Friday, 27 March 2015

Your Pension could now buy a Buy to Let property in Royal Tunbridge Wells

In a recent article, I mentioned that pension rules are changing this April. It certainly created a few emails, with people asking questions about it. Therefore, this week, I want to look a little deeper into the subject of your pension and the Royal Tunbridge Wells property market. George Osbourne, in last years’ Budget, announced pension reforms that come into effect this April, which will give people with pensions unprecedented access to their pension pot and the freedom to look for alternatives. In a nutshell, after the 6th of April, anyone aged over 55 will be allowed to withdraw all or part of their pension pot and spend it as they wish. Until now, you were allowed to take out a quarter of it and were forced to buy an annuity policy with the rest.

However, my readers always know that I like to tell it ‘as it is’. There are always two sides to a story, good and bad. Let me tell you the bad news first. There are some hefty tax implications by taking money from your pension pot. As before, as per the old rules, the first 25% can still be withdrawn from the pension pot tax free but, here is the sting in the tail, if you take more than a quarter of your pot (25%), anything above that initial 25% level will be taxed as income. So if you took the whole lot out, the first 25% will be tax free but the remaining 75% will be taxed at your income tax rate of 20%, 40% (or even 45% if you earn over £150,000 a year) .

.. and now the good news!

Under the old scheme, if you bought an annuity, when you died your annuity normally died as well. You would have no asset to pass on to your family. Also, the returns from pensions are awful at the moment. The best rates according to Hargreaves and Lansdown (big wigs in the City) state if you were 55 years old, the best rate you would get on your annuity pension would be 4.4% fixed for life (so it would never go up) or 2.2% but the payment would go up with inflation.  The sort of rates (also known as yields in the property investing game) being achieved in Royal Tunbridge Wells are in the order of 3% to 6%.

The other aspect of property investment is how the fact property values have risen consistently over the last 50 years.  According to the Office of National Statistics, the life expectancy of a 65 year old male in Royal Tunbridge Wells is 19 years and 6 months (its only 19 years 4 months in Tonbridge). If we roll the clock back 19 years 6 months to November 1995, property values in Royal Tunbridge Wells have risen by 261% to today .. you wouldn’t have had that with your pension!   But this is the biggest win, even by taking a hit in income tax now,  by buying a property, you buy an asset that you can pass on to your family when you die.... (or the cats home if they aren’t nice to you!).

So where next? It totally depends which strategy you are going to look at, one strategy is to look to achieve relatively small rental returns (ie low yields) in an up market area which has decent capital growth or, alternatively, another strategy is to buy properties in not so good areas known to produce a high returns (ie high yields) but low capital growth (ie how much the value of the property goes up). Now, I am not financial advisor, so cannot offer financial advice on what the best thing for you with your pension is. However, I can share my knowledge and experience of the Royal Tunbridge Wells property market, what to buy, what not to buy and where to buy etc etc.  My thoughts on the Royal Tunbridge Wells Property market can always be found on the Royal Tunbridge Wells Property Blog  

Friday, 20 March 2015

Massive drop in Homeownership in Royal Tunbridge Wells

An Englishman’s home is his castle but when it comes to the UK  the ‘Brit’s are still a nation of homeowners ‘(although wasn’t it Napoleon who thought we were all shop keepers!). It  is interesting to note that up until the mid to late 1960’s, more people rented their home (albeit mostly from the local council) than owned their own. In fact, I was surprised to read that in 1921, over 75% of homes in England and Wales were privately rented with the remaining 25% being owner occupied. 

It was only after the Second World War, when the Beatles were rocking, that people started to buy instead of rent .. but instead of owning our property outright, we borrowed money from banks and building society’s to buy them and the roots of the growth of the private rental sector can be drawn back to the late 1970’s early 1980’s, when the council houses began to be sold off under the right to buy scheme.

In 2001, 71.7% of households were owner occupied in Royal Tunbridge Wells, but ten years later, that percentage dropped massively to 65.7%.  But here is the interesting part, when you look at the actual numbers of households, 30,540 households in Royal Tunbridge Wells were owner occupied in 2001. Ten years later, in 2011, that number (who owned their own home) had slightly increased to 30,999 households.

So why big drop in percentages but not in actual properties? An additional 4,479 properties were built in Royal Tunbridge Wells between 2001 and 2011, but a lot of them were bought as buy to let investments, thus more than doubling the number of private rental properties in Royal Tunbridge Wells. In fact, the number of properties in Royal Tunbridge Wells, which were privately rented, jumped from 4,092 in 2001 to 7,412 in 2011!

With the local  Council housing waiting lists being in the 5 to 10 year range for a decent property in a decent location. Therefore, with no more council houses being built, and an increasing number of people looking for a roof over their head, private renting is the only option

With every report stating the rental market will continue to grow throughout the rest of this decade and beyond, linked with high demand and limited supply in the Royal Tunbridge Wells, then if you are considering buying a property for buy to let investment in Royal Tunbridge Wells, as I don’t sell property (I’m just a letting agent), I am always happy to give you my considered opinion on which property to buy (or not as the case may be).

