‘Flipping’ Heck - Royal Tunbridge Wells Property Values Rise by £58.63 a day

Investing in Royal Tunbridge Wells buy to let property is different from investing in the stock market or depositing your hard-earned cash in the Building Society. When you invest your money in the Building Society, this is considered by many as the safe option but the returns you can achieve are awfully low (the best 2-year bond rate from Nationwide is a whopping 0.75% a year!). Another investment is the Stock Market, which can give good returns, but unless you are on the phone every day to your Stockbroker, most people invest in stock market funds, making the investment quite hands off and one always has the feeling of not being in control.

However, with buy to let, things can be more hands on. One of the things many landlords like is the tactile nature of property - the fact that you can touch the bricks and mortar. It is this factor that attracts many of Royal Tunbridge Wells’s landlords – they are making their own decisions rather than entrusting them to city whizz kids in Canary Wharf playing roulette with their savings.

I always say investing in property is a long-term game. When you invest in the property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as 'capital growth'. Capital growth, also known as capital appreciation, has been strong in recent times in Royal Tunbridge Wells, but the value of property does go up as well as down just like shares do but the initial purchase price rarely decreases.  Rental income is what the tenant pays you - hopefully this will also grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return. So, over the last 5 years, an average Royal Tunbridge Wells property has risen by £107,000 (equivalent to £58.63 a day), taking it to a current average value of £469,400. Yields range from 5% a year and can reach double digits’ percentages (although to achieve those sorts of returns, the risks are higher).

However, something I haven’t spoken of before is the more specialist area of flipping property to make money. (flipping - buying a property, carrying out some minor cosmetics and re selling it quickly).  I have seen several investors recently who have made decent returns from this strategy. For example …

·       One Royal Tunbridge Wells Investor paid £225,000 for a 2 bed terrace on Bedford Road in February 2016. It appears some cosmetic work was done to the property and it was resold a few months ago (November 2016) for £278,000 … 23.56% return before costs (or compound annual return equivalent of 32.14% AER)  http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=45122751&sale=4689232&country=england

This demonstrates how the Royal Tunbridge Wells property market has not only provided very strong returns for the average investor over the last five years but how it has permitted a group of motivated buy to let Royal Tunbridge Wells landlords and investors to become particularly wealthy.

As my article mentioned a few weeks ago, more and more Royal Tunbridge Wells people may be giving up on owning their own home and are instead accepting long term renting whilst buy to let lending continues to grow from strength to strength. If you want to know what (and what would not) make a decent buy to let property in Royal Tunbridge Wells, then one place for such information would be the Royal Tunbridge Wells Property Blog.

How The Rented Sector Has Transformed The Property Market In Royal Tunbridge Wells

The Royal Tunbridge Wells housing market has gone through a sea change in the past decades with the Buy-to-Let (B-T-L) sector evolving as a key trend, for both Royal Tunbridge Wells’ tenants and Royal Tunbridge Wells’ landlords.

A few weeks ago, the Government released a White Paper on housing. I have had a chance now to digest the report and wish to offer my thoughts on the topic. It was interesting that the private rental sector played a major part in the future plans for housing. This is especially important for our growing Royal Tunbridge Wells population.

In 1981, the population of Tunbridge Wells Council area stood at 98,700 and today it stands at 116,200.

Currently, the private rented (B-T-L) sector accounts for 21.4% of households in the town.  The Government want to assist people living in the houses and help the economy by encouraging the provision of quality homes, in a housing sector that has grown due to worldwide economic forces, pushing home ownership out of the reach of more and more people. Interestingly, when we look at the 1981 figures for homeownership, a different story is told.

