Bristol house prices since the Millennium have risen by 204.28%, whilst average salaries in Bristol have only grown by 51.27% over the same time frame. This has served to push homeownership further out of reach for many Bristol people as they have to battle against raising considerable deposits and meet sterner lending criteria, as a result of new mortgage regulations brought in 2014/15.
The private renting market in Bristol 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 Bristol South Constituency, roll the clock back 20 years and there were 41,799 properties in the Constituency, whilst the most recent set of figures show there are 46,316 properties in the Constituency, a growth of 4,517 properties.
However, anecdotal evidence suggests the large majority of those 4,517 were bought by Bristol buy to let landlords, as over the same 20 year time frame, the number of rental properties has grown from 3,492 to 7,812 in the Constituency, a rise of 4,320 properties.
Nevertheless, some say this historic growth of the Bristol rental market might start to change with the 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 market’s traditional Easter rush corresponded with landlords hurrying to beat George Osborne’s new stamp duty changes, as 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 Bristol and these are my reasons why I believe that.
Firstly, what else are Bristol 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 204.28% rise in Bristol 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 as there is a serious shortage of properties to buy at the moment in Bristol, the stock of property for sale being at a six year all time low.
Thirdly, if there are fewer rental properties in Bristol, as supply drops and demand remains the same (although ask any letting agent in Bristol and they will say demand is constantly rising) this will create a squeeze in the Bristol rental market and as a result rents will rise. In fact, I predict even if landlords don’t sell up, Bristol rents will rise as Bristol landlords seek to compensate for increased costs which means more landlords will be attracted back.
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