Monday, 29 August 2022

Why Aren’t Liz and Rishi Courting Royal Tunbridge Wells’s Generation Rent?


Why Aren’t Liz and Rishi Courting Royal Tunbridge Wells’s Generation Rent?

With the cost-of-living crisis beginning to hitthe 20 and 30-somethings of Tunbridge Wells urgently need the help and support of the Government to help them get on the property ladder.

For the last few weeks, we have listened to the debates and hustings of Liz and Rishi. Between them, they have told us how they are going to stop building on the green belt, slash taxesoutbid each other on the number of refugees they are going to deport and push back against WOKE culture warsbut what are they doing for the 20 to 30-somethings of Tunbridge Wells?

Dubbed ‘Generation Rent’ by the press, desperate to get on the property ladder, this is an open goal for any candidate to obtain more votes to become the next Prime Minister.

Yet only 16of the c.200,000 Tory membership is aged 18 to 34 whilst 47% of members are aged between 55 and 74.

Therefore, it's not a surprise that neither Liz nor Rishi aren’t speaking daily about the cost of petrol for the daily commuterising childcare fees or the lack of opportunities for first-time buyers to purchase their own properties

(For balance, 16% of Labour’s members are 18 to 34, 20% for the Lib Dems and 16% for the SNP).

Everyone is feeling the effect on their household budgets with the rise in energy bills. Yet, it is the younger generation (i.e.,Generation Rent) that are having to cope with the frenzy of rising energy costs the most.

 

Whilst increasing energy prices will affect all households across the country, younger (and less affluent) households are more prone to be disproportionately affected than those on the lowest incomes (i.e., Generation Rent).

In the financial year ending in 2020, the least well off 25% of households spent 5.59% on energy compared to 3.9% for the average UK household. With 2023 energy bills set to be triple those figuresenergy bills for those in the lower quartile will rise to around 16.8% of their household budget.

And let's look at the housing element of the ‘Generation Rent’ household budget.

The average rental of a Tunbridge Wells property in the summer of 2020 was £1,361PCM; by the summer of 2021, it was £1,473 PCM, and todayit is £1,585 PCM.

Overall, Tunbridge Wells rents are 7.6% higher than a year ago and 16.4% higher than two years ago.

This is the fastest annual rate of rental growth since records began in 2006. This increase in rents isn’t standard. Before 2020, I would have expected to see this level of rent growth over a seven-to-ten-year period – not two years. Good news for Tunbridge Wells landlords, yet not so for Tunbridge Wells tenants.

Why have rents increased so much in Tunbridge Wells?

It comes down to fewer rental properties and existing Tunbridge Wells tenants not moving as much.

There are 364 fewer rental properties in Tunbridge Wells than 

five years ago, leaving only 6,451 private rental properties in Tunbridge Wells. 

9 out of 10 rentals come onto the market because the existing tenant is moving. Yet, because there are fewer Tunbridge Wells rental properties and the asking rents for those are much higher than their current home, many Tunbridge Wells tenants are not moving, exasperating the issue even further. 

Today, I looked on Rightmove, and there were only 97properties available to rent. I would have expected that to be over double that pre-pandemic.

Neither candidate has been silent on the topic of homeownership for the young.

Rishi Sunak said he would stop building on the greenbelt. This, however, would not help Generation Rent massively.

Liz Truss has pledged to help more renters buy their first home by stating she will ensure tenant’s rental payments could be used as part of mortgage affordability assessments. This is important as the mortgage payments can be 10% to 20% lower than the rental payments. 

Tied in with new relaxed mortgage affordability rules announced by the Bank of England in early August, this is undoubtedly a step in the right direction to help Generation Rent.

Truss also plans to scrap the red tape holding back housebuilding and give local populations more say on developments. However, when Boris Johnson suggested something similar a few years ago, the policy was quietly dropped after the Liberal Democrats used this against them resulting in the Tory’s resounding by-election defeat in 2021 in Chesham and Amersham.

So, by the end of the first week of September, we will know who the Prime Minister will be. Whoever gets the job has a gigantic task on their hands. I wish them luck and ask them not to forget the younger generation and their aspiration to be homeowners.

Thursday, 11 August 2022

​Tunbridge Wells’ ‘Generation Stuck’ and Their £4.2bn Tied-up Equity



The predicament of the Tunbridge Wells 20 to 30 year olds who rent and their inability to get onto the housing ladder is often discussed in the press. 

There are 4.43m properties in the UK that are still in the private rented sector (compared to 2.13m in 2002)

This group of people in their 20s and 30’s, who rent from a private landlord, are often called ‘Generation Rent’.

Yet would it surprise you that since 2017, the number of UK households in the private rented sector has reduced by 260,000 whilst the number of homeowners has increased by 1.1m?

In this article I want to talk about another set of people, not ‘Generation Rent’, but ‘Generation Stuck’.

