Housing Market Newcastle News May 2021

Landlord rent increasing, request for short break holiday homes in Newcastle are up, yet cladding issues and some properties exceeding £1M. Is now the time to invest in a buy-to-let property in Newcastle? SMartmove Northeast, Newcastle’s best movers, compile the Newcastle housing market stories.

Is now the time to invest in a buy-to-let in the North?

New planning rules, a London exodus and ‘levelling up’ — the smart money is in northern cities

Reported in The Times. Looking to “level up” your property portfolio? Interest in buy-to-let in northern cities has picked up following the government’s pledge to build and spend in historically “left behind” areas, a vow it reiterated after its success in the local elections last week.

Steve Jacob, who advises investors as the CEO of Essex-based Fabrik Property Group, says he gets about 2,000 calls from potential investors a month and 80 per cent of them want to buy in the north of England.

Landlord demand hits record volumes

Landlord activity is on the rise according to an analysis by estate & letting agent comparison site, Rentround, which have seen a 13% increase in letting agent related terms run by landlords vs the previous all-time monthly high, states Property Reporter.

While London landlords looking for agents on the site was only up 4% vs the previous all-time high, the rest of the UK was buoyant, with Newcastle, Birmingham, and Bristol experiencing the largest increases, all above 18% compared to previous 6-month averages.

The letting agent comparison service continued to see increases in searches for guaranteed rent services, which increased by 7% vs the previous month. Searches for guaranteed rent activities are already up 30% in the first quarter of 2021 as compared to Q1 2020.

Letting agent Google searches vs the previous years

The April Google activity, which was 24% up vs the previous month, is 47% higher than the 2017-2021 average number of monthly letting agent related searches. The April record numbers in 2021 paint a vastly different picture to the same time 12 months ago.

In April 2020, volumes of letting agent searches on Google dropped to 330,000 searches the lowest on record excluding December months. Of course, the announcement of lockdown in March 2020 brought a halt to the property market which meant landlord & letting activity was severely reduced.

On the estate agent/seller side, the search volume is buoyant however not at record volumes. April Google searches related to the estate agent world hit 837,000, this is 35,345 less than the previous record in September 2020.

Raj Dosanjh, Rentround founder, comments: “Statistics on the letting agent search terms will be very encouraging for estate & letting agents.

“We all know the impact pent up lockdown demand and the stamp duty holiday has placed the property market in a strong place. These numbers not only back that up but show that the trend is still rising, indicating room for more growth and opportunities for agents to increase revenues.

“May already looks encouraging as the current trend is on track to match, if not beat, the April record volumes. “Landlord demand has been through the roof on Rentround and we’re amazed to be helping so many find their ideal letting agent.

“I’m proud of the position of both the number of searches run on Rentround last month & agents subscribed to the platform. April 2020 was a tough month for everyone, including us as agents pulled back their marketing budgets which were reflected in a drop in agents listing with us.

“Gladly now we’re a bigger player for a higher number of agents, assisting them with their marketing activity to a higher degree than this time last year.

“We’ve now expanded to helping sellers compare estate agent fees, services & performance. This new stream only launched at the end of April but the subscribed number of agents so far is promising.”

Where the most expensive homes were sold in North East this year – with some fetching more than £1m

Properties with a price tag of more than £1m were snapped up in areas including Ponteland, Jesmond, Gosforth and in County Durham reports “Chronicle LIve”

According to the Office for National Statistics, average house prices across the UK increased by 8.6% over the year to February 2021, up from 8.0% in January 2021 – the highest annual growth rate the UK has seen since October 2014.

Between the beginning of 2016 and the end of 2019, there was a general slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England.

The start of 2020 saw a pick-up in annual growth in the housing market before the coronavirus restrictions were put in place at the end of March 2020.

Recent price increases may reflect a range of factors including some possible changes in housing preferences and a response to the changes made to property transaction taxes across the nations.

The pandemic may have caused buyers to reassess their housing preferences.

