Friday, 24 April 2015

Rents Paid By Tenants In Royal Tunbridge Wells On The Rise

With Easter just gone and considering we are a quarter of the way through 2015, I was talking to landlord from Langton Green the other day about what is happening to the level of rents that are being achieved in the Royal Tunbridge Wells property market.

In terms of rents in Royal Tunbridge Wells, it appears that rents being achieved for new rentals (ie when the tenant moves out and new tenant moves in) have risen in the order of 3.8% in the last 12 months on top of the range modern properties, yet remained static for older Victorian terraced houses and converted apartments. However, landlords with existing sitting tenants, irrespective of age are not increasing their rents, as most landlords prefer to keep their existing tenant paying the same rent and have the peace of mind that their tenant remains, paying the rent (thus reducing the risk of a void period).

It must be remembered rents dropped by 2% over 2008/9, due to oversupply in the rental market in 2009.) A lot of the people who couldn’t sell their property in Royal Tunbridge Wells in 2008/9 when the Credit Crunch hit in 2008, decided to let their house out instead of selling at a loss. In fact, the number of houses on the market in Royal Tunbridge Wells dropped by 62.6% between October 2008 and March 2010, a lot of which came on to the rental market in Royal Tunbridge Wells. However, looking at the longer term though, tenants have had it good  because since the turn of the Millennium, average wages have grown by 46%, but rents outside London have only grown by 36% rental growth over this period

I told the landlord that there is a lack of new rental properties in Royal Tunbridge Wells coming on the market, in fact according to the Office of National Statistics, there are only 37 new rental properties are coming to the market each month in Royal Tunbridge Wells but the population of Royal Tunbridge Wells is rising by 91 people a month – something will have to give soon! This is compounded by the fact a number of landlords are looking to sell their rental properties in the coming months, as the property market in Royal Tunbridge Wells has improved. This further compounded as tenants in existing rental properties appear to be staying in properties for longer periods of time.
Looking at the rents charged in Royal Tunbridge Wells, historic evidence in the UK suggests private market rents have moved in line with general inflation. Government figures only go back as far as the year 2000, but looking at other countries with similar housing markets (America, Australia, Ireland and Holland) the fact is rents paid by tenants tend to rise in line or just ahead of inflation.

As short term wage growth in Royal Tunbridge Wells has eased off recently, rising by only 1.3% in the last 12 months, taking average salaries in Royal Tunbridge Wells to £35,338pa, with the tax breaks announced by The Chancellor in the Budget, I believe, even though rents have kept pace with inflation in the past, renting as an option has become more affordable, and is increasingly seen as a lifestyle choice. With returning economic growth and expected increases in the rate of growth of wages, above inflation rental growth could rise.

Friday, 17 April 2015

Royal Tunbridge Wells Landlords invest £1.38bn in the Royal Tunbridge Wells Property market

South East property asking prices jumped by more than £6,400 to £363,900 in February according to Rightmove, an increase of 1.8% from January and 8.1% higher than a year ago. After the traditionally quiet months of January and February, the property market has started to warm up, but talking to some Royal Tunbridge Wells Estate Agents, they are reporting their lowest ever stocks of quality property for sale. However, asking prices have no relation to what property sells for (ie their REAL value), is the issue a lack of supply?

Putting aside Royal Tunbridge Wells’s continual housing supply shortage, (we only built 4,479 properties in the last decade but the population of Royal Tunbridge Wells grew by 11,019), this is now, according to some people, being exaggerated by an increase in homes being owned by buy to let investors, who tend to be buying a property as part of a long term pension plan and are more likely to keep it for longer than an owner occupier would. I have also seen unwillingness among homeowners looking to move, to put their own property on the market as they can find few suitable properties to make it worth their while going through the whole moving process.

Talking to some Royal Tunbridge Wells landlords only last week, I said that I believe this is the new norm in the Royal Tunbridge Wells property market, and is the consequence of over 35 years of not enough homes being built to meet the escalating growth in household numbers, resulting in a lack of quality homes for sale in many popular areas of Royal Tunbridge Wells.

