Waiting for the Royal Tunbridge Wells House Market to Crash will Cost you £63,283

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Doom and gloom in the British property market or clickbait doom-mongers?

Newspapers and clickbait 24-7 news websites, desperate for clicks, are peddling a story of a doomsday time for the economy, particularly the property market, as interest rates and inflation create the perfect storm for the UK property market.

So, let us look at what is happening in the British property market and whether house prices will drop.

Yes - Tunbridge Wells house prices will be lower in 24 months.

Yet the reductions in what I believe a property will sell for in the next couple of years compared to the doom-mongers is wildly different.

The doom-mongers are saying the 2022 property market will be like the crash years of 1988 and 2008.

I'm afraid I have to disagree, let me explain what the difference is this time compared to the previous house price crashes.

To start with …

56.25% of homeowners don’t have a mortgage, whilst in 1988, that was 35.8%. These people are shielded from the interest rate rises.

The next point is negative equity.

Yes, negative equity was an issue after 1988 when everyone had an endowment mortgage, so they never paid any of the capital off their mortgage. Therefore, when house prices dropped, negative equity was a massive issue as people owed more than what their house was worth.

By 2008, nobody was taking out endowment mortgages, yet still, 1 in 2 were interest-only mortgages (meaning the capital wasn’t being paid off). Today, 17 out of 20 homeowners are on repayment mortgages - so they have more home equity, so negative equity isn't so much an issue.

The issue is the increasing interest rates. Yes, they are rising … albeit from artificially low rates.

In 1988, nearly everyone was on a variable rate mortgage and an average mortgage interest rate was 10.8%, and they rose to 16.4% by 1990. That hurt, yet most survived.

In 2008, 6 out of 10 homeowners had learned their lesson and were on fixed rates at an average rate of 6.07%. Today 17 out of 20 homeowners have long-term fixed rates with an average of 2.14%.

Also, it must be noted that homebuyers have been stress tested for 6% to 7% mortgage rates since 2014 because of the Bank of England MMR rule changes. It will be challenging, and lifestyle choices will need to be made, yet we should not see the dumping of houses on the market as we did in 2008/9.

The next issue is the number of mortgages being pulled. Yes, around 1,000 mortgage deals have been removed in the last week - yet there are still 3,000+ deals out there … and most are still fixed rates.

Also, let’s not forget that 1 in 5 people rent today and are protected from all this, yet in 1988, only 1 in 14 rented. 

Therefore, the economic conditions surrounding the house price crash in 1988 and 2008 are not there now.

Don’t get me wrong, those homeowners coming off their fixed rates of around 2% in the coming years will have to make tough choices as they will see their monthly mortgage payments rise substantially.

Yet, as I have discussed in other articles, extending your mortgage term can significantly affect your monthly mortgage payments and there are things that homeowners should be doing now to mitigate the issue in the coming few years.

But back to the question, should people wait to move, and what will happen to Tunbridge Wells property prices?

I believe that subject to nothing seismic happening in the world, Tunbridge Wells property values will be broadly neutral and slowly drift downwards over the next 24 months. I believe they will drift because of the issues of inflation and mortgage affordability, yet we won’t have a crash for the points made in the first part of this article. I believe Tunbridge Wells property will be selling for sums of 4% to 6% less in a couple of years compared to today.

This means if we achieve prices of 4% to 6% less, homeowners will still be getting the same prices the property market was getting in the summer of 2021 – again – nobody was complaining about those!

However, let us assume I am wrong with my thoughts, and we see a significant house price crash; what then?

Well, let me look at the last two house price crashes first.

• The housing crash of 1988 saw the average house in the UK drop from £63,784 to £50,167, a drop of 20.09%.

• The housing crash of 2008 saw the average house in the UK drop from £184,132 to £154,065, a drop of 16.33%.

So, let’s assume that Tunbridge Wells house prices fall by 18% - surprisingly, it will not help Tunbridge Wells buyers.

In previous house price crashes, people tend to find their careers are more at risk, and in turn, their wages don't rise as much. It is the younger generation (i.e., first-time buyers age range) that often gets hit the toughest by these recessions.

Let me look at Tunbridge Wells first-time buyers.

