of a Rotherham property in 1922 was £231.

The 1930s – By 1930, the average value of a Rotherham property stood at £292. With the country building a third of a million houses per annum, interest rates fixed at 2% and hardly any planning regulations, supply of property was outstripping demand, so the average Rotherham home dropped ever so slightly in value to £270 by 1938.

The 1940s – With the bombing of many towns and cities and housebuilding being stopped because of the war, this created a perfect storm to increase house prices after the war. By 1947, the average Rotherham home had risen in value to £904 because just as food was rationed during and after the war, so were building materials. Builders could spend no more than £350 on building materials for a new home (and that lasted until 1954).

The 1950s – The ’50s were all about building council houses – a quarter of a million of them each year. By 1959, the average Rotherham home had risen steadily to £1,254.

The 1960s – This decade saw even more houses being built in the UK, with an average of a third of a million houses a year being built. Rotherham is full of 1960’s council houses and now even more owner-occupied housing, meaning by the end of the decade Britain had as many homeowners as renters. The average Rotherham house had risen in value to £2,299 by 1969.

The 1970s – We experienced the first boom and bust housing bubble in the early 1970s with house prices rising by over 30% a year in the early years of the decade (so the current 10% a year is child’s play!) but prices dropped in 1974. They recovered quickly in the following years, not because of increased demand but due to hyperinflation, making the average Rotherham house price rise to £11,691 by 1980.

The 1980s – This was the decade of council tenants being able to buy their own homes, although not many people know it was an idea from Labour. They decided against the idea, but it was seized upon by the Tories, who made it the cornerstone of their 1979 election manifesto. The property market helped improve the economy, and by 1988, Rotherham property values increased to £24,454 (only to drop by 32% a couple of years later).

The 1990s – The housing market crash of the early 1990s was painful for all, exacerbated by mortgage interest rates being raised to 15% on Black Wednesday (16 September 1992) and left there for 12 months. Unemployment went from 1.5m to 3m for the second time in ten years, and many of those homeowners who had taken out large mortgages in the late 1980’s housing boom could no longer afford the repayments because of the high interest rates, meaning repossessions went through the roof. The crash also made builders nervous, and they only built 150,000 houses on average a year in this decade. Yet, by the mid-1990s, things started to improve. So much so, the average Rotherham home was worth £45,841 by the turn of the millennium.

The 2000s – The decade of cheap mortgages and the rise of Buy-to-Let, together with a severe drop in the number of new homes being built, contributed to the UK’s third big housing bubble since WW2. The average Rotherham house price more than doubled to £122,758 by 2008, before the Credit Crunch brought the boom to an end, and a year later (2009), the average Rotherham property had dropped to £109,033.

The 2010s – The property market started to come back to life in the early 2010s with property values steadily rising throughout the decade, yet builders were only building around 135,000 new homes a year. It also might surprise you that by 2015/6, the number of homeowners was starting to rise quite significantly, meaning today, as we enter the 2020’s decade, the average value of a Rotherham property now stands at £155,474.

So, now we are back to 2021.

Yes, your Great-Great-Grandfather might have been able to buy their Rotherham house for a shade over £198 in 1871. Taking inflation into account since 1871, that same Rotherham house today would be £23,872.73, yet if his wages had increased by inflation at the same rate, the average wage today would be £81.91 per week, not the current £585.50 per week.

I appreciate there are plenty of other factors involved with this topic, such as the cost of renting, raising a deposit, changing lifestyles and the biggest point, the cost of borrowing money on a mortgage.

All this begs the question, what does the future hold for the Rotherham property market?

It’s obvious since the mid-1980s, house prices have sustained a period of impressive growth (even withstanding a couple of property crashes). The Bank of England has gone on record to say that much of the rise in average house values, comparative to wages, between 1985 and now can be seen because of a sustained, dramatic, and consistently unexpected decline in real interest rates and additionally concludes that: ‘An unexpected and persistent increase in the medium-term real interest rates will generate a fall in real house prices.’

Cheap mortgages and a lack of building have created this situation. So as long as interest rates don’t go back to their long-term average of the 5% to 7% range or the Government decides to increase building new homes to half a million a year (from the current 240,000 per year) … things will carry on as they are in the medium to long-term.

These are my thoughts. I would love to hear any stories of your family buying property in the late 19^th Century or early 20^th Century and what they paid for it, together with the affordability of Rotherham property and the future of it.

All the signs are that the Rotherham housing market is sat on good foundations, yet one key hazard could still scupper the market.

‘UK Property Prices Rising at Record Levels’ is the headline of many newspapers. In the last few weeks, the Halifax reported they had grown by 6.5% in the last 12 months, whilst the Nationwide said 7.1% and not to be outdone, the Government’s own Land Registry said 8.6%. Nothing new there then you might think, don’t UK house prices always increase?

Actually, they don’t, as many Rotherham homeowners will remember 2009, when they dropped by 19%. Also, some more mature Rotherham homeowners will remember the early 1990’s where house prices dropped just over 40% over 4 years (after the 1989 property crash). So, the increase in UK house prices over the last 12 months has mystified all the forecasts made by most economists as…

house prices were forecast to drop during the pandemic because during the previous six UK recessions experienced since WW2, house prices have always fallen sharply in real terms.

Yet 2020 was different with house price growth increasing at its highest rate since 2014 as the substantial Government support programmes (including Bounce Back Loans, grants and furlough) has mollified the hit to household incomes. Add to that the pent-up demand from the Boris Bounce, all the people working from home wanting an extra room for an office and therefore needing to move, plus the stamp duty tax holiday, with the cherry on the cake of 0.1% Bank of England interest rates keeping borrowing affordable. This has meant…

Rotherham property values are 4.8% higher than a year ago.

Yet the affordability of property is a big issue going forward. By the time of the height of the last property boom in 2008, the national ratio of average property values to earnings had risen from 5.1 in 2000 to 8.8 (i.e. the average house price was 8.8 times the size of the UK’s average person’s annual earnings). We then had the property crash in the proceeding years, and the ratio dropped to around late six’s/early sevens. However, over the last few years, the ratio has been steadily rising and now with the recent growth in demand for property (the five reasons mentioned in the previous paragraph), the ratio has now smashed past nine. Looking locally…

the ratio of average property values to earnings in Rotherham as a comparison was 2.8 in 2000, rising to 5.5 in 2008, dropping to 4.9 the year later when the Credit Crunch hit, and now currently

 stands at 5.2

So, are we heading for another house price crash? Maybe, maybe not – because the House Price to Earnings ratio only tells us part of the story. Another indicator of the property market is mortgage affordability, which measures the proportion of mortgage payments to average incomes. For all mortgage holders, in 2015, this stood at 24.13% and today it is only just above the national long-term average of 25%, demonstrating that property is still affordable.

Yet, the life blood of the property market are first-time buyers. The long-term average percentage of income which goes on mortgage payments for first-time buyers is 33%. Just before the 1989 property market crash, this stood at 54%. Whilst just before the 2008 property crash, it reached 49%. Today, it stands at 31.7% (and the reason it’s so low even with record high property prices is low interest rates, because when mortgage interest rates are low, this permits people to afford larger mortgages, which enables them to bid up house prices).

So why aren’t more first-time buyers buying more homes? Well in fact they are buying more homes. At the turn of the Millennium, just over half of 25yo to 35yo were homeowners and by 2014, this had dropped to just a third, although since then it has increased to 41%. Now with the reintroduction of the Government backed 95% mortgages in April, this demand will continue further.

Once furlough ends, unemployment will doubtless rise in the following 12 months, yet the economy is more than likely to be in a boom phase, so by the spring/summer of 2022, the unemployment rate should start to fall.

So, does everything look great for the Rotherham property market?

Before you get the Champagne out, there is a cloud on the horizon – the possibility of higher interest rates.

Undoubtedly, for the next few years, interest rates will not go up (and if they do – it will only be nominally). However, down the line it may be a different tale. Interest rates are used to control a number of economic factors, one being the currency and secondly inflation.

As many suggest, if we get an economic boom in the next 12 to 18 months, as we come out of lockdown, this will put upward pressure on the price of goods and services. Normally, when prices go up (inflation), to ensure that inflation doesn’t get out of control, interest rates are normally increased to dampen down the inflation.

So, will interest rates rise? Undoubtedly they will. Rotherham homeowners and buy-to-let landlords should seriously consider protecting themselves with fixed rate mortgages (yet 3 in 10 mortgagees are still on variable rate mortgages!). I believe we will see some inflation in the order of 3% to 5% in the coming 24 to 36 months, yet the interest rates won’t be enabled to bring it down. We had a similar case in the early 2010’s when we had a mis-match of demand and supply of goods, and inflation spiked to 5%, before returning back to its long term 2% average quite quickly thereafter.

The Chancellor will also encourage some inflation to reduce the ‘real’ cost of the Billions he has borrowed because of the pandemic, yet won’t want to see interest rates increase to take the cost of the borrowing upwards.

If you are considering moving home or buying/selling a buy-to-let property in Rotherham in the next 12 to 18 months, and want a chat about your options, don’t hesitate to drop us a line.

Moving home is said to be the third most stressful thing you can do, so if you can do anything to reduce that stress, so much the better? When buying your next Rotherham home, being chain-free can certainly reduce your stress and offers many advantages over other buyers (and some disadvantages).

So, what is a chain? A property chain is made when there is a line of home buyers and home sellers linked through their property transactions e.g. a Rotherham first-time buyer purchases a property, the sellers of that property then buy another property, and those sellers then buy another property, so on and so forth. Each home sale and purchase are reliant upon the success of every property in the so called ‘chain’. This means if there is one hiccup on one of the properties, every sale and purchase along the whole chain would collapse. No wonder everyone is on tenterhooks when there is a long chain involved.

Yet Rotherham buyers who sell their home before searching for a new Rotherham home considerably reduce their stress levels because they are not needing all the ducks to ‘line up in a row’ on the sale of their home in order to buy their new Rotherham home.

Being chain-free puts Rotherham home buyers in an enhanced position to negotiate with home sellers and they in turn may be more enthusiastic to accepting a lower offer.

Sounds brilliant this chain-free life doesn’t it? Everyone is a chain-free buyer once … when they are a first-time buyer and if they are lucky enough to have an additional home to move into. The other option is selling your Rotherham home and moving into rented accommodation, but that will end up costing quite a few thousand pounds (in what many perceive as wasted money) together with the added cost of employing the services of home removers twice (with all the hassle that entails doubled!). However, that is what many Rotherham homeowners are doing.

21.6% of all the properties on the market today in Rotherham are being sold without a chain.

I can’t disagree, moving home twice in a short period will be stressful and rent could be perceived as ‘wasted money’, but I have to recommend you look at the bigger picture. It is one of the sturdiest sellers’ markets in a generation, meaning you should get top dollar for your Rotherham home, knowing that many buyers are keen to complete before the stamp duty holiday ends in the autumn.

Then by waiting for the return of stamp duty and for the full roll out on the immunisation programme to give more Rotherham homeowners the peace of mind to place their Rotherham home on to the property market, for Rotherham house prices to cool and the number of properties for sale to increase. Then you could pounce in and buy, with more Rotherham homes to choose from and at more realistic asking prices.

So, does the type of Rotherham property that is being sold make any difference?

• 1% of detached houses in Rotherham are being sold chain-free
• 1% of semi-detached houses in Rotherham are being sold chain-free
• 1% of town house/terraced Houses in Rotherham are being sold chain-free
• 5% of apartments/flats in Rotherham are being sold chain-free
• 6% of bungalows in Rotherham are being sold chain-free

Of course, these aren’t all Rotherham homeowners going into rented accommodation hoping to bag a bargain next year. Many of the bungalows are being sold because their homeowner has either moved into sheltered accommodation or sadly passed on and there are Rotherham landlords selling their Rotherham buy-to-let rental investments.

And don’t get me wrong, there are also risks involved with this type of home buying strategy. Moving into rented accommodation means you are out of the Rotherham property market. Property values could dip in the next 12 months, yet they still could continue to rise – you are taking a gamble on a dip in the market and it could go wrong.

Like most things in life, it depends on your own personal circumstances, where you are in your life, your attitude to risk and your belief on what will (or won’t) happen to property values in Rotherham in the next 12 to 18 months.

If you would like a chat about your potential choices for your home move, call the office on 01709 365584.