Values of Royal Tunbridge Wells Terraced Houses smash through the £360/sqft barrier

The Council of Mortgage Lenders (CML) latest snapshot of the buy to let mortgage market shows us that buy to let landlords haven’t been put off by the Chancellors announcements on the way buy to let’s are taxed.

Last month, the CML stated £1.4billion was borrowed by UK landlords to purchase 10,500 buy to let properties, up 26.5% from the same month in 2014, when only 8,300 properties were bought with a buy to let mortgage. Go back two years and the number of buy to let mortgages used for purchasing (again not re-mortgaging) is 36.4% higher! Even more interesting has been the fact that the average amount borrowed has risen as well. The average buy to let mortgage last month was £133,330, up from £128,480 a year ago.

In Royal Tunbridge Wells, I am speaking to more and more landlords, be they seasoned professional landlords or FTL’s (first time landlords), as they read reports that the Royal Tunbridge Wells rental market is doing reasonably well, with rents and property values rising.  Interestingly, one landlord recently asked how much he should be paying per square foot (more of that in a second).

The first thing you have to decide is whether you want great capital growth or great rental yield, as every knowledgeable landlord knows, you can’t have both. Over the last twenty years, property values in Royal Tunbridge Wells have risen by 232.29%, compared to Greater London’s 436.2%. This has proved that capital growth increases faster in the more expensive Capital, but your investment money doesn’t go very far, meaning there won’t be as much rental yield from a 1 bed flat in Chelsea (2% per year at best with a fair wind) as a 2 bed semi in Royal Tunbridge Wells. However, whilst the figure of 232.29% is an average for the area, certain areas of Royal Tunbridge Wells have seen capital growth much higher than that and others areas much worse (we have talked about those in previous articles).

If you recall in an earlier article, my research reveals that Royal Tunbridge Wells apartments tend to generate a better yield than houses, probably because several sharers can afford to pay more than a single family. But houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built.

So what should you be buying in Royal Tunbridge Wells, and more importantly, how much?

·         The average apartments in the town are currently selling for approximately £358 per square foot.

·         Terraced houses in Royal Tunbridge Wells are currently obtaining, on average, £335,600 or £364 per square foot,

·         An average semi in Royal Tunbridge Wells is selling for £400,800 (and achieving £363 per square foot). 

Now these are of course averages, but it gives you a good place to start from. In the coming weeks, I will look at rents being achieved on Royal Tunbridge Wells houses and apartments, and the yields that can be obtained, depending how many bedrooms there are. In the meantime, if you would like to read more articles like this, then can I suggest you visit the Royal Tunbridge Wells Property Blog?  

Royal Tunbridge Wells Buy To let –Freehold House or Leasehold Flat?

Well my Royal Tunbridge Wells Property Blog reading friends, as seems to be all the rage with Jeremy Corben asking the PM questions emailed in to him at Prime Minster Question Times, I to wish to answer a question emailed into me from a potential Royal Tunbridge Wells landlord last week. Nice chap, lives in Langton Green, and it turns out, after having a coffee with him, he works in IT, has a spare bit of cash (now the kids have flown the nest) and wanted to buy his first buy to let property.

His main question was ... Do I buy a freehold house or a leasehold flat in Royal Tunbridge Wells?

Most people will say freehold every time, because you own the land. However, it’s not as simple as that (it never would be would it!). The definitive answer though is to research what Royal Tunbridge Wells tenants want in the area of Royal Tunbridge Wells they want! The tenant is ultimately your customer, and, if they don't want to rent what you decide is best to buy, then you are not going to have a successful BTL investment. So starting with the tenant in mind and working backwards from there, you won’t go far wrong. In a nutshell, find the demand before you think about creating the supply.

Leasehold flats and apartments in Royal Tunbridge Wells are excellent in some respects as they offer the landlord certain advantages, including the fact a flat can be initially cheaper to buy. Yields can be quite good, offering better cash flow. The building will already be insured and yes there is a service charge, but it’s still for a service at the end of the day and that cost is spread between many others (i.e. when your freehold house roof goes, its falls 100% on your shoulders) and one of my favourites is that there is often no garden to maintain or blown down fences to replace!

