Monday 28 December 2015

Values of Royal Tunbridge Wells Terraced Houses smash through the £360/sqft barrier

The Council of Mortgage Lenders (CML) latest snapshot of the buy to let mortgage market shows us that buy to let landlords haven’t been put off by the Chancellors announcements on the way buy to let’s are taxed.

Last month, the CML stated £1.4billion was borrowed by UK landlords to purchase 10,500 buy to let properties, up 26.5% from the same month in 2014, when only 8,300 properties were bought with a buy to let mortgage. Go back two years and the number of buy to let mortgages used for purchasing (again not re-mortgaging) is 36.4% higher! Even more interesting has been the fact that the average amount borrowed has risen as well. The average buy to let mortgage last month was £133,330, up from £128,480 a year ago.

In Royal Tunbridge Wells, I am speaking to more and more landlords, be they seasoned professional landlords or FTL’s (first time landlords), as they read reports that the Royal Tunbridge Wells rental market is doing reasonably well, with rents and property values rising.  Interestingly, one landlord recently asked how much he should be paying per square foot (more of that in a second).

The first thing you have to decide is whether you want great capital growth or great rental yield, as every knowledgeable landlord knows, you can’t have both. Over the last twenty years, property values in Royal Tunbridge Wells have risen by 232.29%, compared to Greater London’s 436.2%. This has proved that capital growth increases faster in the more expensive Capital, but your investment money doesn’t go very far, meaning there won’t be as much rental yield from a 1 bed flat in Chelsea (2% per year at best with a fair wind) as a 2 bed semi in Royal Tunbridge Wells. However, whilst the figure of 232.29% is an average for the area, certain areas of Royal Tunbridge Wells have seen capital growth much higher than that and others areas much worse (we have talked about those in previous articles).

If you recall in an earlier article, my research reveals that Royal Tunbridge Wells apartments tend to generate a better yield than houses, probably because several sharers can afford to pay more than a single family. But houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built.

So what should you be buying in Royal Tunbridge Wells, and more importantly, how much?

·         The average apartments in the town are currently selling for approximately £358 per square foot.
·         Terraced houses in Royal Tunbridge Wells are currently obtaining, on average, £335,600 or £364 per square foot,
·         An average semi in Royal Tunbridge Wells is selling for £400,800 (and achieving £363 per square foot). 

Now these are of course averages, but it gives you a good place to start from. In the coming weeks, I will look at rents being achieved on Royal Tunbridge Wells houses and apartments, and the yields that can be obtained, depending how many bedrooms there are. In the meantime, if you would like to read more articles like this, then can I suggest you visit the Royal Tunbridge Wells Property Blog?  





Wednesday 23 December 2015

Royal Tunbridge Wells Buy To let –Freehold House or Leasehold Flat?

Well my Royal Tunbridge Wells Property Blog reading friends, as seems to be all the rage with Jeremy Corben asking the PM questions emailed in to him at Prime Minster Question Times, I to wish to answer a question emailed into me from a potential Royal Tunbridge Wells landlord last week. Nice chap, lives in Langton Green, and it turns out, after having a coffee with him, he works in IT, has a spare bit of cash (now the kids have flown the nest) and wanted to buy his first buy to let property.

His main question was ... Do I buy a freehold house or a leasehold flat in Royal Tunbridge Wells?

Most people will say freehold every time, because you own the land. However, it’s not as simple as that (it never would be would it!). The definitive answer though is to research what Royal Tunbridge Wells tenants want in the area of Royal Tunbridge Wells they want! The tenant is ultimately your customer, and, if they don't want to rent what you decide is best to buy, then you are not going to have a successful BTL investment. So starting with the tenant in mind and working backwards from there, you won’t go far wrong. In a nutshell, find the demand before you think about creating the supply.

Leasehold flats and apartments in Royal Tunbridge Wells are excellent in some respects as they offer the landlord certain advantages, including the fact a flat can be initially cheaper to buy. Yields can be quite good, offering better cash flow. The building will already be insured and yes there is a service charge, but it’s still for a service at the end of the day and that cost is spread between many others (i.e. when your freehold house roof goes, its falls 100% on your shoulders) and one of my favourites is that there is often no garden to maintain or blown down fences to replace!

However, some Royal Tunbridge Wells leasehold flats can suffer from poor capital growth. Some leasehold properties have no cap on the level of the service charge and it may get out of control. The length of the lease will significantly affect value if not renewed before it gets too short. Thankfully there’s not many, but some Royal Tunbridge Wells apartments/flats have burdensome clauses. Finally, with leases, there can be sub-letting issues – which means you can’t let them out.
So what do the numbers look like? Well since 2003, the average freehold property in Royal Tunbridge Wells (detached, semis and terraced) has risen from £317,941 to £506,437, a rise of 60% whilst the average Royal Tunbridge Wells leasehold property (flats and apartments) has gone up in value from £150,225 to £229,149, a more mediocre rise of 53%. 

I was really interested to note that of the 7,412 rental properties in the Royal Tunbridge Wells Borough Council area that the Office of National Statistics believe are either let privately or through a letting agency, 4,218 of them (or 56.9%) are apartments. However, there are only 11,867 apartments in the whole council area (be they owned, council rented or privately rented), which represents 25.2% of the whole housing stock in the area. This really intrigued me that, quite obviously, there is a high proportion of Royal Tunbridge Wells’ leasehold apartments/flats rented to tenants compared to detached, semi’s or terraced. Fascinating don’t you think?

Every Royal Tunbridge Wells apartment block, every terraced house or semi is different. Like I said at the start, the definitive answer though is to research what Royal Tunbridge Wells tenants want in the area of Royal Tunbridge Wells they want. Demand for town centre apartments near transport links can be popular and can offer the Royal Tunbridge Wells landlord very good yields with minimal voids. However, Royal Tunbridge Wells terraced houses and semis, whilst not always offering the best yields (although sometimes they can), they do offer the Royal Tunbridge Wells landlord decent capital growth.

My advice to the prospective landlord as it is to you is do your homework.  One such website, which only talks about the Royal Tunbridge Wells buy to let Property Market, is the Royal Tunbridge Wells Property Blog. Another source of info many Royal Tunbridge Wells landlords use is me! What many Royal Tunbridge Wells landlords do, irrespective of whether you are a landlord of ours, a landlord with another agent or a DIY landlord, if you see any property in Royal Tunbridge Wells, that catches your eye as a potential buy to let property, be it a terraced house, semi or flat ... email me and I will email you back with my thoughts (although I will tell you what you need to hear .. not want to hear!)




Saturday 19 December 2015

Royal Tunbridge Wells Tenants Pay 39.4% of their Salary in rent

I had the most interesting chat with a local Royal Tunbridge Wells landlord the other day about my thoughts on the Royal Tunbridge Wells property market. The subject of the affordability of renting in Royal Tunbridge Wells came up in conversation and how that would affect tenant demand. Everyone wants a roof over their head, and since the Second World War, owning one’s home has been an aspiration of many Brits.  However, with rents at record highs, many are struggling to save enough for a house deposit.

Let’s be honest, it’s easy to get stuck in a cycle of paying the rent and bills and not saving, but even saving just a small amount each month will sooner or later add up.  George Osborne announced such schemes as the upcoming Help to Buy ISA, where the Government will top up a first time buyers deposit.

