Royal Tunbridge Wells First Time Buyers Need 13.2 Times Annual Salary to Get on Housing Ladder

What is it to be British? Our stubbornness, long-suffering stoicism, our vexation at injustice, our obsession with football and rugby, we are weather obsessed external awkward noncommittal modest people whilst underneath seething like a volcano because someone jumped the queue….. and our No.1 obsession is with the property ladder.

This ‘love affair’ with owning our own home has been both good and bad for the UK as a whole; giving people financial freedom in their later years whilst also reducing the quantity (and quality) of housing provision whilst adding the extra pressure of a ‘them and us’ society. Strong words I know .. but let me explain more.

I honestly believe that most Governments since the end of the 1970’s, Conservative and Labour, have attempted to nourish our addiction to home ownership (to keep the housing market on track) with the Council House Right to Buy sell off in the 1980’s, tax relief of mortgages, relaxation of the mortgage rules in the late 1990’s/early 2000’s and most recently, the Help to Buy scheme.

But the Brits haven’t always had this obsession.

Roll the clock back 100 years and, in 1918, just under a quarter of all Brits owned their own homes and the other 77% rented. Go back 50 years to 1968, and only 46% of people owned their own home, the rest rented. This homeownership thing is quite a recent phenomenon.

According to my research, anyone looking to get a foot onto the property ladder as a first-time buyer in Royal Tunbridge Wells today, AS A SINGLE PERSON, would need to spend 13.2 times their earnings on a Royal Tunbridge Wells first time buyer property. 

Using the numbers from the Office of National Statistics (ONS), the average value of a first-time buyer property in Royal Tunbridge Wells today is £265,000, compared to £180,000 in 2007. If we divide those property values by the average annual earnings of first time buyers - in 2007, that was £17,758 pa and that has risen to £20,097 pa .. giving us the ratio of 13.2 to 1.

However, what must be remembered is that these are raw statistics from the ONS and don’t take into account other factors, like most people buy their first home as a couple. Also, mortgage rates are at an all-time low and who can remember mortgage rates of 15%+ in the 1990’s, meaning borrowing today is relatively cheap. Also, 95% Loan to Value first time buyer mortgages have been available since the end of 2009  (i.e. you only need to save a 5% deposit) and first time buyer rates of 2.19% fixed for 5 years can be obtained (correct at time of writing this article)… it is cheaper to buy than rent .. fact!

I believe there has been a mind-set change to owning a home. Home ownership was the goal of the youngsters in the latter half of the 20^thcentury. Britain is changing to a more European model of homeownership, where people rent in early to mid-life, wait to inherit the money from their parents when in their 50’s and then buy.. thus continuing the circle - albeit in a different way to the last Century.

This means the demand for privately rented accommodation will, in the long term, only continue to grow. If you would like to know more about where the hot spots are for that growth in Royal Tunbridge Wells, then one place would be my property blog or if you want to drop me an email or telephone call, feel free to pick my brain on the best places to buy (and not to buy) in Royal Tunbridge Wells to ensure your rental investment gets you want you want. The choice is yours!

Royal Tunbridge Wells House Prices vs Royal Tunbridge Wells Rents since 2006

It doesn’t seem two minutes ago that it was 90 degrees Fahrenheit in the shade (32 degrees Celsius for my younger readers), hosepipe bans looked likely and it was simply too hot to sleep at night, yet early indications were, that as the temperatures soared, the Royal Tunbridge Wells property market appeared to be doing the reverse and was already starting to cool down. 

22.12% less people moved home in the Tunbridge Wells area in the first part of 2018, when compared to the average number of people moving home (in the same time frame) between 2014 and 2017

The average number of households who sold and moved locally between 2014 and 2017 in the winter and spring months was 151 homes a month.. yet in the same time frame in 2018, only 118 (on average) sold and moved.

So, what is the issue? Many have cited Brexit as the issue – but I think its deeper than that. 

Brexit seems to be the “go to excuse” for everything at the moment – my neighbour even blamed it for the potholes! Anyway a few weeks ago, I was out for a family get together in another part of the UK when one of my extended family said that they were planning on buying their first home this autumn most of those present said they were stupid to do so because of Brexit. Nonetheless, half an hour later, another distant cousin said to the same family crowd that they were planning to sell their home; to which most said they were also daft to do so because of Brexit.

Both sides of the argument can’t be right! So, what exactly is happening? 