If Tunbridge Wells first-time buyers wait until 2024 to buy and Tunbridge Wells property values drop by 18%, that will prove more expensive. Let me explain why …

In the last property crash of 2008, lenders withdrew 5% deposit mortgages. The smallest mortgage that first-time buyers could obtain was with a 10% deposit, and even those were hard to come by.

When writing this article, first-time buyers can obtain a 5% deposit mortgage for a fixed rate of 3.92% for five years.

The typical first-time buyer terraced house in Tunbridge Wells sells for £434,566.

If first-time buyers were to buy now, on this mortgage deal, they would have to find a £21,728 deposit, and their monthly mortgage payments would be £1,808.18 per month.

So, let’s say property values in Tunbridge Wells do drop by 18% in the next 24 months; the terraced house would now be worth £356,344, a significant saving in the purchase price.

Or is it?

Everyone believes the Bank of England will raise interest rates further, so let's assume they go to 5.5% by the autumn of 2024. That will mean the rate for a 10% deposit first-time buyer mortgage will be in the early 7%’s, so let me assume 7.19% (because the lenders have in the past increased the gap between the Bank of England base rate and the mortgage rate in more challenging economic times to allow for the extra risk).

The monthly mortgage payment in two years on the 7.19% mortgage would be £2,091.75 per month, and in those two years, you would have had to have saved an additional £13,906 to make up your 10% deposit of £35,634.

So even if Tunbridge Wells house prices did drop by 18%, the first-time buyer would be £3,403 worse off a year in mortgage payments (and would have to save many thousands extra for their deposit) 

... and then there is the other cost of waiting.

You have two years’ worth of rent to pay. The average rent for a Tunbridge Wells property is £1,632 per month.

If you waited a couple of years for Tunbridge Wells house prices to drop by 18%, you would spend £39,168 in rent plus have higher mortgage payments in 2024/5/6 and with the extra deposit mentioned above it would add up to an additional £63,283 over the next five years.

Yes, the price you paid for your Tunbridge Wells home would be lower if you waited two years. Yet, you would only benefit from that when you sold on versus the economic pain of two years of extra renting, the higher deposit and higher mortgage payments in a couple of years.

This doesn't even consider the emotional cost of putting your life on hold for two years, and there is no guarantee that the mortgage lending criteria in two years would allow you to step onto the property ladder.

So, now I have shown that waiting will cost you financially and emotionally, what are your thoughts on the matter?

Tunbridge Wells house prices will drop, yet did you realise it will cost you more, even if house prices are falling?

Do you believe the doom-mongers, or do you believe in the robust nature of the British economy?

Don’t forget, George Osbourne said house prices would drop by 18% in May 2016 if we voted to leave the European Union, whilst many economists said house prices would fall by 5% to 10% when Covid hit in March 2020.

And we all know what happened to those predictions now.

If you believe you will be better off owning your own Tunbridge Wells home rather than renting one, don't bother to wait for the suggested house price crash that may never happen.

These are my thoughts - what are yours? Let me know in the comments.

What Will Rishi Sunak as PM Mean for Royal Tunbridge Wells House Prices?

What will the stamp duty cuts and interest rate rises mean for Tunbridge Wells homeowners and landlords?

Recently, the Bank of England increased interest rates to 2.25% and they are expected to be 3.25% by early next year. This increase will make the monthly mortgage payments more expensive for first-time buyers, an issue dubbed by some as the 'property affordability crunch.'

 

It will also damage the household budgets of homeowners coming off their fixed-rate mortgages in the next 12 months.

 

So how many homeowners are coming off their fixed rates in the next year?

 

Of the 7.97 million homeowners with a mortgage in the UK, 6.1 million of them are on a fixed-rate mortgage at an average rate of 2.04%. Industry statistics show around 1.3 million homeowners are coming off their fixed rate in the next 12 months.

 

The current crop of fixed-rate mortgage deals available today have already had the recent increase in the base rate ‘priced-in’ for weeks. 

 

The cheapest 5-year fixed-rate today for a 65% Loan to Value re-mortgage (i.e., you are borrowing 65% of the value of your home) is a mortgage rate of 3.8% with Royal Bank of Scotland (RBS).

 

So, what will be the difference in mortgage payments between a 2.04% mortgage and a 3.8% mortgage?

