I was reading a report the other day produced by the
Halifax, about the UK property market and why more and more of the younger
generation seem to be renting rather than buying. I find it fascinating that
over the last ten years, the British obsession of buying a house almost as soon
as you left school, and the fact that if you rented you were seen as a second
class citizen, has turned on its head to a point where the hopes and dreams to
own a nice home will be replaced by the ambition simply to live in one.
In the latter half of the 20th Century, you left school, got
a job, bought a small house and kept buying and selling property, constantly
upgrading until eventually they carried you out in a box. However, the perceived
shame and stigma of renting is no longer the case, as it seems that the British
are now beginning to accept a lifetime of renting. This is a very important
consideration for both Royal Tunbridge Wells homeowners and Royal Tunbridge
Wells landlords as it will transform the way the Royal Tunbridge Wells property
ladder looks in the future and I might ask whether or not it will exist at all
for some people? The make up of households is one important factor, especially
in the Royal Tunbridge Wells property market. The normal stereotypical married
couple, two kids and dog of the 1970’s and 80’s has changed. More and more we
have the need for larger houses where two families come together after divorces
(+ kids) and need a property to house everyone through to an increase in the
number of one person households.
Looking at the data for Royal Tunbridge Wells, of the 7,412
private rental properties in the Royal Tunbridge Wells District Council area, 36.23%
of those rented properties are one person households (2,686 properties).
However, when we compare the number of one person Royal Tunbridge Wells
households who have bought their own property with a mortgage (ie therefore
they are still in work), of the 30,999 owner occupied households in the area,
only 2,416 of those properties are a one person household (ie 7.79%).
Compared
to a decade ago, this explosion in demand for decent high quality rental
properties that one person households require has not been met with an increase
in supply of such properties. More and
more I believe Royal Tunbridge Wells landlords need to consider this change in
the make up of Royal Tunbridge Wells households, as I believe this could be an
opportunity. As an aside, another interesting stat that raised an eyebrow was
that 9.48% of those 7,412 rental properties (1,132 properties) are lone parents
households as well. Again, another possible opportunity that Royal Tunbridge
Wells landlords might want to consider in their future investment plans.
It is true that the
Governments introduction in 2013 of the Help to Buy scheme, where first time
buyers only needed a 5% deposit, changed the perception of peoples’ ability to
buy without having to save ten’s of thousands of pounds for a deposit. However,
it might surprise you, 95% mortgages were re-introduced within six months of
the Credit Crunch in late 2009, so again it comes down to people’s own
perception. Many youngsters think they won’t get a mortgage, so don’t even
bother trying.
Coming back to the
deposit, it’s still a fact that once you start renting it becomes that much
harder to save for a deposit, regardless of the size. Interestingly, 7
out of 8 renters polled by the Halifax (86% to be exact) refuse to sacrifice
the quality of accommodation they currently live in to reduce the amount of
rent they pay in order to save for a deposit.
This is the crux and the real
reason why people aren’t buying but renting... and why demand for renting will
continue to grow in the future (ie good news for landlords). Royal
Tunbridge Wells tenants can upgrade the quality and size of the property they
live in for a minimal rent increase.
The average rent of a two bed property in Royal
Tunbridge Wells is £1,132pm, a three bed is £378pm more at £1,510pm, whilst the
average four bed rent is £2,148pm. If you had to make that jump when buying,
the monthly mortgage payments would be stratospherically more than that!
Without any social pressure and better quality
rental properties compared to a decade ago, we will
become a nation of renters within the next generation, as the UK is becoming
more like Europe, where renting is ‘the norm’. Who is going to supply all these
properties to rent? Landlords! Whether you are an existing landlord looking to
grow your portfolio or looking to become a ‘first time landlord’, my thoughts
are take advice from as many people as possible. However, as the majority of
landlords buy their buy to let properties in the same town they live, you will
need specific advice about Royal Tunbridge Wells itself. One place for such
advice and opinion is the Royal Tunbridge Wells Property Blog
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