The most expensive homes sold in the North East from January to March were at:

  • Western Way, Ponteland – a detached house sold for £1,300,000 on January 08
  • Woodlands, High Street South, Shincliffe, Durham – a detached house went for £1,200,000 on January 21
  • Rose Cottage, Wynyard, Billingham, Stockton-On-Tees – a detached house sold for £1,050,000 on January 08
  • Willow Place, Ponteland – a detached house sold for £925,000 on January 15 (This sale may have been a buy-to-let, a transfer to a company, or a repossession)
  • Mitchell Avenue, Jesmond, Newcastle – a semi-detached house sold for £873,500 on January 21
  • Aykley Green, Durham – a detached home sold for £850,000 on February 08
  • Denevale, Yarm, Stockton-On-Tees – a detached house sold for £840,000 on January 11
  • Yarm Road, Eaglescliffe, Stockton-On-Tees – a detached house sold for £810,000 on January 07
  • Western Way, Ponteland – a detached house sold for £780,000 on January 15
  • Fernville Road, Gosforth, Newcastle – a semi-detached house sold for £725,000 on January 15
  • Elm Steading, Newton, Stocksfield, Northumberland – a terrace house sold for £725,000 on January 22

In July 2020, the Chancellor announced a suspension of the tax paid on property purchases in England and Northern Ireland, with similar suspensions announced in Scotland and Wales.

In England and Northern Ireland, properties up to the value of £500,000 would incur no tax, while the thresholds for Scotland and Wales were £250,000. This may allow sellers to request higher prices as buyers’ overall costs are reduced.

The tax holiday for Scotland ended on March 31, 2021. It has been extended until June 30, 2021 in Wales, while in England and Northern Ireland, it has been extended until the same date but the threshold will then decrease to £250,000 until September 30, 2021.

According to the Land Registry, 44,049 home sales have been registered for January, 9,558 for February, and 1,353 for March.

It may take several weeks for sales to be registered after completion so some sales from later in the period may not be listed yet. The impact of coronavirus has meant that it is taking longer than for sales to be registered.

Staycation 2021 – where are the top UK holiday rental hotspots?

With travel abroad clouded by uncertainty during the coronavirus pandemic, throwing many travel plans into disarray, there has been an influx of holidaymakers looking to vacation within the UK in 2021.

Research from private and commercial banking firm Arbuthnot Latham, reported by “Property Investor Today”, has revealed that in the last three months alone, search demand for ‘holiday homes for sale’ has grown by 73% year-on-year, while the number of larger properties offering accommodation for 10 or more has increased by 35%.

The report suggests UK-based holiday demand is hugely outstripping supply as people prepare to get away. This renewed interest among city dwellers and high demand for domestic holiday lets presents the perfect opportunity to invest in a UK holiday let following the ease of lockdown.

Income from holiday lets typically generates a higher gross yield than buy-to-lets, but there are several considerations when entering the short-term rentals market. Not only will you need to factor in general wear-and-tear, costs to run the rental, changeover, privacy and the suitability of your property, but also the location.

Below, Property Investor Today explores the top UK holiday rental hotspots and what return is available for those considering a holiday let investment.

Countryside locations

With its rolling hills, enchanted wooded areas and lush green landscapes, it’s no wonder the British countryside has become a huge hit among both locals and overseas travellers.

Aside from being the ultimate relaxing getaway, it is also an ideal location for investors. Hotel room offer platform Hoo analysed 60 major UK destinations across the country to determine the best rental yields for investors.

It found countryside locations offer annual rental yields of 3.5%, with average monthly rents reaching £711 and a typical house price of £243,505.

While yields are typically lower here compared to seaside locations, the data revealed Bangor, Wales as the top countryside location with a rental yield of 4.7%.

In Scotland, Dumfries leads the way on yields (4.1%), while Bury St Edmunds in Suffolk (4.1%) is a competitive area for those looking to invest in an English countryside holiday let.

In February, Sykes Holiday Cottages crowned the Lake District in the North West as the top countryside area for UK holidays, based on customer searches during the last year.

Known for its glacial lakes and tranquil atmosphere, the mountainous Lake District National Park has plenty of countryside to explore, welcoming around 19.38 million visitors each year, according to its official website.

Towns such as Bowness-on-Windermere – home to the largest body of water in the Lake District – and Keswick are popular destinations, both easily accessible by road and bustling with amenities.

