Royal Tunbridge Wells Property Market and Hammond’s Budget Promise to Build 300,000 more homes

I miss the good old days of George Osborne as Chancellor, with his hardhat and hi-vis jacket. He must have visited every new home building site in the UK with his trademark attire! For the last few years, the nearest Philip Hammond got to donning a ‘Bob the Builder’ outfit was at his grandchild’s birthday party. However, with what appears to be a change in focus by the Tories to ensure they get back in power in 2022, they appear to have fallen in love with house building again with the Chancellor’s promise to create 300,000 new households in a year.

Nationally, the number of new homes created has topped 217,344 in the last year, the highest since the financial crash of 2007/8. Looking closer to home: in total there were 460 ‘net additional dwellings’ in the last 12 months in the Tunbridge Wells Borough Council area, a decent increase of 63% on the 2010 figure.

The figures show that 64% of this additional housing was down to new build properties. In total, there were 293 new dwellings built over the last year in Tunbridge Wells. In addition, there were 138 additional dwellings created from converting commercial or office buildings into residential property and a further 30 dwellings were added as a result of converting houses into flats.

While these all added to the total housing stock in the Tunbridge Wells area, there was 1 demolition to take into account.

Net additional dwellings in Tunbridge Wells in the last 12 months
New build	Conversions	Change of use	Demolitions	Net Additions
293	30	138	-1	460

I was encouraged to see some of the new households in the Royal Tunbridge Wells area had come from a change of use. The planning laws were changed a few years back so that, in certain circumstances, owners of properties didn’t need planning permission to change office space in to residential use.

With the scarcity of building land available locally (or the builders being very slow to build on what they have, for fear of flooding the market), it was pleasing to see the number of developers that had reutilised vacant office space into residential homes in the local council area. Converting offices and shops to residential use will be vital in helping to solve the Royal Tunbridge Wells housing crisis especially, as you can see on the graph, that the level of building has hardly been spectacular over the last seven years!

Now we have had the autumn budget, Theresa May and Philip Hammond have set out their stall with housing as their key focus. I was glad to see the Government introducing a variety of changes to improve housing, including more funding for the supply side and an injection of urgency into the planning system.

The biggest question is, just where are the Government going to build all these new houses? Maybe a topic for a future article?

Back to the main point though and the focus on the housing market by the Tory’s is good news for all homeowners and buy to let landlords, as it will encourage more fluidity in the market in the longer term, sharing the wealth and benefits of homeownership for all. However, in the short term, demand still outstrips supply for homes and that will mean continued upward pressures on rents for tenants.

Royal Tunbridge Wells Apartments are 3.4% more affordable than 10 years ago

My research shows that certain types of Royal Tunbridge Wells property are more affordable today than before the 2007 credit crunch.

Roll the clock back to 2007 just before the credit crunch hit which saw Royal Tunbridge Wells property values plummet like a lead balloon and the Royal Tunbridge Wells property market had reached a peak with the prices for Royal Tunbridge Wells property hitting the highest level they had ever reached.  Between 2008 and 2010, Royal Tunbridge Wells property values lay in the doldrums and only started to rise in 2011, albeit quite slowly to begin with.

Nevertheless, even though property values have now passed those 2007 peaks, my research indicates that Royal Tunbridge Wells property, especially flats/apartments, are now more affordable than they were before the 2008 credit crunch.

Back in 2007, the average value of a Royal Tunbridge Wells flat/apartment stood at £236,411 and today, it stands at £289,662, a rise of £53,251 or 22.5%.

However, between 2007 and today, we have experienced inflation (as measured by the Government’s Consumer Price Index) of 25.97% meaning that in real spending power terms Royal Tunbridge Wells apartments are 3.4% more affordable than in 2007. Looking at it another way, if the average Royal Tunbridge Wells apartment (valued at £236,411 in 2007) had risen by 25.97% inflation over those 10 years, today it would be worth £297,807 (instead of the current £289,662).

The point I’m trying to get across is that Royal Tunbridge Wells property is more affordable than many people think.  Royal Tunbridge Wells first time buyers can get on the ladder as 95% mortgages have been readily available to first-time buyers since 2010.

It really comes down to a choice and if Royal Tunbridge Wells first-time buyers can get over the hurdle of saving the 5% deposit for the mortgage on the property – they will be on to a winner, especially with these ultralow mortgage interest rates, a mortgage can be between 10% and 30% cheaper per month than the rental payments on the same house.

So why aren’t Royal Tunbridge Wells 20 somethings buying their own home?

Back in the 1960’s and 1970’s, renting was considered the poor man’s choice in Royal Tunbridge Wells (and the rest of the Country) a huge stigma was attached to renting. However, over the last 10 years as a country, we have done a complete U-turn in our attitude towards renting - meaning that many people find renting a better option and a lifestyle choice.

Saving the 5% deposit means going without many luxuries in life (such as holidays, every satellite movie and sports channel, socialising or the latest mobile phone – even if only in the short term) therefore instead of saving every last pound to put towards a mortgage deposit Royal Tunbridge Wells 20 somethings choose to rent.

There is no denying the simple fact that over the next 10 to 15 years, the people who choose to rent instead of buy in Royal Tunbridge Wells will continue to rise.