When one looks at the historic data, in October 2008, there were 1,246 properties on the market in Royal Tunbridge Wells compared to today’s 405. Should we be worried?  Well in March 2010, there were only 465 properties for sale in Royal Tunbridge Wells but five months later in August 2010 this had jumped to 763 properties, for it to drop to 309 properties in March 2014. The number of properties on the market is a cyclical thing in Royal Tunbridge Wells, it always has been and always will be. As we go into the Spring of 2015, the number of new properties coming onto the market will increase ... just as the daffodils will flower.

So are landlords to blame? Well, on one side of the coin, yes they are. If they buy a property to rent out, that means someone can’t buy it to live in. However, it doesn’t matter if someone wants to live in a property if they can’t afford the deposit and upkeep .. and the youngsters of Royal Tunbridge Wells still need a roof over their head. So on the other side of the coin, if the Council aren’t building any properties and people can’t afford the large deposit for the mortgage, then Royal Tunbridge Wells landlords have stepped in and bought property to rent out to them. Royal Tunbridge Wells landlords have bought 3,320 properties over the last decade (investing approximately £1.38bn buying those Royal Tunbridge Wells rental properties), meaning there were at the last count, 7,412 Royal Tunbridge Wells properties being privately rented out to tenants. 

Royal Tunbridge Wells tenants are in fact getting a good deal as well, as average rents in Royal Tunbridge Wells are 5.9% above where they were seven years ago. That sounds like a win-win situation for everyone to me. Stop blaming landlords and start building more properties in Royal Tunbridge Wells .. that is the only answer.

In the meantime, the demand from Royal Tunbridge Wells tenants for Royal Tunbridge Wells property is only set to rise over the coming years.

Friday, 10 April 2015

“The way it works in Royal Tunbridge Wells is this, you have to rent where you want to live, or buy where you don’t want to live”

I had this really interesting chat with some of my tenants the other day on renewal of their tenancy agreement. They are a lovely couple in their early thirties and I know they have decent jobs in Royal Tunbridge Wells. They have been tenants of ours for quite a while, so I know them quite well.  We got talking and I enquired if they ever thought of buying a property for themselves, to which they replied back with the title of this article. It made me think and so I did some more research into the subject which I want to share with you.

After the end of the Second World War, just over a quarter of the UK population owned their own home, the rest rented from private landlords or the local Council. If someone told you in the 1970’s and 1980’s that they rented, they were considered a second class citizen. Everyone wanted to own their own home .. it was the done thing.   We think that home ownership will inevitably happen, but it won't.

It all changed in the 1970’s, when two things happened. Firstly, the number of people who owned their own home broke through the 50% barrier in 1971 and by 1981 it was at 57%. Tied in with that, the average house prices in Royal Tunbridge Wells were doubling at one point every four years in the 1970’s so property and profit started to feed off each other.

To put that growth in context, if we were to look at the last 85 years in Royal Tunbridge Wells, in 1930, the average Royal Tunbridge Wells property was worth £825. It took 16 years for Royal Tunbridge Wells property values to double, rising to £2,041 by 1946. Another 15 years and the average Royal Tunbridge Wells property doubled again to £3,875 in 1961. The next doubling only took 10 years, as by 1971 the average Royal Tunbridge Wells property had reached £7,878 in value.
It was (as mentioned above) the 1970’s when things really took off, as by 1975 (ie only four years) they had doubled to £16,488 and they doubled again to £33,007 by 1980. It took another eight years for values to double again, as an average Royal Tunbridge Wells property reached £69,041 in 1988. Twelve years had to pass until the doubled again in 2000 (£142,054) and just six years to double again by 2006, when they reached £286,504.  Where are we today? The average property value in Royal Tunbridge Wells currently stands at £418,400.