 

Say an average Tunbridge Wells first-time buyer bought their first home in November 2019 on a 25-year mortgage. They had a 3-year fixed-rate mortgage, and let's assume they fixed it at 2.04% (as mentioned above), meaning their fixed-rate deal finishes next month. They have £260,000 outstanding on their mortgage, and their house is worth £400,000. They would have been paying £1,107 per month for the last three years (assuming they took out a 25-year repayment mortgage).

 

On the RBS deal above, they will have to start paying £1,548 per month from November when they come off their initial rate – a rise of £441 per month in mortgage payments. That’s quite a rise and potential blow to their household budgets.

 

Yet if they pushed back the repayment term from 22 years to, say, 35 years, that reduces the payment to £1,120 per month – something to consider if you are re-mortgaging in the coming 12 months.

 

What will the stamp duty changes mean for

 property owners?

 

Previous PM Liz Truss and Chancellor Kwasi Kwarteng believed that cutting stamp duty would support economic growth by encouraging more people to move home or jump onto the property ladder. 

 

Stamp duty also has other harmful side effects as it decreases labour market elasticity and curtails people from selling up and buying elsewhere, where the jobs are. 

 

Also, stamp duty makes mature homeowners stay put in their large homes rather than downsizing. This reduction in stamp duty will encourage those mature homeowners to move, thus freeing up their large family homes for the younger families that need them.

 

The Chancellor doubled the zero-rate stamp duty band from £125,000 to £250,000, passing a stamp duty tax saving of up to £2,500 for all English homebuyers.

 

Also, tax savings are even more significant for first-time buyers, particularly in areas with high house prices, such as London and the South East. They can save a maximum of £11,250 in stamp duty – with a new zero-rate band of £425,000, based on a higher £625,000 spend cap (i.e., the house they buy can't be over £625,000 for them to qualify for the tax relief).

So, what effect will these stamp duty changes have on the property market? Looking at recent events in the local property market is the best place to start.

 

Of the 1,926 transactions in the  area since June 2021, 336 were below £250,000. These would now be tax-free!

 

Unsurprisingly, most housing transactions in Tunbridge Wells were above the £250,000 threshold, yet irrespective of that point, it’s a saving of up to £2,500 for all future homebuyers.

 

Anyone currently buying a house and not yet completed on their purchase (completion is when you have paid the money for your home and collected the keys) will be in line to make this saving. 

 

 Landlords purchasing buy-to-let properties will also save money with the stamp duty cut (but they will still be liable for their second home stamp duty levy of 3%).

 

Overall, this is a welcome move to help the property market.

 

Yet will the stamp duty threshold rise have the seismic effect that the Rishi Sunak stamp duty holiday did in 2021, where just under 40% more people moved home than the long-term 

30-year average?

 

I am sure the stamp duty cut will somewhat offset the rising costs in mortgage rates mentioned in this article and cushion the blow to the property market.

 

A blow to what you might ask?

 

Well, many people judge the property market's health by house prices.

 

The average value of a Tunbridge Wells property stands at £556,301 and has risen 20.9% in the last five years. Not bad, eh?

 

But I believe there is a better way to judge the health of the local property market, and that is the number of people moving home (i.e., housing transactions). 

 

You might be asking yourself why we should be more concerned about the number of property transactions and not the change in property values.

 

Many economists believe the number of property transactions is a far more accurate bellwether for the health and potency of the local housing market. A greater number of people moving home is better for the whole economy (i.e., what these changes are being made for) than a smaller number of transactions, whilst the same can’t be said for higher house prices.  

 

So, what is going to happen to house prices?

 

I believe the growth in Tunbridge Wells house prices achieved in 2021/22 is not sustainable into 2023.

 

In conjunction with the price cap on energy bills, the stamp duty change, the reversal of the rise in National Insurance and the drop in Income Tax will mitigate house price drops. Yet, I foresee a ‘slight’ realignment in the house prices being achieved in 2023, compared to 2022.

 

The more significant impact these changes will have is the number of people moving home in the next 12 months.

 

I have been forecasting a 15% to 20% year-on-year drop in property transactions in 2023. Following this stamp duty cut and the measures mentioned above, I believe it will be lower, yet around 5% lower.

