The Private Rented Market in Cheshire West and Chester

The Private Rented Market in Cheshire West and Chester

An evidence base

June 2013

Main contact: Helen Brzozowski

arc4 Ltd

Mob: 07721 011 276

email:

web:www.arc4.co.uk

1. Introduction 5

2. The Evidence Base 6

The size of the sector 6

The growth in the sector 7

New properties coming onto the market 10

Property type and bed size 13

Rent levels 15

Affordability 18

Properties let 20

Rent differentials 21

Time to let property 22

Rental yields 24

3. In summary and conclusion 25

Total stock 25

Properties on the market 25

Rent levels 26

Affordability 26

Time to let a property 26

Rental yields 27

The emerging markets 27

List of Tables

Table 1: Private Rented Sector by Spacial Area 6

Table 2: Growth in PRS 2001-11 by Spatial Area** 7

Table 3: Average Property Price by Spatial Area 9

Table 4: Number of Properties coming to Market 2009-12 10

Table 5: Number of properties coming to market as percentage of PRS 11

Table 6: Size of property on market 2009-12 13

Table 7: Number of properties coming to market 2009-12 by property size 13

Table 8: The percentage of properties coming onto the market by bed size 2009-2012 14

Table 9: Average rent levels 15

Table 10: Average rent change by type and size 2009-12 16

Table 11: Rent levels by property type in Spatial Areas 17

Table 12: Affordability by property size 18

Table 13: Income versus rental by Spatial Area 19

Table 14: Income versus rental by property size 19

Table 15: Average time to let by Spatial Area 22

Table 16: Average time to let property by type and size 2009-12 23

Table 17: Rental yields by Spacial Area 24

List of figures

Chart 1: The percentage growth in the Private Rented Sector 2001-2011 7

Chart 2: The growth in the private rented sector 2001-2011 8

Chart 3: The growth in the private rented sector 2001-2011 8

Chart 4: The percentage of the private rented sector in each Spatial Area 12

Chart 5: The property sales market 2008-2012 (2008=100) 12

Chart 6: The percentage of properties coming onto the market by bed size 2009-2012 13

Chart 7: The proportion of flats and houses coming onto the market and let 2009-2012 20

Chart 8: Rent differentials 21

List of maps

Map 1: The location of the private rented sector 6

Map 2: The increase in the number of properties coming onto the market 2009-2012 10

Map 3: The number of the private rented homes coming onto the market as a percentage of the total private rented stock in 2012 11

Map 4: The average rent change 2009 to 2012 16

Map 5: The percentage change of rent levels for flats 2009-2012 17

Map 6: The percentage change of rent levels for houses 2009-2012 17

Map 7: The average time to let a property in 2012 22

Please note that in this report some of the tables include rounded figures. This can result in some column or row totals not adding up to 100 or to the anticipated row or column ‘total’ due to the use of rounded decimal figures. We include this description here as it covers all tables and associated textual commentary included. If tables or figures are to be used in-house then we recommend the addition of a similarly worded statement being included as a note to each table used.

arc4 Limited accepts no responsibility or liability for, and makes no representation or warranty with respect to, the accuracy or completeness of any third party information (including data) that is contained in this document.

The information contained in this document is strictly confidential and is intended for the addressee only. The unauthorised use, disclosure, copying, alteration, distribution or communication to the public of this document or any part thereof is strictly prohibited.

1. Introduction

1.1 The Government’s Housing Strategy, published in November 2011[1], set out the Government’s plans to boost housing supply. It recognised an increasingly important role for the private rented sector, both in meeting people’s housing needs and in supporting economic growth by enabling people to move to take up jobs elsewhere and to respond to changing circumstances.

1.2 The private rented sector is growing; the recently published Census figures for 2011 confirmed that the sector now totals 18.1%, an increase of 31.2% from 13.8% in 2001. Increasing house prices pre 2007 and the struggling sales market when the down turn came are both factors that have underpinned the growth of the rental market for both ‘active choice’ renters and ‘frustrated would be’ homeowners. Tenure reform and less accessible social rented housing is also likely to be an increasing factor to the growth in the private rented sector and the sector clearly now plays a vital role in meeting housing needs as well as providing an alternative to homeownership.

1.3 Local authorities have an important role in ensuring that the Private Rented Sector meets both these requirements. Balancing good quality supply with demand will help to stabilise rents and encouraging good quality management will improve the reputation of the sector and encourage longer term lets and lower turnover. However, this is a challenging task where existing partners need to be encouraged to participate and new partners and investors need to be identified.

