Research article

What next for new homes in Bedfordshire?

Residential Development

Transaction levels in Bedfordshire’s new homes market remain strong

New home sales accounted for 19.3% of all residential transactions in Bedfordshire in the year to August 2018, according to Land Registry data. This is notably higher than the national figure of 11%. 51% of new build flats are sold for between £170,000 and £250,000, below the 5% stamp duty threshold. New build houses have a broader price range, but there is a clustering of transactions between £300,000–£360,000. Transaction activity in new houses is strong right up to the £600,000 Help to Buy limit before tailing off.

Figure 9

Figure 9 | Distribution of sales in Bedfordshire, year to August 2018
Source: Land Registry

Transaction volumes in Bedfordshire have been consistent over the last three years. 2017 saw a fall to 11,107 total transactions, down from 11,477 the year before. Volumes so far this year look very healthy, with the figure running at 9,968 to August 2018.

As Figure 10 shows, Luton sees the most activity and also accounts for the majority of the lower value transactions, with central Bedford and Dunstable also seeing robust activity. Higher value sales are less clustered with some concentrations in the greenbelt areas in Central Bedfordshire.

A significant proportion of buyers are moving out from London and Milton Keynes. Demand from these buyers is strongly linked to employment centres; locations with fast links into London and Milton Keynes being the most popular.

Figure 10

Figure 10 | New build sales, year to August 2018
Source: Land Registry, OS

Help to Buy and First-Time Buyers

Help to Buy has been used extensively in Bedfordshire, with Central Bedfordshire and Bedford in the top five unitary authorities in the country for total Help to Buy Equity Loans since the inception of the scheme until June 2018.

Overall in the year to June 2018, 58% of all new build properties sold with the assistance of the scheme. Central Bedfordshire saw the highest volume at 654, over seven times the amount seen in Luton, which recorded just 90.

The statistics underscore the importance of Help to Buy to the new build market in Bedfordshire as a whole. After the scheme comes to an end, developers will need to deliver more diversity of product type and a range of tenures to ensure the current level of housebuilding can be maintained.

More positively, the introduction of the price cap on Help to Buy properties announced in the Autumn 2018 Budget is unlikely to have any significant impact as the cap for the East of England will be £407,200. This is significantly higher than the average new build transaction value in Bedfordshire of £288,600. Even in Central Bedfordshire the average is £346,100, which is pulled up by some higher value sales above the Help to Buy price limit and therefore not eligible for the scheme.

After 2023, the scheme will also be restricted to first-time buyers. Since the scheme was launched, a substantial minority of those who have used it in Bedfordshire, 35%, were home movers rather than first-time buyers.

Figure 11

Figure 11 | Help to Buy Assisted Sales
Source: MHCLG, Land Registry

PRS in Luton and beyond

Luton has experienced huge growth in the proportion of its residents living in the private rented sector between 2001 and 2011, increasing by 95%. This compares to Bedford at 55%, Central Bedfordshire at 68% and a regional average of 61%.

At the time of the 2011 census Luton had 24% of its population living in private rental accommodation, compared to 18% for England & Wales. Since 2011, this trend has likely become more pronounced.

Over 60% of households are private renters in Luton town centre. To the north and south of the centre, over 40% of households rent. This shows how well established the private rented sector is in Luton and where this demand is concentrated.

The census household data suggests that there is demand for both multifamily units (apartments and flats) and single family units (houses) because there is substantial demand from families with children and younger households.

Despite the compelling demand side evidence, Luton has seen lacklustre rental growth over the last two years at 0.3% for median asking rents. This can be explained to some extent by sluggish earnings growth which has affected the whole country.

Looking beyond Luton, Central Bedfordshire and Bedford have seen a more positive rental growth story, showing growth over the same time frame of 4.7% and 1.9% respectively. Both have seen the highest increase for one-bed and three-bed units.

Both these authorities have a higher proportion of their population who are young couples in their first homes starting families than the regional and national average according to Acorn demographic segmentation.

This suggests there could be a role for a suburban PRS model in these locations like we have seen in Faygate, three miles west of Crawley town centre where M&G and Crest Nicholson have teamed up to fund, build and let 227 new private rented sector PRS homes.

To date there is only one Build to Rent scheme in Bedfordshire, in Bedford itself. Looking ahead, with large sites coming forward, the role of Build to Rent in speeding up delivery and making the new build market accessible to a greater number of people, seems particularly relevant in Bedfordshire.

Figure 12

Figure 12 | Proportion of population in Private Rented Sector
Source: 2011 census

Getting to work

Commuting patterns in Bedfordshire demonstrate the importance of good links to employment centres for home buyers in the county. Over a third of the population in employment work outside the county. 8.1% commute to London, but Milton Keynes, Stevenage and St Albans also attract significant numbers of workers.

Across all commuters, car is the dominant method of travelling to work. However, rail links are more important for those working outside of the county; 16.7% of those commuting beyond Bedfordshire use trains, compared to 6.3% of all workers in the county.

Source: 2011 census

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