1 in 9 Salisbury Properties are Leasehold

There are 23.36 million properties in England and Wales with 64% being owner occupied and 36% being rented either from a private landlord, local authority or housing association.

Over nine out of ten of those English and Welsh owner-occupied properties are a whole house or bungalow. Now, most people would assume they would be freehold – however, of those renting nearly half of rental properties, 44% to be precise, lived in other leasehold apartments and flats.

It might be wise to quickly explain the difference between freehold and leasehold. When someone owns the freehold of a property they own it outright, including the land it is built on, whilst with a leasehold property the leaseholder owns the property for the length of their lease agreement. Leaseholders must pay the person who owns land (the freeholder) ground rent and other fees. When the leasehold ends, ownership returns to the freeholder although the leaseholder can extend the lease or they can buy the freeholder out, but there are rules and regulations with regards doing that.

Therefore, it would be safe to assume that houses are freehold and flats are leasehold .. wouldn’t it? Not necessarily! Most houses are freehold but some might be leasehold – usually through shared-ownership schemes – but more and more new homes builders are selling houses on a leasehold as well. The protection of the law afforded to leaseholders who own a flat is massive, but sadly lacking to leasehold houses sold privately.

Looking specifically at the figures for Salisbury, at the last count in SP1 and SP2 there were 24,181 properties. Since 1995, 21,933 properties in SP1 and SP2 have changed hands and have been sold. Looking further at those 21,933 transactions in SP1 and SP2 since 1995, using data from Land Registry and solicitors practice My-Home-Move, 11.21% have been leasehold (lower than the national average of 15%).

However, I am concerned about a few new homes builders selling new houses (not flats – houses) as leasehold. There has been a growing (yet small) trend for new-build houses to be sold as leasehold in recent years. While not all house builders use this model, those that do maintain it helps make developments financially viable.

The issue comes when builders sell the freehold separately to an investment company without informing the lease holder  – which they are legally allowed to do without telling the leaseholder. In England and Wales, the “right of first refusal” to buy the freehold is written in law to leaseholders of flats i.e. the freeholder must offer it to the leaseholders of all the flats of the building first), but not leaseholders of houses.

.. and this is the point I am trying to get across. If you are buying a new home and it’s a house (i.e. not a flat) – please check very carefully indeed whether its freehold or leasehold. If it is a leasehold, whilst you do have rights, they are not as strong as for those people buying a leasehold flat. I appreciate I am only talking about a very small percentage of the property market, but potentially this could end up costing thousands of pounds to those affected.

Randalls Croft Road, Wilton – £125,000

In the words of connells, the managing agent, ‘the property would be an ideal first time buy or buy to let investment.’

Accomodation comprises large Living/Dining Room, seperate fitted Kitchen, two Double Bedrooms and seperate family Bathroom. The property is conveniently situated on the outskirts of Wilton with access to Salisbury, Amesbury, Devizes and Shaftesbury and benefits from communal Parking. I would estimate a potential rent of around £700pcm, meaning a potential yield of 6.7%! http://www.rightmove.co.uk/property-for-sale/property-67232354.html

Salisbury Flats Out Perform Property Market Average by 15%

According to the Land Registry’s latest House Price Index for Salisbury and the surrounding locality, the value of apartments/flats are rising at a faster rate than terraced/town houses, semi-detached properties and even detached property.

Values of apartments in Salisbury have increased by 9.07% over the past year, which is proportionally 15% more than the Salisbury average rise of 7.87%. The last time flats/apartments in Salisbury out performed all the other types of property, by such a gulf, was back in the spring of 2003. For comparison, the other property types performed as follows ..

  • Detached homes rose by 7.88%
  • Semi-detached homes rose by 7.69%
  • Terraced/Town-Houses rose by 7.5%

This moderately increasing rate of property value growth is opportune – but no one should confuse it with a strong and vigorous healthy Salisbury property market. Instead, it is somewhat an indicator of the long-lasting lack of property on the market. In fact, I have spoken about the lack of homes for sale in Salisbury on a number of occasions in my Salisbury Property Blog and whilst it isn’t as bad as it was 12 months ago – choice is quite limited for buyers.

