Over the last five years, life has become a little trickier for Melksham landlords, with changes to their taxation status, mortgage interest relief and an additional 3% stamp duty for a buy-to-let property, and has made lots of Melksham landlords ask themselves:

‘Is buy-to-let in Melksham still worth the risk?’

Regarding taxation, in 2016, the Government added a 3% supplement in stamp duty on all buy-to-let properties. Then, in 2017, the Government started to reduce mortgage interest by stopping landlords from deducting the interest they paid on their mortgage before paying tax on the rental profits and replacing it with a flat rate tax credit based on 20% of the interest they spent on their mortgage.

There would be no effect if a Melksham landlord were a basic rate 20% taxpayer. Yet Melksham landlords who were higher-rate (40%) or top-rate taxpayers (45%) saw an effect as their tax relief was cut in half.

So, is buy-to-let in Melksham still an advisable investment?

The response to this question is much more significant than the issue of taxation.

To a large degree, as with all investments, it depends on why you are investing and what your final objective is. Let me expand.

The rewards of Melksham buy-to-let.

You can earn money two ways with buy-to-let.

The first is the rental income from the property.

The average rent achieved in Melksham is £1,007 pcm, a rise of 9.9% in the last 12 months.

This rent is expressed as a yield and is described as a percentage figure that’s calculated using the annual rental income and dividing it by the value of the buy-to-let property.

Landlords and buy-to-let investors use rental yield to judge and measure the value of their rental investments and portfolios. E.g. rent is £1,000 per calendar month (pcm), which means the annual rent is 12 x £1,000 = £12,000. If the property is worth £180,000, the rental yield is £12,000 divided by £180,000, which, when expressed as a yield percentage, is 6.67%.

The average yield in Melksham is 3.7%.

Some areas in Melksham can easily achieve a 5.2% to 7% yield, sometimes even more, depending on your choice of property and type of tenancy you wish to have.

If yield is your number one focus, the highest average yield in the UK can be found in Bradford City Centre, where it is 12%, Hyson Green and Radford in Nottingham at 9.6% and Pontypridd at 8.7%, while other areas in the UK can be as low as 2.2%.

So indeed, is the best strategy to go for high-yielding properties?

The problem with pursuing high-yielding Melksham buy-to-let properties is that you usually must compromise on the property’s capital growth to attain that high yield.

The second way to earn money with buy-to-let is capital growth as your Melksham property increases in value.

SN12 property values are 17% higher than 3 years ago.

A reasonable return in anyone’s books.

Of course, this all depends on the rent coming in, yet you can buy landlord insurance to cover against loss of rental income, tenant damage and legal costs.

Interestingly, using Government data and Industry data, Denton House Research found that in the first lockdown landlords who managed their rental properties themselves were 272.5% more likely to be in arrears of 2 months or more (compared to those who utilised the services of a letting agent to manage their property).

The drawbacks of Melksham buy-to-let.

Your tax bill is higher today than a few years ago, but isn’t everyone’s?

If Melksham property prices fall, the capital you invested will reduce, yet if it sat in the bank, it would decline in value anyway.

Being a landlord is a big responsibility, with over 170 pieces of legislation and orders to comply with. That’s where a suitable letting agent can help you with your rental property to ensure you remain compliant.

I recommend Melksham landlords consider all options to maximise their rental income whilst reducing their outgoings concerning their rental property.

Rents are rising in Melksham (as mentioned above), and many Melksham landlords appreciate the demand-led increases in their rent. And let me ask you, why shouldn’t they, as they have been exposed to many legislative and taxation changes over the last five years?
Ok, last point and the elephant in the room.

Will there be a house price crash, and should Melksham landlords wait for it?

A house price crash conjures up a big event that makes house prices go down, and it certainly happened like that in 1988 with the removal of dual-MIRAS tax relief on mortgages and the Credit Crunch in 2008. Yet this time, it’s different.

As there is more normality and balance in the Melksham property market at the moment (compared to 2021/early 2022), the price that is being paid today on most houses in Melksham is not as extreme or as extravagant as what was being paid in 2021/early2022 (when people were outbidding each other).

Therefore, if you were to look at the house price indexes going into the spring and summer of 2023, then there will be a reduction. The doom-mongers and newspaper editors will call that a house price crash, yet I see it as the market easing back to normality.

A massive driver behind landlords and home buyers ‘waiting for a house price crash’ is that they fear they have ‘missed the boat’ when it comes to buying/investing.

There is always newspaper (and now social media) attention when house prices explode. This means people quickly feel pressure to enter the ‘property market’, as everyone is making money, yet they aren’t.

The problem is that during the previous boom phases (the late 1980s and early/mid-2000s), house prices increased quicker than some people could save money for their deposit (for a house purchase). They saw their friends and acquaintances snapping up buy-to-let deals and they were missing out on the spoils of house price growth. As a result, many of these excluded house buyers judged that a house price correction was foreseeable, inevitable, and sometimes even needed. Not with any rational economic argument, but classic FOMO (Fear of Missing Out).

Yet a ‘house price crash’ isn’t the silver bullet that many think it will be.

‘House price crashes’ virtually never drop house prices to reasonable levels, and in fact, they have a lot of additional effects that make house buying even harder.

Investing in buy-to-let is a long-term investment. Remember what I said at the start. It would help if you decided why you’re getting into buy-to-let investment and when you will get out (and what you want to get out of it). Buy-to-let has advantages and disadvantages, but it is something tangible and something that investors can understand.

The UK needs to build more houses, so the demand for rental properties will only continue to grow.

The heady days of the early 2000s, when anybody could make money from any property, though, have gone. With increased legislation and taxation, you need the advice of a great agent to guide you on what to buy (and not to buy) for an excellent yield, incredible capital growth or a balance of the two. That agent should be able to find you a great tenant who will pay the rent on time and look after the property to ensure that when they leave, your investment is returned to you in the best condition possible.

If you would like to pick my brain, whether you are considering becoming a landlord in Melksham, an existing landlord (irrespective of which agent you use) or even a self-managed landlord, do not hesitate to pick up the phone to me.

