We’re coming to the end of another year – where does the time go? My father warned me that time would pass quicker as I got older. How right he was! I thought it would be interesting to look back on our local market in 2018, and see how property has performed compared to the 12 months before. Our core market is north west Leeds, basically from the city centre west along the A65 and north along Scott Hall Road to the Ring Road.
1,741 sales (source: HMRC) were sold in the 12 months to the end of the past week. Transaction volumes are down 5% on the previous 12 months. The average sale price was £195,205. Compared to the year before this is a 4% annual rise in prices. 24% of the sales were flats with an average price of £123,510; 27% were terrace houses averaging £170,017; 34% were semis averaging £219,714 and 15% were detached at an average price of £403,114.
The national average growth in prices was 2.7% (source: Land Registry). This is the slowest growth rate since 2013. I suspect the fall in prices in London has ‘dragged’ the national average down – not so much due to Brexit but I believe more to do with the higher rate stamp duty that adversely affects most properties in the capital.
Our ‘corner’ of Leeds has seen property enjoy an average growth of 19% in the past 5 years. The growth will not have been linear of course, and some properties have fared better than others (book a valuation with me if you want specifics about your own property) but with an average annual growth rate of 3.8%, property has consistently performed ahead of inflation.
Rental property in north west Leeds has also seen a strong year. The average rent in our core area is £757 pcm with the tenants paying all utility costs. This is 13% up year on year (source: dataloft.co.uk). Compared to average rental growth for the UK of 0.9% (unchanged in the past 3 months), rental values in Leeds are doing brilliantly well. As a more regional comparison for Yorkshire and Humberside, the rental value of flats is 36% higher in our area at an average of £687 pcm; terrace houses 29% higher at £689 pcm; semis 26% higher at £759 and detached houses 25% higher at £963 pcm.
New legislation passing through Parliament and expected to be effective from 6th April next year, will switch the onus onto landlords to pay for referencing tenants. Landlords will also have to pay for inventories, check out charges, etc. as the cost of these will no longer legally be charged to the incoming/outgoing tenant(s). Some agents don’t charge tenants for these costs at the moment, but those agents who do will no doubt shift the financial burden on to their landlord clients. I am one of many agents up and down the country who have written to Government and supported petitions to prevent this change in the lettings industry, not to support the ‘ripping-off’ of tenants by any means, but due to the concern that this step will lead to a significant rise in rents. Switching the onus onto landlords for all the set-up costs will simply force landlords to increase rents to recoup these costs. With reduced up-front costs tenants will feel happier to pay a slightly higher monthly rent, not necessarily appreciating how much more they will pay overall for the rental of the property.
Someone has to reference tenants, create an inventory and schedule of condition, check the tenants in and out again, etc. If the tenant is paying for this service and agents cannot absorb such costs out of present management fee income without risking bankruptcy, there is only one other area where costs can be recouped – rents. Landlords will not suffer financially if they all adopt the same philosophy. In my view Government would have been better ‘capping’ these costs, so that all landlords and agents charged the same across the country, but this was not considered feasible due to inflation and the variations in property types, risk, etc. It will be interesting to review rental values in another years time!
May I take this opportunity to thank all our clients and customers for their business in 2018, and on behalf of all the team at Moores we wish all those who celebrate the seasonal festivities a very Merry Christmas, and for those who don’t, do have a happy holiday period. We look forward to seeing or speaking with you all in the New Year.