Saturday, 28 November 2015

Could your Royal Tunbridge Wells property save you from Pension oblivion?

If you were born in the early 1970’s or late 1960’s, if you haven’t started to think about it yet, retirement is closer than you think. In fact the number of years you have left to work is less than the number of years you have worked. The basic state pension is worth £115.95 a week for a single person in 2015/16 (or £6,029 a year) and £231.90 a week for a couple (£12,118 a year) as long as your partner has paid their stamp (although there are certain get of jail cards if they haven’t). 

As a household, could you live on just over £12k a year?

However, could the property you are living in in Royal Tunbridge Wells save you from poverty when you reach retirement? You see, a regular income is vital in retirement, and the bricks and mortar you own in Royal Tunbridge Wells could provide a way for you to finance life when you retire.

If you are in your 30’s, instead of saddling yourself with bigger and bigger mortgages, going from your first time buyer flat, to a terraced, to the semi and then the large detached house, you could instead keep your terraced or small semi, turning it into buy a buy to let property, let the rent pay the mortgage and then rely on capital growth to provide you with a lump sum when you sell the property and retire.  One of the biggest plus points of buy to let is what is known as leverage. Let me explain ... say you have a deposit of 25% and the value of the property rises by 3% a year, your gains in fact multiply to 12%.  However, if property prices drop, 'leverage' can be catastrophic, as losses will also be multiplied. Property values have dropped a number of times in the last 50 years, but they always seem to bounce back ... property must be seen as a long term investment.

Let me explain how leverage could work for you. If you had bought a Royal Tunbridge Wells house in Spring of 1983 for £50,000, using a 75% mortgage and 25% deposit, (meaning your deposit would be £12,500). Today, that Royal Tunbridge Wells property would have risen in value to £361,895, a rise of 623.8%. However, when you look at the growth on just your deposit, the rise is even better ... instead of 623.8%, we see a rise of 2795% (remembering that the mortgage would have been paid off).

However, buy to let is not all about capital growth and in retirement, income is more important than capital growth, as rent is the key to a steady income.

So surely the best strategy is to buy those Royal Tunbridge Wells properties with the high rents (when compared to the value of the property). These are called high yield properties in the buy to let world because the monthly return is so much greater. So surely they are the best in Royal Tunbridge Wells? Possibly, but the properties that offer these higher yields (in the order of 5% to 6% per year) tend to be in such areas as Sherwood in Royal Tunbridge Wells, historically they haven’t offered such good capital growth when compared to the town average, have a higher tendency for void periods and such properties tend to attract tenants that have a greater propensity to be high maintenance.

Therefore, if a high maintenance rental portfolio wasn’t for you, another strategy could be buy a property with relatively smaller rental returns of 3% to 4% per year (i.e. lower yields), but in a more up market area such as Langton Green. Properties such as these tend to suffer from less void periods (i.e. when there is no tenant in the property paying you rent) and they historically have had better long term capital growth when compared to the town average.
Every landlord is different and every property is different. All I suggest to you is do your homework.
As regular readers will know, I am happy to share my knowledge and experience of the Royal Tunbridge Wells property market, high yields, high capital growth, what to buy, what not to buy and where to buy in the Royal Tunbridge Wells Property market can always be found on the Royal Tunbridge Wells Property Blog 

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Monday, 23 November 2015

Royal Tunbridge Wells tenants feel the squeeze as rents continue to rise

As my regular readers know, my passion is talking about Royal Tunbridge Wells property. As a property agent I like to comment on the Royal Tunbridge Wells property market, which I hope will be of interest to both homeowners and buy to let landlords alike. However, this week, I want to highlight the plight of the tenants of Royal Tunbridge Wells as more and more of their wages are being taken up by ever increasing rents.

The cost of renting a home in Royal Tunbridge Wells has broken through the £1100 a month barrier as the average rent for a property in the town, now stands at £1144 per month, and whilst this was a drop of 1.6 % last month, rents for new lets are 7% higher than they were 12 months ago.