I will tell you what you need to hear, not necessarily what you want to hear.

As we enter February, the Corsham (and British) property market is full of mixed messages.

Whilst the Bank of England increased the base rate nine times in 2022, meaning they are now at 3.5% (3% higher than 12 months ago), mortgage rates are now dropping.

The Corsham property market rocketed over the last few years because of the imbalance of the number of properties for sale versus the demand, with many more people looking to move home than there were properties available.

Now, as we are over the first month of 2023, we are experiencing a steadier Corsham housing market, where homebuyers have the time and opportunity to ensure they find the right home for them.

The days of 50 viewers per property on the first weekend of marketing, frenzied Corsham buyers outbidding each other by increasing their offers by tens of thousands of pounds over the asking price has become the exception and not the norm.

I often get asked my thoughts on the Corsham property market (hence these blog articles), and at this time of year, I get asked my forecast for the year ahead.

The one big thing I have noticed is the imbalance of what is coming on the market for sale versus what is selling.

For example, 38.2% of properties that came on the market nationally in November and December 2022 had an asking price of £250,000 or less, yet 45.6% of the properties sold subject to contract since 1st January 2023 have been £250,000 or less.

That doesn’t sound like a lot, yet it makes a massive difference to the property market.

However, it’s very easy to look at national averages, regional averages and, of course, Corsham averages. Yet the property market is just one market nationally, as there isn’t just one Corsham property market.

However, the same pattern is seen in the higher-priced Corsham properties. These higher-priced properties are selling more slowly than the lower-priced Corsham properties. Therefore, the need for those larger Corsham properties to be more realistic in price is paramount to stand out from the crowd, especially with the next point.

Evidence suggests there is a growth of Corsham buyers, who are looking to find a home before putting theirs onto the market. This was unthinkable last year, yet as the Corsham property market returns to normality, this will be seen more and more.

What are my thoughts?

Firstly, the time scale of how long it will take to sell a Corsham home.

I expect to see the time it takes to sell a Corsham home increase from 36 days in 2022 to a more ‘normal’ housing market of around 65 days.

Secondly, the imbalance of the Corsham property market.

A greater number of larger homes in Corsham are coming on the market because (as mentioned recently in a previous blog post) of the higher number of mature homeowners looking to downsize. This is because these larger homes have become much more expensive to heat, and as many of the occupants are on fixed incomes with their pensions, they are downsizing to cut costs.

Thirdly, that brings me to talk about energy efficiency.

Many buyers have started to ask about a property’s Energy Performance Certificate (EPC) rating. I recommend to Corsham homeowners considering moving in the spring or summer to have an EPC done on their property now, as there may be points that could easily be rectified and improved from one EPC rating band to another.

This would mean you will get a lot more interest and a better price for your property. If you need any help or guidance in organising an EPC on your Corsham property (even if you are not selling for six/twelve months), do not hesitate to me give me a call.

So, what is happening in the Corsham property market in terms of new properties (aka new listings) and what is selling?

12 properties have sold (STC) in the Corsham area since 1st January 2023.

(Corsham being SN13).
However, it’s essential to look at what is selling in Corsham, and the most active price range is the £250k to £300k range, where 4 properties have been sold subject to contract (representing 33.3% of sales).
Looking at what is coming onto the market in the same time frame …

33 properties have come onto the market in the Corsham area since 1st January 2023.

Yet the price range with the most listings is the £350k to £400k range. Again, this backs up the idea that the lower to middle of the Corsham property market is where the sales are, but the properties coming onto the market are slightly higher in price.

This means those Corsham homeowners with properties in those middle to upper price ranges need to be ‘on point’ to stand out from the crowd regarding their marketing, be spot on regarding their pricing (compared to the growing competition of other larger homes for sale) and now more than ever, their EPC rating (especially if they are on the cusp between two EPC bands).

Before I conclude, you might wonder why I have not mentioned Corsham house prices.

Well, what will happen to Corsham house prices in 2023 is something I am not sure of.

(Yes, I know that level of frankness is strange coming from an estate/letting agent).

I know the prices being achieved for homes in Corsham in the spring of 2022 (when everyone was out bidding each other) are not being achieved today. It all depends how you look at it.

Are Corsham house prices dropping or are they just returning to normal? I would say the latter.

However, looking at house prices as a ‘bellwether’ for the health of the Corsham property market has flaws.

Many economists and property market commentators believe transaction numbers (the number of properties sold) give a more accurate and truthful indicator of the property market’s health than just house values alone.

The reason is three-fold.

Firstly, most people also buy a home when they sell their own, so if Corsham property values drop by 10% or rise by 10% on the one you are selling, it will do the same on the one you are buying – meaning to judge the health of a property market on house prices is very one dimensional.

Secondly, as most people move up market when they do move home, if the price of the one they’re selling might not be as much as they would’ve achieved in 2022 (if they drop), the price that they will pay on the one they want to buy will be lower. Thus, it will cost them less to move upmarket!

E.g. Last year, your Corsham home was worth £400,000, and the one you wanted to buy would have been £750,000. Let’s say Corsham house prices did drop 10% in 2023 (which I don’t know if they will); your home would be only worth £360,000. Yet the one you want to buy would now be worth £675,000. So last year, it would have cost £350k to move, but if Corsham house prices drop 10%, the move would cost £315k, saving you £35,000.

Third and finally, moving home is a human thing. Property habitually delivers a robust emotional connection with homeowners – a connection that few would attribute to their other investments like their stock market investments or building society savings passbook.

Moving home could be described as a human journey, moving from one chapter of one’s life to another.

Therefore, when people do move home, it shows they are moving forward in their lives, which gives a great indicator of the property market’s health.

It’s going to be an interesting year for the 2023 Corsham property market.

My opinion. Do what is suitable for you, your family and your finances.

Ignore the newspapers and look at the facts in hand and if you want a frank chat about the Corsham property market, irrespective of whether you want to sell or not, call me. I might not tell you what you want to hear, but I will tell you what you need to hear.

An additional 30,376 spare bedrooms have been locked out of the Wiltshire housing market since 2011 as Britain’s ageing population means the country’s stock of homes is being used more unproductively.

