Tuesday, 26 April 2016

Royal Tunbridge Wells’ ‘Generation Rent’ to grow by 1,097 households by 2021

The growth of the private rented sector, and the arrival of an investor class of buy to let landlords within it, is an issue that won’t be going away anytime soon, no matter what you read in the Daily Mail”, I said, as I chatted over a coffee with a landlord client of mine at Fine Grind Espresso Bar on High Street in the town. Whether you are a landlord of mine (or not as the case maybe), I am always happy to look over any properties you are thinking of buying for buy to let purposes and more so over a coffee!

Some commentators are saying buy to let is about to die, with the new stamp duty changes and how mortgage tax relief will be calculated. Some say 500,000 rental properties will flood the market nationally in the next 12 months as landlords leave the rental market. Have you heard the phrase ‘Bad news sells newspapers’? Let me explain why buy to let in Royal Tunbridge Wells is only going in one direction – and not the direction the papers say they are going.

According to Sheffield University, buy to let landlords will continue fuelling the growth of the private rented sector in the coming decades. By their estimates (and they are considered a centre of excellence on the topic), the rate of homeownership nationally will fall to 50% (today it is 62.7% in Royal Tunbridge Wells) by 2032, while the rate of private sector renting will increase to 35% (interestingly, in Royal Tunbridge Wells it stands at 21.4% today).

Therefore, the demand for rental accommodation in Royal Tunbridge Wells will grow by 1,097 households in the next five years ... and these are the reasons why, irrespective of the distractions set out in the newspapers

Royal Tunbridge Wells property values over the last six years have risen a lot more than average wages/salaries, meaning as homeownership and mortgage availability is dependent on your ability to pay has served to push home ownership further out of reach for many, at a time when the stock of council houses has actually withered. (Nationally, the number of council houses in the last ten years has dropped from 3.16m to 2.18m households - a drop of 31.1%).

Now it’s true the Tory’s efforts to fix the deficiency of affordable housing have focused on those who want to buy a home, ranging from Help to Buy and their much vaunted Help to Buy Isa, and Starter Homes Scheme, an initiative offering a 20% discount for first time buyers … but if you are unable to save for the deposit ... none of this means anything to the ‘20 something’s’ of Royal Tunbridge Wells ... and they still need a roof over their heads!

Currently, 10,874 people live in private rented accommodation in Royal Tunbridge Wells

These are big numbers and a sizeable chunk of the electorate. So whilst it appears Royal Tunbridge Wells “Generation Rent” youngsters will continue to rent and to not to buy for the reasons set out above, Royal Tunbridge Wells buy-to-let landlords will be lifted by the projections of greater rental demand. Royal Tunbridge Wells and the area around it still offers the prospect of strong economic growth forecasts and has a reputation as a lively and desirable place to live. You see, with the new rules on tax, more and more landlords will be looking to move away from the previous honeypot of central London, because its higher prices meant lower rental yields. With the new tax rules and central London’s cooling of house price inflation, more and more landlords will look further afield, including Royal Tunbridge Wells (interestingly, I have already been chatting to a few central London landlords after they read the Royal Tunbridge Wells Property Blog).

So, by 2021, the number of rental properties in Royal Tunbridge Wells will rise to 7,548

This prediction in growth of the Royal Tunbridge Wells rental market is even on the back of the government clamping down on tax reliefs for landlords. The point is this, gone are the days of making guaranteed returns on BTL property. For the last 20 to 30 years, irrespective of which property you bought, making decent money on buy to let property was like shooting fish in a barrel – anyone could do it  - but not now. You must take a more considered approach to your existing and future portfolio, especially in Royal Tunbridge Wells. The balance of capital growth and yield, especially in this low interest rate world we live in, means Royal Tunbridge Wells landlords need to do more homework to ensure the investment in property gives the desired returns. One place for Royal Tunbridge Wells landlords and homeowners to visit for such information is the Royal Tunbridge Wells Property Market Blog.

Sunday, 17 April 2016

8.4% rise in Royal Tunbridge Wells Property Values adds weight to the town’s Housing Crisis

Royal Tunbridge Wells’s continuing housing shortage is putting the town’s (and the Country’s) repute as a nation of homeowners ‘under threat’, as the number of houses being built continues to be woefully inadequate in meeting the ever demanding needs of the growing population in the town.   In fact, I was talking to my uncle the other day at a family get together; the subject of the Royal Tunbridge Wells Property market came up in the conversation (as I am sure it does at many family parties in Royal Tunbridge Wells) after the weather and politics.  My uncle said It used to be that if you went out to work and did the right thing, you would expect that relatively quickly over the course of your career you would be buying a house, you would go on holiday every year, you would save for a pension.   But now things seem to have changed?

