Sunday, 27 March 2016

23.7% of Royal Tunbridge Wells tenants in the private rented sector are on Housing Benefit

What does the ideal Royal Tunbridge Wells tenant look like?”, asked one of my landlords from Langton Green the other day, to which he carried on before I could reply, “Let me guess, a professional couple, both in their 30’s, flawlessly tidy, pays their rent early, doesn’t complain or fuss, who has no plans to move and cheerfully accepts annual rent rises”.

Before I can answer that question properly, I have always believed all a landlord wants (and expects) of their tenants is to pay their rent on time and look after the property as if it were their own. In return, the landlord should provide a property that is warm, clean, modern and damp free and sort any issues (such as repairs) quickly and without fuss. 

Back to the tenants – tenants tend to fall into several groups ... 20 something professionals; young and middle aged families; corporate tenants (ie their employer finds their employee a house to live in); students; older singles/couples and housing benefit claimants – and they come with different needs and wants. So choosing who best suits your Royal Tunbridge Wells property – and steering clear of bad tenants – is a big factor in making property investment a success.
One topic that I am often asked is should they, as a landlord, accept tenants on housing benefit?

It might interest the landlords of Royal Tunbridge Wells that of the 7,412 private rented properties in the local council area, 23.7% of the tenants of those properties are on some form of housing benefit.

(1,760 properties to be exact). I know many landlords have suffered late rent payments with tenants on benefit, especially since 2008, when local authorities started paying housing benefit to tenants rather than directly to the landlords, but you can’t ignore the fact that housing benefit tenants make up a significant proportion of the Royal Tunbridge Wells rental population. My opinion is that the final choice of accepting such tenants has to be the landlords but you can’t tar every tenant with the same brush (I will always give you a balanced opinion if ever asked).

Interestingly, it might surprise some readers of the Royal Tunbridge Wells Property Blog, when we compare Royal Tunbridge Wells to the national picture, Royal Tunbridge Wells’s Housing benefit claimants are lower, as nationally a higher proportion of private tenants claim the benefit. Nationally, 39.2% of the tenants of the 3,891,467 rental properties in Great Britain claim some form of housing benefit (ie 1,526,915 properties).

Now, let us look at the occupations of Royal Tunbridge Wells tenants, which makes even more fascinating reading. Of the 7,412 privately rented properties in the Royal Tunbridge Wells area, 6,227 head tenants (the head tenant being classified as the head of the household) are in employment (the other 1,185 rental property head tenants either being retired, long term sick, students or job seekers).

Splitting those 6,227 head tenants down into their relevant professions, 3,158 of them are Managers, Directors, Senior Officials, Professional or Technical Professions, 494 in Administrative and secretarial occupations, 846 in Skilled Trades, 447 in the Caring, Leisure and other service occupations, 405 Sales and Customer Service Occupations, 318 Process, Plant and Machine Operatives and finally, 559 in Elementary Occupations.

The one thing I have always known anecdotally, but until I did my research, never had anything to back it up with, was the high proportion of professionals and skilled trades renting property in Royal Tunbridge Wells – intriguing! Maybe in future articles, I will look deeper into the corporate tenant market, young and middle aged families, students and older persons rental markets.... but in the meantime, if you want more news, views and commentary about the Royal Tunbridge Wells property market, there are many similar articles like this on the Royal Tunbridge Wells Property Blog 

Tuesday, 22 March 2016

Royal Tunbridge Wells Buy to Let sees returns of 11.35% in 2015

I got chatting with one of my out of town landlords who was back in Royal Tunbridge Wells visiting his family.  Brought up in Royal Tunbridge Wells, he went to The Skinners School for Boys back in the 1970’s and is now a University Lecturer in central London.  To enhance his retirement, he has a small portfolio of four properties in the town and wanted my advice on where to buy the next property in Royal Tunbridge Wells (as he lives in a college owned flat and anyway, would never dream of buying where he lives in Kensington (where the average value of a flat is £1.62m and a town house £4.1m.  Eye-watering to say the least!!).

Before I could advise him, I reminded him that the most important thing when considering investing in property is finding a Royal Tunbridge Wells property with decent rental yields for income returns, yet at the same time, it must have the potential for capital growth from rising house prices over time. Going into 2016, Royal Tunbridge Wells landlords will be under more pressure to find the best permutation of yields and capital growth, as extra stamp duty charges for buying properties and a squeeze on mortgage interest relief will raise their costs.

However, (you knew there would be a however) before we look at yield and capital growth, one important consideration that often many landlords tend to overlook, is the propensity of how likely the rent will increase.  Interestingly, the average rent of a Royal Tunbridge Wells property currently stands at £1,036 per month, which is a rise of 6.0% compared to twelve months ago (although it must be noted this rise in rents is for new tenancies and not existing tenants).