 

To conclude, I predict we will have slightly lower house prices and fewer people moving home in Tunbridge Wells, but not any way a crash that many thought was on the horizon.

 

Before I go though, let me share some thoughts on whether stamp duty is a fair tax.

 

Now, this is almost a topic for a standalone article itself. Some economists believe that removing stamp duty (which raised £14.1bn in tax in 2021) and replacing that lost income to the Exchequer by increasing council tax on more expensive properties would do a lot more than other intended tax cuts to boost economic growth. 

 

According to some commentators, the way UK Government taxes housing is flawed. They suggest instead of taxing an infrequent property transaction particularly harshly (the average stamp duty bill is £10,600), the Government should tax living in a house more, especially those who live in the higher priced properties.

 

So let us see how viable that could be…

 

Even if council tax was frozen for bands A to D (the lower priced properties), and the uplift between the more expensive council tax bands was doubled on each step between band D and H (so a typical band E property owner would see their council tax rise from £2,473 to £3,628 per year and a typical Band H see a rise of from £3,435 per year to £5,790 per year), such massive increases in council tax would be political suicide for the wealthy Tory voting homeowners and only raise £5.28bn – a long way from the £14.1bn currently raised. 

 

Now, if the £14.1bn tax raise were spread evenly over all council tax bands, the average band D property would need to rise by £490 per year, and even a band A would increase by an extra £382 a year … something that again would be political suicide.

 

Yes, stamp duty is flawed. It's just every other option has more significant flaws. 

 

Anyway, these are just my thoughts. Tell me, what are your thoughts on the Budget, the stamp duty changes or whether stamp duty is fit for purpose and what you would do if you were the Chancellor to bolster the British property market?

Royal Tunbridge Wells OAPs are Getting Jobs and Downsizing Properties to Beat the Cost-of-Living Crisis

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Tunbridge Wells OAP retirees have to make tough choices with the onset of the cost-of-living crisis.

 Growing inflation, unpredictable financial markets and the high cost of living mean many former retired Tunbridge Wells people are returning to work in what has been dubbed the ‘great unretirement’. Some are even bringing forward their downsizing house move.

Looking at the changing job market, July saw the most significant month-on-month rise in OAPs working since records began in the 1990s when 1 in 23 of all the UK’s OAPs went back into employment.

That now means ….

 1,084 Tunbridge Wells over 65s are in gainful employment  

(i.e. 1 in 8 of them).

As a backdrop, the number of working 65-year-olds and above has been increasing since the mid-nineties when 466Tunbridge Wells OAPs were employed. Yet, July's figures were the largest monthly jump on record by quite a distance.

Looking at the changing property market, I have been speaking to many Tunbridge Wells OAP homeowners who are having to bring their downsizing plans forward several years to survive the cost-of-living crisis. The money generated from the downsizing will cover their housekeeping and massive energy bills 

So why would someone want to downsize? Mostly, their homes are too big for their needs as their children have flown the nest decades before. The government classifies a property as under-occupied if it has two or more spare bedrooms.

How big is the under-occupation issue in the UK?

Of the 4.52 million British homes owned by those aged 65 and over, 3.04 million have at least two spare bedrooms (i.e.,under-occupied). Looking locally…

 10,192 of the 18,172 Tunbridge Wells OAPs have two or more spare bedrooms.

You might ask why this is important.

 Well, to start, it's holding back Tunbridge Wells families that need the bedrooms and space these larger houses offer if the older occupants won't move on. Also, these larger homes cost more to run in terms of energy bills and other things such as building insurance and council tax.

From October (even with the recent energy bill cap) it will cost on average £354 per month in gas and electricity alone for a large Tunbridge Wells 4-bed detached home(where occupants are home all day).

So why are there so many mature homeowners in their 70s, 80s and even 90s still living in houses that are too large for their day-to-day requirements? There are several reasons for this. One is the obvious emotional attachment to the family home they have often owned since the 1970s and 1980s. The second is to escape the hassle and costs of the house move, and finally, the small number of suitable Tunbridge Wells properties for them to buy to attract them to make a move. 