The number of spare bedrooms in Wiltshire between 2011 and 2021 increased from 236,544 to 266,920.

The number of Wiltshire households living in properties with at least two spare bedrooms (i.e., spare ‘spare’ bedrooms) increased by 12,668, from 85,435 households to 98,103 households between those ten years.

That means 45.6% of Wiltshire households have two or more spare bedrooms.

And this isn’t just a local issue; Britain has 8,902,471 properties with a spare ‘spare’ bedroom (i.e., they have two or more spare bedrooms).

Before I dive deep into the issue of these ‘spare’ spare bedrooms, let me look at the ‘occupancy rating’ of all households in the country.

There are 8.26 million households with one spare bedroom, 6.57million households with no spare bedrooms (i.e., the household’s accommodation has an ideal number of bedrooms), 880,672 households where they are classed as over-crowded under the ‘Bedroom Standard’ by one bedroom and 173,751 households where they are classed as over-crowded under the ‘Bedroom Standard’ by two bedrooms.

The ‘Bedroom Standard’ allocates a separate bedroom to each of these groups (according the Office of National Statistics):

• adult couple
• any remaining adult (aged 21 years or over)
• two adolescents (aged 10 to 20 years) of the same sex
• one adolescent (aged 10 to 20 years) and one child (aged 9 years or under) of the same sex
• two children (aged 9 years or under) regardless of sex
• any remaining child (aged 9 years or under)

So, with this serious overcrowding, why is this under-occupation happening and is there a better use for these homes?

Britain has an ageing population. Just over 1 in 5 (18.6%) of Britain’s population are aged 65 years or older, compared with 1 in 6 (16.4%) a decade ago.

In the last ten years, many of Britain’s baby boomer generation (currently aged 59 years to 77 years of age) have entered retirement. Most of these extra bedrooms are in homes owned by these baby boomers, who are probably still living in the original family homes they bought in the 1980s or 1990s to raise their children, yet still live there years after their children left home.

And it will get worse throughout the 2020s as the number of Brits living in homes greater than their needs will grow further as the demographics of the British population shift.

There are 68,247,855 bedrooms in England & Wales, and even if nobody shared a room, there would be enough for every one of the 59,597,542 of us to have a bedroom and still have 8,650,313 spare bedrooms! They are very unequally distributed between households.

What’s the answer?

Some on the left suggest we forcibly make these older mature Melksham homeowners people move to smaller homes. Yet, it’s their property; they paid the mortgage on it for years (especially when mortgage interest rates were 15% and above), and thus, it’s their choice if they want to move or not.

Some of the difficulties are that downsizing in Melksham often needs to make financial sense for mature homeowners.

Most mature Melksham homeowners live in average-priced homes and suitable bungalows, even though they are smaller, often cost as much, if not more, than their large family home.

This issue will slowly worsen in the coming twenty years, so what are the options?

There is a necessity to motivate builders to build suitable properties for these mature homeowners to move into and to change the dynamics of the available properties to buy. For example, there are only 2 million bungalows in the UK, and we only built just over 1,800 new bungalows in 2020, yet seven in ten UK people (c. 10.7 million) aged over 65 want to live in a bungalow.

Secondly, there needs to be reform of the taxation rules on housing. Taxation works on the carrot or stick method.

The ‘stick’ could make it less attractive to stay in larger houses by increasing the higher council tax rates in the higher council tax bands. The ‘carrot’ could incentivise mature homeowners to downsize with allowances on stamp duty or inheritance tax, thus making a move easier.

However, the cost-of-living crisis and heightened energy bills could be doing the Government’s job for them.

The number of larger Melksham homes owned by mature homeowners, often for 25 years plus, has been snowballing in the last six months.

This is good news for younger families that can afford to jump from their smaller homes, yet many can’t afford to make the jump for the same reasons why mature homeowners are moving home.

For example, of the 181,195 properties put on the market in the UK in November and December 2022, 56.9% were under £350,000. However, of the properties sold in the UK since Christmas 2022, 66.3% of them have been £350,000 or less.

This means those homeowners in the middle to upper levels of the Melksham property market need to be very realistic with this pricing as the supply of the mid/high range properties is outstripping the demand.

Whilst it is not a good distribution of housing if you have some people in overcrowded households and others with spare bedrooms, everyone should be able to choose how to live.

Many Melksham homeowners delay downsizing because they prefer to grow old in their family home rather than downsize. However, I often see mature homeowners downsizing too late when say, they have had a fall, are unable to manage the basics of gardening or cleaning, or the home becomes a physical hazard.

This downsizing phase will continue to grow, peaking in the mid-2030s.

The issue is, I cannot see builders or the Government building hundreds of thousands of bungalows in the next decade.

So maybe, you should consider making a move in the next few years, when you will have a better choice of bungalows to move to and you are able to put your stamp on it when you are in your 70’s and before you are unable to in your mid/late 80s?

If mature homeowners have large properties earned from working hard and paying taxes, then quite frankly, that is nobody else’s business and no one should force you out!! You might want that extra space for children and grandchildren to come and stay or as office space, a television room or a hobby room. Yet please, I must stress these are only suggestions.

These are my thoughts – what are yours?

What is a January bounce?
Statistics from Rightmove today suggest that the market has bounced into January 2023. I can vouch for the fact that I have been booked up since we came back on 3rd January! Full weekly diary of viewings and valuations!

Let’s have a look at the snapshots:
🏡 Biggest post-Christmas bounce in enquiries since 2016. At the beginning of 2023, the number of prospective buyers contacting agents is up 4% compared to the same period in 2019, and up by 55% compared with the two weeks before Christmas.
🏡 Average asking prices are up month-on-month.
Although average asking prices are still £8,720 lower than their peak in October, after two months of falls, they have increased by 0.9% (+£3,301) this month. This is the biggest increase at this time of year since 2020.
🏡 A surge in home valuation requests. The 5th of January saw the number of people sending a request to an estate agent to value their home, at its third largest on record. In total the first week of 2023 was the busiest for home valuation requests since August 2022.