Thursday, 12 March 2015

Is the Royal Tunbridge Wells Property market holding its breath over the General Election?

Has apathy has hit the Royal Tunbridge Wells housing market as sellers await the outcome of the general election and stricter mortgage regulation suppresses buyer demand? Rightmove reported the number of homes registered for sale per estate agent fell to its lowest level for five years in December, with available stock 10% lower than in the same month a year earlier.

Looking at Royal Tunbridge Wells, in the summer of 2014, each estate agent in Royal Tunbridge Wells had on average 18.3 properties on its books (as there were a total of 678 properties up for sale in Royal Tunbridge Wells at the peak in the summer just gone). Our research shows that number plummeted to 12.7 per agent in December.  While the lack of new properties coming onto the market in the later months of 2014 in Royal Tunbridge Wells pushed asking prices up slightly from November to December, traditionally a quiet season for the housing market, property sellers will need to work hard in 2015 to complete a sale.

The length of time a property takes to sell has ever so slightly increased over the last few months. Two bedroom properties in Royal Tunbridge Wells are now taking 80 days to sell, three bedroom 63 days, four bedrooms 61 days, but here an interesting figure, one beds are taking on average 85 days to find a buyer

2015 will be the year of the selective mover.  With only 445 brand new properties a year being built in Royal Tunbridge Wells since the turn of the Millennium, this woefully low and insufficient number of new buildings in the town over the past few decades and a systemic change in the type of properties homeowners want (with families splitting etc so we have too many larger houses and not enough smaller ones), buyers are becoming dissatisfied with, and therefore dismissive of what is up for sale.

The heat has gone out of the Royal Tunbridge Wells property market and I anticipate a moderate reduction from the high transaction volumes seen in 2014, but it most certainly isn’t icy cold. That might mean Royal Tunbridge Wells landlords could bag a bargain during this period of uncertainty, especially if the financial markets do not like the election outcome. Markets and buyers do not like uncertainty, but savvy Buy to let landlords know buy to let is a long term game, and irrespective of short term apathy, reduction in the quality and quantity of stock for homeowners to buy  or the election, if people don’t buy property they rent.  The Council aren’t building anymore properties, the council house waiting list is decades, not years for the better type of property .. the only other place to get a roof over your head .. rent a property!  Good old Bricks and Mortar! In fact with less properties coming on the market in Royal Tunbridge Wells, that will keep prices quite stable.

Therefore, if you are considering buying a property for investment in the near future, I am always happy to give you my considered opinion on which property to buy (or not as the case may be) to give you what you want from your investment. 

Friday, 6 March 2015

Pembury – the place to buy a property?

Information is so important when making decisions on what (or not) to buy when investing in Royal Tunbridge Wells property. The demand for rental properties is much greater that the supply and some circumstances, we have four to five prospective tenants for each decent property. As always the demand is much greater for properties that are good areas. Also, we are noticing that tenants are staying longer in their chosen property with some tenants signing for the third and fourth years. This is obviously causing problems from the supply side so we are relying on new investment Landlords to bring in some new properties.

 Today, I want to look at the Pembury to the North of Royal Tunbridge Wells. By knowing the different areas of Royal Tunbridge Wells, I can weigh up potential hotspots in the rental market and show potential landlords where there could be an opportunity. The majority of properties sold in Pembury during the last 12 months were terraced houses which on average sold for £236,800. Semi-detached properties had an average sold price of £343,100 and detached properties averaged at £396,100.

The overall average property in Pembury is worth £308,200, which as one would expect is lower than Royal Tunbridge Wells overall average at £348,500 or nearby Southborough at £327,800 or Matfield at £439,700.

In Pembury, there are 5,924 people living in 2,400 properties. It is the home ownership percentages that really got me interested, as it is this information, tied in with our intimate knowledge of the market, where we can match tenant demand to an under supply of rental properties. In Pembury, of those 2,400 households, 74.3%  own their property (compared to the Royal Tunbridge Wells average of 65.7%).

There are only 179 rented properties in Pembury which are in the private rented sector (meaning 7.4% of Pembury properties are privately rented compared with the Royal Tunbridge Wells average of 15.7%). The reason the private rental sector is much lower is that Pembury has a high proportion of homeowners and hardly any local authority housing. The properties do sell well, in fact 452 properties have changed hands since 2007. However, with such excellent demand from homeowners and tenants, this could be the right area to purchase your next buy to let investment. 

Therefore, if you are considering buying a property for investment in the near future, as I don't sell property, I am always happy to give you my considered opinion on which property to buy (or not as the case may be) to give you what you want from your investment. If you are a landlord, new or old, I am certainly more than happy for you to pick up the phone or visit the Royal Tunbridge Wells Property Blog