Therefore, everyone in Royal Tunbridge Wells has a responsibility to ensure that an adequate number of quality Royal Tunbridge Wells rental properties are safeguarded to meet those future demands. Interestingly, what I have noticed though over the last few years are the expectations of Royal Tunbridge Wells tenants on the finish and specification of their Royal Tunbridge Wells rental property.

I have perceived that in the past, what a tenant wanted from their Royal Tunbridge Wells rental property was moderately unassuming because renting a property was only a short-term choice to fill the gap before jumping on the property ladder. Before the millennium, wood chip wall paper and twenty-year-old kitchen and bathroom suites were considered the norm.

However, Royal Tunbridge Wells tenants’ expectations are becoming more discerning as each year goes by.  I have also noticed the length of time a tenant remains in their Royal Tunbridge Wells property is becoming longer (and this was backed up recently by stats from a Government Report), although I have noticed a tendency for many Royal Tunbridge Wells landlords not to keep the rental payments at the going market rates  - maybe a topic for a future article for my blog?

The bottom line is this … Royal Tunbridge Wells landlords will need to be more conscious of tenants needs and wants and consider their financial planning for future enhancements to their Royal Tunbridge Wells rental properties over the next five, ten and twenty years -  e.g. decorating, kitchen and bathroom suites etc etc ..

The present-day and future situation of the Royal Tunbridge Wells private rental property market is important, and I frequently liaise with Royal Tunbridge Wells buy-to-let investors looking to spread their Royal Tunbridge Wells rental-portfolios. I also enjoy meeting and working alongside Royal Tunbridge Wells first time landlords, to ensure they can navigate through the minefield of rental voids, the important balance of capital growth and yield and ensuring the property is returned back to you in the future in the best possible condition.

Royal Tunbridge Wells Rents Set to Rise to £1,200 pm in Next 5 Years

It’s now been a good 12/18 months since annual rental price inflation in Royal Tunbridge Wells peaked at 3.4%. Since then we have seen increasingly more humble rent increases. In fact, in certain parts of the Royal Tunbridge Wells rental market over the autumn, the rental market saw some slight falls in rents. So, could this be the earliest indication that the trend of high rent increases seen over the last few years, may now be starting to buck that trend?

Well, possibly in the short term, but in the coming few years, it is my opinion Royal Tunbridge Wells’ rents will regain their upward trend and continue to increase as demand for Royal Tunbridge Wells rental property will outstrip supply, and this is why.

The only counterbalance to that improved rental growth would be to meaningfully increase rental stock (i.e. the number of rental properties in Royal Tunbridge Wells). However, because of the Government’s new taxes on landlords being introduced between 2017 and 2021, that means buy-to-let has (and will) be less attractive in the short term for certain types of landlords (meaning less new properties will be bought to let out).

Interestingly, countless market experts assumed at the start of 2017, that the number of rental properties would in fact drop throughout the year. The assumption being as the new tax rules for landlords started to kick in, landlords looked to kick their tenants out, sell up and invest their capital elsewhere. (Although ironically that would lower supply of rental properties, decreasing the supply, meaning rents would increase again!).

Anecdotal evidence suggests, confirmed by my discussions with fellow property, accountancy and banking professionals in Royal Tunbridge Wells, that Royal Tunbridge Wells landlords are (instead of selling up on masse), actually either (1) re-mortgaging their Royal Tunbridge Wells buy-to-let properties instead or (2) converting their rental portfolios into limited companies to side step the new taxation rules.

The sentiment of many Royal Tunbridge Wells landlords is that property has always weathered the many stock market crashes and runs in the last 50 years. There is something inheritably understandable about bricks and mortar – compared to the voodoo magic of the stock market and other exotic investment vehicles like debentures and crypto-currency (e.g. BitCoin). 

Remarkably, there is some good news for tenants, as Tory’s recently published the draft Tenants’ Fee Bill, which is designed to prohibit the charging of tenants lettings fees on set up of the tenancy. However, looking at evidence in Scotland, I expect rents to rise to compensate landlords, thus hammering faithful tenants looking for long-term tenancy agreements the hardest. This growth will be on top of any usual organic rent growth.  It really is swings and roundabouts!

So, what does this all mean for landlords and tenants in Royal Tunbridge Wells? In my considered opinion,

Rents in Royal Tunbridge Wells over the next 5 years will rise by 9.2%, taking the average rent for a Royal Tunbridge Wells property from £1,099 per month to £1,200 per month.

To put all that into perspective though, rents in Royal Tunbridge Wells over the last 12 years have risen by 21.5%. In fact, that rise won’t be a straight-line growth either, because I have to take into account the national and local Royal Tunbridge Wells economy, demand and supply of rental property, interest rates, Brexit and other external factors. Please see the graph for my projections

In the past, making money from Royal Tunbridge Wells’ buy-to-let property was as easy as falling off a log. But with these new tax rules, new rental regulations and the overall changing dynamics of the Royal Tunbridge Wells property market, as a Royal Tunbridge Wells landlord, you are going to need work smarter and have every piece of information, advice and opinion to hand on the Royal Tunbridge Wells, Regional and National property market’s, to enable you to continue to make money.

One place for that information is the Royal Tunbridge Wells Property Market blog