Not what you were expecting?
I still have some space for more valuations if you are considering selling your home. The meeting is more than just giving you a price! It’s also about giving you advice and help in taking those first steps into moving this year.

Been on the market with another agent? Not had much luck? Let me give you an honest appraisal as to why you may not be selling. No catch, just great advice. Call 01225 705650 and book your meeting with me.

In her first conference speech as the Tory’s new leader in 1975, the grocer’s daughter from Grantham, Margaret Thatcher, asserted her conviction in a ‘property-owning democracy’.

Although Thatcher didn’t conceive the saying – (that credit belonged to Conservative MP Noel Skelton in 1923), it encapsulated what she thought Britain should be.

Through prudence, saving and hard work, she believed that everyday British families should be able to purchase their own homes. Thus, giving them security, self-esteem and independence and freeing them from the nanny state of local authority landlords.

Although that idea was a Labour idea initially in the mid-1970s, Margaret Thatcher introduced legislation (Right-To-Buy) in 1980 to allow local authority tenants to buy their own council homes at significant discounts. In the 1980s, homeownership boomed (although it had been on the increase for the previous two decades), and she led the country in an economy with which house buying became a national passion.

Between 1981 and 1990, home ownership went up from 11.88m to 15.47m.

The other lesser-known fact of the Right-to-Buy legislation in 1980 was it stopped local authorities from building new council houses.

Fundamental to her idea was that government (central or local), which had built between 30% and 45% of all homes in the 1950s, 60s and 70s, should stop providing homes and let the market provide them.

The proportion of homes owned rose from 55.4% in 1980 to 65.7% during Thatcher’s reign as PM.

A few days ago, the housing element of the 2021 Census was released, and it has shown the proportion of home ownership in Britain had fallen to its lowest level since 1985.

The proportion of households owned in the country fell from 64.1% to 62.5% between 2011 and 2021, the lowest level for the past 37 years, when the figure was 61.6%.

In the meantime, the proportion of privately rented households has surged to its highest since the late 1960s, with 20.4% of households renting from a private buy-to-let landlord.

This means the proportion of British households in private rented accommodation has more than doubled in the past two decades, from the 9.5% recorded in the 2001 census.

So, let’s look at the local stats for the Wiltshire council area.

The percentage of households owned in Wiltshire has increased from 67.5% in 2011 to 68.0% in 2021 (bucking the national trend).

Let’s take a look at the actual number of households.

The number of owned households in Wiltshire has grown from 131,083 in 2011 to 146,313 in 2021, a rise of 11.6%.

Next, looking at the private rental sector, the number of privately rented accommodation has grown as well!

The number of privately rented households in Wiltshire has grown from 33,057 in 2011 to 37,540 in 2021, a rise of 13.6%.

Over the coming weeks and months, I intend to drill down further into these stats nationally and locally.

Even though homeownership nationally has increased in terms of pure numbers, the proportion of homeowners with a mortgage has dropped.

Just some headlines to whet your appetite.

As I said above, 64.1% of householders in Britain owned their own home in 2021 (of which 30.8% owned their home outright and 33.3% with a mortgage).

In 2021, of the 62.5% of homeowner households, those without a mortgage has increased to 32.8%, and those with a mortgage has dropped to 29.7%.

So, has Thatcher’s dream been smashed?

Of course, nationally, home ownership is at the lowest level in many decades due to several factors, including the late 1980s and 2008 housing crash, negative equity, the credit crunch and increased mortgage regulation.

Yet, at the same time, as every single local authority in Britain has seen an increase in the number and proportion of private renters over the past 20 years, the entrepreneurial property-owning spirit has moved into the ownership of private buy-to-let property. The market has undoubtedly filled the housing gap that the councils and local authorities left in the 1980s.

These are interesting times, and I shall share more insights in the coming weeks and months.

Let me know your thoughts on the information above.

• The number of properties available to rent in Corsham has dropped from 49 to 21 since February 2020.

• The average rent a tenant has had to pay in Corsham has risen from £932 to £1,511 since February 2020.

• Many Corsham landlords have cashed in on the post-lockdown property boom of the last two years and sold their properties to owner-occupiers – not fellow landlords.

• The supply of Corsham rental property isn’t near what is needed, which is of benefit to Corsham landlords rather than Corsham renters. 

The Corsham rental property shortage is currently very evident. In this article, I will investigate why there is such a significant lack of homes available for rent across Corsham and what it means for buy-to-let investors.

Anybody who enjoys surfing the property portals (Rightmove, Zoopla and On the Market) will have observed an emerging trend that the number of properties available to rent in Corsham has dropped considerably in the last couple of years.

This reduction has been seen all around the UK as well. For example, on 1^st November 2020, there were 372,931 properties to rent on portals. By the 1^st November 2021, that had dropped to 275,650; by the 1^st November 2022, that had fallen to 171,224.

That doesn’t mean the number of privately rented homes in the country has dropped by over half. Fewer properties are coming onto the market to rent. I will explain why in this article.

For tenants, especially over the last 12 months, it has become progressively more challenging to find a Corsham rental home, thus making the rent they must pay go up. This state of affairs in the property market isn’t showing an indication of getting any easier either, making for a hard time for Corsham renters.

So, what is the reason behind the Corsham rental property shortage, and what does this mean for existing Corsham landlords or those potential investors considering buying a Corsham buy-to-let property soon?

Several different components are making the perfect storm in the UK property market.

Firstly, the number of households in the UK.

The UK has not been building enough homes for the last 20 years. I appreciate that parts of Corsham seem like one huge building site, yet as a country, we are woefully undersupplied with property to live in. This has meant house prices continue to rise due to demand. 

The government have known about this issue for decades. The Barker Review of Housing Supply published in 2004 stated that the UK had experienced a long-term upward trend of 2.4% in real house prices since the mid-1970s because of a lack of house building. The report stated that 240,000 houses needed to be built each year to keep up with demand.

The average number of houses built since the mid-1970s has been around

165,000 per year, meaning the UK is short of 3,375,000 houses

(i.e. 45 years multiplied by 75,000 missing homes per year).

Several years ago, the government set a target to build 300,000 new homes each year to address this issue.

