Thursday, 26 May 2016

34% of Royal Tunbridge Wells people Rent - Is that Healthy?

Renting used to be a dirty word in the 60’s and 70’s. You either lived in a ‘Rigsby Rising Damp’ style bedsit with wood chip on the wall and a coin operated electric meter (that buzzed in the night) or you lived in a council house. In the latter part of the 20th Century, the British were persuaded that rent payments were ‘wasted money’. However, owning often makes less financial sense than renting and as the rate of homeownership is starting to drop substantially, as we roll the clock forward to today, there is no stigma at all to renting .. everyone is doing it. In fact, of the 57,061 residents of Royal Tunbridge Wells, 19,544 of you rent your house from either the local authority/social provider (ie council house or housing association) or private landlords – meaning 34.25% of Royal Tunbridge Wells people are tenants.

The idea of homeownership is deeply embedded in the British soul, in fact 36,569 Royal Tunbridge Wells people live in an owner occupied property (or 64.08%). Housing is at the heart of Government policy, as George Osborne has promised 200,000 new properties a year so first time buyers can buy their first home whilst recently changing the tax laws for buy to let landlords. To get votes, Thatcher (and everyone since) ran election campaigns promising everybody their own home, and as a country, we seem to equate homeownership the goal of British life.

So as more and more people are renting nowadays, are we turning to a more European way of living? Well, I believe, as a country, we are. In fact, homeownership could be affecting your health! The UK, according to Bloomberg, is only the 21st most healthy country in the world. Germany is at No.10 and Switzerland at No.4 and homeownership is at 52.5% and 44% respectively in those countries (in the UK it is 64.8%).

In the Tunbridge Wells Borough Council area, 78.81% of homeowners who own their house outright said they were in ‘very good’ or ‘good’ health whilst, at the other end of the scale, 4.5% said their health was ‘bad’ or ‘very bad’. Looking at renting, the census splits tenants into two types – 72.46% of Royal Tunbridge Wells local authority/social tenants said they were in ‘very good’ or ‘good’ health and 9.21% were in ‘bad’ or ‘very bad’ health …

… whilst ‘private rented tenants’ in Royal Tunbridge Wells, were the healthiest, as 88.9% of them described themselves in ‘very good’ or ‘good’ health and only 2.9% were in ‘bad’ or ‘very bad’ health

I am not suggesting that low homeownership rates in Switzerland and Germany are directly linked to health, nor, do I expect Brits to all go to Berlin, Interlaken or D├╝sseldorf and realise how happy people are when they don't need to worry about all the stresses which accompany homeownership. The numbers for Royal Tunbridge Wells do go some way to back up the argument (and they are the same across the whole of the UK). Nonetheless I do think that substantially all of the upside to homeownership in recent years has been a function of monumental rising house prices. Now that's come to an end, it's hard to see why anybody would want to buy?


Renting is here to stay in Royal Tunbridge Wells and it’s growing incrementally each year. Even with the new tax rules for landlords, buy to let is still a viable investment option for most people in the Town. There has never been a better time to buy buy to let property in Royal Tunbridge Wells, but buy wisely. Gone are the days that you would make profit on anything with four walls and a roof. Take advice, take opinion, do your homework. One place to do more homework, to read more articles on the Royal Tunbridge Wells Property market like this, is the Royal Tunbridge Wells Property Blog

Friday, 20 May 2016

What would Brexit mean to the 15,400 Royal Tunbridge Wells Property owners?

I don’t know about you, but I find if you read the Daily Mail, there are only three topics that make the blood boil of ‘Middle England’. Bureaucracy from Brussels, House Prices and the late Princess of Wales. Ignoring the late Princess if I can for this article, but if we as a country were to unshackle ourselves from chains of Brussels (the first topic), could we inadvertently effect the second topic and make UK house values drop?

If you read all the newspapers, the Brexit debate seems to be focused solely on central London. Many commentators have said Brexit would mean central London would have a lower standing in the world, meaning less people would be employed in Central London, with the implication of lower wages, fewer jobs etc., in Central London ... but we are in Royal Tunbridge Wells, not Marylebone, Mayfair or any part of Zone 1 London.

Now on the run up to the vote on the 23rd of June, I predict the ‘in’ camp will start to scare homeowners with forecasts of negative equity, and the ‘out’ camp will appeal the 20 somethings, who have been priced out of the property market with the prospect of a new era of inexpensive housing, should the fears of central London estate agents and developers, who believe the bottom will fall out of the market if we do leave, become real. The only reason the Mayfair’s, Knightsbridge’s, and Kensington’s of central London are attractive to foreign buyers are political and economic steadiness, an open and honest legal system and a lively cultural life. None of that is threatened by Brexit.

... But again, we are in Royal Tunbridge Wells and central London is 40 miles away. We are home to the Nevill Ground, one of the Oldest Motor Clubs in the UK and The Pantiles, and whilst the central London property market exploded after 2009, that explosion really and honestly didn’t affect the Royal Tunbridge Wells property market. So, putting central London aside, what would an ‘in’ or ‘out’ vote really mean for the 15,400 property owners of Royal Tunbridge Wells?

