Quite often, when talking about the rental market,
we talk about the property and the landlords and seem to forget the other party
in the equation, the tenant. Without tenants, there is no demand for the rental
property. The profile of the Royal
Tunbridge Wells tenant has changed and continues to change. Although this is in
part due to the credit crunch, job mobility and the raising of deposits, an
increased number of people in their twenties are choosing to rent rather than buy
and have done so, even when they were in a position when they could have bought
a property.
Since the credit crunch, rents have been good
value for money for most tenants outside London. Few rents (outside London)
have kept pace with inflation as they tend to track wage inflation. In 2008,
the average median gross wage according to Office of National Statistics in Royal
Tunbridge Wells was £30,817. Latest figures for Royal Tunbridge Wells in 2014 show
average salaries in the town had risen to £34,855, an increase of 13.1%. I was
reading some research from the Bank of England which suggests with regards to
inflation, goods and services that cost £100 in 2008 would cost £119 in 2014,
making inflation 19% over those seven years.
Royal Tunbridge Wells tenants are paying less
than both wage and goods inflation. Royal Tunbridge Wells rents are in fact
still only around 5.4% above the level being achieved in 2008 but the tenants
are being paid 13.1% more. That is why we have seen a greater demand for Royal
Tunbridge Wells rental properties with more and more people becoming tenants. So
renting has since the credit crunch, on average, delivered good value for money
for tenants and hence the healthy demand and lack of void periods for most
property.
Overall, considering the recent rises in property
prices over the last 12 months, we are just 0.3% above the 2007 boom prices in Royal
Tunbridge Wells. With reasonable rents, many would-be first time buyers in Royal
Tunbridge Wells have been wise to remain in the private rental sector. Rents tend
to move in line with wages as opposed to inflation and if something goes wrong
with the property, inevitably landlords pick up the bill, so tenants aren’t hit
with awful expenditure surprises as a normal homeowner would be. In addition,
renting offers better mobility both from a location perspective, but also from
a trading up or down perspective in terms of rent commitment which, in this
tough job market, could be considered a wise move.
From
the landlords point of view, the
consequence of this steady / solid market throughout the Royal Tunbridge Wells
area, with good tenant demand, decent long term capital growth (as mentioned in
last week's article) and average yields between 4 and 7%, with home owners it used
to be buy, sell, buy, sell as one rose up the property ladder.. Now it’s buy,
hold, buy, hold.
If you would
like to discuss my thoughts on the rental markets in Royal Tunbridge Wells,
feel free to pop into our offices on Vale Road, or email me on david.rogers@martinco.com
Happy New Year everyone!
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