Therefore, I thought I would do some research into the Royal Tunbridge Wells property market and share with you my findings.  Royal Tunbridge Wells tenants spend on average just over a third of their salary to have a roof over their head.  According to my latest monthly research, the average cost of renting a home in Royal Tunbridge Wells is £1,145 per month.  When the average annual salary of a Royal Tunbridge Wells worker, stands at £34,855 per year, that means the average Royal Tunbridge Wells tenant is paying 39.4% of their salary in rent.  I doubt there is much left to save for a deposit towards a house after that, and that my Royal Tunbridge Wells Property Blog reading friends is such a shame for the youngsters of Royal Tunbridge Wells.

You see one the reasons for rents being so high is property prices being high.  As I have mentioned before, there is a severe lack of new properties being built in Royal Tunbridge Wells.  It’s the classic demand vs supply scenario, where demand has increased, but the number of houses being built hasn’t increased at the same level.  Also, Royal Tunbridge Wells people aren’t moving home as often as they did in the 80’s and 90’s, meaning there are fewer properties on the market to buy.  If you recall, a few weeks ago I said back in Summer 2008, there were over 1,200 properties for sale in Royal Tunbridge Wells and since then this has steadily declined year on year, so now there are only 451 for sale in the town.

So, the planners in Royal Tunbridge Wells haven’t allowed enough properties to be built in the town and existing Royal Tunbridge Wells homeowners are not moving home as much as they used to, thus creating a double hit on the number of properties to buy.  This is a long term thing and the continuing diminishing supply of housing has been happening for a number of decades and there simply aren’t enough properties in Royal Tunbridge Wells to match demand, these are the reasons houses prices in Royal Tunbridge Wells have remained quite buoyant, even though economically, over the last 5 years, it was one of the worst on record for the country and the South East region as a whole.

However, things might not be all doom and gloom as originally thought, as a recent Halifax Survey  (their Generation Rent 2015 Survey) suggested  more and more people may be long term, if not lifelong tenants. In fact there is evidence in the report to suggest that the perception of how difficult it is to get on the housing ladder is vastly different between parents and people aged 20 to 45.  It seems from this survey that the state of the UK economy has shifted priorities quite significantly in quite a short space of time.  With fewer people able to save up the deposit required by mortgage lenders, more and more people are continuing to rent.  This delay in moving up the property ladder has driven rents across the UK up as more people were seeking rental properties .

 It is often said that more people in central Europe rent for longer or never own their own property. The last two census in 2001 and 2011 show that proportionally the percentage of people who own their own home in Britain is slowly reducing and, as a country, we are becoming more and more like Germany.   That isn’t a bad thing as Germany is considered to have a more successful economy, one of the main stays, often quoted,  is because they have a much more flexible and mobile workforce, (which renting certainly gives) and from that, they have a higher personal income than in the UK.      
Therefore, if we are turning into a more European model and the youngsters of Royal Tunbridge Wells and the Country have changed their attitudes, demand for rental properties will only and can only go from strength to strength, good news for Royal Tunbridge Wells tenants as wages will start to rise and good news for Royal Tunbridge Wells landlords, especially as property values in Royal Tunbridge Wells are now 8.4% higher than year ago!





Saturday 12 December 2015

How EU Migration has changed the Royal Tunbridge Wells Property Market

The argument of migration and what it does, or doesn’t do, for the country’s economic wellbeing is something that has been hotly contested over the last few years. In my article today, I want to talk about what it has done for the Royal Tunbridge Wells Property market.

Before we look at Royal Tunbridge Wells though, let us look at some interesting figures for the country as a whole. Between 2001 and 2011, 971,144 EU citizens came to the UK to live and of those, 171,164 of them (17.68%) have bought their own home. It might surprise people that only 5.07% of EU migrants managed to secure a council house. However, 676,091 (69.62%) of them went into the private rental sector.  This increase in population from the EU has, no doubt, added great stress to the UK housing market.

Looking at the figures, the housing market as a whole is undoubtedly affected by migration but it has been the private rented housing sector, especially in those areas where migrants come together, that is affected the most.  Indeed, I have seen that many EU migrants often compete for such housing not with UK tenants but with other EU migrants. In 2001, 3.68 million rented a property from a landlord in the UK.  Ten years later in 2011, whilst EU migration added an additional 676,091 people renting a property from a landlord, there were actually an additional 4.14 million people who became tenants and were not EU migrants, but predominately British!

As a landlord, it is really important to gauge the potential demand for your rental property, especially if you are a landlord who buys property in areas popular with the Eastern European EU migrants.  To gauge the level of EU migration (and thus demand), one of the best ways to calculate the growth of migrants is to calculate the number of people who ask for a National Insurance number (which EU members are able to obtain).

In Royal Tunbridge Wells, migration has risen over the last few years. For example, in 2009 there were 823 migrant national Insurance cards (NIC) issued and the year after in 2010, 800 NIC cards were issued. However, in 2014, this had increased to 1,094 NIC’s. However, if the pattern of other migrations since WW2 continues, over time there will be an increasing demand for owner occupied property, which may affect the market in certain areas of high migrant concentration. On the other hand, over time some households move into the larger housing market, reducing concentrations and pressures.

In essence, migration has affected the Royal Tunbridge Wells property market; it couldn’t fail to because of the additional 8,671 working age migrants that have moved into the Royal Tunbridge Wells area since 2005. However, it has not been the main influence on the market. Property values in Royal Tunbridge Wells today are 18.3% higher than they were in 2005. According to the Office of National Statistics, rents for tenants in the South East have only grown on average by 0.95% a year since 2005 .... I would say if it wasn’t for the migrants, we would be in a far worse position when it came to the Royal Tunbridge Wells property market. This was backed up by the then Home Secretary Theresa May back in 2012 - more than a third of all new housing demand in Britain is caused by inward migration and there is evidence that without the demand caused by such immigration, house prices would be 10% lower over a 20 year period.

If you want to know more about the Royal Tunbridge Wells property market, then for more articles like this, please visit the Royal Tunbridge Wells Property Blog 


Wednesday 9 December 2015

Royal Tunbridge Wells Property Market Crisis as New House Building slumps by 69.57%

   
One of the key factors that determine the price of anything is the demand and supply of the item that is being bought and sold. When it comes to property, demand can change overnight, but it takes years and years to build new properties, thus increasing the supply.

The Conservatives have pledged to build over 1 million homes by 2020. I am of the opinion that as a country, irrespective of which party, we have not built enough homes for decades, and if the gap between the number of households forming and the number of new homes being built continues to grow, we are in danger of not being able to house our children or grand children. I believe the country is past the time for another grand statement of ambition by another Housing Minister. Surely it’s right to give normal Royal Tunbridge Wells families back the hope of a secure home, be that rented or owned? As a town, we need to exert pressure on our local MP Greg Clark, so he can make sure Westminster is held accountable, to ensure there is a comprehensive plan, with enough investment, that can actually get these homes built.

To give you an idea of the sorts of numbers we are talking about, in the Tunbridge Wells Borough Council area, in 2005, 440 properties were built. In 2007 and 2008 it peaked at 690. By 2012, that figure had dropped by a massive 69.57% to 210 properties built... where are we going to house all these new people in RTW when new home building is dropping like it is?

The outcome of too few homes being built in Royal Tunbridge Wells means the working people of the town are being priced out of buying their first home and renters are not getting the quality they deserve for their money. The local authority isn’t building the estates they were after the war and housing associations are having their budgets tightened year on year, meaning they have less money to spend on building new properties. I know of many Royal Tunbridge Wells youngsters, who are living with their parents for longer because they cannot afford to get onto the housing ladder and growing families are unable to buy the bigger homes they need.