The growing energy bills have provoked many of those mature Tunbridge Wells homeowners, who maybe can’t or do not wish to get a job, to re-evaluate their home life strategy. I am seeing an ever-increasing number of mature Tunbridge Wells homeowners downsizing (or, as I prefer, rightsizing) to diminish their monthly expenditures.

 So how much could mature Tunbridge Wells homeowners gain by downsizing?

The numbers are intriguing when looking at the average difference between the sale price and the subsequent purchase price of the average downsizer. 

 Tunbridge Wells downsizers could unlock an average of £178,016 per household.

Not only will Tunbridge Wells homeowners earn this lump of cash for their extended retirement, but they will also save themselves around £176 per month in lower energy bills, buildings insurance and council tax bills.

So, what are the options for mature Tunbridge Wellshomeowners?

Waiting 12 months to make a move might mean you are putting your Tunbridge Wells home on the market as every other OAP homeowner puts their home on the market, meaning the dynamics of the local property market will probably be a lot different. Thus, the equity you release on the downsize could be much lower.

Yet some of you will be worried about finding your next home. Not to worry.

At our agency, we do things differently than many other Tunbridge Wells estate agents. We can find you a buyer, then put everything on ice and go and find you a property to buy. We guarantee you won't be made homeless if you or we can't find another home for you to move to.

We call it peace of mind!

If you would like a chat about this, without any obligation, feel free to get in touch.

 

Why Aren’t Liz and Rishi Courting Royal Tunbridge Wells’s Generation Rent?

Why Aren’t Liz and Rishi Courting Royal Tunbridge Wells’s Generation Rent?

With the cost-of-living crisis beginning to hit, the 20 and 30-somethings of Tunbridge Wells urgently need the help and support of the Government to help them get on the property ladder.

For the last few weeks, we have listened to the debates and hustings of Liz and Rishi. Between them, they have told us how they are going to stop building on the green belt, slash taxes, outbid each other on the number of refugees they are going to deport and push back against WOKE culture wars, but what are they doing for the 20 to 30-somethings of Tunbridge Wells?

Dubbed ‘Generation Rent’ by the press, desperate to get on the property ladder, this is an open goal for any candidate to obtain more votes to become the next Prime Minister.

Yet only 16% of the c.200,000 Tory membership is aged 18 to 34 whilst 47% of members are aged between 55 and 74.

Therefore, it's not a surprise that neither Liz nor Rishi aren’t speaking daily about the cost of petrol for the daily commute, rising childcare fees or the lack of opportunities for first-time buyers to purchase their own properties. 

(For balance, 16% of Labour’s members are 18 to 34, 20% for the Lib Dems and 16% for the SNP).

Everyone is feeling the effect on their household budgets with the rise in energy bills. Yet, it is the younger generation (i.e.,Generation Rent) that are having to cope with the frenzy of rising energy costs the most.

 

Whilst increasing energy prices will affect all households across the country, younger (and less affluent) households are more prone to be disproportionately affected than those on the lowest incomes (i.e., Generation Rent).

In the financial year ending in 2020, the least well off 25% of households spent 5.59% on energy compared to 3.9% for the average UK household. With 2023 energy bills set to be triple those figures, energy bills for those in the lower quartile will rise to around 16.8% of their household budget.

And let's look at the housing element of the ‘Generation Rent’ household budget.

The average rental of a Tunbridge Wells property in the summer of 2020 was £1,361PCM; by the summer of 2021, it was £1,473 PCM, and today, it is £1,585 PCM.

Overall, Tunbridge Wells rents are 7.6% higher than a year ago and 16.4% higher than two years ago.

This is the fastest annual rate of rental growth since records began in 2006. This increase in rents isn’t standard. Before 2020, I would have expected to see this level of rent growth over a seven-to-ten-year period – not two years. Good news for Tunbridge Wells landlords, yet not so for Tunbridge Wells tenants.

Why have rents increased so much in Tunbridge Wells?

It comes down to fewer rental properties and existing Tunbridge Wells tenants not moving as much.

There are 364 fewer rental properties in Tunbridge Wells than 

five years ago, leaving only 6,451 private rental properties in Tunbridge Wells. 

9 out of 10 rentals come onto the market because the existing tenant is moving. Yet, because there are fewer Tunbridge Wells rental properties and the asking rents for those are much higher than their current home, many Tunbridge Wells tenants are not moving, exasperating the issue even further. 