We could blame Maggie Thatcher for making home ownership the ultimate goal, but what we now need to consider is that the country is turning on its head and we need to, as a Country,  love renting again. Some blame the banks, but obtaining a 95% mortgage is hard work, but nowhere near impossible. A typical Royal Tunbridge Wells first time buyer would only need to save £12,500 for a deposit and fees and they could buy a very decent property. For example, you could buy a property on the Ramslye Estate in Royal Tunbridge Wells, and it would be cheaper each month in mortgage payments than renting.

People might say on the surveys they want to buy, when it comes down to it. If you have been living in a top of the range large property in Culverden, but the bank will only lend you enough to buy a smaller property on the Ramslye Estate, what would you do? Don’t get me wrong, the Ramslye Estate has really pulled its socks up over the last ten years, but it isn’t Culverden, is it? Again, if you were a twenty something, what would you do? Look again at the title of the post ... “The way it works is, you have to rent where you want to live, or buy where you don’t want to live,”

With tenant demand only going in one direction, that is probably why more and more people are getting into buy to let in Royal Tunbridge Wells. With the new rules on pensions and the ability to use them to buy residential rental properties from April onwards, this could be the time for you to buy a rental property. You must take advice on your pension from a Independent Financial Advisor (there are plenty in Royal Tunbridge Wells) and you must take advice from people who know what to buy (and not to buy) in Royal Tunbridge Wells to ensure you get the best from your investment. 

Friday, 3 April 2015

Number of Rental Properties in Royal Tunbridge Wells set to rise to 9,800 by 2021

I was having an interesting chat the other day with a couple of solicitors at a Royal Tunbridge Wells business networking event, when the subject of a lack of property for first time buyers came into the conversation.  I followed the chat up with an email with my findings, findings that I would like to share with you today.

At the time of the last census in 2011, 3,401,675 properties in England were privately rented, of which it is estimated,  over 1.25 million were owned by private landlords. The rapid growth of buy-to-let is hugely controversial, especially as only ten years before that, there were only 1,798,864 properties under private renting in England. Buy to let landlords have been held responsible for forcing up property prices and preventing our younger generations from being able to buy. There is also growing resentment toward the billions of pounds in tax relief (estimated to be nearly £10 billion) landlords claim on their mortgage interest -tax relief which is not available to homeowners.

They may be asset rich thanks to recently rising property values, but let us not make the landlords the bogiemen they could easily be. Despite all these benefits enjoyed by private landlords, let us not forget the good they have done, especially in Royal Tunbridge Wells.

Property values today in Royal Tunbridge Wells are still 3.2% above the 2007 property boom levels (2007 being the peak of last property boom before everything dropped in 2008/9), yet inflation has risen by 26% in the same time frame, so in real terms, properties today are 22.8% CHEAPER than they were in 2007. Just think how low they would be without landlords buying all those rental properties in the city. Interest rates are at an all time low and first time buyers only need to save a £12,500 deposit to secure a lovely 2 bed semi in the Blackthorn Avenue area with a 95% mortgage. Forget what the papers say, first time buyers can borrow money relatively easily on a 95% mortgage and nine times out of ten, it’s cheaper to buy than rent. 

So why aren’t people buying?

The number of people choosing to rent, either for lifestyle or economic reasons, has grown over the last 15 years. I also believe they will continue to grow for some time to come (as does every report on the subject). In fact I would go as far to predict the number of rental properties in Royal Tunbridge Wells will have risen from the 7,412 properties recorded in 2011 to 9,800 by 2021. Sounds fanciful?

 Well in 2001, there were only 4,092 privately rented properties in Royal Tunbridge Wells.
It is a fact that we as a Country are more and more turning into a European model when it comes to homeownership, where the norm is renting for the first ten years, as opposed to the norm from the 1960’s to 1990’s, where first time buyers were encouraged to buy as soon as they got a job.

Tenants, in particular, will also feel the benefit from potential changes in the market. The likelihood of interest rate increases in late 2015, existing economic conditions, combined with the uncertainty of new Government manifestos following the General Election in May will result in low demand for people to buy yet also put a dampening effect on increases in rent. As long as landlords buy the right sort of property, that allows for a reasonable yield, decent capital growth, everyone will be a winner.