1.4 This report provides an evidence base around the scale, growth and performance of the Private Rented Sector in Cheshire West and Chester since 2009. It utilises data from a number of secondary sources which are identified in the report. Vizzihomes data is used extensively in this report and only includes private rented property that has been advertised and/or managed through a letting agent.

2. The Evidence Base

The size of the sector

2.1 The Census 2011 confirms (Table 1) that there are 18,225 (13.2%) households living in the private rented sector in Cheshire West and Chester; this is lower than the national figure of 18.1%. The highest percentages are in Farndon (21.1%), Tattenhall (20.8%), Chester Urban Area (18.6%) and Malpas (18.4%) and are significantly larger than most of other areas. The lowest is in Cuddington and Sandiway (8%). The location of the private rented sector, by percentage of the market, is illustrated in Map 1.

2.2 There are nine spatial areas where the private rented sector is larger than the social rented sector, and these are Chester Urban Area, Chester Villages, Farndon, Frodsham, Rural East, Rural North, Tarporley, Tarvein and Kelsall and Tattenhall. In terms of numbers of units, Chester urban Area has the largest private rented sector and Cuddington and Sandiway the smallest.

Table 1: Private Rented Sector by Spacial Area

Spatial Area / Owners
No. / Affordable
Housing
No. / PRS
No. / Total / Owners
% / Affordable
Housing
% / PRS
%
Chester Urban Area / 21,985 / 6,241 / 6,445 / 34,671 / 63.4 / 18.0 / 18.6
Chester Villages / 2,941 / 164 / 320 / 3,425 / 85.9 / 4.8 / 9.3
Cuddington and Sandiway / 1,890 / 180 / 180 / 2,250 / 84.0 / 8.0 / 8.0
Ellesmere Port Urban Area / 17,503 / 5,247 / 2,600 / 25,350 / 69.0 / 20.7 / 10.3
Farndon / 1,762 / 196 / 525 / 2,483 / 71.0 / 7.9 / 21.1
Frodsham / 3,106 / 446 / 473 / 4,025 / 77.2 / 11.1 / 11.8
Helsby / 1,735 / 160 / 248 / 2,143 / 81.0 / 7.5 / 11.6
Malpas / 1,188 / 206 / 315 / 1,709 / 69.5 / 12.1 / 18.4
Neston / 5,365 / 924 / 728 / 7,017 / 76.5 / 13.2 / 10.4
Northwich Urban Area / 16,051 / 3,339 / 2,798 / 22,188 / 72.3 / 15.0 / 12.6
Rural East / 5,363 / 327 / 537 / 6,227 / 86.1 / 5.3 / 8.6
Rural North / 6,131 / 485 / 737 / 7,353 / 83.4 / 6.6 / 10.0
Tarporley / 1,516 / 182 / 226 / 1,924 / 78.8 / 9.5 / 11.7
Tarvin and Kelsall / 2,669 / 224 / 330 / 3,223 / 82.8 / 7.0 / 10.2
Tattenhall / 1,294 / 186 / 389 / 1,869 / 69.2 / 10.0 / 20.8
Winsford Urban Area / 8,052 / 2,727 / 1,374 / 12,153 / 66.3 / 22.4 / 11.3
Cheshire West & Chester / 98,551 / 21,234 / 18,225 / 138,010 / 71.4 / 15.4 / 13.2

Source: Census 2011

The growth in the sector

2.3 Table 2, illustrates the growth in the private rented sector between 2001 and 2011. Overall, the private rented sector has decreased by 4.5 percentage points to 13.2% an increase of 51.7% and as a result both the owner occupied sectors and affordable housing sectors have reduced (Chart 1).

2.4 All spatial areas (with the exception of Tarporley) show growth in the private rented sector. There are a number of spatial areas where the social rented sector has reduced and the private rented sector has increased such as Chester Villages, Neston and Winsford Urban Area. This growth is likely to be through Right to Buy properties being offered for rent and is likely to be a lower value market. However, there are other wards where owner occupied property has converted to the private rented sector and this is more likely to be through investor markets or potentially because owners are unable to sell property, e.g. Chester Urban Area and Helsby.

Table 2: Growth in PRS 2001-11 by Spatial Area**

Spatial Area / Owners
% / Affordable
Housing
% / PRS
% / Owners
% / Affordable
Housing
% / PRS
%
2001 / 2011
Chester Urban Area / 68.2 / 18.9 / 12.9 / 63.4 / 18.0 / 18.6
Chester Villages / 85.2 / 7.0 / 7.8 / 85.9 / 4.8 / 9.3
Cuddington and Sandiway / 77.7 / 16.5 / 5.8 / 84.0 / 8.0 / 8.0
Ellesmere Port Urban Area / 71.4 / 23.2 / 5.4 / 69.0 / 20.7 / 10.3
Farndon / 77.8 / 5.9 / 16.3 / 71.0 / 7.9 / 21.1
Frodsham / 81.1 / 12.5 / 6.3 / 77.2 / 11.1 / 11.8
Helsby / 85.6 / 7.9 / 6.5 / 81.0 / 7.5 / 11.6
Malpas / 75.2 / 10.8 / 14.0 / 69.5 / 12.1 / 18.4
Neston / 72.6 / 20.9 / 6.5 / 76.5 / 13.2 / 10.4
Northwich Urban Area / 75.7 / 16.8 / 7.5 / 72.3 / 15.0 / 12.6
Rural East / 83.7 / 9.5 / 6.8 / 86.1 / 5.3 / 8.6
Rural North / 83.8 / 7.1 / 9.0 / 83.4 / 6.6 / 10.0
Tarporley / 77.9 / 10.1 / 12.0 / 78.8 / 9.5 / 11.7
Tarvin and Kelsall / 86.8 / 5.9 / 7.3 / 82.8 / 7.0 / 10.2
Tattenhall / 70.3 / 9.8 / 19.9 / 69.2 / 10.0 / 20.8
Winsford Urban Area / 67.6 / 26.1 / 6.2 / 66.3 / 22.4 / 11.3
Cheshire West & Chester / 74.2 / 17.1 / 8.7 / 71.4 / 15.4 / 13.2
Base / 98,637 / 22,744 / 11,549 / 98,551 / 21,234 / 18,225

Note: 2001 census based on wards which roughly correspond with current Spatial Areas Source: Census 2001 and 2011

Source: Census 2001 and 2011

** Ward boundaries have changed since between 2001 and 2011. Please note figures in individual wards with caution

2.5 The overall changes mask geographical differences. In terms of percentage increases, the special areas that experienced the highest growth were in Ellesmere Port Urban Area, Frodsham, Winsford Urban area and Helsby (Chart 2).

Source: Census 2001 and 2011

2.6 However, in terms of overall growth the spatial areas that experienced the largest growth are Ellesemere Port Urban Area, Frodsham, Winsford Urban Area and Helsby (Chart 3)

2.7 In table 3, we have compared average property prices in 2012 in each ward with the size of the private rented sector. The table confirms that the sector is relatively well distributed in higher value areas and would suggest that the sector is a higher income economically active household sector providing an alternative for households unable to get onto the household ladder and households that support economic growth. There are areas where the sector is potentially an extension of the social rented sector such as Ellesmere Port Urban area and Winsford Urban Area.

Table 3: Average Property Price by Spatial Area

Spatial Area / Average sales Value 2012 / Total %age of the PRS Census 2011
Chester Urban Area / £195,190 / 18.6
Chester Villages / £277,653 / 9.3
Cuddington and Sandiway / £240,077 / 8.0
Ellesmere Port Urban Area / £136,232 / 10.3
Farndon / £301,093 / 21.1
Frodsham / £215,429 / 11.8
Helsby / £160,685 / 11.6
Malpas / £261,605 / 18.4
Neston / £210,725 / 10.4
Northwich Urban Area / £170,117 / 12.6
Rural East / £280,389 / 8.6
Rural North / £221,647 / 10.0
Tarporley / £362,362 / 11.7
Tarvin and Kelsall / £270,268 / 10.2
Tattenhall / £410,959 / 20.8
Winsford Urban Area / £123,619 / 11.3
Cheshire West & Chester / £191,335 / 13.2

New properties coming onto the market

2.8 Table 4 shows the actual number of properties coming onto the private rented market each year from 2009 to 2012 in each spatial area[2]. Overall, the total number of properties coming onto the market has increased from 5,123 in 2009 to 6,476 in 2012; an increase of 26.4%. The total numbers coming onto the market has increased year on year with 2012 seeing the largest number of properties coming onto the market during the past four years. These year-on-year increases show a steady rate of incline.

2.9 The spatial areas that have experienced the largest percentage increase in new properties coming onto the market are: Malpas (105.9%) although this is based on relatively small numbers, Neston (57.2%), Rural North (75.7%), and Winsford Urban Area (56.2%).

2.10 In terms of the total number of properties coming onto the market in the past four years, the largest numbers have been in Chester Urban Area (10,029) and the lowest number in Malpas (212).