However, some Royal Tunbridge Wells leasehold flats can suffer from poor capital growth. Some leasehold properties have no cap on the level of the service charge and it may get out of control. The length of the lease will significantly affect value if not renewed before it gets too short. Thankfully there’s not many, but some Royal Tunbridge Wells apartments/flats have burdensome clauses. Finally, with leases, there can be sub-letting issues – which means you can’t let them out.

So what do the numbers look like? Well since 2003, the average freehold property in Royal Tunbridge Wells (detached, semis and terraced) has risen from £317,941 to £506,437, a rise of 60% whilst the average Royal Tunbridge Wells leasehold property (flats and apartments) has gone up in value from £150,225 to £229,149, a more mediocre rise of 53%. 

I was really interested to note that of the 7,412 rental properties in the Royal Tunbridge Wells Borough Council area that the Office of National Statistics believe are either let privately or through a letting agency, 4,218 of them (or 56.9%) are apartments. However, there are only 11,867 apartments in the whole council area (be they owned, council rented or privately rented), which represents 25.2% of the whole housing stock in the area. This really intrigued me that, quite obviously, there is a high proportion of Royal Tunbridge Wells’ leasehold apartments/flats rented to tenants compared to detached, semi’s or terraced. Fascinating don’t you think?

Every Royal Tunbridge Wells apartment block, every terraced house or semi is different. Like I said at the start, the definitive answer though is to research what Royal Tunbridge Wells tenants want in the area of Royal Tunbridge Wells they want. Demand for town centre apartments near transport links can be popular and can offer the Royal Tunbridge Wells landlord very good yields with minimal voids. However, Royal Tunbridge Wells terraced houses and semis, whilst not always offering the best yields (although sometimes they can), they do offer the Royal Tunbridge Wells landlord decent capital growth.

My advice to the prospective landlord as it is to you is do your homework.  One such website, which only talks about the Royal Tunbridge Wells buy to let Property Market, is the Royal Tunbridge Wells Property Blog. Another source of info many Royal Tunbridge Wells landlords use is me! What many Royal Tunbridge Wells landlords do, irrespective of whether you are a landlord of ours, a landlord with another agent or a DIY landlord, if you see any property in Royal Tunbridge Wells, that catches your eye as a potential buy to let property, be it a terraced house, semi or flat ... email me and I will email you back with my thoughts (although I will tell you what you need to hear .. not want to hear!)

Royal Tunbridge Wells Tenants Pay 39.4% of their Salary in rent

I had the most interesting chat with a local Royal Tunbridge Wells landlord the other day about my thoughts on the Royal Tunbridge Wells property market. The subject of the affordability of renting in Royal Tunbridge Wells came up in conversation and how that would affect tenant demand. Everyone wants a roof over their head, and since the Second World War, owning one’s home has been an aspiration of many Brits.  However, with rents at record highs, many are struggling to save enough for a house deposit.

Let’s be honest, it’s easy to get stuck in a cycle of paying the rent and bills and not saving, but even saving just a small amount each month will sooner or later add up.  George Osborne announced such schemes as the upcoming Help to Buy ISA, where the Government will top up a first time buyers deposit.

Therefore, I thought I would do some research into the Royal Tunbridge Wells property market and share with you my findings.  Royal Tunbridge Wells tenants spend on average just over a third of their salary to have a roof over their head.  According to my latest monthly research, the average cost of renting a home in Royal Tunbridge Wells is £1,145 per month.  When the average annual salary of a Royal Tunbridge Wells worker, stands at £34,855 per year, that means the average Royal Tunbridge Wells tenant is paying 39.4% of their salary in rent.  I doubt there is much left to save for a deposit towards a house after that, and that my Royal Tunbridge Wells Property Blog reading friends is such a shame for the youngsters of Royal Tunbridge Wells.