Today, I looked on Rightmove, and there were only 97properties available to rent. I would have expected that to be over double that pre-pandemic.

Neither candidate has been silent on the topic of homeownership for the young.

Rishi Sunak said he would stop building on the greenbelt. This, however, would not help Generation Rent massively.

Liz Truss has pledged to help more renters buy their first home by stating she will ensure tenant’s rental payments could be used as part of mortgage affordability assessments. This is important as the mortgage payments can be 10% to 20% lower than the rental payments. 

Tied in with new relaxed mortgage affordability rules announced by the Bank of England in early August, this is undoubtedly a step in the right direction to help Generation Rent.

Truss also plans to scrap the red tape holding back housebuilding and give local populations more say on developments. However, when Boris Johnson suggested something similar a few years ago, the policy was quietly dropped after the Liberal Democrats used this against them resulting in the Tory’s resounding by-election defeat in 2021 in Chesham and Amersham.

So, by the end of the first week of September, we will know who the Prime Minister will be. Whoever gets the job has a gigantic task on their hands. I wish them luck and ask them not to forget the younger generation and their aspiration to be homeowners.

​Tunbridge Wells’ ‘Generation Stuck’ and Their £4.2bn Tied-up Equity

​Royal Tunbridge Wells’ Millennials to Inherit £4.2bn From Their Baby Boomer Parents

The total value of homes owned by Baby Boomers in Tunbridge Wells alone is £4,245,254,994 - and two-thirds of the Tunbridge Wells Millennials are set to inherit all that in the next few decades!

Could this be the answer to the housing crisis?

Could Tunbridge Wells Millennials live it up for the next few decades, safe in the knowledge they will get a huge lump sum to pay off their debts and buy a house with what is left?

Before I look at that, which set of people in Tunbridge Wells exactly are the Tunbridge Wells Millennials or Tunbridge Wells Baby Boomers?

Come to that, who are Generation Z, the Silent Generation or Generation X?

All these are phrases used for the different groups of people in their various life stages of our society. 

So, splitting the groups down:

👉🏻Silent Generation: Born 1945 and before (77 years old and above)

👉🏻Baby Boomers: Born 1946 to 1964 (58 years old to 76 years old)

👉🏻Generation X: Born 1965 to 1980 (42 years old to 55 years old)

👉🏻Millennials: Born 1981 to 1995 (27 years old to 41 years old) 

👉🏻Generation Z: Born after 1996 (everyone under 26 years old)

Using data from the Census, my research shows there are …

7,446 households in Tunbridge Wells owned by Tunbridge Wells Baby Boomers and they are worth a combined value of £4,245,254,994.

The generation that will inherit those Tunbridge Wells properties will be the millennials. 

There are 7,477 millennials in Tunbridge Wells.

After looking at the local demographics, homeownership statistics and current life expectancy, around two-thirds of those Tunbridge Wells Millennials have parents who own those 7,446 Tunbridge Wells properties, meaning each is in line for an inheritance of £851,237.15.

Now that figure is just a simple average and a lot more than the value of many properties in Tunbridge Wells. A lot of that is to do the low number of millennials in Tunbridge Wells (as a proportion of the overall population) and the high number of baby boomers compared to the national average. The inheritance figure is just to show the extent of the money tied up in Tunbridge Wells property and what that could do for the younger generation. 

Yet what about Tunbridge Wells’ Silent Generation?

There are 6,779 homes in Tunbridge Wells owned by the ‘Silent Generation’, and they are worth £3,864,972,281.

The issue for those who will inherit their parents’ homes is that there are far more Generation X people in Tunbridge Wells than millennials.

Two-thirds of the 12,597 Tunbridge Wells Generation X will inherit £430,684.61 - still nothing to sniff at yet not as much as the millennials!

So, whilst the Tunbridge Wells Millennials are less likely to own their own home compared to Generation X and so have done not as well in amassing their assets and savings, they are more likely to benefit from an inheritance boom in the years to come. 

This is likely to be very comforting information for those Tunbridge Wells Millennials, including some from humbler upbringings who historically would have been unlikely to receive an inheritance. 

Nevertheless, inheritance is not the silver bullet that will get the millennials onto the Tunbridge Wells housing ladder.