House price inflation has certainly eased in Royal Tunbridge Wells from the heady days of 2014, but still with retail price inflation (for goods and services) reducing to 0% any increase in property values, no matter how small, means in real terms property is still getting more expensive. Meanwhile, many tenants have given up saving for a mortgage deposit as rents continue to take more and more of their wage packets leaving nothing to save for a deposit. That means, more and more tenants are deciding to rent for the long term and therefore the desire for decent high quality rental properties continues to exceed the available rental stock.

I would go as far as to suggest that rents are an ideal barometer to the state of the local economy as a whole and strongly believe that the recent increase in Royal Tunbridge Wells rents are a sign that the Royal Tunbridge Wells economy is picking up. 

This means Royal Tunbridge Wells landlords are continuing to capitalise on the Royal Tunbridge Wells property market. The most recent Land Registry data suggests the annual property price rises in the town have eased over 2015, leaving property values 8.41% higher than 12 months ago, so as property price growth is easing off, with the increased rents, rental yields are strengthening for the first time in years to compensate. The mortgage market has become more stable after the mad months of May and June after the Tory’s got back into No.10, and so, everything is set to be good news for landlords; even with the Chancellors change of tax rules in the coming years for buy to let mortgages.
You can get some amazingly low mortgage rate deals at the moment, so with mortgage rates so low and returns still extraordinarily attractive, there’s rarely been a better time to invest in rental properties.

However, (you knew there would be a however!), it’s all about buying the right property at the right price. Not all property types are seeing equal rises in rents and capital growth.  Different parts of the town, different types of properties are experiencing quite different changes.  For example, the average length of time the 32 Royal Tunbridge Wells properties up for rent between £250 to £500 per month is 81 days, whilst the average length of time the 126 properties at £500 to £1000 per month is 47 days and 84 properties that fall into the £1000 to £2000 per month price bracket is 42 days.

When you start comparing different parts of Royal Tunbridge Wells, the numbers are even stranger!  The bottom line is that you must take advice and opinion. One source of advice and opinion is the Royal Tunbridge Wells Property Blog. In the Royal Tunbridge Wells Property Blog, you will see many more articles like this, discussions and even what I consider to be the best buy to let deals around, irrespective of which agent is selling it.

Whether you are a landlord, ‘Homes Under the Hammer’ addict or just a homeowner who is interested in what is happening to the local property market, then please visit the Royal Tunbridge Wells property Blog 

Wednesday, 18 November 2015

Royal Tunbridge Wells Property Market - Asking Prices Drop but Values rise

Those of you who regularly read my weekly articles in the Royal Tunbridge Wells Property Blog will know I like to keep abreast of the Royal Tunbridge Wells property market. Something attracted my attention this week about the local property market, something I wanted to share with my many readers.

 Over the last month, there appears to have been an anomaly in the local property market, whereby asking prices in the town have dropped, yet property values have increased.  The average asking price of a Royal Tunbridge Wells property, according to Rightmove, fell 1.2% this month yet the average value of a Royal Tunbridge Wells property rose by 0.9%
So how does this relate in monetary terms?  This anomaly has driven the average asking price of a Royal Tunbridge Wells property down slightly to £492,400 whilst the average value is now £434,900.

So why the difference? Technically an ‘asking price’ can be any price that a homeowner wants to place his or her property on the market for. Unfortunately, many times this is done without research and can result in overpriced properties that don't sell. As the Summer months are normally slightly quieter those left on the market wanting to sell often temper their asking prices in these months to try and generate interest in their property.

On the other side of the coin, the property ‘value’ is the price that a willing buyer is prepared to pay and a willing seller is prepared to sell at.   Therefore, in a nutshell, Royal Tunbridge Wells property values are continuing to rise and those homeowners in Royal Tunbridge Wells who have properties on the market, last month on average, reduced their asking prices .. great news for property owners and buyers alike!

In previous articles, I have spoken about the continued fundamental shortage of property coming on to the market compared to buyer demand. That is especially true for homeowners wanting to upgrade to a better house/better location.  I can appreciate Royal Tunbridge Wells home owners are reluctant to put their own property on the market speculatively and wait for the right property to become available and some high demand locations can suffer from a property stalemate.

Most homeowners don’t want to sell and have nothing to buy.

