Harlow house prices since the Millennium
have risen by 167.8%, whilst average salaries in Harlow have only grown by
51.27% over the same time frame. This has served to push homeownership further
out of reach for many Harlow people as they have to battle against raising considerable
deposits and meet sterner lending criteria, as a result of new mortgage
regulations introduced in 2014/5. The
private rental market in Harlow has grown throughout the last twenty years with
buy-to-let investors purchasing a high proportion of newly built residential properties
that were built and designed for the owner occupier sales markets. For example, in the Harlow Constituency, roll
the clock back 20 years and there were 33,725 properties in the Constituency,
whilst the most recent set of figures show there are 38,878 properties - a
growth of 5,153 properties.
However, anecdotal evidence suggests that a
large number of those 5,153 were bought by Harlow buy-to-let landlords, as over
the same 20-year time frame, the number of rental properties has grown from 2,801
to 4,180 in the Constituency - a rise of 1,379
properties.
Nevertheless, some say this historic growth
of the Harlow rental market might start to change with the new tax rules for
landlords introduced by Mr. Osborne over the last seven or eight months. Yet
the numbers tell another story. Across the board, mortgage borrowing climbed to
a 9 year zenith in March this year as the British property markets traditional
Easter rush corresponded with landlords
hurrying to beat George Osborne’s new stamp duty changes – buy-to-let landlords borrowed £7.1bn in March 2016 (the latest set of figures released) which was 163% up on the £2.7bn borrowed in the previous March.
You see, from my point of view, I don’t
think things will get worse in the buy-to-let market in Harlow and these are
the reasons why I believe that:
Firstly, what else are Harlow landlords
going to invest in if it isn’t property - the stock market? Since the Millennium,
the stock market has risen by an unimpressive total of 5.54%, quite different
to the 167.8% rise in Harlow property prices?
Secondly, its true the 3% stamp duty is the
first blow on top of a number of other tax changes to be phased in between 2017
and 2021, such as landlords facing a constraint in their ability to offset
mortgage interest and, if sizeable numbers of landlords do take the decision to
sell their portfolios, this will lead to a substantial amount of second hand properties
being put up for sale. Yet that might not be a bad thing, as I have mentioned
in previous articles there is a serous shortage of properties to buy at the moment
in Harlow: the stock of property for sale being at a six year all time low.
.. Thirdly, if there are fewer rental
properties in Harlow, as supply drops and demand remains the same (although ask
any letting agent in Harlow and they will say demand is constantly rising) this
will create a squeeze in the Harlow rental market and as a result rents will
rise. In fact, I predict even if landlords don’t sell up, Harlow rents will
rise as Harlow landlords seek to compensate for increased costs, which means
more landlords will be attracted back.