Back in the Autumn, George Osborne, used the Autumn Statement to double the housing budget to £2bn a year from April 2018 in an attempt to increase supply and deliver 100,000 new homes each year until 2020.  The Chancellor also introduced a series of initiatives to help get first time buyers on the housing ladder, including the contentious Help to Buy Scheme and extending Right to Buy from not just Council tenants, but to Housing Association tenants as well.

Now that does all sound rather good, but the Country is only building 137,490 properties a year (split down 114,250 built by private builders, 21,560 built by Housing Associations and and a paltry 1,680 council houses).    

 How George is going to almost double house building overnight, I don’t know, because using the analogy of a greengrocers; if people want to buy more apples (i.e. houses) in a greengrocers’ shop, giving them more money (i.e. with the Help to Buy scheme) when there's not enough apples in the first place doesn't really help.

Looking at the Royal Tunbridge Wells house building figures, in the local authority area as a whole, only 200 properties were built in the last 12 months, split down into 90 privately built properties and 10 housing association with not one council house being built.   This is simply not enough and the shortage of supply has meant Royal Tunbridge Wells property values have continued to rise, meaning they are 8.4% higher than 12 months ago, rising 0.7% in the last month alone.

I was taught at school (all those years ago!), that’s it’s all about supply and demand, this economics game.   The demand for Royal Tunbridge Wells property has been particularly strong for properties in the good areas of the town and it is my considered opinion that it is likely to continue this year, driven by growing demand among buyers (both Royal Tunbridge Wells homebuyers and Royal Tunbridge Wells landlords alike). You see Royal Tunbridge Wells’s economy is quite varied, meaning activity is expected to remain relatively strong into the early Summer of 2016, especially as some Royal Tunbridge Wells buy to let landlords try to complete purchases ahead of the introduction of new stamp duty rules in April.

.. and of supply, well we have spoken about the lack of new building in the town holding things back, but there is another issue relating to supply.   Of the existing properties already built, the concern is the number of properties on the market and for sale.   The number of properties for sale last month in Royal Tunbridge Wells was 403, whilst 18 months ago, that figure was 508, whilst four years ago it stood at 634… a massive drop!

With demand for Royal Tunbridge Wells property rising, minimal new homes being built and less properties coming onto the market, that can only mean one thing ... now is a good time to be a homeowner or landlord in Royal Tunbridge Wells.   For more articles like this, please visit the Royal Tunbridge Wells Property Market Blog 

Friday, 8 April 2016

3,552 Royal Tunbridge Wells Homes bought by private landlords in the last 20 years – Is this the end for first time buyers?

There I was, out with the family at Grosvenor Park last weekend, when a smart gentleman approached me. ‘Hello’, he said, ‘You are the person writes that Property Blog aren’t you? We have met before at that Business Networking event in Royal Tunbridge Wells a few months ago’. I did then recognise him and, whilst I wont mention his name, he runs a small but perfectly formed well known independent retailers in the town ... It’s amazing who you see when out walking! Anyway, I was at a loose end for five or ten minutes as the other half was sorting things with the family, so we had a chat.

He wanted to know my thoughts on the future of the Royal Tunbridge Wells property market, and I would now like to share with you that conversation, my Royal Tunbridge Wells property Blog reading friends. People are always going to need a roof over their heads and somewhere to live will never go out of fashion – it’s a necessity for every single person. The 22 to 30 year olds of the town have a choice to what type of roof they have ... they rent from the Council, they can rent from a private landlord or finally they can get a mortgage and buy one. In the 1970’s/80’s and 90’s, the expected thing was to save like mad for two years for the deposit (going without luxuries) whilst living at home or renting a cheap two up two down, then buy your first house. However, more recently fewer Royal Tunbridge Wells youngsters have been buying, choosing to rent instead – mainly from private landlords (as Councils have been selling off council housing on the Right to Buy Schemes). The numbers are truly staggering ... and I want to share them with you.

Roll the clock back 20 years and Royal Tunbridge Wells was a different place. There were 35,352 households in Royal Tunbridge Wells and 24,178 of those were owner occupied. Move to the present, and with all the building in the town, the total number of households has increased by 22.79% to 43,410 and quite surprising (to me at least), the number of owner-occupiers has increased to 28,530 (although as a proportion, it is only 65.7% compared to 68.3% twenty years ago).

However, it’s rented sector that is truly fascinating … twenty years ago, only 3,972 properties were privately rented in Royal Tunbridge Wells ... and now its 7,524, a rise of 3,552.

The twentysomethings of Royal Tunbridge Wells housing difficulties haven’t been helped by the local authority selling off council housing, with the number of council houses dropping from 4,617 to 532 over the same twenty-year period. Demand for decent rented property remains high, as Cameron’s much vaunted house building program is years away and has decades of under investment to catch up on before it starts to affect demand. Even with the Buy to Let tax rule changes over the coming few years (which will see the maximum tax relief available to landlords drop from 45% to 20%), private landlords still have an important role to play in housing the people of Royal Tunbridge Wells and those who educate themselves and treat it as a business will survive and prosper.

