One
of my landlords rang me last week from Claremont Road, after he had spoken to a
friend of his. They were discussing the Royal Tunbridge Wells property
market and neither of them could make their mind up if it was time to either
sell or buy property. If you read the newspapers and the landlord forums on the
internet, there is a good slice of doom and gloom, especially with changes in
the taxation towards landlords, new legislation on checking tenants and the general
uncertainty in the world economic situation.
I
would admit, there are certain landlords in Royal Tunbridge Wells who have over
exposed themselves in the last few years with high percentage loan to value
mortgages. Those mortgages, with their current (yet artificially low) interest
rates, will start to suffer, as their modest monthly positive cash flow/profit,
i.e. income (rent) less costs (mortgage, fees, tax), will become negative when
the tax and mortgage rates rise throughout 2017 and beyond.
It
appears to me these landlords seem to have treated the Royal Tunbridge Wells
Buy to Let market as a sure bet and have not approached this as a business and,
as a result, they will suffer as they thought "Buy a house - rent it out
so it covers the mortgage and make a few quid on top". These are the people who will be thinking
twice. I see opportunity everywhere and won't be stopping, I’m here to stay. It’s
going to be an exciting new year.
Gone are the days when you could buy
any old house in Royal Tunbridge Wells and it would make money. Yes, in the past, anything in Royal Tunbridge
Wells that had four walls and a roof would make you money because since WW2, property
prices doubled every seven years … it was like printing money – but not
anymore.
True, since January 1997, the average price paid for a Royal
Tunbridge Wells flat/apartment has risen from £49,419 to today’s current
average of £279,275 in the town, an impressive rise of 465% and terraced/town
house have risen in the same time frame, from £74,694 to £369,101, also a great
rise of 394%. However, look back to 2005, and in that year, the average flat
was selling for £177,519, meaning our Royal Tunbridge Wells landlord would have
seen a modest rise of 57% and the terraced owner would have seen an increase of
97%, as they were selling for on average £187,313 ... not bad ... until you
consider inflation.
Since 2005, then inflation, i.e. the cost of living, has
increased by 33.4%. That means to retain its value, a Royal Tunbridge Wells
terraced property bought for £187,313 in 2005 needs to be worth £249,817 today.
Therefore, our landlord has seen the ‘real’ value of his property increase by 63.6%
(i.e. 97% less 33.4% inflation).
The reality is, since around the early 2000’s we haven’t seen
anything like the capital growth in property we have seen in the past and it’s
not predicted to grow at the rates it has previously done either. So it is high
time anyone considering investing in property stopped believing the hype and
did some serious research using independent investment expertise. You can still
make money by buying the right Royal Tunbridge Wells property at the right
price and finding the right tenant. Think about it, properties in real terms
are 63.6% higher than ten years ago, so investing in Royal Tunbridge Wells
property is not only about capital growth, but also about the yield (the return
from the rent). It’s also about having a balanced property portfolio that will
match what you want from your investment – and what is a ‘balanced property
portfolio’? Well we discuss such matters on the Royal Tunbridge Wells Property
Blog ... if you haven’t been, then it might be worth a few minutes of your
time?
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