Generation Stuck are our middle-aged and mature homeowners of Tunbridge Wells. They are the generation that could be described as late ‘Baby Boomers’ (born in late 1950s and early 1960s) and the early ‘Gen X’ (born in the mid 1960s to early 1970s).

These 50 to 64 year old people feel stuck in their homes, and therefore I have nicknamed them ‘Generation Stuck. Their inability to move could be holding back those younger ‘Generation Renters’ 

So, let me look at the numbers involved.

In Tunbridge Wells, there are 3,607 households, whose owners are aged between 50 and 64years old and about to pay their mortgage off on property that is worth £2.056bn.

There are an additional 3,839 mortgage free Tunbridge Wells households, owned by 50 to 64 year olds, worth £2.188bn, meaning ...

Tunbridge Wells Baby Boomers and Tunbridge Wells ‘Gen X’ are sitting on £4.245bn worth of property.

According to the Census, 47.8% of homes occupied by 50 to 64year olds have two or more spare bedrooms. 

This is backed up by the annual English Housing Survey that states nationally, 49% of properties occupied by these ‘Generation Stuck’ are ‘under-occupied’.

Under-occupied is categorised as having at least two spare bedrooms

Looking at the statistics closer to home:

51.5% of Tunbridge Wells 50 to 64 year olds have two or more spare bedrooms, making it the 143rd highest local authority in the country

(out of 348 local authorities).

The rising number of older homeowners who want to downsize their home are often held back by the lack of suitable housing options for older people and the difficulties of moving

Lots of over 50 year old people in the area cannot move home in the way that they would like, due to a lack of suitable housing options and so can find themselves ‘stuck’ in homes which are no longer suitable for them as they age. 

Only 1 in 29 people over the age of 50 move home each year, compared to 1 in 15 for the rest of the population.

Helping mature homeowners (Generation Stuck) to downsize their homes at the right time will also allow younger people (Generation Rent) to find the family homes they need – meaning every generation wins, both young and old

However, to ensure downsizing works, we need more choices for these last-time-buyers”.

That means building more bungalows or more ground floor apartments suitable for the middle to older generation.

One way this could be done is by changing the planning rules to force builders to build these types of properties, whilst the other could be the changing of the stamp duty tax breaks for downsizers.

In this way, older Tunbridge Wells people will be more able to move into homes which suit their specific needs, improve their quality of life whilst meeting their goals in lifeall without them becoming detached from their friends and family locally in the area.

These are my thoughts, please let me know yours.

Monday, 25 July 2022

​Royal Tunbridge Wells’ Millennials to Inherit £4.2bn From Their Baby Boomer Parents


The total value of homes owned by Baby Boomers in Tunbridge Wells alone is £4,245,254,994 - and two-thirds of the Tunbridge Wells Millennials are set to inherit all that in the next few decades!

Could this be the answer to the housing crisis?

Could Tunbridge Wells Millennials live it up for the next few decades, safe in the knowledge they will get a huge lump sum to pay off their debts and buy a house with what is left?

Before I look at that, which set of people in Tunbridge Wells exactly are the Tunbridge Wells Millennials or Tunbridge Wells Baby Boomers?

Come to that, who are Generation Z, the Silent Generation or Generation X?

All these are phrases used for the different groups of people in their various life stages of our society. 

So, splitting the groups down:

👉🏻Silent Generation: Born 1945 and before (77 years old and above)

👉🏻Baby Boomers: Born 1946 to 1964 (58 years old to 76 years old)

👉🏻Generation X: Born 1965 to 1980 (42 years old to 55 years old)

👉🏻Millennials: Born 1981 to 1995 (27 years old to 41 years old) 

👉🏻Generation Z: Born after 1996 (everyone under 26 years old)

Using data from the Census, my research shows there are …

7,446 households in Tunbridge Wells owned by Tunbridge Wells Baby Boomers and they are worth a combined value of £4,245,254,994.

The generation that will inherit those Tunbridge Wells properties will be the millennials. 

There are 7,477 millennials in Tunbridge Wells.

After looking at the local demographics, homeownership statistics and current life expectancy, around two-thirds of those Tunbridge Wells Millennials have parents who own those 7,446 Tunbridge Wells properties, meaning each is in line for an inheritance of £851,237.15.

Now that figure is just a simple average and a lot more than the value of many properties in Tunbridge Wells. A lot of that is to do the low number of millennials in Tunbridge Wells (as a proportion of the overall population) and the high number of baby boomers compared to the national average. The inheritance figure is just to show the extent of the money tied up in Tunbridge Wells property and what that could do for the younger generation. 

Yet what about Tunbridge Wells’ Silent Generation?

There are 6,779 homes in Tunbridge Wells owned by the ‘Silent Generation’, and they are worth £3,864,972,281.