You see one the reasons for rents being so high is property prices being high.  As I have mentioned before, there is a severe lack of new properties being built in Royal Tunbridge Wells.  It’s the classic demand vs supply scenario, where demand has increased, but the number of houses being built hasn’t increased at the same level.  Also, Royal Tunbridge Wells people aren’t moving home as often as they did in the 80’s and 90’s, meaning there are fewer properties on the market to buy.  If you recall, a few weeks ago I said back in Summer 2008, there were over 1,200 properties for sale in Royal Tunbridge Wells and since then this has steadily declined year on year, so now there are only 451 for sale in the town.

So, the planners in Royal Tunbridge Wells haven’t allowed enough properties to be built in the town and existing Royal Tunbridge Wells homeowners are not moving home as much as they used to, thus creating a double hit on the number of properties to buy.  This is a long term thing and the continuing diminishing supply of housing has been happening for a number of decades and there simply aren’t enough properties in Royal Tunbridge Wells to match demand, these are the reasons houses prices in Royal Tunbridge Wells have remained quite buoyant, even though economically, over the last 5 years, it was one of the worst on record for the country and the South East region as a whole.

However, things might not be all doom and gloom as originally thought, as a recent Halifax Survey  (their Generation Rent 2015 Survey) suggested  more and more people may be long term, if not lifelong tenants. In fact there is evidence in the report to suggest that the perception of how difficult it is to get on the housing ladder is vastly different between parents and people aged 20 to 45.  It seems from this survey that the state of the UK economy has shifted priorities quite significantly in quite a short space of time.  With fewer people able to save up the deposit required by mortgage lenders, more and more people are continuing to rent.  This delay in moving up the property ladder has driven rents across the UK up as more people were seeking rental properties .

 It is often said that more people in central Europe rent for longer or never own their own property. The last two census in 2001 and 2011 show that proportionally the percentage of people who own their own home in Britain is slowly reducing and, as a country, we are becoming more and more like Germany.   That isn’t a bad thing as Germany is considered to have a more successful economy, one of the main stays, often quoted,  is because they have a much more flexible and mobile workforce, (which renting certainly gives) and from that, they have a higher personal income than in the UK.      

Therefore, if we are turning into a more European model and the youngsters of Royal Tunbridge Wells and the Country have changed their attitudes, demand for rental properties will only and can only go from strength to strength, good news for Royal Tunbridge Wells tenants as wages will start to rise and good news for Royal Tunbridge Wells landlords, especially as property values in Royal Tunbridge Wells are now 8.4% higher than year ago!

How EU Migration has changed the Royal Tunbridge Wells Property Market

The argument of migration and what it does, or doesn’t do, for the country’s economic wellbeing is something that has been hotly contested over the last few years. In my article today, I want to talk about what it has done for the Royal Tunbridge Wells Property market.

Before we look at Royal Tunbridge Wells though, let us look at some interesting figures for the country as a whole. Between 2001 and 2011, 971,144 EU citizens came to the UK to live and of those, 171,164 of them (17.68%) have bought their own home. It might surprise people that only 5.07% of EU migrants managed to secure a council house. However, 676,091 (69.62%) of them went into the private rental sector.  This increase in population from the EU has, no doubt, added great stress to the UK housing market.

Looking at the figures, the housing market as a whole is undoubtedly affected by migration but it has been the private rented housing sector, especially in those areas where migrants come together, that is affected the most.  Indeed, I have seen that many EU migrants often compete for such housing not with UK tenants but with other EU migrants. In 2001, 3.68 million rented a property from a landlord in the UK.  Ten years later in 2011, whilst EU migration added an additional 676,091 people renting a property from a landlord, there were actually an additional 4.14 million people who became tenants and were not EU migrants, but predominately British!

As a landlord, it is really important to gauge the potential demand for your rental property, especially if you are a landlord who buys property in areas popular with the Eastern European EU migrants.  To gauge the level of EU migration (and thus demand), one of the best ways to calculate the growth of migrants is to calculate the number of people who ask for a National Insurance number (which EU members are able to obtain).