59.9% Royal Tunbridge Wells people owned their own home in 1981

23.51% Royal Tunbridge Wells people rented from the Council or Housing Association in 1981

 and 16.59% Royal Tunbridge Wells rented from a Private Landlord            

The significance of a suitable housing policy is vital to ensure suitable economic activity and create a vibrant place people want to live in. With the population of the Tunbridge Wells area set to grow to 132,000 by 2037 – it is imperative that Tunbridge Wells Borough Council and Central Government all work actively together to ensure the residential property market doesn’t hold the area back, by encouraging the building and provision of quality homes for its inhabitants.

One idea the Government has proclaimed is a variety of measures aimed at encouraging the Build-to-Rent (B-T-R) sector (instead of the B-T-L sector). These include allowing local authorities to proactively plan for B-T-R schemes, and making it simpler for B-T-R developers to offer inexpensive private rented homes.

To do this, the government will invent a distinct affordable housing class for B-T-R, called ‘Affordable Private Rent’, which will oblige new homes builders to provide at least 1 in 5 of a new home developments at a 20% discount on open-market rents and three year tenancies for tenants. In return, the new homebuilders will get better planning assurances.

Private landlords will not be expected to offer discounts, nor offer 3-year tenancies – but it is something Royal Tunbridge Wells landlords need to be aware of as there will be greater competition for tenants.

Over the last ten years, home ownership has not been a primary goal for young adults as the world has changed. These youngsters expect ‘on demand’ services from click and collect, Amazon, Dating Apps and TV with the likes of Netflix. Many Royal Tunbridge Wells youngsters see that renting more than meets their accommodation needs, as it combines the freedom from a lifetime of property maintenance and financial obligations, making it an attractive lifestyle option.

Private rented housing in Royal Tunbridge Wells, be it B-T-L or B-T-R, has the prospective to play a very positive role.

Royal Tunbridge Wells’ ‘Generation Trapped’ and the £6.3bn legacy

Last week, I wrote an article on the plight of the Royal Tunbridge Wells 20 something’s often referred to by the press as ‘Generation Rent’. Attitudes to renting have certainly changed over the last twenty years and as my analysis suggested, this change is likely to be permanent. In the article, whilst a minority of this Generation Rent feel trapped, the majority don’t – making renting a choice not a predicament. The Royal Institution of Chartered Surveyors (RICS) predicted that the private rental sector is likely to grow substantially by 1.8m households across the UK in the next 8 years, with demand for rental property unlikely to slow and newly formed households continuing to choose the rental market as opposed to buying.

However, my real concern for Royal Tunbridge Wells homeowners and Royal Tunbridge Wells landlords alike, as I discussed a couple of months ago, is our mature members of the population of Royal Tunbridge Wells. In that previous article, I stated that the current OAP’s (65+ yrs in age) in Royal Tunbridge Wells were sitting on £2.8bn of residential property ... however, I didn’t talk in depth about the ‘Baby Boomers’, the 50yr to 64yr old Royal Tunbridge Wells people and what their properties are worth – and more importantly, how the current state of affairs could be holding back those younger Generation Renters.

In Royal Tunbridge Wells, there are 3,607 households whose owners are aged between 50yrs and 64yrs and about to pay their mortgage off. That property is worth, in today’s prices, £1.6bn. There are an additional 3,839 mortgage free Royal Tunbridge Wells households, owned by 50yr to 64yr olds, worth £1.8bn in today’s prices, meaning...

Royal Tunbridge Wells Baby Boomers and Royal Tunbridge Wells OAP’s are sitting on £6.3bn worth of Royal Tunbridge Wells Property

These Royal Tunbridge Wells Baby Boomers and OAP’s are sitting on 13,420 Royal Tunbridge Wells’ properties and many of them feel trapped in their homes, and hence I have dubbed them ‘Generation Trapped’.

Recently, the English Housing Survey stated 49% of these properties owned by the Generation Trapped, as I have dubbed them, are ‘under-occupied’ (under-occupied classed as having at least two bedrooms more than needed). These houses could be better utilised by younger families, but research carried out by the Prudential suggest in Britain it’s estimated that only one in ten older people downsize while in the USA for example one in five do so.