I talk to many Royal Tunbridge Wells business people and they tell me they need a flexible and mobile workforce, but the high cost of moving home and lack of decent and affordable housing are barriers to attracting and retaining employees. Furthermore, building new homes is a powerful source of growth, creating jobs across the county and supporting hundreds of Royal Tunbridge Wells businesses. It is true that landlords have taken up the mantle and over the last 15 years have bought a large number of properties. The Government need to be thankful to all those Royal Tunbridge Wells landlords, who own the 5,353 rental properties in the town. Most local landlords only have a handful of rented properties (to aid their retirement), and without them, I honestly don’t know who would house all the extra people in Royal Tunbridge Wells!

Moving forward, those Royal Tunbridge Wells landlords have many pitfalls, both in the short term and medium term. For instance, were you aware that the rules of changes for new tenancies from the 1st October 2015 (with some imposing penalties including loosing the right to require the tenant to vacate, if they are done incorrectly) or in the medium term, the planned change in the way buy to let’s are taxed?

More than ever, the days of buying any old property in Royal Tunbridge Wells and you would be set for life are gone. Now, it’s all about ensuring you stay the right side of the law, buying the right property (and that might mean even selling some to buy others), so you build the right portfolio for you as a landlord. One source of info on all of these issues, where you will find other articles similar to this on the Royal Tunbridge Wells property market, is the Royal Tunbridge Wells Property Blog 


Saturday 5 December 2015

Royal Tunbridge Wells House owners desert the housing market with an 8 year low

Even though the housing market is in an upbeat state in many parts of the UK, getting on the property ladder is still challenging for many and regarded as unattainable by some.  However, that goal has become even worse recently in Royal Tunbridge Wells as the number of houses available to buy is at an 8 year all time low.

Back in Summer 2008, there were over 1,200 properties for sale in Royal Tunbridge Wells and since then this has steadily declined year on year, so now there are only 451 for sale in the town.  This continuing diminishing supply of housing has been happening over those years for a while and there simply aren’t enough properties in Royal Tunbridge Wells to match demand.

According to a recent report by the National Association of Estate Agents, that said, “There are now 11 house hunters fighting after every available house which isn’t sustainable.”   What that means is Royal Tunbridge Wells youngsters, who are looking to buy their first home, are finding themselves being squeezed out by the competition.  However, in the meantime, nobody wants to live with parents until they are in their 30’s, so that in turn creates demand for more rental properties, which means landlords have a greater demand for more rental properties so are buying more, resulting in even less smaller properties for the youngsters to buy, it’s a vicious circle.   

Talking to fellow agents, mortgage arrangers, surveyors and solicitors in the town, all of whom have extensive dealings in the Royal Tunbridge Wells property market like myself, most of us agree the movement in the Royal Tunbridge Wells market is taking place in the middle to upper market, higher up the property ladder and it’s second and third steppers pushing through the properties that are being bought and sold.

That has meant as people tend to move less in the middle to upper market, the number of the properties actually selling has drastically reduced over the last couple of years.

When we look at the individual areas of the town, it paints an interesting picture.

  • TN1 - Royal Tunbridge Wells, town centre 22 properties sold in May 2015 (the most recent set of figures from the HM Land Registry), whilst over the Summer months of 2014, the number of properties selling in this postcode was always between 36 and 42 per month. (Interestingly the average value of those properties was £413,318).
  • TN2 - Pembury 24 properties sold in May 2015 (with an average value of £355,203), whilst over the Summer months of 2014, the number of properties selling in this postcode reached into the early 70’s.
  • TN3 - Langton Green, Groombridge, Frant, Speldhurst, Lamberhurst 9 properties sold in May 2015 (the most recent set of figures from the HM Land Registry), whilst over the Autumn months of 2014, the number of properties selling in this postcode was always between 16 and 25 per month. (Interestingly the average value of those properties was £547,562).
  • TN4 - Southborough 51 properties sold in May 2015 (with an average value of £349,939), whilst over the Summer months of 2014, the number of properties selling in this postcode reached into the early/mid 70’s.
So what does this all mean for homeowners and landlords alike in Royal Tunbridge Wells?  Demand for Royal Tunbridge Wells property is good, especially at the lower end of the market.  However, with fewer properties coming up for sale, it means property prices are proving reasonably stable too.
You see I believe a more stable, consistent Royal Tunbridge Wells property market, with less people seeing property as an easy way to make a quick buck (as many did in the early 2000’s when prices were rising at nearly 20% a year so people were buying and selling every other minute), but a property market that has a steady growth of property values in Royal Tunbridge Wells, year on year, without the massive peaks and troughs we saw in the late 1980’s and mid/late 2000’s might just be the thing that the Royal Tunbridge Wells property market needs in the long term.

For more insights, comments and facts on the Royal Tunbridge Wells Property market please visit the Royal Tunbridge Wells Property Blog where you will find many similar articles to this.



 

Saturday 28 November 2015

Could your Royal Tunbridge Wells property save you from Pension oblivion?

If you were born in the early 1970’s or late 1960’s, if you haven’t started to think about it yet, retirement is closer than you think. In fact the number of years you have left to work is less than the number of years you have worked. The basic state pension is worth £115.95 a week for a single person in 2015/16 (or £6,029 a year) and £231.90 a week for a couple (£12,118 a year) as long as your partner has paid their stamp (although there are certain get of jail cards if they haven’t). 

As a household, could you live on just over £12k a year?

However, could the property you are living in in Royal Tunbridge Wells save you from poverty when you reach retirement? You see, a regular income is vital in retirement, and the bricks and mortar you own in Royal Tunbridge Wells could provide a way for you to finance life when you retire.

If you are in your 30’s, instead of saddling yourself with bigger and bigger mortgages, going from your first time buyer flat, to a terraced, to the semi and then the large detached house, you could instead keep your terraced or small semi, turning it into buy a buy to let property, let the rent pay the mortgage and then rely on capital growth to provide you with a lump sum when you sell the property and retire.  One of the biggest plus points of buy to let is what is known as leverage. Let me explain ... say you have a deposit of 25% and the value of the property rises by 3% a year, your gains in fact multiply to 12%.  However, if property prices drop, 'leverage' can be catastrophic, as losses will also be multiplied. Property values have dropped a number of times in the last 50 years, but they always seem to bounce back ... property must be seen as a long term investment.

Let me explain how leverage could work for you. If you had bought a Royal Tunbridge Wells house in Spring of 1983 for £50,000, using a 75% mortgage and 25% deposit, (meaning your deposit would be £12,500). Today, that Royal Tunbridge Wells property would have risen in value to £361,895, a rise of 623.8%. However, when you look at the growth on just your deposit, the rise is even better ... instead of 623.8%, we see a rise of 2795% (remembering that the mortgage would have been paid off).

However, buy to let is not all about capital growth and in retirement, income is more important than capital growth, as rent is the key to a steady income.

So surely the best strategy is to buy those Royal Tunbridge Wells properties with the high rents (when compared to the value of the property). These are called high yield properties in the buy to let world because the monthly return is so much greater. So surely they are the best in Royal Tunbridge Wells? Possibly, but the properties that offer these higher yields (in the order of 5% to 6% per year) tend to be in such areas as Sherwood in Royal Tunbridge Wells, historically they haven’t offered such good capital growth when compared to the town average, have a higher tendency for void periods and such properties tend to attract tenants that have a greater propensity to be high maintenance.