But that’s the beauty of the much maligned English and Welsh house buying process. You can find a purchaser for your property, then ask them to wait. By agreeing a sale (subject to contract) before you try to buy sounds concerning to many, but with fewer properties for sale you need to have a buyer for your property or you will be treated as a less serious buyer yourself. If you cannot find the right home for you, you can slow the deal with your purchaser until it comes along. If nothing suitable does comes along and you lose your buyer then the worst outcome is that you have to find another purchaser or take your property off the market and stay put for now, and as long as you mention this at the start they must not commit to any costs until you have agreed your onward purchase.

However, for the landlord/buy to let investors, these potential problems are nothing further from the truth. As I write this article, there are over 160 flats for sale, 54 terraced houses and over 80 semis for sale in Royal Tunbridge Wells.  Landlord/Buy to let investors can normally pick up some bargains in the Autumn months, as sellers who are selling their homes often have a pressing need to sell by this time.

The types of houses a Royal Tunbridge Wells landlord typically buys, are not the same types as the homeowners wanting to move to a posher area of the town as they are attracted by larger semis and detached properties. The best types of properties for buy to let are the smaller flats, terraced and semis (not the big detached ones). There are in fact too many of these smaller properties for sale .. just look at the numbers of properties for sale (mentioned in the previous paragraph).

If you are a landlord or thinking of become one for the first time, and you want to read more articles like this about the Royal Tunbridge Wells Property Market together with regular postings on what I consider the best buy to let deals in Royal Tunbridge Wells, out of the many properties on the market,  irrespective of which agent is selling it, then you might like to visit the Royal Tunbridge Wells Property Blog

Monday, 2 November 2015

Claremont catchment area properties outperform Royal Tunbridge Wells average by 59.04%

I was having a chat with a Royal Tunbridge Wells property investor the other day, when he asked if schools, especially primary schools, affected the local property market in terms of demand from buyers and tenants to a property.  Anecdotally, I have always known this to be true, a good school creates good demand and good demand does affect house prices.  So, I asked my colleagues on the front line, who take the phone calls from people putting themselves on our mailing list and they confirmed that most people cite location as their number one factor.

After looking through our mailing list, it confirms there is a close correlation between the high demand areas of Royal Tunbridge Wells and the close proximity to a good primary school.  Talking to my team in a recent morning meeting, they agreed many people would look to increase their budget quite significantly, whilst others would consider downgrading their property requirements to be close to a good primary school.

Those of you who regularly read this blog will know I like a challenge, so I decided to look at the science behind these assumptions.  According to the SchoolGuide website, Claremont Primary School is one of the best primary schools in Royal Tunbridge Wells.  Its figures are certainly impressive. Their last Ofsted Report classified it as Outstanding, 92% of 11-year pupils achieving Level 4 or above in maths, reading and writing whilst 46% of them achieved level 5.  Finally, the schools’ KS2 rating was classed as Excellent.

Looking at property sales within half a mile of Claremont, property values have risen in value since 2001 by 161.46%, whilst according to recent figures, the Royal Tunbridge Wells average as a whole has risen in the same time frame by 101.52%.

That means the parents of Claremont have seen the values of their properties rise proportionally 59.04% more than the Royal Tunbridge Wells average ... interesting don’t you think?

However, whilst a good primary school significantly contributes more to house prices, the same can’t be said for secondary schools. There are two reasons for this, firstly, as secondary schools are much larger, so their catchment areas are correspondingly much larger, meaning parents don’t need to live so close to the school. Secondly, in the UK, whilst the difference between the top 25% and bottom 25% of secondary schools is not insignificant, in the primary school sector, the difference between the top 25% and bottom 25%, according to the London School of Economics, is considerably and significantly more.

Many other Royal Tunbridge Wells landlords, both who are with us and many who are with other Royal Tunbridge Wells agents, like to pop in for a coffee or ring/email us to discuss the Royal Tunbridge Wells property market, to consider how Royal Tunbridge Wells compares with its closest rivals and hopefully we can answer all their questions. You must take lots of advice and seek out the best opinion. One good source of opinion, specific to the Royal Tunbridge Wells property market is the Royal Tunbridge Wells Property Blog. I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion.