Moving from a 2 bed Tamworth Property to a 4 bed will cost you £694 pm

Moving to a bigger home is something Tamworth people with growing young families aspire to. Many people in two bedroom homes move to a three-bedroom home and some even make the jump to a four-bed home. Bigger homes, especially three-bed Tamworth homes are much in demand and it can be a costly move.

If you live in Tamworth in a two-bedroom property and wish to move to a four-bedroom house in Tamworth, you would need to spend an additional £175,807 (or £694.44 pm in mortgage payments (based on the UK Bank average standard variable rate)). However, going straight to a four bed from a two-bed home is quite rare as most people jump from a two to three-bedroom home, then later in life, from a three to four-bedroom home.

So, after being asked my thoughts on moving home in Tamworth by a friend recently, please find my analysis of the local property market and then some thoughts. To start with, let us see what the average property price is for a Tamworth property by the number of bedrooms it has.

Average Property Price in Tamworth by Bedroom
1 bed 2 bed 3 bed 4 bed 5 bed
£94,486 £154,180 £217,456 £329,987 £299,723

I then decided to calculate what it would cost to make the jump upmarket from one bedroom to two bedrooms, two to three bedrooms etc, etc, both in actual money and in mortgage payments (using the current standard variable rate of UK Banks of 4.74% – so the mortgage cost could be higher or lower depending on the mortgage taken).

Tamworth
Price Difference to make the move Cost per month to move up market (Mortgage)
1 bed to 2 bed £59,693  £235.79
2 bed to 3 bed £63,277  £249.94
2 bed to 4 bed £175,807  £694.44
3 bed to 4 bed £112,531  £444.50
4 bed to 5 bed (£30,264)  £(119.54)

There are some interesting jumps in costs when moving upmarket as a Tamworth buyer. The cost of moving from one to two beds, and two to three beds is relatively reasonable, whilst the jump from three to four beds in Tamworth is quite high and therefore financially prohibitive for most families. This helps provide a partial explanation as to why some four-bed properties are currently taking slightly longer to sell.

As an aside, there is a lesson here for all my blog readers. You can quite clearly see why the larger 4 and 5 bed properties don’t offer the best returns for buy to let. Simply put the monthly finance costs and rents achieved don’t match up so well (i.e. a mortgage for a 4 bed home in Tamworth would cost you 51.75% compared to a 3 bed mortgage, but the jump in rent would be a lot less than that). I don’t wish to be dismissive about the solidity of investing in larger properties because it does depend on your circumstances. Four bedroom properties sometimes offer other advantages. Pick up the phone if you want to know what they are in more detail.

A further look at the stock of properties in Tamworth is revealing.

Housing Stock in Tamworth by Bedrooms
1 bed 2 bed 3 bed 4 bed 5 bed
4.17% 19.44% 44.44% 27.78% 4.17%

The most active purchasers are 20 and 30 something home-owning parents with growing families. Many look to more modern developments for the perfect balance of access to decent primary schools, commutability and lifestyle. For landlords looking to buy within Tamworth, they face stiff competition from these 20/30 something families, making the three bedroom Tamworth home massively in demand, often attracting spirited offers and selling within weeks of listing. This mix of homebuyers and landlords is a pressure point in the Tamworth property market.  Again, if you are a landlord, call me and I will show you areas with decent returns where you aren’t in so much competition with young Tamworth family homebuyers.

Yet, the cost of an additional bedroom can be too much for some Tamworth buyers. It is quite challenging moving home the first time, but to then find you are priced out on the next move up the ladder can be quite disconcerting, with families often having to move to a different part of town to get the bigger home they need.

Nevertheless, that’s the position many homeowners find themselves in with the cost of the additional bedroom being too much to bear. To those buying their home for the first time, all I suggest is they not only consider the mortgage payments and other costs of their first home, but also do their homework into their next rung up the Tamworth property ladder. Thinking about it now will keep you ahead of the game in the future; as your number of bedrooms, family property needs and lifestyle wants change.

..and Tamworth landlords – well these changes in the way people live also mean there are opportunities to be had in the Tamworth rental market. Many Tamworth landlords are starting to pick my brain on this, so if you don’t want to miss out – drop me a line.

If you enjoyed reading my article, feel free to take a look my other online resources below:

Hall and Thompson Estate Agents Tamworth Youtube Channel

Follow The Buy-To-Let Property Investment Market in Tamworth

Lorraine’s Tamworth Property Market LinkedIn Page

Hall and Thompson Estate Agents Tamworth Facebook Page

Tamworth Hall and Thompson Estate Agents Twitter Page  

Tamworth Buy-to-Let Return / Yields – 3% to 8.5% a year

The mind-set and tactics you employ to buy your first Tamworth buy to let property needs to be different to the tactics and methodology of buying a home for yourself to live in. The main difference is when purchasing your own property, you may well pay a little more to get the home you (and your family) want, and are less likely to compromise. When buying for your own use, it is only human nature you will want the best, so that quite often it is at the top end of your budget (because as my parents always used to tell me – you get what you pay for in this world!).

Yet with a buy to let property, if your goal is a higher rental return – a higher price doesn’t always equate to higher monthly returns – in fact quite the opposite. Inexpensive Tamworth properties can bring in bigger monthly returns. Most landlords use the phrase ‘yield’ instead of monthly return. To calculate the yield on a buy to let property one basically takes the monthly rent, multiplies it by 12 to get the annual rent and then divides it by the value of the property.

This means, if one increases the value of the property using this calculation, the subsequent yield drops. Or to put it another way, if a Tamworth buy to let landlord has the decision of two properties that create the same amount of monthly rent, the landlord can increase their rental yield by selecting the lower priced property.

To give you an idea of the sort of returns in Tamworth…

The average buy to let yields in Tamworth
The average buy to let yields in Tamworth

 

Now of course these are averages and there will always be properties outside the lower and upper ranges in yields: they are a fair representation of the gross yields you can expect in the Tamworth area.

As we move forward, with the total amount of buy to let mortgages amounting to £199,310,614,000 in the country, landlords need to be aware of the investment performance of their property, especially in the era of tax increases and tax relief reductions. Landlords are looking to maximise their yield – and are doing so by buying cheaper properties.

The average range of buy to let yields in Tamworth
The average range of buy to let yields in Tamworth

 

 

However, before everyone in Tamworth starts selling their upmarket properties and buying cheap ones, yield isn’t the only factor when deciding on what Tamworth buy to let property to buy.  Void periods (i.e. the time when there isn’t a tenant in the property between tenancies) are an important factor and those properties at the cheaper end of the rental spectrum can suffer higher void periods too. Apartments can also have service charges and ground rents that aren’t accounted for in these gross yields. Landlords can also make money if the value of the property goes up and for those Tamworth landlords who are looking for capital growth, an altered investment strategy may be required.

In Tamworth, for example, over the last 20 years, this is how the average price paid for the four different types of Tamworth property have changed…

  • Tamworth Detached Properties have increased in value by 229.3%
  • Tamworth Semi-Detached Properties have increased in value by 252.1%
  • Tamworth Terraced Properties have increased in value by 237.3%
  • Tamworth Apartments have increased in value by 243.2%

It is very much a balancing act of yield, capital growth and void periods when buying in Tamworth. Every landlord’s investment strategy is unique to them. If you would like a fresh pair of eyes to look at your portfolio, be you a private landlord that doesn’t use a letting agent or a landlord that uses one of my competitors – then feel free to contact me and let’s have a chat. What do you have to lose?

https://www.tamworthpropertyblog.co.uk

https://www.facebook.com/Hallandthompsonestateagents/

http://www.hallandthompson.co.uk

https://www.youtube.com/channel/UCyF9OUR3g6E8HywCx7tU4DA

https://twitter.com/hallandthompson

How to prepare your Tamworth home for photographs

Yes, it is true. A photo speaks a thousand words. Great photos attract buyers whereas poor photos can put buyers off.

At Hall & Thompson, we believe in clear photography that shows off the whole room. Here are a few of our top tips to help you get ready for your photo shoot!

The kitchen

Declutter your workspaces and clear away anything stored on top of kitchen cupboards. Get rid of the bin! Ensure the hob is clean and find a hiding place for the dish drainer and scouring pads.
Why not add fresh flowers or a bowl of fruit. 

The bathroom  

Remove spare toilet rolls, razors and toothbrushes.
Put down the toilet seat, hide shampoo bottles and bath toys. .  Remove grime limescale that has built up and grout.
Display fresh towels.                       