Therefore, if a high maintenance rental portfolio wasn’t for you, another strategy could be buy a property with relatively smaller rental returns of 3% to 4% per year (i.e. lower yields), but in a more up market area such as Langton Green. Properties such as these tend to suffer from less void periods (i.e. when there is no tenant in the property paying you rent) and they historically have had better long term capital growth when compared to the town average.
Every landlord is different and every property is different. All I suggest to you is do your homework.
As regular readers will know, I am happy to share my knowledge and experience of the Royal Tunbridge Wells property market, high yields, high capital growth, what to buy, what not to buy and where to buy in the Royal Tunbridge Wells Property market can always be found on the Royal Tunbridge Wells Property Blog 


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Monday 23 November 2015

Royal Tunbridge Wells tenants feel the squeeze as rents continue to rise


As my regular readers know, my passion is talking about Royal Tunbridge Wells property. As a property agent I like to comment on the Royal Tunbridge Wells property market, which I hope will be of interest to both homeowners and buy to let landlords alike. However, this week, I want to highlight the plight of the tenants of Royal Tunbridge Wells as more and more of their wages are being taken up by ever increasing rents.

The cost of renting a home in Royal Tunbridge Wells has broken through the £1100 a month barrier as the average rent for a property in the town, now stands at £1144 per month, and whilst this was a drop of 1.6 % last month, rents for new lets are 7% higher than they were 12 months ago.

House price inflation has certainly eased in Royal Tunbridge Wells from the heady days of 2014, but still with retail price inflation (for goods and services) reducing to 0% any increase in property values, no matter how small, means in real terms property is still getting more expensive. Meanwhile, many tenants have given up saving for a mortgage deposit as rents continue to take more and more of their wage packets leaving nothing to save for a deposit. That means, more and more tenants are deciding to rent for the long term and therefore the desire for decent high quality rental properties continues to exceed the available rental stock.

I would go as far as to suggest that rents are an ideal barometer to the state of the local economy as a whole and strongly believe that the recent increase in Royal Tunbridge Wells rents are a sign that the Royal Tunbridge Wells economy is picking up. 

This means Royal Tunbridge Wells landlords are continuing to capitalise on the Royal Tunbridge Wells property market. The most recent Land Registry data suggests the annual property price rises in the town have eased over 2015, leaving property values 8.41% higher than 12 months ago, so as property price growth is easing off, with the increased rents, rental yields are strengthening for the first time in years to compensate. The mortgage market has become more stable after the mad months of May and June after the Tory’s got back into No.10, and so, everything is set to be good news for landlords; even with the Chancellors change of tax rules in the coming years for buy to let mortgages.
You can get some amazingly low mortgage rate deals at the moment, so with mortgage rates so low and returns still extraordinarily attractive, there’s rarely been a better time to invest in rental properties.

However, (you knew there would be a however!), it’s all about buying the right property at the right price. Not all property types are seeing equal rises in rents and capital growth.  Different parts of the town, different types of properties are experiencing quite different changes.  For example, the average length of time the 32 Royal Tunbridge Wells properties up for rent between £250 to £500 per month is 81 days, whilst the average length of time the 126 properties at £500 to £1000 per month is 47 days and 84 properties that fall into the £1000 to £2000 per month price bracket is 42 days.

When you start comparing different parts of Royal Tunbridge Wells, the numbers are even stranger!  The bottom line is that you must take advice and opinion. One source of advice and opinion is the Royal Tunbridge Wells Property Blog. In the Royal Tunbridge Wells Property Blog, you will see many more articles like this, discussions and even what I consider to be the best buy to let deals around, irrespective of which agent is selling it.

Whether you are a landlord, ‘Homes Under the Hammer’ addict or just a homeowner who is interested in what is happening to the local property market, then please visit the Royal Tunbridge Wells property Blog 


Wednesday 18 November 2015

Royal Tunbridge Wells Property Market - Asking Prices Drop but Values rise


Those of you who regularly read my weekly articles in the Royal Tunbridge Wells Property Blog will know I like to keep abreast of the Royal Tunbridge Wells property market. Something attracted my attention this week about the local property market, something I wanted to share with my many readers.

 Over the last month, there appears to have been an anomaly in the local property market, whereby asking prices in the town have dropped, yet property values have increased.  The average asking price of a Royal Tunbridge Wells property, according to Rightmove, fell 1.2% this month yet the average value of a Royal Tunbridge Wells property rose by 0.9%
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So how does this relate in monetary terms?  This anomaly has driven the average asking price of a Royal Tunbridge Wells property down slightly to £492,400 whilst the average value is now £434,900.

So why the difference? Technically an ‘asking price’ can be any price that a homeowner wants to place his or her property on the market for. Unfortunately, many times this is done without research and can result in overpriced properties that don't sell. As the Summer months are normally slightly quieter those left on the market wanting to sell often temper their asking prices in these months to try and generate interest in their property.

On the other side of the coin, the property ‘value’ is the price that a willing buyer is prepared to pay and a willing seller is prepared to sell at.   Therefore, in a nutshell, Royal Tunbridge Wells property values are continuing to rise and those homeowners in Royal Tunbridge Wells who have properties on the market, last month on average, reduced their asking prices .. great news for property owners and buyers alike!

In previous articles, I have spoken about the continued fundamental shortage of property coming on to the market compared to buyer demand. That is especially true for homeowners wanting to upgrade to a better house/better location.  I can appreciate Royal Tunbridge Wells home owners are reluctant to put their own property on the market speculatively and wait for the right property to become available and some high demand locations can suffer from a property stalemate.

Most homeowners don’t want to sell and have nothing to buy.

But that’s the beauty of the much maligned English and Welsh house buying process. You can find a purchaser for your property, then ask them to wait. By agreeing a sale (subject to contract) before you try to buy sounds concerning to many, but with fewer properties for sale you need to have a buyer for your property or you will be treated as a less serious buyer yourself. If you cannot find the right home for you, you can slow the deal with your purchaser until it comes along. If nothing suitable does comes along and you lose your buyer then the worst outcome is that you have to find another purchaser or take your property off the market and stay put for now, and as long as you mention this at the start they must not commit to any costs until you have agreed your onward purchase.

However, for the landlord/buy to let investors, these potential problems are nothing further from the truth. As I write this article, there are over 160 flats for sale, 54 terraced houses and over 80 semis for sale in Royal Tunbridge Wells.  Landlord/Buy to let investors can normally pick up some bargains in the Autumn months, as sellers who are selling their homes often have a pressing need to sell by this time.

The types of houses a Royal Tunbridge Wells landlord typically buys, are not the same types as the homeowners wanting to move to a posher area of the town as they are attracted by larger semis and detached properties. The best types of properties for buy to let are the smaller flats, terraced and semis (not the big detached ones). There are in fact too many of these smaller properties for sale .. just look at the numbers of properties for sale (mentioned in the previous paragraph).

