Saturday, 27 June 2015

Royal Tunbridge Wells Buy To Let – Should you look further afield?

I was at a recent business networking event in Royal Tunbridge Wells, when a landlord (who it transpired had a couple of Buy to let properties) bent my ear on where the next hot spot town or city is to invest his money in and where the best rental yields are. Now it can be tempting to just look at Royal Tunbridge Wells when growing a buy to let property portfolio, but there can be big differences in the amount of rental income you receive and how much your property will appreciate by considering other locations in the country.

Now regular readers of my articles of the Royal Tunbridge Wells Property Blog know of my love of the ‘buy to let seesaw’. On one side of the seesaw is yield and the other capital growth. Landlords should be looking for a high rental yield so that they can comfortably cover any mortgage payments and make some profit from the income return, but you also want the property to rise in value over time so you can get some capital growth when you come to sell. However, high yielding property in say such areas as Ramslye in Royal Tunbridge Wells, (so the seesaw arm with yield on it goes up on one side), will suffer from low capital growth (so the other arm with capital growth on the seesaw goes down).  The relationship works in reverse as well, so in such upmarket areas as Culverden and Langton Green, properties offer good capital growth, but at the expense of a decent yield.  

The North East and North West of the UK are landlord magnets for great yields. The average yield in Royal Tunbridge Wells today is 4.49%, which when you compare with say Hartlepool in the North East, which achieves 7.73% or  9.43% in the Anfield area of Liverpool, doesn’t look too healthy. Now of course, these are only averages and some of my Royal Tunbridge Wells landlords are achieving 6% to 7% on some of their Royal Tunbridge Wells properties, but at the expense of capital growth. Anyway, after wasting a tank full of petrol up the A1 to Teeside or the M1 to Home of the ‘The Reds’,  that Liverpool property, would have dropped in value by 2.2% in the last 12 months and the Hartlepool property would have dropped by 1.4%.

When you compare the long term house price growth, it gets even worse. Since 1995, property values in Royal Tunbridge Wells have risen by 219.37%,compared with Hartlepool at 21.02% and Liverpool  at 90.11% – it just shows you shouldn’t always chase the yield because of the poor increases in property values in those two places. As I always like to explain to landlords, a decent yield is important, but when you come to sell your buy to let property it would also be nice to make a decent profit.

At the end of the day, as a Royal Tunbridge Wells landlord, you want to be making gains from both your rent and house price growth, particularly when you want to sell, because when combined, the rental yield and capital growth, that gives you the real return on your investment. Finally though, do you know Hartlepool and Liverpool as well you know Royal Tunbridge Wells? Do you know where the good and bad areas are in both those places? Are you happy that it would require you to take a day out of work if there was an issue with your property in the North?  If you can’ t answer yes to all three questions, then maybe you should be considering a closer to home?

Saturday, 20 June 2015

Royal Tunbridge Wells Property Market – Post Election Blues?

With the election now over and the stability of Downing Street secure, with David Cameron and his Blue Tories as the largest party in Westminster, in Royal Tunbridge Wells (as in the rest of the UK) average wages are beginning to grow faster than inflation. This is good news for the Royal Tunbridge Wells housing market, as some buyers may be willing or able to pay higher prices given the more certain political outlook and attractive inexpensive mortgage rates. However, sellers who think they have the upper hand due to the lack of property for sale should be aware that we should start to see an increase in the number of people putting their properties on to the market in Royal Tunbridge Wells giving buyers some extra negotiating power.

At the last election in May 2010, there were 635 properties for sale in Royal Tunbridge Wells and by October 2010, this had risen to 867, an impressive rise of 26% in five months. An increase in the supply of properties coming on to the market could tip the balance in the demand and supply economics seesaw, thus potentially denting prices. However, as most sellers are buyers and confidence is high, this means there will be good levels of property and buyers, well into the summer, as demand will continue to slightly outstrip supply.

Just before we leave the run up to the election, it is important to consider what the uncertainty in April did to the Royal Tunbridge Wells property market. I mentioned a few weeks ago that property values (ie what properties were actually selling for) had dropped by 0.2% in March 2015. Now new data has been released from Rightmove about April’s asking prices of property in Royal Tunbridge Wells. It shows that pre-election nerves finally came home to roost in the final weeks of electioneering, with the average price of property coming to market only increasing by a very modest 1.1% (April is normally one of the best months of the year for house price growth).

I am sure our local MP, Greg Clark, would agree that the biggest issue is the lack of new properties being built in Royal Tunbridge Wells. The Conservative manifesto pledged to build 200,000 discounted starter homes for first-time buyers in the next five years. For Royal Tunbridge Wells to gets its share, that would mean only 79 such properties being built in Royal Tunbridge Wells each year for the next five years, not much when you consider there are 43,410 properties in Royal Tunbridge Wells.

Housing is not a big issue for Conservative voters and because London is an increasingly Labour city where the biggest housing issues are found by a country mile, so will it remain on the ‘to do list’ but won’t get recognition it deserves. Until another political party gets back into power, nothing will seismically change in the property market, thus demand for housing will continue to outstrip supply, meaning property values will increase (good news for landlords). However, as rents tend to go up and down with tenant wages, in the long term, rents are still only 7.4% higher than they were in 2008 (good news for tenants)... with renting everyone wins! 

Saturday, 13 June 2015

Property Values drop by 0.2% in Royal Tunbridge Wells

Property values in Royal Tunbridge Wells fell by 0.2% in March. This follows several months of sluggish activity in the Royal Tunbridge Wells property market in the run up to the Election, putting the average price of a property in Royal Tunbridge Wells at £842,100, 9.1% higher than in March 2014. Despite the not so insignificant fall in March, the figures showed property values in Royal Tunbridge Wells were still higher in the first quarter of 2015 than in the last quarter of 2014.