Well if you have been reading my blog on the Royal Tunbridge Wells property market over the last few months, I have been discussing the threats and opportunities of the current state of fluidity in the Royal Tunbridge Wells property market, including the issue of OAPs staying in homes that are too big for them as their children have flown the nest, interest rates, inflation, lack of new homes being built and the long term attitude to homeownership.. yet I have noticed a new trend in the last few months.. the emergence of the ‘sell to renter’.

Sell to Renter?

I have seen a subtle, yet noticeable number of Royal Tunbridge Wells homeowners that have been selling their Royal Tunbridge Wells homes, renting and wagering that, in the next few years, the Royal Tunbridge Wells property market will tumble by more than what they spend on their short-term rental home, before they buy another Royal Tunbridge Wells home in a couple of years i.e. a ‘sell to renter’. This type of ‘sell to renter’ is mostly predominant at the middle to upper end of the Royal Tunbridge Wells property market – so I’m not too sure if it will catch on in the main ‘core’ market?

So, what does this all mean for Royal Tunbridge Wells homeowners and Royal Tunbridge Wells Buy To Let landlords?

Well, in the short term, demand for middle to upper market Royal Tunbridge Wells rental properties could increase as these ‘sell to renters’ demand such properties. I would however give a note of caution to Royal Tunbridge Wells landlords buying in this sector of the Royal Tunbridge Wells property market as yields in this sector can be quite low. However, for homeowners of middle to upper market Royal Tunbridge Wells properties, you might have less people wanting to buy your type of property, as some buyers are turning to renting? 

Like I have always said, Royal Tunbridge Wells properties are selling if they are realistically priced (realistic for the market – not a rose-tinted version where someone will pay 10% over the odds because everyone has access to the market stats with the likes of Rightmove and Zoopla!).

P.S Notice the spike in the graph, where the number of property sales jumped to 271 in the month of March 2016? That was all the Royal Tunbridge Wells buy to let landlords snapping up buy to let properties before the stamp duty rules changed! 

Royal Tunbridge Wells House Prices vs Royal Tunbridge Wells Rents since 2006

The Royal Tunbridge Wells housing market is a fascinating beast and has been particularly interesting since the Credit Crunch of 2008/9 with the subsequent property market crash. There is currently some talk of a ‘property bubble’ nationally as Brexit seems to be the ‘go-to’ excuse for every issue in the Country. Upon saying that, looking at both what we do as an agent, and chatting with my fellow property professionals in Royal Tunbridge Wells, the market has certainly changed for both buyers and sellers alike (be they Royal Tunbridge Wells buy to let landlords, Royal Tunbridge Wells first time buyers or Royal Tunbridge Wells owner occupiers looking to make the move up the Royal Tunbridge Wells property ladder).

Royal Tunbridge Wells House Values are 1.88% higher than a year ago, and the rents Royal Tunbridge Wells’ tenants have to pay are 1.5% higher than a year ago

When we compare little old Royal Tunbridge Wells to the national picture, national property values have risen by 0.4% compared to last month and risen by 3.0% compared to a year ago, and this will surprise you even more, as nationally, property values are 19.8% higher than January 2015 (compared to 11.4% higher in the EU in the same time frame).

However, if we look further back...

Since 2006, Royal Tunbridge Wells House Values are 77.6% higher, yet the rents Royal Tunbridge Wells’ tenants have had to pay for their Royal Tunbridge Wells rental property are 26.4% higher

...which sounds a lot, yet UK inflation in those 12 years has been 42%, meaning Royal Tunbridge Wells tenants are 15.6% better off in ‘real spending power terms’.

Looking at the graph, the rental changes have been much gentler than the roller coaster ride of property values. I particularly want to bring to your attention the dip in Royal Tunbridge Wells house values (in red) in the years of 2008 and 2009 ... yet as Royal Tunbridge Wells property values started to rise after the summer of 2009, see how Royal Tunbridge Wells rents dipped 6/12 months later (the yellow bars)…. Fascinating!

So, we have a win for tenants and a win for the homeowners, as they are also happy due to the increase in the value of their Royal Tunbridge Wells property.

However, maybe an even more interesting point is for the long-term Royal Tunbridge Wells buy to let landlords. The performance of Royal Tunbridge Wells’ rental income vs Royal Tunbridge Wells house values has seen the resultant yields drop over time (if house prices rise quicker than rents – yields drop).