If you are a landlord or thinking of become one for the first time, and you want to read more articles like this about the Royal Tunbridge Wells Property Market together with regular postings on what I consider the best buy to let deals in Royal Tunbridge Wells, out of the many properties on the market,  irrespective of which agent is selling it, then you might like to visit the Royal Tunbridge Wells Property Blog


Monday 2 November 2015

Claremont catchment area properties outperform Royal Tunbridge Wells average by 59.04%

I was having a chat with a Royal Tunbridge Wells property investor the other day, when he asked if schools, especially primary schools, affected the local property market in terms of demand from buyers and tenants to a property.  Anecdotally, I have always known this to be true, a good school creates good demand and good demand does affect house prices.  So, I asked my colleagues on the front line, who take the phone calls from people putting themselves on our mailing list and they confirmed that most people cite location as their number one factor.

After looking through our mailing list, it confirms there is a close correlation between the high demand areas of Royal Tunbridge Wells and the close proximity to a good primary school.  Talking to my team in a recent morning meeting, they agreed many people would look to increase their budget quite significantly, whilst others would consider downgrading their property requirements to be close to a good primary school.

Those of you who regularly read this blog will know I like a challenge, so I decided to look at the science behind these assumptions.  According to the SchoolGuide website, Claremont Primary School is one of the best primary schools in Royal Tunbridge Wells.  Its figures are certainly impressive. Their last Ofsted Report classified it as Outstanding, 92% of 11-year pupils achieving Level 4 or above in maths, reading and writing whilst 46% of them achieved level 5.  Finally, the schools’ KS2 rating was classed as Excellent.

Looking at property sales within half a mile of Claremont, property values have risen in value since 2001 by 161.46%, whilst according to recent figures, the Royal Tunbridge Wells average as a whole has risen in the same time frame by 101.52%.

That means the parents of Claremont have seen the values of their properties rise proportionally 59.04% more than the Royal Tunbridge Wells average ... interesting don’t you think?

However, whilst a good primary school significantly contributes more to house prices, the same can’t be said for secondary schools. There are two reasons for this, firstly, as secondary schools are much larger, so their catchment areas are correspondingly much larger, meaning parents don’t need to live so close to the school. Secondly, in the UK, whilst the difference between the top 25% and bottom 25% of secondary schools is not insignificant, in the primary school sector, the difference between the top 25% and bottom 25%, according to the London School of Economics, is considerably and significantly more.


Many other Royal Tunbridge Wells landlords, both who are with us and many who are with other Royal Tunbridge Wells agents, like to pop in for a coffee or ring/email us to discuss the Royal Tunbridge Wells property market, to consider how Royal Tunbridge Wells compares with its closest rivals and hopefully we can answer all their questions. You must take lots of advice and seek out the best opinion. One good source of opinion, specific to the Royal Tunbridge Wells property market is the Royal Tunbridge Wells Property Blog. I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion.

Friday 16 October 2015

Royal Tunbridge Wells’s £1.9 billion Mortgage Powder Keg

Eight years ago, in the summer of 2007, hardly anyone had heard of the term ‘credit crunch’, but now the expression has entered our daily language and even the Oxford Dictionary.  It took a few months throughout the autumn of 2007, before the crunch started to hit the Royal Tunbridge Wells Property market, but in November / December 2007, and for the following seventeen months, Royal Tunbridge Wells property values dropped each and every month like the proverbial stone. The Bank of England soon realised in the late summer of 2008 that the British economy was stalling under the continued pressure of the Credit Crunch. Therefore, between October 2008 and March 2009, interest rates dropped six times in six months from 5% to 0.5% to try and stimulate the British economy. 

Thankfully, after a period of stagnation, the Royal Tunbridge Wells property market started to recover slowly in 2010, but really took off strongly in late 2013 / early 2014 as property prices started to rocket. However, the heat was taken out of the market in late 2014/early 2015, with the new mortgage lending rules and some uncertainty, when some people had a dose of pre–election nerves.  

With the Conservatives having been re-elected in May, the Royal Tunbridge Wells property market regained its composure and in fact, there has been some ferocious competition among mortgage lenders, which has driven mortgage rates to record lows. Whilst I have no actual figures to back this up, I know an awful lot of long serving bank managers, mortgage arrangers and people in the finance industry, all of whom have told me on previous occasions when interest rates rose (1987, 1992, 1997 and 2003), it wasn’t the first rate rise that was the catalyst for many homeowners and landlords to remortgage but the second or third increase.  The reason being that it was only by the time of the third rate rise,  it started to hit the wallet.  However, the issue is, by the time of the second or third rate rise the best fixed rates, were in all instances, no longer available as they had been pulled by the banks months before.

But here is the good news for Royal Tunbridge Wells homeowners and landlords, over the last few months a mortgage price war has broken out between lenders, with many slashing the rates on their deals to the lowest they have ever offered.  I read that the well respected UK financial website Moneyfacts said only a couple of weeks ago, the average two year fixed rate mortgage has fallen from 3.6% twelve months ago to just under 2.8%.

Interestingly, according to the Council of Mortgage Lenders, the level of mortgage lending had soared to a seven year high in the UK.  So what about Royal Tunbridge Wells?  In Royal Tunbridge Wells, if you added up everyone’s mortgage, it would total £1.9 billion.  Even more interesting is when we look at Royal Tunbridge Wells and split it down into the individual areas of the town,

  • TN1 - Royal Tunbridge Wells town centre £279.2m
  • TN2 - Pembury £613.3m
  • TN3 - Langton Green, Groombridge, Frant, Speldhurst, Lamberhurst £352.3m
  • TN4 - Southborough £683.3m


Since 1971, the average interest rate has been 7.93%, making the current 0.5% very low.  So, if interest rates were to rise by only 2%, according to my research, the 4,636 Royal Tunbridge Wells homeowners, who have a variable rate mortgage would, combined, have to pay an approximate additional £21,660,000 a year in mortgage payments.  That means every Royal Tunbridge Wells homeowner with a variable rate mortgage, will on average have to pay an additional £4,672 a year or £389 a month in interest payments.

 I know over the last couple of posts, I have talked about mortgages a lot however, I am not a mortgage arranger but a letting / estate agent and as regular readers know, I always talk about what I consider to be the most important issues when it comes to the Royal Tunbridge Wells Property market and at the moment, in my humble opinion, this is the most important thing!

Buy to let is all about maximising your investment, increasing income and reducing costs.  I give advice, opinions, thoughts, concerns, worries, expectations and fears about the Royal Tunbridge Wells Property market in my blog on the Royal Tunbridge Wells Property Blog.  If you are interested in the Royal Tunbridge Wells Property Market, you might learn something by visiting the blog.


Friday 9 October 2015

Interest rates set to rise – How will that affect the Royal Tunbridge Wells property market?

A couple of weeks ago, I mentioned in this blog about how the Bank of England has been indicating recently that UK interest rates will be going up in the not too distant future. Therefore, if you are one of the 8,133 homeowners in Royal Tunbridge Wells, who own your own home with a mortgage, then you need to consider your options and start to budget for an interest rate rise. However, if you are a landlord, who owns one of the 5,075 rental properties in the town, whilst your exposure to interest rate rises is lower, it is most certainly something you should be aware of.

Since the spring of 2009, British interest rates have been at a record low of 0.5%. It’s not a case of if, but when, they will rise. Some people think it will be before Christmas, although I am of the opinion, it will early in the New Year around Easter time, when they do rise. I also expect those rises will be slow, steady and limited. It depends on what is happens to UK wage rises, UK inflation and the general state of the British economy. Nevertheless, as much most of us in Royal Tunbridge Wells would love to pull the shutters and stick two fingers up to the world, we have to recognise we are part of a global economy and global economic worries still exist to prevent an abrupt and instantaneous rate rise.