Nor will it deal with the increasing wealth inequalities in British society, as the inheritance they are likely to receive won’t be accessible when they are trying to buy their first Tunbridge Wells home.

So, before all you Tunbridge Wells Millennials start running up your credit card bills, safe in the knowledge they will be paid for when your parents pass away in 20/30 years, over half of the females and around a third of men are going to have to pay for their nursing home fees. 

Remarkably, I recently read 25% of people who must pay for their nursing home fees run out of money, and therefore have to rely on funding from the local authority.

Therefore, if you are a Tunbridge Wells Millennial, no inheritance will be left for you. It goes without saying, most Tunbridge Wells parents want to give some inheritance to their children.  

Yet if waiting until you pass away to help your children or even grandchildren with your legacy could be seen as too late, so what are the options?

One solution to help and fix the housing crisis in Tunbridge Wells (and the UK as a whole) is if parents and grandparents, where they can, help financially with the deposit for a house whilst their children/grandchildren are in, say, their 20's and early 30's. 

Buying a Tunbridge Wells property is much cheaper than renting – I have shown it many times in these articles. 

It’s not a case of not being able to afford the mortgage; the problem is raising the mortgage deposit (of 5% to 10%) for these Tunbridge Wells Millennials.

Maybe families should be discussing the distribution of family wealth whilst everyone is alive (in the form of helping the family with house deposits) as opposed to waiting until the end, as it will make a massive difference to everyone in the short and long run. 

And a final thought, your legacy will have a more significant impact, and you will be here to see it with your own eyes.

A win-win for everyone.

​Royal Tunbridge Wells Starter Homes are 43.8% Cheaper Today Than in 1989

Even though the average value of a Tunbridge Wells first-time buyer property has risen by

331.8% since 1989 to £448,070, the monthly payments Tunbridge Wells first-time buyers

must make on their mortgages as a proportion of their take-home pay is 43.8% less today

compared to 1989.

Today, according to the Nationwide Building Society…

the average Tunbridge Wells first-time buyer only needs to pay out

41.6% of their household take-home pay on their mortgage

payments, compared to 74.1% in 1989 (i.e., just over two fifths less).

You might say 1989 was 33 years ago, a long time ago and not relevant to today. I would

agree.

So next, I looked a little closer to home, and in 2007…

the average Tunbridge Wells first-time buyer had to spend 49.5% of

their household income on mortgage payments (i.e., 15.8%

proportionally cheaper than today).

So why do I say all these things?

Last month, the Bank of England revealed that its Financial Policy Committee would be

removing their mortgage market affordability test on people taking out mortgages in

August.

The test was introduced in 2014 to ensure the UK didn’t have a repeat of the 2008 Credit

Crunch and particularly hit first-time buyers with what they could afford to buy. This rule change means Tunbridge Wells property buyers could soon be able to borrow thousands of pounds more and purchase larger homes.

The decision to withdraw the affordability test certainly raised eyebrows in the press,

primarily as the Bank of England has raised interest rates five times in the last six months to

try and reduce rising inflation. Yet, as stated in the first part of this article, Tunbridge Wells first-time buyers are comfortably paying their mortgages compared to previous years –

therefore everything should be ok with this rule change.

The old rules tested home buyers on mortgage repayments if interest rates rose to 6%/7%,

yet the Bank thought that rule was too harsh. Not all rules have been changed, as the important Bank of England ‘loan to income ratio’ stays put.

The Bank were keen to stress that the mortgage market was not going to turn into a free-

for-all, as it did in the mid-2000s when the likes of Northern Rock were offering 125%

mortgages, and a sixth of all UK mortgages were given without proof of income.

I believe it will have a progressive effect on the Tunbridge Wells property market.

Many Tunbridge Wells tenants who have been paying rents far more than actual mortgage payments for the same Tunbridge Wells home, but have failed affordability assessments regardless, will now be able to get on the property ladder.

The rule change should open the Tunbridge Wells property market up a little more and

allow house prices to grow in Tunbridge Wells.

I advise anyone who has been refused a mortgage on affordability in the past to speak to a

mortgage arranger. If you don't know of one, drop a message to me, and I will give you

details of mortgage arrangers you could talk to.

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