There are also key areas that are popular for those wishing to explore the great outdoors. Grassmere, for instance, is the perfect base for those wanting to climb England’s tallest peak, Scafell Pike.

According to PaTMa Property Prospector, the villages of Parton & Distington in Cumbria offer the best rural yields in England, where investors can expect a whopping 8.52% annual return on their investment.

Seaside locations

Coastal and seaside towns have long been a popular spot for UK holidaymakers – the perfect bolthole for sun, sea and sand – but they also make ideal hunting grounds for holiday let investments.

Returns for homes by the sea stand between 3.9% and 2.7%, according to Hoo. Seaside properties have annual rental yields of 3.3%, an average monthly rent of £683 and tend to go for £248,359 on average.

The research found the best three coastal areas for yields are Tynemouth in Northumberland, Brighton in East Sussex and Crosby in Merseyside – all offering a 3.9% return.

However, Brighton has far higher house prices than the other two, at £389,855 compared to £175,589 in Tynemouth and £182,316 in Crosby.

Recently, One Touch Property Investment outlined the areas that are best for serviced apartments, with Bournemouth taking the top spot for coastal getaways in the UK.

With its miles of golden sands, beautiful gardens and wide range of shopping and entertainment options, Bournemouth holds its title as the true jewel in Dorset’s crown.

Although a popular spot among the older generation, the coastal area has plenty to keep all ages occupied – from pristine Blue Flag beaches to the pier attractions and sea life centre. With Poole just a short drive away, visitors can enjoy an array of watersports, including windsurfing, sailing and kitesurfing.

Best Western Hotels voted the city as the number one seaside town in the UK in 2019, and it boasts average rental yields of 5.5% for a one-bedroom home.

Meanwhile, a one-bedroom serviced apartment-style offering would cost around £710 for four nights over a weekend during the peak summer season.

City locations

Contrary to popular belief, cities offer the best rental yields for those looking to invest in a holiday let.

Whether it’s a historic city break, walking trip, an adventurous tour, or a family getaway, city locations are suitable for all holiday types.

Cities typically offer annual yields of 4.6%, compared to 3.5% in the country and 3.3.% at the seaside. They are also cheaper to purchase, with a typical price of £189,938, Hoo’s figures show.

The best city rental yields can be found in Glasgow (7.2%), Belfast (6.2%) and Newcastle (5.6%), and average house prices in the areas are relatively affordable, at £149,565, £140,750 and £167,246 respectively.

In the capital, prices average at £496,006, making it a challenging place for investors to buy without deep pockets. Bristol and Edinburgh are the second and third most expensive cities, at £311,829 and £288,899, offering yields of 4.2% and 4.6% apiece.

York is currently enjoying a boom in temporary accommodation demand and has appeared high on the list of best places to invest in UK property, attracting more than seven million visitors from across the globe each year.

Renowned as a ‘world-class’ city, York is known for its vibrant culture, historic architecture, impressive of life and has been recognised as one of the fastest-growing economies in the UK.

A unique destination to both live and work, the cathedral city is well-placed in the heart of the Yorkshire county, and is easily accessible, hosting nine million visitors last year.

York offers great investment potential, with the property market benefitting from strong rental demand and attractive property prices when compared to those in the south of the UK.

Research shows the average house price in York is now said to be £250,000, with prices rising by 3% in 2020 – ahead of the UK national average of 2.5%.

Adrian Murdock, co-founder of Hoo, comments: “Due to the current situation, Brits are still looking for a break closer to home this year, meaning there should be strong demand for holiday homes as the weather improves and the holiday season approaches.”

“The good news is, that whether you’re keen on the city, country or coast, there are plenty of options at all budgets that provide healthy returns.”

House price growth plays a major role

Staycations are more popular than ever, with 77% of Brits saying they aspire to own a UK holiday home, according to Park Leisure.

With all of summer ahead to enjoy a UK holiday home and international homeownership becoming more complicated due to travel restrictions, now is the perfect time to invest in a UK holiday home.