Those Royal Tunbridge Wells landlords, who do have a mortgage, need to realise that as interest rates rise, their monthly mortgage costs rise. It’s easy to say you will look at your mortgage next month, then before you know it, Christmas will be here!  Don’t forget, mortgage lenders have always removed the juicy low rate mortgage deals a few months before interest rate rise. Speak to a qualified mortgage arranger, there are lots of them in Royal Tunbridge Wells and seriously consider fixing your mortgage rate now.  You didn’t buy your Royal Tunbridge Wells buy to let property for it to become a millstone around your neck. It’s all about mitigating your costs and maximising your income to make your Royal Tunbridge Wells buy to let property the investment you want it to be.

However, on the other side of the coin, two in three landlords who have bought property since 2007, have done so without a mortgage. A rise in interest rates might be a good thing. Let me give you some background first, then I’ll explain why. Royal Tunbridge Wells landlords have see their return on investment for their Royal Tunbridge Wells buy to let property, over the last couple of years, perform very well indeed with Royal Tunbridge Wells property values rising by 28.43% since the Spring of 2009. However, when rates do rise, whilst more expensive mortgage rates will ease the demand for borrowing, on the other hand, it may temper house price growth, making the property market more competitive... and therefore, we should see the return of some bargain property buys in Royal Tunbridge Wells!

Finally though, can I ask all Royal Tunbridge Wells homeowners and Royal Tunbridge Wells landlords, who have a mortgage that isn’t fixed, they need to recognise that rates will rise throughout 2016 to 2018 and will continue to move steadily upwards towards more viable and feasible long term levels.  I am not qualified to give that advice and this is my personal opinion, so please speak to a qualified mortgage arranger and, if appropriate, fix your mortgage before interest rates rise. Don’t say I didn’t warn you!

In the meantime, if you are a landlord looking for a bargain now, don’t despair ... there are plenty out there, if you know where to look! One place is Rightmove, another Zoopla and another OnTheMarket. However, sometimes, you can’t see the wood for the trees. At the time of writing, Rightmove had 422 properties for sale in Royal Tunbridge Wells, Zoopla 232 properties for sale in the town and OnTheMarket 178 properties ... where do you start? 

A lot of savvy Royal Tunbridge Wells landlords like to visit the Royal Tunbridge Wells Property Blog  where, irrespective of which agent is selling it, I regularly post what I consider out of the hundreds of properties on the market, to be the best buy to let deal in Royal Tunbridge Wells.   


Friday 2 October 2015

Crisis in the Royal Tunbridge Wells Property Market ..probably?

I don’t know about you, but if you watch Sky News every waking hour or read the newspapers, it always seems we as a Country, Europe or the World seem to lurch from one crisis to another. Another week, another crisis averted. It was only last summer the soothsayers were predicting the end of the world over the supposed house price bubble that many believed was developing in the South. Property prices were rising at 20%+ per annum in London, only for things to ease as the property market in the Capital showed a controlled slowdown and cooling in activity with price growth easing to a more realistic 8% to 9% per annum. Interestingly, there was no panic when some modest price drops were seen in some of London’s highest priced suburbs.

However, this month’s crisis is the buy to let boom and as George Osborne always likes to be topical, in the July emergency budget, he declared that he will start to scale back, from 2017, the tax relief that those high income tax rate landlords with a mortgage have benefited from. The Daily Mail ran headlines stating it was the end of the private landlord; predicting many landlords will give up on buy to let altogether and we will be inundated with rental properties up for sale as landlords feel squeezed from the market.

Even Mr Carney, the Governor of the Bank of England, recently cautioned that the buy to let property market could destabilise the whole UK property market. He was concerned landlords who bought with high loan to value mortgages could be spooked if there is a property crash, they would panic because of negative equity, sell cheaply, which would worsen house price falls.

End of the world then?   .. this week, yes probably, but next week .. that’s another story!  Before we all go and live like a hermit in the Scottish highlands, let me explain to you my perspective on the whole subject. As I mentioned a few weeks ago, two thirds of buy to let properties bought in the last eight years have been bought mortgage free – so they won’t be affected by the Chancellors’ tax changes.  Also, something I feel is often overlooked but very important, is the fact that landlords historically have only been able to normally borrow up to 75% of the value of the rental property.  In the last property crash of 2008, property values dropped by the not so insignificant figure of 17.93% in Royal Tunbridge Wells, but even then, when we had the credit crunch and the world’s banking sector was on the brink, no landlord would have been in negative equity in Royal Tunbridge Wells.

I believe we have a case of ‘bad news selling newspapers’ and I believe that buy to let, and the property market as a whole, will carry on relatively intact. It’s true reducing tax relief will hit landlords who pay the higher rate of income tax and this may slightly diminish buy to let as an investment vehicle, but I doubt people will sell. Many landlords have been lazy with their investments, buying with their heart, not their head. You would never dream of investing in the stock market without doing your homework and talking to people in the know. If you want to make money in the Royal Tunbridge Wells property market as a buy to let landlord, it’s all about having the right property and as you grow, the right portfolio mix to offer a balanced investment that will give you both yield and capital growth.

The Royal Tunbridge Wells buy to let market still offers good investment opportunities to new and old alike. Those who have bought in the last twelve to eighteen months have reaped the benefit from buying in Royal Tunbridge Wells, because the town offered a combination of reasonable house prices with subsequently increasing rents.  Property values have risen by 13.18% in the last eighteen months in Royal Tunbridge Wells, whilst looking at rents, in Q2 2015, average rental values for new tenancies were 11% higher than Q2 2014, which is particularly interesting as they only rose by 4.5% between Q2 2013 and Q2 2014.

I cannot stress enough the importance of doing your homework. One source of information and advice is the Royal Tunbridge Wells Property Blog where I have similar articles to this about the Royal Tunbridge Wells property market and what I consider to be the best buy to let deals around at anyone time in the City, irrespective of which agent it is on the market with. If you haven’t visited and you are interested in the local property market in Royal Tunbridge Wells .. you are missing out! .. 


Friday 25 September 2015

Royal Tunbridge Wells Property Values 8.6% higher than year ago

Royal Tunbridge Wells property values rose by 0.3% last month, meaning they are 8.6% higher than 12 months ago. Overall, I expect future property price growth to remain firm, built on the foundations of an improving labour market, strengthening economy and very low mortgage rates. In fact, talking to a number of other agents in the city, mortgage arrangers and solicitors (all of whom have their direct finger on the pulse of the Royal Tunbridge Wells property market), the steady long term growth in Royal Tunbridge Wells property prices tied in by strong demand conditions so far this summer, alongside an underlying lack of supply and the continued low mortgage rate environment, means the slow but steady upward momentum of the Royal Tunbridge Wells property market is likely to continue in the second half of 2015.

However, there are a couple points I wish to highlight as all my blog readers will know, I like to give a balanced and honest opinion of what is happening in the Royal Tunbridge Wells property market.  The two main points being low interest rates and a lack of supply of property.

Interest rates first - Mark Carney (Chief of the Bank of England) said in a speech a few weeks ago at Lincoln Cathedral, the Bank will be seriously considering raising interest rates around Christmas time. An upward movement in interest rates will temper demand and result in a marked slowdown in house price growth. Mr Carney said that only six out of ten people that had a mortgage (57% to exact) had a variable rate mortgage, compared with more than one in seven (73% to be exact) in the Summer of 2012. Now I am not a mortgage arranger and cannot give advice, but rates are only going on one direction, so whether you are a landlord or homeowner, this might be a time to consider fixing your mortgage rate?  Don’t say I didn’t warn you!