The growing numbers of older homeowners who want to downsize their home are often put off by the difficulties of moving. The charity United for all Ages, suggested recently many are put off by the lack of housing options, 19% by the hassle and cost of moving, 14% by having to declutter their possessions and 14% by family reasons such as staying close to children and grandchildren.

Helping mature Royal Tunbridge Wells (and the Country) homeowners to downsize at the right time will also enable younger Royal Tunbridge Wells people to find the homes they need – meaning every generation wins, both young and old. However, to ensure downsizing works, as a Country, we need more choices for these ‘last time buyers’.

Theresa May and Philip Hammond can do their part and consider stamp duty tax breaks for downsizers, our local Council in Royal Tunbridge Wells and the Planning Dept. should play their part, as should landlords and property investors to ensure Royal Tunbridge Wells’ ‘Generation Trapped’ can find suitable property locally, close to friends, family and facilities.

‘Generation Rent (Forever)’ – 4,176 Royal Tunbridge Wells Tenants have no intention of ever buying a property to call home

The good old days of the 1970’s and 1980’s eh … with such highlights lowlights as 24% inflation, 17% interest rates, 3 day working week, 13% unemployment, power cuts ... those were the days (not)… but at least people could afford to buy their own home. So why aren’t the 20 and 30 something’s buying in the same numbers as they were 30 or 40 years ago?

Many people blame the credit crunch and global recession of 2008, which had an enormous impact on the Royal Tunbridge Wells (and UK) housing market. Predominantly, the 20 something first-time buyers who, confronting a problematic mortgage market, the perceived need for big deposits, reduced job security and declining disposable income, discovered it challenging to assemble the monetary means to get on to the Royal Tunbridge Wells property ladder.

However, I would say there has been something else at play other than the issue of raising a deposit - having sufficient income and rising property prices in Royal Tunbridge Wells. Whilst these are important factors and barriers to homeownership, I also believe there has been a generational change in attitudes towards home ownership in Royal Tunbridge Wells (and in fact the rest of the Country).

Back in 2011, the Halifax did a survey of thousands of tenants and 19% of tenants said they had no plans to buy a home for themselves. A recent, almost identical survey of tenants, carried out by The Deposit Protection Service revealed, in late 2016, that figure had risen to 38.4%, with many no-longer equating home ownership to success and believing renting to be better suited to their lifestyle.

You see, I believe renting is a fundamental part of the housing sector, and a meaningful proportion of the younger adult members of the Royal Tunbridge Wells population choose to be tenants as it better suits their plans and lifestyle. Local Government in Royal Tunbridge Wells (including the planners – especially the planners), land owners and landlords need an adaptable Royal Tunbridge Wells residential property sector that allows the diverse choices of these Royal Tunbridge Wells 20 and 30 year olds to be met.

This means, if we applied the same percentages to the current 10,874 Royal Tunbridge Wells tenants in their 5,353 private rental properties, 4,176 tenants have no plans to ever buy a property – good news for the landlords of those 2,056 properties. Interestingly, in the same report, just under two thirds (62%) of tenants said they didn’t expect to buy within the next year.

.. but does that mean the other third will be buying in Royal Tunbridge Wells in the next 12 months?

Some will, but most won’t … in fact, the Royal Institution of Chartered Surveyors (RICS) predicts that, by 2025, that the number of people renting will increase, not drop. Yes, many tenants might hope to buy but the reality is different for the reasons set out above.  The RICS predicts the number of tenants looking to rent will increase by 1.8 million households by 2025, as rising house prices continue to make home ownership increasingly unaffordable for younger generations.  So, if we applied this rise to Royal Tunbridge Wells, we will in fact need an additional 2,294 private rental properties over the next eight years (or 287 a year) … meaning the number of private rented properties in Royal Tunbridge Wells is projected to rise to an eye watering 7,647 households.