Initially, over the coming months, on the run up to referendum, I believe it will be like the run up to last year’s General Election. With the short-term uncertainty in the country, quite often, big decisions are put on ice and people are less likely to make big money purchases i.e. buy a property. However, in the four months up to last year’s Election, property values in Royal Tunbridge Wells increased by 1.65%, not bad for a country that thought it would get a hung parliament! So that argument doesn’t hold much weight with me.

Post vote, should the UK opt to leave Brussels, there would be a much more noteworthy impact. I believe that a vote to stay in the EU would see the Royal Tunbridge Wells property market return to a status quo very quickly, but the contrasting result could lead to some changes. The principal menace to the Royal Tunbridge Wells (and UK) housing market could be variation (in an upwards direction) in interest rates as a result of a Brexit, which could theoretically see the cost of mortgages grow swiftly, pricing many out of the market … but then two thirds of landlords buy without a mortgage, so that won’t affect them. Also, according to the Bank of England, 80.33% of all new mortgages taken out in 2015 were fixed rate. Looking at all mortgages as a whole, according to the Bank of England, 44% of all UK mortgagees have a fixed rate mortgage, but 56% don’t, so if you aren’t on a fixed rate ... talk to your mortgage broker now, because they can only go in one direction!

So in reality, if I really knew what will happen, I wouldn’t be a letting / estate agent in Royal Tunbridge Wells, but a City Whiz Kid in London earning millions. However, I suspect whatever decision the electorate of Royal Tunbridge Wells and the country as a whole makes, over the long term it won’t have a major effect on the Royal Tunbridge Wells property market. We have seen off ‘the end of the world’ credit crunch of 2008/9 and subsequent property crash, the 1988 Nigel Lawson induced post dual-MIRAS property crash, the 1979 Winter of Discontent property crash, the 1974 oil crisis that stimulated another property crash ... hell, we can even go back nearly a century with the 1926 post General Strike slump in property prices...

Today, property prices are 246.59% higher than 21 years ago in Royal Tunbridge Wells and are 9% higher than 12 months ago. So, make your own decision on 23rd of June 2016 safe in knowledge that whatever the result, there might be some short term volatility in the Royal Tunbridge Wells property market, but in the long term (and property investment is a long term strategy) there aren’t enough houses in Royal Tunbridge Wells to live in either to buy or rent … and until the Government allow more properties to be built – the Royal Tunbridge Wells property market, will be just fine ... even if it has a little blip in the summer, there could be some property bargains on the run up to Christmas to be had!









Tuesday, 17 May 2016

Royal Tunbridge Wells Property Values rise by 0.8% month on month

I do like to have a coffee at The Nutmeg Tree on Royal Victoria Place in Royal Tunbridge Wells. Whilst in there, a suited gentleman approached me and asked if I was the person who wrote the newsletters about the Royal Tunbridge Wells property market. We ended up having an interesting chat about the local property market, as he was concerned his daughter would never be able to buy her own property, a place in Royal Tunbridge Wells she herself can call home.

My latest analysis, using the Land Registry and Office of National Statistics, shows that overall, month on month, Royal Tunbridge Wells’ property values increased by 0.8%. The year on year figures showed the value of residential property in Royal Tunbridge Wells has increased by 9% in the year to the end February 2016, taking the average value of a property in the council area to £227,500.

It gets even more interesting when we look at the last few months’ figures and see the patterns that seem to be emerging.

·      January 2016               - a rise of 0.6%
·      December 2015          - a rise of 0.7%
·      November 2015          - a rise of 0.6%

We have talked in many recent articles about the lack of properties being built in Royal Tunbridge Wells over the last 30 years. This lack of new building has been the biggest factor that has contributed to Royal Tunbridge Wells’ property values still being 246.59% higher than in 1995. At the risk of repeating myself, until the Government addresses this issue, and allows more properties to be built, things will continue to get worse as the UK population grows at just under 500,000 people a year (which is a combination of around 226,000 people because of higher birth rates/people living longer and 259,000 net migration) whilst the country is only building 152,400 properties a year – no wonder demand is outstripping supply.

Another reason intensifying the current level of property values in Royal Tunbridge Wells, is the fact that people aren’t moving home as much as they used to, meaning fewer properties are coming onto the market for sale, so in consequence, there is a lack of choice of property to buy, meaning people thinking of moving are discouraged from putting their property on the market ... thus perpetuating the problem, as the scarcity of possible properties to buy in order to move also deters people from offering their home for sale. This unevenness between demand from would-be purchasers and the number of properties coming on to the market for sale is causing pressures in Royal Tunbridge Wells (and the rest of the UK).