Tie this in with the stricter mortgage lending rules which were introduced in 2014, which affected people’s ability to have larger mortgages, this means homeowners will need to be realistic in their pricing if they want to sell. Reading other recent reports though, property owners have continued to pay off mortgages at a faster rate while mortgage rates have been low. Therefore, when mortgage rates rise, the affect on home movers sentiment which, given the shortage of supply, would result in a marked slowdown in the rate of house price growth.

Shortage of Supply As I have mentioned in previous articles, the number of houses on the market in Royal Tunbridge Wells is at an all time low. One reason is the large number of buy to let landlords who have bought Royal Tunbridge Wells property over the past fifteen years. Unlike first time buyers who tend to move on after a few years, landlords tend to keep their properties long term, meaning there are less properties coming onto the market ... thus restricting supply and sales. In fact over the last four months, only 7,197 properties in the Kent County Council area have changed hands and sold, compared to 8,030 in the same time frame in 2014, a not so insignificant drop of 10.37%. 

If you are planning on investing in the Royal Tunbridge Wells property market, or just want to know more, things to consider for a successful buy to let investment, one source of information is the Royal Tunbridge Wells Property Blog

Saturday 19 September 2015

My concerns about the Royal Tunbridge Wells Property market

I am genuinely concerned about the Royal Tunbridge Wells property market, but in a way that might surprise you.  Rightmove announced that average ‘asking prices’ fell slightly last month by 0.4% in the South East, leaving them 5.8% higher than a year ago.  Whilst it could be said that monthly change is very modest, in the same period a year ago, we saw a monthly fall of 0.6% in the South East, which is more the norm given the onset of  schools breaking up and everyone going on holiday.

Looking at all the data on the Royal Tunbridge Wells property market; putting aside the need for more houses to be built in the next decade to balance out the increase in population (helped in part by inward European migration) but not matched by a similar increase in housing being built; my research shows there is a widening gap between what property buyers want and what is available to buy. In a nutshell, many more buyers are looking for the smaller one and two bed properties (the typical semi detached and smaller terraced houses/apartments), whilst there is an oversupply of the four and five bed properties, which are the typical large detached properties available.

Demand for smaller properties comes from both first time buyers and the growing number of buy to let landlords, where it is more cost effective and efficient to buy smaller properties to let out compared to larger properties which tend to offer poorer returns.  Also, landlords with larger loans (on those larger more expensive properties) will also be hit harder with the changes in the way tax is paid on buy to let investments, which start in 2017.

If you recall, a few weeks ago I did some research on how different types of properties had performed in Royal Tunbridge Wells since the year 2000.  I revisited those calculations and it hit me how different types of properties had performed over the last 15 years.  In a nutshell, this mismatch of demand and supply isn’t a new phenomenon, it’s been happening under our noses for years!

In the last 15 years, the average terraced house in Royal Tunbridge Wells has risen in value from £122,243 to £330,928 whilst the detached house has risen in value from £307,777 to £809,383.  Nothing seems amiss until you look at the percentage growth.  The terraced has grown in value by 171% whilst the detached by only 163% meaning the gap between the inexpensive terrace’s and expensive detached properties has in percentage terms narrowed (this isn’t just a Royal Tunbridge Wells thing, it has happened all across the Country).

I am concerned because more houses need to be built, not only in Royal Tunbridge Wells, but in the South East and the UK as a whole.  In particular, there is specific need for more affordable starter homes for the growing demand from both tenants (and the landlords that will buy them) and first time buyers.  The Tories need to face up to the fact that unless they can get the builders, the planners (to release more building land), the banks (to finance it) and themselves together, to ensure long term plans can be made, and implemented, this issue will continue to worsen.

The country needs 200,000 houses a year to be built to keep up with demand, let alone reverse the imbalance between demand and supply.  Last year, only 141,040 properties were built, the year before 135,510 and 146,850 in the year before that.  This means only one thing for Royal Tunbridge Wells landlords.  Unless David Cameron starts to rip up huge swathes of the British countryside and build on acres and acres of green belt, demand will always exceed supply when it comes to property for the foreseeable future.

Therefore, investment in the local Royal Tunbridge Wells property market as a buy to let investment could be the best move to make as the stock market investments are possibly on the wane.  Everyone is different and trust me, there are many pitfalls in buy to let.  You must take lots of advice and seek out the best opinion.

Friday 11 September 2015

Royal Tunbridge Wells – The 10 year Time Bomb on Home Ownership

Many people think the British obsession with owning your own home started with Thatcher in the early 1980’s, when she allowed council tenants to buy their council houses under the right to buy scheme. However, the growth actually started just after the Second World War. Looking at the country as a whole in 1951 30% of residential property was owner occupied then, every ten years that rose incrementally to 39% by 1961; 51% by 1971; 58% by 1981 and 68.07% by 2001 but after that, it dropped to 63.4% by 2011 and continues to drop today.

Young adults tend to start to think about settling down and moving out of the family home in their early-mid twenties.  After a couple of years, they will have a choice of either buying their first house (albeit with a mortgage) or decide to privately rent for the long term (because the Council House waiting list is measured in decades at the moment!). The ratio of people owning a house with a mortgage verses privately renting is an extremely important guide to what people are doing about their housing needs and what their attitude to renting vs buying is.  With that in mind, within the next ten years, I am predicting there will be more people renting privately in Royal Tunbridge Wells than own a property with a mortgage and that the British love affair of property ownership will fade as the decades roll on.

This is a really important change in the way we live, as I explained to a local Royal Tunbridge Wells landlord the other day, knowing when and where the demand of tenants is going to come from in the coming decade is just as important as knowing the supply side of the buy to let equation, in relation to the number of properties built in the town; Royal Tunbridge Wells property prices and Royal Tunbridge Wells rents.

In the Tunbridge Wells Borough Council area as a whole there are 7,412 households that are privately rented via a landlord or letting agency verses 16,264 households that are owned with a mortgage, so my prediction appears to be outrageous. However, when we look deeper (as the devil is always in the detail), 7,986 of those 16,264 households are 35 to 49 year olds and 5,055 are households of 50 to 64 year olds. I would expect all the 50+ years to be paying their mortgage off as they enter retirement as I would with some of the people in their mid/late 40’s. 

Meanwhile, at the other end, in the 25 to 34 age range (the age most people bought their first home in the 1970’s/80’s/90’s) only 2,100 of the 4,433 households occupied by those 25 to 34 year olds are owner occupiers with mortgages, because 2,333 households are privately rented. This means only 47.3% of 25 to 34 year olds have bought their house (with a mortgage). Twenty years ago, that would have a much higher percentage of homeowners (between 75% to 85%).

It can be seen that as the older generation pay their mortgages off as they start to get to retirement and the younger generation aren’t jumping on the property ladder like they were 20 or 30 years ago, the private rental sector will take up the slack as more and more people will want a roof over their head, but won’t buy one but rent one. With Local Authorities and Housing Associations not building houses anywhere near like the number of houses they were building in the 1950’s, 60’ and 70’s, the private landlord appears to have good demand for their rental properties for many decades to come.

This will create a polarisation in the housing market between those, mostly older, households who own outright and those, mostly younger, households who rent. Our housing market is very much turning into the European model. However, all is not lost, the younger generation will inherit their parents properties, which in turn will enable them to buy, albeit later in life.