Anyway, back to yield and capital growth, the average value of a Royal Tunbridge Wells property currently stands at £449,200, meaning the average yield stands at 2.77% per annum, which on the face of it, many landlords would find disappointing.  That is the problem with averages, so if I were to look at say 2 bed houses in Royal Tunbridge Wells which are the sort of properties a lot of landlords buy, in Royal Tunbridge Wells, the average value of a 2 bed house is £342,200, whilst the average rent for a 2 bed house is £1,041 per month, giving a yield of 3.65%.   However, if that wasn’t high enough, there are landlords in Royal Tunbridge Wells who own some specialist properties with specialist tenancies, that are achieving nearly double that yield – again it comes down to your attitude to risk and reward (give me a tinkle if you wanted a chat about those sorts of properties – although they can be fun and games!).

Ultimately investors want to be making gains from both rent and house price growth.   When combined, the rental yield and capital growth gives you the return on investment, and that is what I told our University friend from Kensington.   Return on investment is everything.   So, looking at property values in Royal Tunbridge Wells have risen in the last year by 7.7% …. which means the current annual return on investment in Royal Tunbridge Wells for a typical 2 bed house is 11.35% a year .... not bad.

Whether you are a soon to be new landlord or existing seasoned landlord in Royal Tunbridge Wells, you might be interested in a blog about the Royal Tunbridge Wells Property market, where you will find similar articles to this one about what is happening in the Royal Tunbridge Wells Property market ..... and to answer the question on what he should buy, well on the same blog, once or twice a week, I post what I consider to be the best buy to let deals in Royal Tunbridge Wells, irrespective of which agent it is being marketed with.   Maybe you should visit the blog as well?

Friday, 11 March 2016

Private Renting in Royal Tunbridge Wells increases by 54.18% in 20 years

You find me in a reflective mood today as I want to talk about the future of investing in property in Royal Tunbridge Wells. The truth is that we have got fat and lethargic, with many people having mistaken the ever rising Royal Tunbridge Wells (and in fact the whole of the UK) property market since the 1960’s as the eternal gift that kept giving as property prices constantly rose and doubled every five to seven years.

The days of making money from property as easy
as falling off a log, like taking candy from a baby are sadly
over my Royal Tunbridge Wells Property Blog reading friends

Whilst George Osborne has decided now is the time to milk the ‘Golden Cow’ of UK’s private landlords, with changes in taxation for buy to let property, many pundits are predicting the end of buy to let as we know it. However, it is still possible to make a reasonable, profitable and safe return on property with these changes. You see, I have always seen investing in the Royal Tunbridge Wells buy to let market (as I would anywhere in the UK), as I might see mother nature, creating some truly wonderful stunning warm weather but at the same time, she will bite, creating catastrophic situations such as snowstorms and hurricanes.  You need to study the market, take advice and opinions from many people and then decide what the proverbial property weather will be … remember, tenants will always want a roof over their head and I don’t see the HM Government building the millions of houses required to house them?

Nobody knows the future, and yes people can predict but I wouldn’t be afraid of this change .. because as a famous French proverb says, (I told you I was a reflective mood today), ‘the more things change, the more they stay the same’.  I mean, no one could have predicted how the property market has changed in Royal Tunbridge Wells over the last couple of decades? Looking specifically at the Tunbridge Wells Parliamentary Constituency, twenty years ago, 24,178 households (meaning 68.39% of property) was owned and only 3,972 households were privately rented (meaning 11.24% of property was rented out by private landlords). Roll the clocks on twenty years and the change shows that now 28,530 of properties in the Constituency are home-owners (a slight drop to only 65.72% being owner occupied) and the jump in private renting has risen to 7,524 properties now privately rented proportionally 17.33%). (NB Neighbouring Constituencies show similar changes as well).

Who would have predicted in 1995 the private rental sector in
Royal Tunbridge Wells would have grown by 54.18% in the proceeding 20 years?

Also, if you had asked someone in 1995 to predict what would happen to property values over the proceeding 20 years (ie between 1995 and 2015), they might have predicted similar growth to the growth experienced over the previous 20 years (ie between 1975 and 1995), which was a very impressive 351.55%. Yes, property values in Royal Tunbridge Wells have increased over the last 20 years (between 1995 and 2015), but by a more modest 240.77 (and most of that can be attributed to house price growth between 2000 and 2006.)

The property market is constantly changing and buy to let for too long has been heavily dependent solely on house price growth, where yield has been almost forgotten.  I see the changes in tax and landlord and tenant law in a different perspective to the doom-mongers and see it as bringing many opportunities. You might need to change your buy to let benchmarks, your approach to financing or even consider places other than Royal Tunbridge Wells in which to invest your money, but this will shine a light on investing in properties with healthier yields and create more realistic long term buy to let opportunities, instead of short term growth bets and wagers.

The advice I give to my landlords, and you my blog reading friends is this; these changes will make some landlords panic, meaning competition for decent Royal Tunbridge Wells buy to let bargains will reduce as fear of change kicks in and amateur investors flee the market. These opportunities will provide a more stable platform for knowledgeable and wise Royal Tunbridge Wells buy to let landlords to thrive in. If you want to learn more about the Royal Tunbridge Wells Property Market, feel free to pop in for a coffee at our office for a chat with me, or failing that, visit the Royal Tunbridge Wells Property Blog, where you will find many more articles like this ..solely on the one topic of the Property Market in Royal Tunbridge Wells