The best way Royal Tunbridge Wells landlords can protect their income from property (and mitigate the affects of the tax rises) is to keep the homes they let out in Grade A condition. I have found, especially over the last three or four years, Royal Tunbridge Wells tenants have ever growing demands from their rental property, but many are prepared to pay ‘top dollar‘ for houses and apartments that meet their high expectations. You must not forget, letting property in Royal Tunbridge Wells (in fact anywhere) is a business, so all private landlords should also seek the advice, opinion and commentary of property professionals.

... And just as the other half had sorted the family, he asked ‘What of the news of Stamp Duty changes for Landlords coming in April?’ My thoughts are with such low supply (i.e. numbers of property for sale), and high demand it is hard to imagine Royal Tunbridge Wells property values will see much impact – but I predict, ever so slightly, the proportion of owner occupiers should increase slightly compared to buy to let landlords in the coming decade as the the housing market should return to balance. For more in-depth thoughts on the Royal Tunbridge Wells Property Market, which have a library of similar articles like this, all on the Royal Tunbridge Wells Property Market, please visit my blog 

Sunday, 3 April 2016

£350,000 inheritance - Is buying Royal Tunbridge Wells Property still the best place for my windfall?

I had an interesting email from someone in Royal Tunbridge Wells a few weeks ago that I want to share with you (don’t worry I asked his permission to share this with you all). In a nutshell, the gentleman lives in Rusthall, he is in his mid 60’s and still working. He has a decent pension, so that when he does retire in a couple of years’ time, it will give him a comfortable life. He had recently inherited £350,000 from an elderly aunt. One option he told me was put it into a savings account. The best he could find was a 2 year bond with the Post Office which paid 1.9%; meaning he would get £6,650 in interest a year. One of his other options was to buy a property in Royal Tunbridge Wells to rent out and he wanted to know my thoughts on what he should buy, but he had concerns as he didn’t want to take a mortgage out at his time of life. He was also worried about all the tax changes he had read about in the papers for landlords.

Notwithstanding the war on Royal Tunbridge Wells landlords being waged by George Osborne, the attraction of bricks and mortar endures for many. As our man is a cash buyer, he would not have to deal with the intricate cut to mortgage interest tax relief that will diminish, or even eradicate, the profits of many Royal Tunbridge Wells landlords. It’s true he would face the extra 3% in stamp duty to buy a second property, but with some good negotiation techniques, that could soon be mitigated.

I told him that buying a Royal Tunbridge Wells buy to let property is all about the total return on investment. True, he could put the money in the Post Office bond and receive his interest of £6,650 a year or, as he rightly suggested, invest in property in Royal Tunbridge Wells. The average yield (yield being the equivalent of the interest rate on the property) at the moment in Royal Tunbridge Wells is 3.35% per annum, meaning our potential F.T.L (First Time Landlord) should be able to, depending on what he bought in the town, earn before costs £11,725 a year. (However, I told him there are plenty of landlords in Royal Tunbridge Wells earning half as much again (if not more), if he was willing to consider more specialist investment types of properties – again, if you want to know where – look at my blog or drop me an email).

The bottom line is that the success of investing in Royal Tunbridge Wells buy to let property versus a savings account with the Post Office (or whatever Bank or Building Society is offering the best rate) will depend on the performance of those assets. Unlike with a savings account, with property the capital you invested can also go up (and yes, it can go down as well – more of that in second). Property values in Royal Tunbridge Wells have risen in the last twelve months by 8.4% meaning, that if our chap had bought a year ago, not only would he have received the £11,725 in rent, but also seen an uplift of £29,400 …meaning his overall return for the year would have been £41,125 (not bad when compared to the Post Office!).

..  but the doom mongers amongst you will say, property values can go down, as they did in 2008, and in 1988 and 1979. Yes, but after 1979 prices had bounced back to their ’79 levels by 1984 and went on to grow an additional 58% in the following four years. Then again, they dropped in 1988 and did take 13 years to reach back to those ’88 figures, but the following six years (between 2001 and 2007) they then increased by an additional 66%. Now, according to the Land Registry, average property values in Kent currently stand 10.42% above the January 2008 level, and anecdotal evidence suggests that in the nicer parts of Royal Tunbridge Wells, we are well above these sorts of levels. Therefore, all this talk of property crashes is unfounded.

… and what would that £350,000 get you in Royal Tunbridge Wells? A superb 2 bed apartment in Molyneux Park Road, a really nice 3 bed semi in Hawkenbury or a decent 3 bed detached in Rusthall.. in fact, the world is your oyster. But which Oyster? Well, my blog reading friends, if you want to read similar articles like this and what I consider to be the very best of buy to let deals in Royal Tunbridge Wells, irrespective of which agent is selling it, then you need to visit the Royal Tunbridge Wells Property Blog