If you are a landlord or thinking of become a landlord, and would like to read more articles like this and other information on the Royal Tunbridge Wells Property Market, then please visit the Royal Tunbridge Wells Property Blog 

Saturday 5 September 2015

George Osborne – The Royal Tunbridge Wells landlord’s friend?

Well the last few weeks has been rather hectic as Royal Tunbridge Wells landlords, some who use us to manage their properties and other landlords who just read our Royal Tunbridge Wells Property Blog, have been sending me emails or picking the phone up to me about the new rules on buy to let taxation announced in the recent budget. George Osborne confirmed in the recent summer budget that the tax relief given to landlords on mortgage interest payments, on their buy to let (BTL) properties, would be reduced over the coming years for higher rate income tax payers. The Chancellor said the tax relief that private buy to let landlords (who pay the higher rate of income tax) would change in 2017 from the current 45%/40% and would steadily reduce over the following four years to the existing 20% by 2020.


With 21.4% of residential property in the Tunbridge Wells area being privately rented (as there are 5,353 privately rented properties in the Local Authority area), these changes are potentially something that will not only affect most Royal Tunbridge Wells landlords, but also the tenants and the wider property market as a whole. The choice of rental properties could drop, especially at the top end of the market which could push up rents.

However, Royal Tunbridge Wells landlords could protect themselves by reassigning one or more rental properties into a company structure (e.g., a Limited Company, Partnership or Sole Trader) and by doing so, the total tax paid is greatly reduced, because a company only pays tax on the profit. Nonetheless, before everyone goes off setting up companies for their BTL portfolios, it must also be noted, if a sole trader firm is started, stamp duty needs to be paid, yet if the owner is in business with a partner, they could enjoy some stamp duty relief.  The biggest tax variation is Capital Gains Tax (CGT) where the tax bill will be much higher when you come to sell your portfolio. 

In essence, by going into business with your BTL properties, you will potentially have a modest stamp duty to pay when you start, but you will have a lot less monthly tax to pay, irrespective of the interest rate, but the CGT bill will be much higher when you come to sell ... as you can see, it is not a ‘get out of jail card’. Now it must be remembered, I am not a tax advisor, so you must take advice from a qualified person.

Those planning to purchase a BTL property will have to factor these new rules into their calculations, and this could affect the offers they are willing to make. However, I am not that concerned, as the scaremonger reports fail to see the fact that two out of three BTL properties that have been bought since 2007 have been purchased without the support of BTL mortgage. With those two thirds of landlords paying cash for the purchase of their rental properties, that means two thirds of landlords will be totally unaffected by the changes.

So what of the future? The British love their Bricks and Mortar, it’s an asset that they can touch and feel and has a 70 year track record of capital growth that has out stripped inflation. Buy to let will still be attractive to Royal Tunbridge Wells investors and let me explain why. If you invested £80,000 in Royal Tunbridge Wells property in September 1987, today it would be worth £314,836. If you had invested the same £80,000 in to the London Stock Market (the FTSE 100 to be exact), it would be only be worth £229,012 today, whilst Inflation would have taken the original £80,000 and pushed it up to £166,254.

It’s true some central London landlords relying solely on the tax breaks rather than high yields may be forced out of the market, but even those landlords could seek to recoup any losses by increasing rents. However, those landlords may leave the market and this could constrict the availability of rented houses even more than it is already, increasing rents and thus pushing yields even higher for landlords and BTL investors still in the market... thus attracting new landlords into the market because of those higher yields.

The reality is, there is too much demand and not enough supply of homes for people to live in in the town. Official figures show the population in Tunbridge Wells is rising by 1,101 persons per year (i.e., demand rising), but only 447 properties are being built each year (i.e., supply is low). This sets up the Royal Tunbridge Wells (and UK) property market to continue to create strong and steady returns, irrespective of any tax loophole being there (or not as the case maybe).

Friday 28 August 2015

Royal Tunbridge Wells Landlord’s mortgages top £300 million!

The Brits can’t stop talking about property. The hot topic of discussion at the posh dinner parties of Langton Green, Speldhurst and Neville Park’s movers and shakers is the subject of the Royal Tunbridge Wells Property market, but in particular, buy to let. These people are buying up buy to let properties quicker than an ace Monopoly player .. or so it would seem if you read the Sunday papers. So is the buy to let market a sure fire way to make money?  Is it something everyone should be jumping into? Is it a sure fire way to make money? 

The answer is Yes and No to all those questions!

Firstly, the government gives tax breaks to landlords, as it allows the mortgage interest payments on a buy to let property to be tax deductible. Also, a landlord only has to flick through Rightmove or Zoopla, pick any property at random and agree a price. Then, find a modest deposit of 25% (often by remortgaging their own home) which for an average Royal Tunbridge Wells terraced house, would mean finding £82,732 for the deposit (as the average Royal Tunbridge Wells terraced house is currently worth £330,928) and borrow the rest with a low interest rate buy to let mortgage.  Finally, the landlord would rent out the property in a matter of hours for top dollar and live happily ever after, with the rent then covering the mortgage payments, with loads of money to spare and come retirement have a portfolio of property that would have quadrupled in value in fifteen years. Sounds wonderful – doesn’t it? Or does it???

Let us not forgot that the half of one per cent Bank of England base rate is artificially low. The international money markets can be fickle and if interest rates do rise quicker and higher than expected because of some unforeseen global economic situation, that monthly profit will soon turn into a loss as the mortgage will be more than the rent. Even though tenants are staying longer in their rental property, tenants still come and go and my guidance to landlords is they should allow for void periods, plus the maintenance costs of a rental property and of course, agents fees. .. all things that eat into that profit.

Interestingly, by my calculations, there are approximately 1,603 Royal Tunbridge Wells landlords owing in excess of £300 million in mortgages on those Royal Tunbridge Wells buy to let properties.  An impressive amount when you consider Royal Tunbridge Wells only has 0.150% of all the rental properties in the Country. It really does come down to a number of important factors going forward to ensure you are water tight for the future. A lot of my existing landlords are fixing their mortgage rates. One told me that the Metro Bank are currently offering a 5 year fixed BTL remortgage rate at 3.79% for 5 years (based on a 75% loan). I don’t give financial advice, so you must speak with a qualified mortgage advisor.. but that sounds very fair!

However, one thing I do know is that buy to let is a long term investment, it’s a ten, fifteen, twenty year plan and property prices will go down as well as up. You wouldn’t dream of investing in the stock market without advice, so why invest in the Royal Tunbridge Wells Property Market without advice? We give bespoke detailed advice to our landlords to enable them to spot trends in the Royal Tunbridge Wells Property Market before others, enabling them to buy better properties at better prices. For example, did you know that semis are selling for around 14% lower than 12 months ago in Royal Tunbridge Wells yet flats are selling for 30% more (with every other type in between). This means we can advise on which properties will go up in value better (or lose less if property prices drop), we can also advise which have lower voids and which properties have higher maintenance issues.  

Information on the local property market and ability to process it is the strongest asset we can give you. As Lois Horowitz, the famous author says, ”Not having the information you need when you need it leaves you wanting. Not knowing where to look for that information leaves you powerless. In a society where information is king, none of us can afford that”. One place to find information on the Royal Tunbridge Wells Property Market is the Royal Tunbridge Wells Property Blog, where you will find many articles just like this.