However, in 2019/20, the actual number of homes delivered stood at just 243,770. In 2020/21, the number of properties built dropped to only 216,000 new homes. In a nutshell, there are fewer available homes to buy, meaning fewer available homes to rent. 

Secondly, Corsham tenants are staying in their rental homes longer.

A Corsham first-time buyer’s average house deposit is £49,592

(the UK average deposit is £53,935).

The average rent of a Corsham property in November 2022 is £1,511 per calendar month (up from £932 per calendar month in February 2020) – quite a rise!

These numbers translate into Corsham renters not being able to pay the rent and be able to save for a deposit, or if they are saving, it is taking a lot longer to save for a deposit due to the cost-of-living crisis and higher rent costs.

Also, many Corsham tenants have decided to stay in their existing rental homes because of the rent rises. Many landlords are less inclined to raise the rent on an existing property when they have a decent tenant who keeps the property in good condition and pays rent on time. Anecdotal evidence also suggests that rent arrears in those properties are dropping as tenants know if they don’t pay the rent, the chances are they will have trouble finding another property, and if they do, they will have to pay a lot for their next rental home. 

For Corsham landlords, this is all positive news – tenants are staying for longer in their Corsham rental properties, arrears are lower, and void periods are less likely. When it comes to the market there is less competition (because of the decrease in the availability of Corsham rental properties) so this makes the investment an even better bet.

Thirdly, landlords are selling up on the back of recently increased house prices.

It would be difficult for Corsham buy-to-let landlords to ignore the rising property prices in recent years.

The average property value in Corsham in the summer of 2022

was 16.3% higher than in the summer of 2021.

For some Corsham buy-to-let landlords, especially those who were classified as ‘accidental landlords’ (an accidental landlord is a landlord who never chose to become a landlord, it was just after the Credit Crunch of 2008/9, they found themselves unable to sell their property, so they temporarily let their own property out), they chose to ‘cash in’ on the higher house prices. This would have also contributed to the lack of available Corsham homes for rent.

Yet everything isn’t all sweetness and light for Corsham landlords.

Landlords have a few costs to consider before investing in buy-to-let, including everything from regular refurbishment costs, buildings insurance, letting agents’ fees, income tax, and, not forgetting, stamp duty.

Talking of costs, one issue some Corsham landlords are facing is their failure to plan financially for the recent mortgage interest rate rises. Some Corsham landlords may have become complacent to the ultra-low Bank of England base rates we have had since 2008 and, therefore, may need to sell their rental property, which, if bought by a first-time buyer, will remove another property from the Private Rented Sector.

Another hurdle to jump is the proposed new regulations requiring better energy efficiency for rental properties. It is proposed all new tenancies must have at least a minimum of a ‘C’ rating for their EPC (Energy Performance Certificate) from 2025 (and 2028 for all existing tenancies).

Therefore, as a buy-to-let Corsham landlord, it is wise to do your research to make sure the buy-to-let opportunity is correct for your rental portfolio, particularly when it comes to weathering any impending financial storms. 

Landlords need to consider the returns from their

Corsham buy-to-let investments.

Landlords can earn money from their buy-to-let investments in two ways. One is the property’s capital growth, and the other is the rental return (often expressed as a yield). In 96% of buy-to-let investments, there is an inverse relationship between capital growth and yield (i.e. properties that tend to go up in value quicker will have lower yields 96% of the time – and vice versa).

Getting the best balance of yield and capital growth depends on your current and future needs from your Corsham buy-to-let investment.

If you would like me to review your portfolio and ascertain if your existing portfolio will match your current and future needs for the investment – whether you are a client or not, feel free to drop me a line, and we can have a no-obligation chat and possibly organise a review.

What does all this mean for the Corsham rental market?

The continued shortage of Corsham rental properties means it will be more difficult than ever to find a Corsham property to rent, and so rents will continue to grow.

Unlike in Scotland, England and Wales do not have rent controls, with Westminster ruling out the possibility of introducing rent control here to deal with the cost-of-living crisis.

You would think rent controls would be a no-brainer, yet economists from around the world have proved for the last 75 years that rent controls might help tenants in the short term, yet ultimately it drives landlords to sell their investments in the long term, thus reducing the stock of available properties to rent out (not great for future tenants).

Therefore, it is highly likely that Corsham rents

will continue to rise for tenants.

Landlords who persevere with their Corsham buy-to-let properties or become a Corsham buy-to-let landlord are set to benefit because they have an asset in very high demand.

The housing shortage, not to mention the other issues discussed above that are affecting the supply of rental properties, is unlikely to be fixed anytime soon!

In conclusion, the Corsham rental market is a constantly changing picture. What is known is that the supply of rental properties is far from what is needed, which can only be to the benefit of buy-to-let investors rather than of tenants renting.

I see buy-to-let as a long-term investment. Everyone reading this knows that the real value in your buy-to-let investment is playing the long game, allowing your Corsham buy-to-let investment to grow over time. Like the crypto or stock market, getting sucked in by get-rich-quick schemes that are selling ‘apparent quick wins’ in property investment is very easy. I regularly highlight the best buy-to-let deals for Corsham landlords with all the estate agents (not just my own). You don’t need to be a client of mine either to receive that information. Drop me a line or call (without any cost or obligation) if you are interested in making your first Corsham buy-to-let investment or considering adding to your existing Corsham portfolio

The Winners & Losers

The doom and gloom of the national newspaper headlines regarding the UK property market would make you think Armageddon has arrived, this being the second most interesting topic to the Brits (the first being the weather!).

So, what is happening in the British property market? As with most things in life, the devil is in the detail.

2020 and 2021 were exceptional years for the UK Property Market.

In Q4 2020 (Q4 being October, November and December combined), an average of 23,071 properties were sold per week in the UK (sold – as in a sale was agreed and the property went from available to sold subject to contract (STC)).

In Q4 2021, an average of 21,051 properties were sold per week in the UK.

So by the end of week 3 in November 2022, with an average of 19,694 properties per week becoming sold STC, quarter to date … the housing market doesn’t look good. Yet a different story emerges from the Q4 averages for 2016 to 2019.