But while location, location, location plays a major role, knowing the property market in potential hotspots, and which areas are seeing the biggest house price growth, is also key.

A recent study by Halifax found some of the most popular staycation destinations are in areas with the biggest house price growth this summer compared to last.

With the stamp duty holiday applying to purchases of second homes, a summer bolthole proves even more appealing with the tax saving factored in, although those interested in holiday lets will still have to pay the 3% surcharge.

The biggest house price rise was seen in Gwynedd in Wales, home to the Snowdonia National Park and Mount Snowdon – the highest peak in England & Wales – and miles of coastline. The lender found prices rose by almost £20,000 in the region to £201,000.

Also in Wales, Mid Glamorgan with its beaches and historic Caerphilly saw the second-biggest price rise, of £18,400 to £166,000.

Popular with summer sailors and beachgoers, the Isle of Wight saw the third biggest increase, with the average home rising £17,300 in value to £256,000.

Prices in Renfrewshire, west of Glasgow in the Scottish Lowlands, and Stirlingshire also rose significantly, up £16,600 and £15,400 respectively.

Russell Galley, managing director of Halifax, says: “Recent events may mean plans have changed but, with the easing of lockdown restrictions, the opportunity to travel is an option once more.”

“Staying local and exploring home-grown tourist attractions could make more financial sense, whilst providing the beauty, excitement and cultural enrichment many of us look for when travelling to Europe or beyond.”

Further insight from Hodge revealed the average price of a holiday home has increased by 12% in the past six months, with the average cost of a holiday let mortgage application totalling £435,476 in March 2021 – up from £387,993 in October 2020.

The specialist lender also reported a 30% leap in holiday let mortgage applications in the six months to March 2021, with the average mortgage also increasing 7% over that period.

Previous research from Hodge found that the most popular destination for holiday let buyers was the South West with 39%, followed by Wales at 19% and the North West at 12%.

Commenting on the rise in holiday let mortgages, Emma Graham of Hodge explains: “It is not surprising that the popularity of our holiday let mortgage products continue to grow at pace.”

“The stamp duty holiday has no doubt helped drive more interest in second homes, as has the fact that Brits are not yet permitted to holiday abroad, and some might also be afraid to do so.”

With the number of second homes in the UK rising by 30% to a record high of 495,000 over the last five years, Tom Jones, co-founder and chief commercial officer of Houst, adds: “The likes of Airbnb and other platforms have revolutionised second homeownership and have certainly been one of the main driving forces behind second homeownership.”

“Owners are now able to generate income from their second home extremely easily, almost all year round.”

It seems despite the 8% decline in short-term holiday bookings between February and March 2021, investors can benefit greatly from the stability of the UK tourism sector.

These North East property hotspots have seen house prices soar in the last five years

North East property hotspots have been revealed following analysis of latest house sale figures.

They show that North Tyneside has seen the biggest price increase with 18.26% over five years between February 2016 and February 2021, report “Chronicle Live”

In that time the average house price there went up from £148,679.39 to £175,828.81.

Close behind is Northumberland where the average house prices rose from £145,172.44 to £171,421.00, an increase of 18.08%.

The smallest increase was in South Tyneside which saw average house prices go up 10.6% from £120,680.15 to £133,474.51.

The study was carried out by money transfer experts Xendpay, which looked at figures across more than 400 areas of the UK.

Their findings also revealed that North Tyneside has the most expensive average house price in the region, having overtaken Newcastle, which had the highest average price in February 2016.

Other parts of the region also saw an increase in prices. In Gateshead they jumped 15% from £123,669.27 to £142,214.44.

County Durham saw a 14.89% increase from £98,114.39 to £112,722.16 and the average price of a house in Sunderland went up 13.97% from £108,348.81 in February 2016, to £123,484.72 five years later.

While Newcastle is the second most expensive area on the list, it had the second smallest average house price increase, going up by 11.35%, standing at £150,838.04 in February 2016, and £167,964.16 five years on.

Across the UK, the average house price in February 2016 was £205,555, while the latest figure stands at £250,340 – an increase of 21.78%.

Comparing the four nations of the UK, Wales has seen the biggest increase in average house price over the past five years – 26% – going from £142,711 in 2016, to £179,860 in 2021.