Whilst, it’s true Royal Tunbridge Wells landlords have benefited from decent capital growth over the last decade –with the new tax rules for landlords – now more than ever, it’s so important to maximise one’s yields to ensure the long term health of your Royal Tunbridge Wells buy to let portfolio. More and more I am sitting down with both Royal Tunbridge Wells landlords of mine and landlords of other agents who might not be trained in these skills - to carry out an MOT style check on their Royal Tunbridge Wells portfolio, to ensure your investment will meet your future needs of capital growth and income. If you don’t want to miss out on such a MOT check up, drop me a line – what have you got to lose? 30 minutes of time againstpeace of mind - the choice is yours.

Great(er) Expectations: Why Royal Tunbridge Wells Home Sellers are Having to Reduce Their Asking Prices by an Average of £21,600 Each

As we leave the memorably hot summer behind us, some interesting statistics have come to light on the Royal Tunbridge Wells Property Market which will be thought provoking for both homeowners and buy to let landlords alike.

Over the last 12 months 1,007 households have changed hands in Royal Tunbridge Wells, interesting when compared with the 10-year average of 1,352 households per year.

Yet, for the purpose of this week’s article, I want to discuss the pricing of the current crop of Royal Tunbridge Wells’ property sellers and the prices they are asking for their homes and the prices they are achieving (or not as at the case may be). It is so important for all property owners to know the real story, so they can judge for themselves where they stand in the current Royal Tunbridge Wells housing market, thus enabling them to make suitable and informed decisions… and that is why, in my blog about the Royal Tunbridge Wells Property Market, I pride myself in telling the people of Royal Tunbridge Wells the real answers, not just the ones they want to hear.

The national average of homes selling at or above the asking price currently stands at around 10%, so around 90% go below the asking price – but by how much? Well according to Rightmove, in the Royal Tunbridge Wells area, the average difference between the ‘FINAL asking price’ to the price agreed is 3.1% … yet note I highlighted the word FINAL in the last statement. 

You see some Estate Agents will deliberately over inflate the suggested initial asking price to the house seller, because it gives them a greater chance to secure the property on that agent’s books, as opposed to a competitor. This practice is called overvaluing. Now of course, each homeowner wants to get the most for their property, it is quite often their biggest asset – yet some agents know this and prey on those house sellers. You might ask, what is the issue with that?

Well, you only get one chance of hitting the market as a new property. Everyone has access to the internet, Rightmove and Zoopla etc, and your potential buyers will know the market like the back of their hand. If you have a 3 bed semi that is on the market for a 3 bed detached house price.. those buyers will ignore you. Your Royal Tunbridge Wells property sticks on the market, potential buyers will keep seeing your Royal Tunbridge Wells property on Rightmove each week, then start to think there is something wrong with it, dismiss it even further, until you, as the house seller have to reduce the asking price so much (to make it appear inexpensive) to get it away. According to our own research, the average house buyer only views between 4 and 5 houses before buying – so don’t assume viewers will come round your optimistically priced (i.e. overvalued) property, thinking they will knock you down – no quite the opposite!

So how widespread is overvaluing in Royal Tunbridge Wells? The results might surprise you…

43.4% of properties in Royal Tunbridge Wells, currently on the market, have reduced their asking price by an average reduction of 5.0% (which equates to £21,600 each)

So, all I ask is this.. be realistic and you will sell at a decent price to a decent buyer. First time – every time – enabling you to move on to the next chapter of your life.

7 Reasons Why Royal Tunbridge Wells Buy To Let Landlords Shouldn’t Be Criticised

There is no escaping the fact that over the last couple of decades, the rise in the number buy to let properties in Royal Tunbridge Wells has been nothing short of extraordinary.  Many in the “left leaning” press have spoken of a broken nation, the fact many youngsters are unable to buy their first home with the rise of a new cohort of younger renters, whom have been daubed ‘Generation Rent’ as landlords hoover up all the properties for their buy to let property empires. Government has been blamed in the past for giving landlords an unfair advantage with the tax system. It is also true many of my fellow professionals have done nothing to avail themselves in glory, with some suspect, if not on some rare occasions, downright dubious practices. 

Yet has the denigration and unfair criticism of some Royal Tunbridge Wells landlords gone too far? 

It was only a few weeks ago, I read an article in a newspaper of one landlord who had decided to sell their modest buy to let portfolio for a combination of reasons, one of which being the new tax rules on buy to let that were introduced last year. The comments section of the newspaper and the associated social media posts were pure hate, and certainly not deserved.