So what of the future of the Royal Tunbridge Wells property market and this man’s daughter? I firmly believe the property market in Royal Tunbridge Wells and the country as a whole is changing its attitude about homeownership. Back in the 1960’s, 70’s, 80’s and 90’s, getting on the property ladder was everything. Since the late 1990’s, we as a country (in particular, the young) have slowly started to change our attitude to homeownership. We are moving to a more European model, where people choose to rent in their 20’s and 30’s (meaning they can move freely and not be tied to a property), then inherit money in their 50’s when their property owning parents pass away, allowing them to buy property themselves ... just like they do in Germany and other sophisticated and mature European counties, meaning his daughter will end up owning property, just later in life than we did. So, whatever the vote on the 23rd of June, if you think about it, we might be more European than we think!





Saturday, 14 May 2016

7,844 Spare ‘Spare’ Bedrooms in Royal Tunbridge Wells – Is this the cause of the Royal Tunbridge Wells Housing Crisis?

That isn’t a typo, of the 24,962 households in Royal Tunbridge Wells, 7,844 of those properties don’t only have one spare bedroom, but two spare bedrooms! … and it is this topic I want to talk about this week, my Royal Tunbridge Wells Property Market Blog readers – because this could be the cure for Royal Tunbridge Wells’s housing crisis.  The fundamental problem of the Royal Tunbridge Wells housing ‘crisis’, is the fact that the supply of homes to live in has not historically met demand, increasing property values (and in turn rents), thus ensuring home ownership becomes an unattainable ambition for the twenty something’s of Royal Tunbridge Wells.

Call me a realist, but it’s obvious that either demand needs to drop or supply needs to rise to stop this trend getting worse for the generations to come.  Don’t get me wrong, I admire Downing Street’s plans to build 200,000 starter homes which will be offered to first time buyers under 40 with a minimum 20% discount price.  However, the building of starter homes on current building sites, where new homes builders already have to build a certain number of affordable ‘starter’ homes at the moment under a different scheme, does not increase the stock of new ‘starter’ homes, it simply replaces one affordable scheme with another.

One option that could resolve the housing crisis is if the Government literally looked closer to home, concentrating on matching households with the appropriate sized home.

In Royal Tunbridge Wells, 15,752 households have one spare bedroom and of these, 7,844 have two or more spare bedrooms.

This compares to 1,079 households in Royal Tunbridge Wells that are overcrowded (i.e. there are more people than bedrooms in the property).

Looking specifically at the homeowners of Royal Tunbridge Wells, 5,531 owner occupied Royal Tunbridge Wells houses have one spare bedroom.  Now having a spare bedroom is not considered a luxury.  However, in addition to those 5,531 households with one spare bedroom, there are on top, a further 7,126 owner occupied Royal Tunbridge Wells households with two or more spare bedrooms.  

Therefore, I am beginning to see there is the spare capacity in the Royal Tunbridge Wells housing market.  Principally, I will concentrate on the group that makes up the bulk of this category, the owner occupiers of large properties, in their 60’s and 70’s, where the kids flew the nest back in the 80’s and 90’s.  They call it ‘downsizing’, when you sell a big property, where the extra bedrooms are no longer required, to move into a smaller and, usually, less expensive property.

However, there are many explanations why these individuals do not downsize.   These people have lived in the same house for 30, 40 even 50 years, and as one matures in life, many people do not want to depart from what they see as the family home.  Much time has been invested in making friends in the area and it’s nice to have all those rooms in case every grandchild decided to visit, at the same time, and they brought their friends!  But on a more serious note, more and more people are beginning to downsize earlier, but in my opinion, not at a fast enough rate.  As the years go one, we will have a situation where younger families will be living in smaller and smaller houses, whilst all the large houses with a couple of 70 something empty-nesters rattling around them!  I believe the Government should put more weight behind downsizing, because with the right incentives, many could be encouraged to think again and make the spare rooms available.

.. and it would have to be incentives, as the using the stick (instead of the carrot) would be political suicide for any party, especially the Tory’s.  One option is to allow retired downsizers not to pay stamp duty on the new property, saving them thousands of pounds and another for the planners to work with builders to build not only starter homes for under 40’s, but also have housing built just for retired downsizers ... or is this one step too far in ‘social engineering’?

The fact is not enough properties are being built in Royal Tunbridge Wells, and with population rising at a faster rate, something needs to be done.  However, I believe the Royal Tunbridge Wells population (and in fact the whole of the UK) is slowly turning into a more European model of house ownership.  In Europe, most people rent in their 20’s and 30’s, only buying in their 40’s and 50’s, when they inherit money from the sale of their late parent’s property.   That works particularly well in Germany and I can’t see why it can’t work here.  In the meantime, there is an opportunity in the coming 20 years for people to supplement their pension by buying smaller properties to rent out, as that is where the demand will be in the next few decades in Royal Tunbridge Wells.  For even more thoughts on the Royal Tunbridge Wells Property Market – visit the Royal Tunbridge Wells Property Blog