The issue for those who will inherit their parents’ homes is that there are far more Generation X people in Tunbridge Wells than millennials.

Two-thirds of the 12,597 Tunbridge Wells Generation X will inherit £430,684.61 - still nothing to sniff at yet not as much as the millennials!

So, whilst the Tunbridge Wells Millennials are less likely to own their own home compared to Generation X and so have done not as well in amassing their assets and savings, they are more likely to benefit from an inheritance boom in the years to come. 

This is likely to be very comforting information for those Tunbridge Wells Millennials, including some from humbler upbringings who historically would have been unlikely to receive an inheritance. 

Nevertheless, inheritance is not the silver bullet that will get the millennials onto the Tunbridge Wells housing ladder.

Nor will it deal with the increasing wealth inequalities in British society, as the inheritance they are likely to receive won’t be accessible when they are trying to buy their first Tunbridge Wells home.

So, before all you Tunbridge Wells Millennials start running up your credit card bills, safe in the knowledge they will be paid for when your parents pass away in 20/30 years, over half of the females and around a third of men are going to have to pay for their nursing home fees. 

Remarkably, I recently read 25% of people who must pay for their nursing home fees run out of money, and therefore have to rely on funding from the local authority.

Therefore, if you are a Tunbridge Wells Millennial, no inheritance will be left for you. It goes without saying, most Tunbridge Wells parents want to give some inheritance to their children.  

Yet if waiting until you pass away to help your children or even grandchildren with your legacy could be seen as too late, so what are the options?

One solution to help and fix the housing crisis in Tunbridge Wells (and the UK as a whole) is if parents and grandparents, where they can, help financially with the deposit for a house whilst their children/grandchildren are in, say, their 20's and early 30's. 

Buying a Tunbridge Wells property is much cheaper than renting – I have shown it many times in these articles. 

It’s not a case of not being able to afford the mortgage; the problem is raising the mortgage deposit (of 5% to 10%) for these Tunbridge Wells Millennials.

Maybe families should be discussing the distribution of family wealth whilst everyone is alive (in the form of helping the family with house deposits) as opposed to waiting until the end, as it will make a massive difference to everyone in the short and long run. 

And a final thought, your legacy will have a more significant impact, and you will be here to see it with your own eyes.

A win-win for everyone.


Friday, 15 July 2022

​Royal Tunbridge Wells Starter Homes are 43.8% Cheaper Today Than in 1989




Even though the average value of a Tunbridge Wells first-time buyer property has risen by

331.8% since 1989 to £448,070, the monthly payments Tunbridge Wells first-time buyers

must make on their mortgages as a proportion of their take-home pay is 43.8% less today

compared to 1989.


Today, according to the Nationwide Building Society…


the average Tunbridge Wells first-time buyer only needs to pay out

41.6% of their household take-home pay on their mortgage

payments, compared to 74.1% in 1989 (i.e., just over two fifths less).


You might say 1989 was 33 years ago, a long time ago and not relevant to today. I would

agree.


So next, I looked a little closer to home, and in 2007…


the average Tunbridge Wells first-time buyer had to spend 49.5% of

their household income on mortgage payments (i.e., 15.8%

proportionally cheaper than today).


So why do I say all these things?


Last month, the Bank of England revealed that its Financial Policy Committee would be

removing their mortgage market affordability test on people taking out mortgages in

August.


The test was introduced in 2014 to ensure the UK didn’t have a repeat of the 2008 Credit

Crunch and particularly hit first-time buyers with what they could afford to buy. This rule change means Tunbridge Wells property buyers could soon be able to borrow thousands of pounds more and purchase larger homes.


The decision to withdraw the affordability test certainly raised eyebrows in the press,

primarily as the Bank of England has raised interest rates five times in the last six months to

try and reduce rising inflation. Yet, as stated in the first part of this article, Tunbridge Wells first-time buyers are comfortably paying their mortgages compared to previous years –

therefore everything should be ok with this rule change.


The old rules tested home buyers on mortgage repayments if interest rates rose to 6%/7%,

yet the Bank thought that rule was too harsh. Not all rules have been changed, as the important Bank of England ‘loan to income ratio’ stays put.


The Bank were keen to stress that the mortgage market was not going to turn into a free-

for-all, as it did in the mid-2000s when the likes of Northern Rock were offering 125%

mortgages, and a sixth of all UK mortgages were given without proof of income.


I believe it will have a progressive effect on the Tunbridge Wells property market.


Many Tunbridge Wells tenants who have been paying rents far more than actual mortgage payments for the same Tunbridge Wells home, but have failed affordability assessments regardless, will now be able to get on the property ladder.


The rule change should open the Tunbridge Wells property market up a little more and

allow house prices to grow in Tunbridge Wells.


I advise anyone who has been refused a mortgage on affordability in the past to speak to a

mortgage arranger. If you don't know of one, drop a message to me, and I will give you

details of mortgage arrangers you could talk to.