In Royal Tunbridge Wells, migration has risen over the last few years. For example, in 2009 there were 823 migrant national Insurance cards (NIC) issued and the year after in 2010, 800 NIC cards were issued. However, in 2014, this had increased to 1,094 NIC’s. However, if the pattern of other migrations since WW2 continues, over time there will be an increasing demand for owner occupied property, which may affect the market in certain areas of high migrant concentration. On the other hand, over time some households move into the larger housing market, reducing concentrations and pressures.

In essence, migration has affected the Royal Tunbridge Wells property market; it couldn’t fail to because of the additional 8,671 working age migrants that have moved into the Royal Tunbridge Wells area since 2005. However, it has not been the main influence on the market. Property values in Royal Tunbridge Wells today are 18.3% higher than they were in 2005. According to the Office of National Statistics, rents for tenants in the South East have only grown on average by 0.95% a year since 2005 .... I would say if it wasn’t for the migrants, we would be in a far worse position when it came to the Royal Tunbridge Wells property market. This was backed up by the then Home Secretary Theresa May back in 2012 - more than a third of all new housing demand in Britain is caused by inward migration and there is evidence that without the demand caused by such immigration, house prices would be 10% lower over a 20 year period.

If you want to know more about the Royal Tunbridge Wells property market, then for more articles like this, please visit the Royal Tunbridge Wells Property Blog 

Royal Tunbridge Wells Property Market Crisis as New House Building slumps by 69.57%

   

One of the key factors that determine the price of anything is the demand and supply of the item that is being bought and sold. When it comes to property, demand can change overnight, but it takes years and years to build new properties, thus increasing the supply.

The Conservatives have pledged to build over 1 million homes by 2020. I am of the opinion that as a country, irrespective of which party, we have not built enough homes for decades, and if the gap between the number of households forming and the number of new homes being built continues to grow, we are in danger of not being able to house our children or grand children. I believe the country is past the time for another grand statement of ambition by another Housing Minister. Surely it’s right to give normal Royal Tunbridge Wells families back the hope of a secure home, be that rented or owned? As a town, we need to exert pressure on our local MP Greg Clark, so he can make sure Westminster is held accountable, to ensure there is a comprehensive plan, with enough investment, that can actually get these homes built.

To give you an idea of the sorts of numbers we are talking about, in the Tunbridge Wells Borough Council area, in 2005, 440 properties were built. In 2007 and 2008 it peaked at 690. By 2012, that figure had dropped by a massive 69.57% to 210 properties built... where are we going to house all these new people in RTW when new home building is dropping like it is?

The outcome of too few homes being built in Royal Tunbridge Wells means the working people of the town are being priced out of buying their first home and renters are not getting the quality they deserve for their money. The local authority isn’t building the estates they were after the war and housing associations are having their budgets tightened year on year, meaning they have less money to spend on building new properties. I know of many Royal Tunbridge Wells youngsters, who are living with their parents for longer because they cannot afford to get onto the housing ladder and growing families are unable to buy the bigger homes they need.

I talk to many Royal Tunbridge Wells business people and they tell me they need a flexible and mobile workforce, but the high cost of moving home and lack of decent and affordable housing are barriers to attracting and retaining employees. Furthermore, building new homes is a powerful source of growth, creating jobs across the county and supporting hundreds of Royal Tunbridge Wells businesses. It is true that landlords have taken up the mantle and over the last 15 years have bought a large number of properties. The Government need to be thankful to all those Royal Tunbridge Wells landlords, who own the 5,353 rental properties in the town. Most local landlords only have a handful of rented properties (to aid their retirement), and without them, I honestly don’t know who would house all the extra people in Royal Tunbridge Wells!

Moving forward, those Royal Tunbridge Wells landlords have many pitfalls, both in the short term and medium term. For instance, were you aware that the rules of changes for new tenancies from the 1^st October 2015 (with some imposing penalties including loosing the right to require the tenant to vacate, if they are done incorrectly) or in the medium term, the planned change in the way buy to let’s are taxed?