In Q4 2019, an average of 16,263 properties were sold per week

In Q4 2018, an average of 15,922 properties were sold per week

In Q4 2017, an average of 15,721 properties were sold per week

In Q4 2016, an average of 15,811 properties were sold per week

The British property market is only returning to how things were before the first lockdown.

As I have discussed recently in several posts on the Melksham property market in my blog, I do believe the price that will be achieved for Melksham property in 12/16 months will be around 8% to 12% lower than what was being paid for property in the late spring (of 2022). Note I didn’t use the word ‘crash’.

Question – Why do the newspapers use the phrase “house price crash”?

Answer – To sell more newspapers!

Include the time, policy and efforts that the political parties go to in order keep British house prices on an upwards trajectory to gain votes and you might believe that a fall in house prices is a total catastrophe.

Nothing could be further from the truth for most homeowners and landlords.

Indeed, when you look at house prices without any emotion, when house prices fall — in isolation — more people win than lose.

So, who wins when house prices drop?

Let’s say you own a two-bedroom Melksham home worth £200,000. You have an expanding family, and you need a third bedroom.

The three-bedroom home in Melksham you want is £290,000, meaning you need to find £90,000 to trade up. 

If Melksham house prices rose by 10%, get the Champagne on ice as your Melksham two-bedroom home is now worth £220,000. Mind you before you open the fizzy stuff — remember the three-bed you want has also risen 10%, meaning it is now £319,000. If you want to trade up, you need to find £99,000. 

Melksham house prices rising has cost you an additional £9,000.

On the other side of the coin, what if Melksham house prices fell 10%?

Your two-bedroom home is now only worth £180,000. Catastrophe! Yet wait — the three-bedroom Melksham home you want to move up to is now worth £261,000, meaning you only need to find £81,000 to trade up.

Also, stamp duty, solicitor fees, and estate agent fees tend to be percentage based – thus saving you money.

As over 7 out of 10 home movers move up the property ladder, falling

house prices are not necessarily a problem.

Falling Melksham house prices are great for those who want to move up the property ladder and trade up.

So, who loses when house prices drop?

The first set of people that lose out are homeowners moving down market. The gap between selling a larger home and buying a smaller one narrows when one moves down market. Given the massive growth in house prices over the many decades those homeowners have been in the property market, it’s tough to see this as a calamity, yet it’s certainly a loss.  

The second set of people that lose out are beneficiaries of the home being sold when a parent/grandparent passes away.

Let us all be honest; I believe there will be little sympathy in the broader community for those first two sets of people for their loss of money.

However, the most exposed (and many people will sympathise with these) are those first-time buyers who bought their first home with a small deposit. If you had just bought your first home for £200,000 with a 5% deposit (so you had a £190,000 mortgage) but Melksham house prices dropped by 10%, you now own a home worth £180,000 (less than the mortgage). Now you are in ‘negative equity’ (as your mortgage is £10,000 more than what the house is worth, i.e. £190k less £180k), which causes you two main problems.

Firstly, when your fixed rate deal ends, most of the time, it is wise to re-mortgage to another rate. However, when you have negative equity, the range of mortgage deals open to you will be minimal, so you will probably have to pay your bank/building society’s quite pricey ‘standard variable rate’.

Secondly, suppose you want to sell your Melksham home. In that case, the price you achieve will not pay off the mortgage, which means you will have to find the difference elsewhere (i.e. a gift/borrowing from your family or selling an asset like a car)—in a nutshell, making a move very difficult.

How many people will be drawn into negative equity if house prices drop 10%?

Just 2.9% of homeowners will be in negative equity,

if house prices drop by 10%.

Now of course, if you are one of that 2.9%, that will be challenging. Yet, the vast majority of those first-time buyers have been in their homes a year or less, and most first-time buyers only move to their second home after four to six years. Also, they will be fixed-rate mortgages (mostly five-year fixed-rate mortgages), so re-mortgaging won’t be an issue either.

But what would it mean to Melksham house prices if they did drop by 10%?

If house prices drop by 10% in the next 12 months in Melksham, that would only bring us back to the house prices being achieved in November 2021.

(For all you property stat fans – the average house price in Wiltshire today is £347,139, whilst back in November 2021, it was £314,438).

Yet what if they dropped by the same percentage (19%) as they did in the Credit Crunch?

If house prices dropped by the same percentage as they fell in the Credit Crunch in Melksham, that would only bring us back to the house prices being achieved in October 2020.

And nobody was complaining about those!

Let me get back to the real problem with falling house prices.

When the country’s house prices fall, that tends to correspond with more challenging economic times. Now, because of rising interest rates and inflation, the price people are paying for a Melksham property is lower than one would have paid in the spring (when you were bidding against multiple offers and had to pay top dollar to secure the purchase).

However, during times of falling house prices, that can start to negatively affect the broader British economy. For some strange reason, homeowners tend to spend less because they ‘feel’ less well-off because the value of their home has dropped, and fewer people move home, meaning there is less choice for people to buy. Lenders start to be meaner about lending because they are nervous about arrears and bad debts building up. 

2023 will be challenging for many Melksham families, yet …

As we go into recession, the share of homeowners exposed to falling house prices is smaller than in the 2008 Credit Crunch.

• 92.48% of new mortgages taken out in the last four years have been fixed-rate mortgages, compared to 63.08% in the years before the Credit Crunch.

• In 2008, 45.4% of existing mortgages were 4% above the base rate, today, that is only 2.1%.

• Going into the Credit Crunch, the average mortgage rate homeowners were on was 5.88%, whilst the average rate existing mortgaged homeowners today are on is 2.17%.

Ultimately, unemployment is the main factor of whether this goes from being a possibly benign slow 10% decline to a full-scale crash.

If homeowners keep their jobs, they will keep paying their mortgages. However, (as in the 1988 and 2008 house price crash) if people lose their jobs, mortgages don’t tend to get paid, and that is when repossessions increase and forced selling starts to take effect. 

However, looking at the Autumn Statement, the Government have learned the lesson of previous generations and vastly improved the safety net of contributing to people’s mortgages. Should someone become unemployed, at the moment, homeowners must wait 39 weeks before the Government will help pay the mortgage (thus increasing their chances of repossession). This will be reduced to 12 weeks in the spring, reducing mortgage repossessions later in 2023/4.

So where does that leave us?

We should be less keen to celebrate ‘house price booms’ throughout the ‘good times’ because the usual ‘house price crashes’ tend to worsen the ‘bad times’.

In its place, we should concentrate on what British society can do to obtain a more stable property market over time. That is a topic for another article in my property blog! (Do send me a message if you want a link to the other articles I write about the Melksham property market).

Final thoughts: the house prices being achieved in late 2021/early 2022 in Melksham will be a distant memory in a year’s time, yet for most people, that is not a bad thing. 2023 will be a challenging year, but don’t let the price paid for property by 3.54% of the UK population (the percentage of privately owned houses that will sell next year) affect your outlook and worth as a homeowner/landlord.

I often get asked what is going to happen to Corsham house prices.

Many things affect house prices, and it comes down to simple supply and demand.

On the supply side of the equation, in the short-term, the number of people wanting to sell their property at any one time has a massive effect on house prices.

In 2007, the number of properties that came onto the market in Corsham jumped drastically. In January 2008, 100 properties were available for sale in Corsham and by April in the same year, that had risen to 239 properties.

This flooded the Corsham market with houses to buy whilst, at the same time, the banks almost stopped lending money because of the Credit Crunch, thus causing the house price crash of 2008.

Also, on the supply side of the equation is the total number of houses in the whole country (irrespective of whether they are on the market or not). This is an essential factor in house prices, although that has a longer-term effect. Governments can control the number of properties being built with changes in planning regulations, incentives for builders and the buyer schemes such as the Help to Buy plan.

On the demand side of the equation, property values typically rise if homeowners believe they will be wealthier in the future.

Typically, that occurs when the whole country’s economy is performing well as more Brits are in work and salaries are higher. The opposite is also the case when the economy goes into recession; people tighten their spending, lose their jobs, and thus, house prices drop. Inflation will affect British household budgets (because if more of the household budget is going on increased bills, there is less available for mortgage payments).

Another factor on the demand side for housing is when the population increases (through people living longer or increasing net migration) or when the divorce rate increases (making one family household into two single-person households). As always, rising demand typically means higher house prices.

One aspect of the demand side of housing that the Government can control is the taxation of moving home. In the late spring of 2020, the Government vastly reduced the tax (Stamp Duty) paid to buy a house, saving many home buyers thousands of pounds.

Also, on the demand side, property values usually increase if more homebuyers can borrow more money with a mortgage to buy their home.

The more banks and building societies can offer mortgages, the more homebuyers can buy their future home, thus raising house prices.

However, the constraint is the amount a home buyer can borrow on a mortgage.

What someone can borrow depends on what they earn and if they can afford the monthly mortgage payments. The level of mortgage payments is dependent on three things.

1. How much you borrow
2. The interest rate charged
3. The length of the mortgage

The lower the interest rates are, the lower the cost of borrowing to pay for your house is and thus more people can afford to borrow money with a mortgage to buy a home, meaning house prices tend to go up.

Corsham house prices have risen by 66.48% between 2010 and today, mainly fuelled by low interest rates.

So, looking at everything above, apart from Stamp Duty and the incentives for buyers (which historically have made a minimal difference), the Government in the short-term, irrespective of who the Prime Minister is, makes little difference directly to house prices.

The most significant short-term factor which directly affects house prices is interest rates.

However, the Bank of England (not the Government) sets the interest rate for the UK economy. That means the Government (and Rishi as PM) cannot directly make any differences in house prices (apart from the points raised above).

Yet, indirectly, as seen with the Liz Truss / Kwasi Kwarteng Mini-Budget catastrophe only a few weeks ago, what the Prime Minister (and their Government) does can make a massive difference to interest rates and, thus, the property market and house prices.

 Since December 2021, the Bank of England has been slowly raising interest rates to combat inflation. Unfortunately, the downside is that it increases the mortgage rates homebuyers must pay if they are on a variable-rate mortgage or coming off a fixed-rate deal secured a few years ago.

 As 17 out of 20 homebuyers have a fixed-rate mortgage, when a bank or building society calculates a 5-year or 10-year fixed-rate deal, they consider what the Bank of England interest rate is today, but they also consider something equally important, something called the ‘swap rate’.

 As Corsham homeowners and landlords, it is vital you should be aware of the swap rates as they are based on what the global money markets think future UK interest rates will be.

 If the swap rate rises, then mortgage lenders will increase their rates on the mortgages they offer, and by doing so, (as discussed previously in this article), increased mortgage rates will affect affordability and, thus, house prices.

 So, what affects UK swap rates? Mainly one thing, the price of government debt in the form of gilt yields.

Given the vast increase of planned government debt originally announced in that mini-budget by Truss/Kwarteng, the money markets who would be lending the Government the billions of pounds to fund those tax cuts got worried the Government wouldn’t be able to pay back such a rise in borrowing, so wanted a higher rate of return on the money they were lending the Government. 

That return is measured in the ‘gilt yield rate’, and the gilt yield rate directly drives the ‘swap rate.’

That rise in the gilt yield rate/swap rate was the main reason mortgage rates rocketed after the mini-budget and helped in the collapse of Liz Truss’s Prime Ministership.

So, what can Corsham homeowners expect in the coming weeks and months with gilt/swap rates?

Rishi Sunak’s first job was to re-establish confidence in the money markets for UK plc. During the summer, the 5-year gilt rate rose steadily from 1.6% to 3.5%, in line with the general rise in Bank of England base rates. Yet when the mini-budget was delivered on the 23^rd of September 2022, that rose almost straight away to 4.6%.

That meant every mortgage rate jumped in price by 1 to 1.5% almost overnight.

At the time of writing, the 5-year British gilt yield has dropped to 3.5%, and the others have either dropped below their pre-mini-budget rate or were moving in that direction, depending on the gilt type.