Monday, 27 June 2022

26.3% of Royal Tunbridge Wells Property Sellers Reduce Their Asking Prices as the Property Market Equilibrium Starts to Return


 

• 178 of the 676 properties on the market in the Tunbridge Wells area have had a price reduction in the last 3 months.
• The average reduction has been 5.6% of the original asking price.
• This is great news for Tunbridge Wells home buyers and Tunbridge Wells buy-to-let landlordsstrangely Tunbridge Wells house sellers as well. 

 

The last couple of years of the Tunbridge Wells property markethas seen some amazing prices being achieved with multiple offers and many properties selling for way over the asking price. 

 

Yet, as I have been writing about the Tunbridge Wells property market over the last few weeks, the tide is beginning to turn, and pendulum swing more towards a balanced Tunbridge Wellsproperty market as more homeowners in the Tunbridge Wells area (TN1 – TN4) have been reducing their asking prices. 

 

Of the 676 properties for sale in the Tunbridge Wells area,

178 have been reduced in price in the last 3 months.

 

This can be broken down as follows…

 

 

Price Range of the Tunbridge Wells Property

Number of Price Reductions in Last 3 Months

£100k-£150k

11

£150k-£200k

12

£200k-£250k

22

£250k-£300k

13

£300k-£350k

13

£350k-£400k

25

£400k-£500k

25

£500k-£600k

19

£600k-£750k

9

£750k-£1m

17

£1m-£2m

8

£2m-£3m

1

£3m-£5m

3

 

 

So why is this important and why is this good news, even for Tunbridge Wells house sellers?

 

Property industry statistics show that 5 out of 6 house sellers will buy another property and over 80% of those sellers will move up the property ladder.

 

When you move up the property ladder, that normally means you pay more for the one you want to move to (that’s why it’s called the property ladder).

 

So, whilst you wont be getting as much for yours as you might have done earlier in the year, you wont have to pay as much forthe one you want to buy (and the price difference between the two properties will be smaller – meaning you will end up saving money because of these reductions). 

 

Therefore, what is the level of reduction being seen in the Tunbridge Wells property market?

 

The average percentage of the price reduction in the

Tunbridge Wells area has been 5.6%.

 

I must stress house prices/values in Tunbridge Wells haven’t dropped 5.6%, just the asking prices of some of the properties on the market.

 

This is good news for Tunbridge Wells first-time buyers and landlords, as they will be more likely to buy a property at a more reasonable price whilst. As I explained above, this is also good news for sellers as most of them will end up paying less for thehigher priced property they end up buying after selling theirs.

 

So, what should Tunbridge Wells homeowners be aware of if they are selling their home now oin the future?

 

For me it is important that I inform all Tunbridge Wells property owners of the real story. This enables them to judge for themselves where they stand in the current Tunbridge Wells property market, thus enabling them to make better informed decisions.

 

You see some Tunbridge Wells estate agents will deliberately over inflate the suggested initial asking price to the house seller, because it gives them a bigger chance to secure the property on that agent’s book, as opposed to a competitor.

 

This practice is called overvaluing. 

 

Now of course, each Tunbridge Wells homeowner wants to get the most for their homeyet some estate agents know this and prey on those Tunbridge Wells house sellers. 

 

You might ask, what is the problem with that?

 

Well, you only get one opportunity at hitting the Tunbridge Wellsproperty market as a new property. Everybody has access to the internet, social media and the four main property portals (Rightmove, Boomin, OThe Market, Zoopla), and your potential buyers will know the property market like the back of their hand. 

 

If you have a 2-bed Tunbridge Wells semi that is on the market for a 3-bed Tunbridge Wellssemi-detached house price ... those Tunbridge Wells buyers will ignore you.

 

Your Tunbridge Wells property will stick on the market as yourpotential buyers keep seeing your property on the portals each week.

 

These buyers will then start to believe there is something wrong with your property and dismiss it even further. That is until you, as the house sellerreduce your asking price. The issue is that sometimes these buyers will think something is wrong with your home and could bid you down even further, meaning you will get less even though you asked for more! (This was backed up by some research done by Which?).

 

Now according to research by Denton House, the average British house buyer only views around six properties before buying – so please don’t assume viewers will come round your optimistically priced (i.e., overvaluedTunbridge Wells home, thinking they will knock you down quite the opposite - they just wont view your home in the first place.

 

And you know that because I bet you have done the same yourself when searching for property.

 

So, all I suggest is this ... be realistic with your asking price to start with.

 

Do that and you will sell your Tunbridge Wells property at a decent price to a decent buyer ... first timeevery time - enabling you to move onto the next chapter of your life. 

 

If you know of anyone currently selling their home in the Tunbridge Wells area and finding things difficult, please share this article with them as it could be of interest.