Northern Ireland isn’t far behind, showing a 24.18% increase, with the average price rising from £118,850 to £147,592.

England’s average house price has gone from £220,626, to £268,291 – an increase of 21.6%.

Scotland has seen the lowest rise, 19.98%, as the average cost of a house in 2016 was £134,625, compared to £161,529 now.

Table shows– Area; average house price in February 2021; average house in February 2016; percentage increase

North Tyneside; £175,828.81; £148,679.39; 18.26%

Northumberland; £171,421.00; £145,172.44; 18.08%

Gateshead; £142,214.44; £123,669.27; 15%

County Durham; £112,722.16; £98,114.39; 14.89%

Sunderland; £123,484.72; £108,348.81; 13.97%

Newcastle : £167,964.16: £150,838.04: 11.35%

South Tyneside; £133,474.51; £120,680.15; 10.6%

Flat Owners Caught in Cladding Scandal Could Cost Individual Leaseholders as much as £75,000

Research by Newcastle-based property developer, StripeHomes, has revealed how much leasehold flat owners could see wiped off the value of their home, should they find their home is affected by ACM and other unsafe materials.

Last week parliament voted against protecting them from post-Grenfell fire safety costs, a move that could cost individual leaseholders as much as £75,000, however, it’s thought the average cost will be £9,000.

StripeHomes analysed housing data from MHCLG which shows that there are some 1,270,000 leasehold homes over 11m in height that could be affected by the scandal.

This could mean the total cost of addressing this issue could run as high as £11.43bn based on the average estimated cost of £9,000 to leaseholders.

However, The MHCLG also estimates that there are 610,000 of these homes that do not require an EWS1 process and so are subsequently not affected, based on new guidance from the RICS.

However, the jury is still out on this guidance, especially given the fact it was only introduced in April. However, if it does ring true, it still leaves 660,000 homeowners facing a hefty cost to rectify the wrongdoings of their developers. A cost that could still reach an estimated £5.94bn.

But what does this mean for property values for those incurring this cost?

StripeHomes analysed the number of leasehold flats to have sold in the last year to find the average sold value in each region of England, before applying the potential price decrease of rectifying potential fire safety shortfalls.

The figures show that across England, a cost of £9,000 to address these issues would wipe 4% off the value of the average leasehold flat, although those hit the hardest would see a maximum cost of £75,000 remove 33% from the value of their home.

This impact is greatest in the North East where house prices are at their lowest, with the average cost of £9,000 removing 10% from the value of the average leasehold flat, climbing to as high as 83% should they be hit with the maximum cost of £75,000.

Leasehold flat owners in the East Midlands would also stand to lose the most footing the bill for poor fire safety standards, losing an average of 7.6% or potential as much as 63% for those worst hit.

In London, the far higher cost of property means that the smallest amount of value would be lost although those hit with the highest cost of £75,000 could still stand to see 17% wiped from the value of their home.

Managing Director of StripeHomes, James Forrester, commented:

“The extent of the fire safety failings by many big housebuilders has been gobsmacking, to say the least, and now the lack of support from the government to those impacted really is the anti-cherry on the cake in what has to be one of the biggest scandals to ever hit the UK property market.”

“Time after time we see hardworking homebuyers receive below par properties, from greedy developers, intent on cutting corners in order to maximise profits.”

“A practice that has led to one of the most horrific and devastating events in recent times with many more still residing in unfit homes through no fault of their own.”

“Now, if they wish to rectify this issue, they will have to do so out of their own pocket adding a significant chunk to the cost of their home. Failure to do so leaves them with an unmortgageable home and one they will be unable to sell anyway.”

“The silver lining, at least, is that while regions such as the North East face seeing the largest percentage reduction in value, the likelihood is that less homeowners will be impacted.”

“Not only are transaction numbers lower, but there is a far greater emphasis on responsible, ethical practices from smaller house builders who place the consumer ahead of their own profit margins.”

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Martyn Lenthall

Martyn works for Smartmove Northeast as a marketing specialist. He takes great pride in creating quality content for people looking for a removal company in Newcastle.

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