The gilt rate (which directly affects the swap rate, which in turn, directly affects mortgage interest rates) could drop further, subject to what Rishi Sunak and his Chancellor Jeremy Hunt have planned in the budget (and supplementary report from the Office for Budget Responsibility) on the 17th of November 2022.

A drop in the gilt/swap rate is vital for any Corsham homebuyer buying a house or Corsham homeowner re-mortgaging to a new mortgage deal. Why? Because…

with the average Corsham home worth £413,464 (a rise of 3.35% over the past year), each 1% extra in the mortgage rate would cost every Corsham homeowner an additional £344.55 per month.

So, what does this all mean for Corsham house prices, then?

Greater certainty will keep the volume of housing transactions ticking over, yet not inescapably Corsham house prices.

In my blog articles on the Corsham property market, I believe Corsham house prices will be lower in 12 months, and I expect Corsham prices to return to where they were in the late spring/early summer of 2021.

And why is that? Unlike the 2008 Credit Crunch house price crash, today, the country has very low levels of unemployment and very well-capitalised banks (because the Bank of England subsequently forced them to keep lots of cash in their banks to cover downturns). Therefore, I don’t anticipate the kind of double-digit house price decreases seen 14 years ago. If you would like to pick my brain about the Corsham property market, be you a potential Corsham first-time buyer, a Corsham homeowner looking at your options on re-mortgaging or selling, or, in fact, anyone with questions, don’t hesitate to drop me a line. I will gladly share my thoughts and opinions without cost or obligation

What will the stamp duty changes mean for

Corsham property owners?

PM Liz Truss and Chancellor Kwasi Kwarteng believe that cutting stamp duty will support economic growth by encouraging more people to move home or jump onto the property ladder.

Stamp duty also has other harmful side effects as it decreases labour market elasticity and curtails people from selling up and buying elsewhere, where the jobs are.

Also, stamp duty makes mature homeowners stay put in their large homes rather than downsizing. This reduction in stamp duty will encourage those mature homeowners to move, thus freeing up their large family homes for the younger families that need them.

The Chancellor doubled the zero-rate stamp duty band from £125,000 to £250,000, passing a stamp duty tax saving of up to £2,500 for all English homebuyers.

Also, tax savings are even more significant for first-time buyers, particularly in areas with high house prices, such as London and the South East. They can save a maximum of £11,250 in stamp duty – with a new zero-rate band of £425,000, based on a higher £625,000 spend cap (i.e., the house they buy can’t be over £625,000 for them to qualify for the tax relief).

So, what effect will these stamp duty changes have on the Corsham property market? Looking at recent events in the local property market is the best place to start.

Of the 307 transactions in the Corsham area since June 2021, 67 were below £250,000. These would now be tax-free!

Unsurprisingly, most housing transactions in Corsham were above the £250,000 threshold, yet irrespective of that point, it’s a saving of up to £2,500 for all future Corsham homebuyers.

Anyone currently buying a house in Corsham and not yet completed on their purchase (completion is when you have paid the money for your home and collected the keys) will be in line to make this saving.

Corsham landlords purchasing buy-to-let properties will also save money with the stamp duty cut (but they will still be liable for their second home stamp duty levy of 3%).

Overall, this is a welcome move to help the Corsham property market.

Yet will the stamp duty threshold rise have the seismic effect that the Rishi Sunak stamp duty holiday did in 2021, where just under 40% more people moved home than the long-term

30-year average?

I am sure the stamp duty cut will somewhat offset the rising costs in mortgage rates mentioned in this article and cushion the blow to the property market.

A blow to what you might ask?

Well, many people judge the property market’s health by house prices.

The average value of a Corsham property stands at £420,273 and has risen 20.4% in the last five years. Not bad, eh?

But I believe there is a better way to judge the health of the local property market, and that is the number of people moving home (i.e., housing transactions).

You might be asking yourself why we should be more concerned about the number of property transactions and not the change in property values.

Many economists believe the number of property transactions is a far more accurate bellwether for the health and potency of the local housing market. A greater number of people moving home is better for the whole economy (i.e., what these changes are being made for) than a smaller number of transactions, whilst the same can’t be said for higher house prices. 

So, what is going to happen to Corsham house prices?

I believe the growth in Corsham house prices achieved in 2021/22 is not sustainable into 2023.

In conjunction with the price cap on energy bills, the stamp duty change, the reversal of the rise in National Insurance and the drop in Income Tax will mitigate house price drops. Yet, I foresee a ‘slight’ realignment in the house prices being achieved in 2023, compared to 2022.

The more significant impact these changes will have is the number of people moving home in the next 12 months.

I have been forecasting a 15% to 20% year-on-year drop in Corsham property transactions in 2023. Following this stamp duty cut and the measures mentioned above, I believe it will be lower, yet around 5% lower.

To conclude, I predict we will have slightly lower house prices and fewer people moving home in Corsham, but not any way a crash that many thought was on the horizon.

Before I go though, let me share some thoughts on whether stamp duty is a fair tax.

Now, this is almost a topic for a standalone article itself. Some economists believe that removing stamp duty (which raised £14.1bn in tax in 2021) and replacing that lost income to the Exchequer by increasing council tax on more expensive properties would do a lot more than other intended tax cuts to boost economic growth.

According to some commentators, the way UK Government taxes housing is flawed. They suggest instead of taxing an infrequent property transaction particularly harshly (the average stamp duty bill is £10,600), the Government should tax living in a house more, especially those who live in the higher priced properties.

So let us see how viable that could be…

Even if council tax was frozen for bands A to D (the lower priced properties), and the uplift between the more expensive council tax bands was doubled on each step between band D and H (so a typical band E property owner would see their council tax rise from £2,473 to £3,628 per year and a typical Band H see a rise of from £3,435 per year to £5,790 per year), such massive increases in council tax would be political suicide for the wealthy Tory voting homeowners and only raise £5.28bn – a long way from the £14.1bn currently raised.

Now, if the £14.1bn tax raise were spread evenly over all council tax bands, the average band D property would need to rise by £490 per year, and even a band A would increase by an extra £382 a year … something that again would be political suicide. Yes, stamp duty is flawed. It’s just every other option has more significant flaws.