More than ever, the days of buying any old property in Royal Tunbridge Wells and you would be set for life are gone. Now, it’s all about ensuring you stay the right side of the law, buying the right property (and that might mean even selling some to buy others), so you build the right portfolio for you as a landlord. One source of info on all of these issues, where you will find other articles similar to this on the Royal Tunbridge Wells property market, is the Royal Tunbridge Wells Property Blog 

Royal Tunbridge Wells House owners desert the housing market with an 8 year low

Even though the housing market is in an upbeat state in many parts of the UK, getting on the property ladder is still challenging for many and regarded as unattainable by some.  However, that goal has become even worse recently in Royal Tunbridge Wells as the number of houses available to buy is at an 8 year all time low.

Back in Summer 2008, there were over 1,200 properties for sale in Royal Tunbridge Wells and since then this has steadily declined year on year, so now there are only 451 for sale in the town.  This continuing diminishing supply of housing has been happening over those years for a while and there simply aren’t enough properties in Royal Tunbridge Wells to match demand.

According to a recent report by the National Association of Estate Agents, that said, “There are now 11 house hunters fighting after every available house which isn’t sustainable.”   What that means is Royal Tunbridge Wells youngsters, who are looking to buy their first home, are finding themselves being squeezed out by the competition.  However, in the meantime, nobody wants to live with parents until they are in their 30’s, so that in turn creates demand for more rental properties, which means landlords have a greater demand for more rental properties so are buying more, resulting in even less smaller properties for the youngsters to buy, it’s a vicious circle.   

Talking to fellow agents, mortgage arrangers, surveyors and solicitors in the town, all of whom have extensive dealings in the Royal Tunbridge Wells property market like myself, most of us agree the movement in the Royal Tunbridge Wells market is taking place in the middle to upper market, higher up the property ladder and it’s second and third steppers pushing through the properties that are being bought and sold.

That has meant as people tend to move less in the middle to upper market, the number of the properties actually selling has drastically reduced over the last couple of years.

When we look at the individual areas of the town, it paints an interesting picture.

• TN1 - Royal Tunbridge Wells, town centre 22 properties sold in May 2015 (the most recent set of figures from the HM Land Registry), whilst over the Summer months of 2014, the number of properties selling in this postcode was always between 36 and 42 per month. (Interestingly the average value of those properties was £413,318).
• TN2 - Pembury 24 properties sold in May 2015 (with an average value of £355,203), whilst over the Summer months of 2014, the number of properties selling in this postcode reached into the early 70’s.
• TN3 - Langton Green, Groombridge, Frant, Speldhurst, Lamberhurst 9 properties sold in May 2015 (the most recent set of figures from the HM Land Registry), whilst over the Autumn months of 2014, the number of properties selling in this postcode was always between 16 and 25 per month. (Interestingly the average value of those properties was £547,562).
• TN4 - Southborough 51 properties sold in May 2015 (with an average value of £349,939), whilst over the Summer months of 2014, the number of properties selling in this postcode reached into the early/mid 70’s.

So what does this all mean for homeowners and landlords alike in Royal Tunbridge Wells?  Demand for Royal Tunbridge Wells property is good, especially at the lower end of the market.  However, with fewer properties coming up for sale, it means property prices are proving reasonably stable too.

You see I believe a more stable, consistent Royal Tunbridge Wells property market, with less people seeing property as an easy way to make a quick buck (as many did in the early 2000’s when prices were rising at nearly 20% a year so people were buying and selling every other minute), but a property market that has a steady growth of property values in Royal Tunbridge Wells, year on year, without the massive peaks and troughs we saw in the late 1980’s and mid/late 2000’s might just be the thing that the Royal Tunbridge Wells property market needs in the long term.

For more insights, comments and facts on the Royal Tunbridge Wells Property market please visit the Royal Tunbridge Wells Property Blog where you will find many similar articles to this.