Interestingly, the Council of Mortgage Lenders and Estate Agent trade bodies over the last few months have reported seeing a fall in mortgage lending and enquiries from prospective homebuyers. This is important because it comes amid an overall fall in housing market activity in Royal Tunbridge Wells. Data from the Land Registry said completed house sales in Royal Tunbridge Wells in the three months to January 2015, (the most up-to-date figures available) fell by 6.78% compared to the same three month period up to January 2014.

However, I believe that the slowdown in property sales in Royal Tunbridge Wells is supporting Royal Tunbridge Wells property values, as there is a shortage of houses coming onto the market. Even though in the whole of the first Quarter of 2015, Royal Tunbridge Wells property value increases may seem subdued when compared to 2014, let us remember, property values are still rising well above the level of inflation. 

As I have said many times before, the population in Royal Tunbridge Wells is growing at a much higher rate than the number of properties being built. This increasing demand for a roof over people’s head, which is outpacing the supply of new houses being built in Royal Tunbridge Wells, is creating a severe imbalance in the Royal Tunbridge Wells (in fact the whole of UK’s) housing market, thus making homeownership an ever increasingly distant dream for many of Royal Tunbridge Wells’s potential first time buyers.

In fact, I still maintain the view that house prices are likely to rise by around 3 to 5% in Royal Tunbridge Wells in 2015, even after taking into account this blip at start of the year. The reason being is that the rise reflects both strong economic conditions and steady market conditions with (and this is the most important factor) very low numbers of properties on the market. 

Many Buy to Let landlords know that investing in the Royal Tunbridge Wells property market is a long-term strategy of 10, 20 even 30 years. Governments come and go, but unless Royal Tunbridge Wells Borough Council start to build hundreds of new properties a year to make up for the shocking lack of supply, Royal Tunbridge Wells people will always want a roof over their head, and irrespective of which party is in power, if there aren’t any council houses and they can’t (or are unable to buy), a demand for rental properties will always remain.

As my existing Royal Tunbridge Wells landlord clients will testify, whether you manage your property yourself, or another Royal Tunbridge Wells agent manages your properties, everyone is always made to feel welcome when they pop in for a coffee at our offices in Royal Tunbridge Wells to discuss anything to do with the Royal Tunbridge Wells property market, how Royal Tunbridge Wells compares with its closest rival towns. I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion. However, if you are too busy to pop into town, you could always visit the Royal Tunbridge Wells Property Blog (insert url here) for advice, intelligent commentary and analysis of the Royal Tunbridge Wells Property market.

Saturday, 6 June 2015

What does the General Election result mean for the Royal Tunbridge Wells Property Market?

After the shock of the Conservatives returning to power with a majority at Westminster, all the potential issues and possible uncertainties of a hung parliament has lifted the cloud from the Royal Tunbridge Wells property market.  Talking to other Royal Tunbridge Wells agents, surveyors and solicitors in the area over the last few days, there are signs this has started a new impetus in the Royal Tunbridge Wells property market after a subdued six months, when an amalgamation of tougher lending conditions, a natural correction after the strong recovery in Royal Tunbridge Wells property prices in 2014, and political uncertainty ahead of the General Election slowed demand.

Against the back drop of Labour’s election promises of rent controls and three year tenancies, some Royal Tunbridge Wells buy to let landlords were waiting to see how these new policies would be implemented before they committed themselves to buying more property for their  buy to let portfolio. Now that uncertainty has been removed, the long term picture is very positive.

So, with all that uncertainty now removed, where next for the Royal Tunbridge Wells property market?  Well with inflation at zero and with the Money markets happy David Cameron is still at No.10, the Bank of England have no reason to raise interest rates until 2016 at the earliest. As mortgage rates are at their lowest levels since 2010, landlords with large deposits will now be wooed by the mortgage companies in the coming months with low rates.

You see over the past couple of years, Royal Tunbridge Wells landlords have benefitted from a booming Royal Tunbridge Wells job market. Unemployment in the Royal Tunbridge Wells has dropped to 0.9%, as a year ago, 614 people were claiming unemployment benefit compared to today’s 499. With more jobs and better pay, as the level of rents is directly linked to tenant’s wages, there has been an increase in the rental prices tenants are willing to pay for good quality Royal Tunbridge Wells properties.

Some landlords might be nervous about Tory’s plans for the housing market in the next five years in terms of tenant demand for their rental properties. One plan is for Housing Association tenants to have the right to buy their property. These kind of tenants were never in the private rented sector and will actually increase the supply of properties in the housing stock in decades to come. The Government ‘Help to Buy Scheme’ has only helped to buy eighteen Royal Tunbridge Wells properties since April 2013. Considering 1,358 properties have changed hands in the last year alone in Royal Tunbridge Wells, I don’t think it has made a huge difference to our local property market.

The biggest matter, when it comes to tenant demand of rental property going forward, comes from the shift in the mindset and attitudes towards renting itself. Twenty years ago you were seen as a second class citizen if you rented a property. 

In Royal Tunbridge Wells, as in the rest of the UK (apart from Central London), renting continues to offer good value for money for tenants.  If you are an existing landlord in Royal Tunbridge Wells or thinking of becoming one (or as we like to call you .. a FTL .. a ‘first time landlord’), then I must suggest you seek out specialist advice and opinion. Like many agents in Royal Tunbridge Wells, we will happily give you our opinion on the current state of the  market and the advantages/disadvantages to investing in the Royal Tunbridge Wells property market if you pop into our offices. However, if time is at a premium, another source of information on the Royal Tunbridge Wells Property Market is the Royal Tunbridge Wells Property Blog