The average property value in Salisbury now stands at £355,100.

When split down into property types ..

  • Salisbury Apartments at £206,800
  • Salisbury Detached at £494,600
  • Salisbury Semi-Detached at £290,800
  • Salisbury Terraced/Town-House at £260,800

So why have Salisbury apartments performed so well, and is it just a Salisbury thing? When I scrutinised the figures for the rest of the UK, it appears that apartments are pacemakers in the clear majority of the country. Of the 379 local authority areas in the UK, the value of apartments is rising faster than detached, semi-detached and terraced houses in 320 of them.

So, should Salisbury apartment owners be getting out the Champagne? Well, I would keep it on ice as the Land Registry figures are notorious for short term fluctuations. It’s hard to have faith in the fact that Salisbury house values rose rapidly last month given that, in the last six months, the Land Registry has frequently made downward revisions to their first published House Price Index figures.

Thankfully, the bigger picture from the Council of Mortgage Lenders (CML) stated that home buying activity last month was up 2% over the same month in 2016 – not bad as we have had the Autumn, Winter and now Spring since Brexit. The CML stated first time buyer’s levels of affordability was being squeezed and that the average amount borrowed by those first-time buyers dropped slightly last month, but the overall amount borrowed (by all buyers) was an impressive 12% higher than the same month in 2016.

So, what next for the Salisbury Property market? I believe the uplift in the values of apartments is a short-term blip. The real issue is with the way wage growth might not keep up with inflation as the effects of 2016 exchange rate sucks in inflation (meaning real wage growth stagnates). This will mean buyer demand growth will be curtailed and with property values already so full, I believe a renewed hastening in house price growth is unlikely.

I believe we are starting to return to the housing market we saw in the mid 1990’s, Steady demand, steady supply – nothing silly when it comes to house price growth. Therefore, I believe, with what is happening around us – this isn’t a bad thing at all. HMS Salisbury Property Market…. “Nice and steady as she goes”, says the Captain

Pennyfarthing Street, Salisbury – £185,000

In the words of Whites, the advertising agent, ‘The property would make an ideal purchase for a first time or investment buyer.’

This cracking little house, situated in an ideal City Centre location provides well proportioned accomodation comprising Lounge/Diner, Kitchen, two double Bedrooms and family Bathroom. There is also a small rear courtyard Garden. In my opinion, the property would benefit from some cosmetic updating throughout to make the property more attractive to potential tenants.

This property is currently tenanted at a figure of £715pcm, however I believe that with the above improvements made, if you were to re-advertise the property you could achieve a figure of £775, conveniently maximising your yield to 5%. Of course the fact that the property is already tenanted makes this property more attractive to investment purchasers as it would mean income from day of completion. Give Whites a call to arrange a viewing!http://www.rightmove.co.uk/property-for-sale/property-60560281.html

Flint Way, Harnham – £179,950

It would appear that the BTL market has gone quiet, however I still managed to find this fantastic BTL opportunity!

This well presented ground floor apartment, situated in the highly desirable area of Harnham, is currently on the market with Carter & May. Accomodation comprises Lounge/Diner, Kitchen, Master Bedroom, further double Bedroom and family Bathroom. There is also the added bonus of an off-road Parking space. I have no doubt with it’s location and well presented accomodation that this flat will rent incredibly well! I would estimate a monthly rental value of around £795pcm, which would mean a potential yield of 5.3%!

If you would like our honest opinion on the rental potential of a property, be it your own property, one you are purchasing or one you have seen advertised, give the office a call, we would be more than happy to discuss this with you, or alternatively attend any viewings with you.http://www.rightmove.co.uk/property-for-sale/property-48959286.html