Like all aspects in life, there are always good (and bad) landlords, just like there are good (and bad) letting agents ... and so it should be said, there are good tenants and in equal measure bad tenants. Bad letting agents and bad landlords should be routed out … but not at the expense of the vast majority whom are good and decent.

But are the 2,093 Royal Tunbridge Wells portfolio buy to let landlords at fault?

The Tories allowed people to buy their own Council house in the 1980’s, taking them out of the collective pot of social rented houses for future generations to rent them. Landlords have been vilified by many, as it has been suggested by some they have an unhealthy and ravenous avarice to make cash and profit at the expense of poor renters, unable to buy their first home. Yet, looking beyond the headline grabbing press, this is in fact ‘fake news’. There are seven reasons that have created the perfect storm for private renting to explode in the 2000’s.

To start with, the Housing Acts of 1988 and 1996 gave buy to let landlords the right to remove tenants after six months, without the need for fault. The 1996 Act, and its changes, meant banks and building societies could start to lend on buy to let properties, knowing if the mortgage payments weren’t kept up to date, the property could be repossessed without the issue of sitting tenants being in the property for many years (even decades!) ... meaning in 1997, buy to let mortgages were born… and this, my blog reading friends, is where the problem started. 

Secondly, in the early 2000’s, those same building societies and banks were relaxing their lending criteria, with self-certification (i.e. you did not need to prove your income), mortgages 8 times their annual salary, and very helpful interest only mortgage deals helped to keep repayments inexpensive. 

Thirdly, the totally inadequate building of Council Houses (aka Local Authority Housing) in the last two decades and(so I’m not accused of Tory bashing) - can you believe Labour only built 6,510 Council Houses in the WHOLE OF THE UK between 1997 and 2010? Giving the Tories their due, they have built 20,840 Council Houses since they came to power in 2010 (although still woefully low when compared the number of Council Houses built in the 1960’s and 1970’s when we were building on average 142,000 Council Houses per year nationally). This meant people who would have normally rented from the Council, had no Council House to rent (because they had been bought), so they rented privately.

And then 3^rd, 4^th, 5^th, 6^thand 7^th…  

·     Less of private home building (again look at the graph) over the last two decades.

·     A loss of conviction in personal pensions meaning people were looking for a better place to invest their savings for retirement.

·     Ultra-low interest rates for the last nine years since the Credit Crunch meaning borrowing was cheap.

·     A massive increase in EU migration from 2004, when we had eight Eastern European countries join the EU. That brought 1.4m people to the UK for work from those countries – and they needed somewhere to live.

Thus, we got the perfect storm conditions for an eruption in the Royal Tunbridge Wells Private Rented Sector.

Commercially speaking, purchasing a Royal Tunbridge Wells property has been undoubtedly the best thing anyone could have done with their hard-earned savings since 1998, where property values in Royal Tunbridge Wells have risen by 301.92%...

…and basing it on the average rental in Royal Tunbridge Wells, earned £232,416 in rent.

Yet, the younger generation have lost out, as they are now incapable to get on the property (especially in Central London). 

The Government have over the last few years started to redress the imbalance, increasing taxes for landlords, together with the Banks being tighter on their lending criteria meaning the heady days of the Noughties are long gone for Royal Tunbridge Wells landlords. In the past 20 years, anything but everything made money in property and it was easy as falling off a log to make money in buy to let in Royal Tunbridge Wells – but not anymore.

Being a letting agent has evolved from being a glorified rent collector to a trusted advisor giving specific portfolio strategy planning on each landlord’s buy to let portfolios. I had a couple of instances recently of a couple of portfolio landlords, one from Frant who wanted income in retirement from his buy to let’s and the other from Fordcombe, who wanted to pass on a decent chunk of cash to his grandchildren to enable them to buy their own home in 15/20 years’ time. 

Both of these landlord’s portfolios were woefully going to miss the targets and expectations both landlords had with their portfolios, so over the last six/nine months, we have sold a few of their properties, refinanced and purchased other types of Royal Tunbridge Wells property to enable them to hit their future goals (because some properties in Royal Tunbridge Wells are better for income and some are better for capital growth) ... And that my blog reading friends is what  ‘portfolio strategy planning’ is!  

If you think you need ‘portfolio strategy planning’, whether you are a landlord of ours or not (because the Fordcombe landlord wasn’t)  ... drop me line or give the office a call. Thank you for reading.