The bedroom’s

Clear away any clutter including anything that is stored on top of wardrobes. Bedside tables should be clear of clutter, ever heard of the term less is more!
Try dressing your bed with nice linen and add a touch of luxury with quality cushions.

General areas

Ensure all curtains and blinds are open. Clean your windows.  Store old shoes in plastic boxes with lids.  De-personalising the house by removing other personal effects, ornaments etc. Tidy away the kids toys and if possible, move pet paraphernalia and litter boxes to a garage or shed. Why not ask a relative or friend to look your pets while viewings are taking place.

Outside your home

Move your car from the drive or house front. Tidy the garden and move the wheelie bins out of sight. Put up hanging baskets to add colour and if you have a garden, plant some seasonal  bedding flowers.

Our team’s favourite tips – How to prepare your home for photos!

Jody's tips
Jody’s tips

Switch on lights.  A lamp can brighten up a  gloomy corner and add atmosphere to a room.  See how lighting transforms a room! Add  bedside lamps to make your bed the focal point of your bedroom. Make sure each room in your house has a purpose. Buyers want to envisage their belongings in your home. Clean up by renting a storage unit for knickknacks, photos, extra furniture and other personal items.

Lorraine's tips
Lorraine’s tips

If you want to use scent to help sell your home, try using a hint of a single-note organic one such as: orange, lemon, vanilla, cinnamon, or cedar.

When you’re in the  estate agency business, you want someone to walk in and want to stay in the house. You want the home to feel familiar and welcoming. Sometimes it may take more than one visit  to decide to buy a home  so you  want to encourage people to feel at ease and want to revisit.

Jackie's tips
Jackie’s tips

Make sure your home feels
warm and inviting when buyers come around.  If it’s chilly outside put your heating on a timer so it switches on an hour before they arrive.  Buyers love the glow of a fire in the winter so if you have a fire, switch that on a few minutes before the buyer is due. Fit brighter light bulbs and mend that broken light switch or socket.

And lastly, make yourself scarce when your agent arrives.

If you would like any help in how to prepare your home for photos, please get in touch. We would love to help. We can create a bespoke plan just for you, which is ultimately designed to help your home attract a buyer easier, and at a better price.

info@hallandthompson.co.uk

http://www.facebook.com/Hallandthompsonestateagents/ww

w.youtube.com/channel/UCyF9OUR3g6E8HywCx7tU4DA

http://www.hallandthompson.co.uk

 

 

 

 

 

 

 

 

 

33.7% Drop in Tamworth People Moving Home in the Last 10 Years

I was having a lazy Sunday morning, reading through the newspapers at my favourite coffee shop in Tamworth.  I find the most interesting bits are their commentaries on the British Housing Market.  Some talk about property prices, whilst others discuss the younger generation grappling to get a foot-hold on the property ladder with difficulties of saving up for the deposit.  Others feature articles about the severe lack of new homes being built (which is especially true in Tamworth!).  A group of people that don’t often get any column inches however are those existing homeowners who can’t move!

Back in the early 2000’s, between 1m and 1.3m people moved each year in England and Wales, peaking at 1,349,306 home-moves (i.e. house sales) in 2002.  However, the ‘credit crunch’ hit in 2008 and the number of house sales fell to 624,994 in 2009.  Since then this has steadily recovered, albeit to a more ‘respectable’ 899,708 properties by 2016.  This means there are around 450,000 fewer house sales (house-moves) each year compared to the noughties.  The question is … why are there fewer house sales?

No. of house Sales in England & Wales between 1995 & 2016
No. of house Sales in England & Wales between 1995 & 2016

 

To answer that, we need to go back 50 years.  Inflation was high in the late 1960’s, 70’s and early 80’s.  To combat this, the Government raised interest rates to a high level in a bid to lower inflation.  Higher interest rates meant the householders monthly mortgage payments were higher, meaning mortgages took a large proportion of the homeowner’s household budget. However, this wasn’t all bad news since inflation tends to erode mortgage debt in ‘real spending power terms’.  Consequently, as wages grew (to keep up with inflation), this allowed home owners to get even bigger mortgages.  At the same time their mortgage debt was decreasing, therefore allowing them to move up the property ladder quicker.

Roll the clock on to the late 1990’s and the early Noughties, and things had changed.  UK interest rates tumbled as UK inflation dropped.  Lower interest rates and low inflation, especially in the five years 2000 to 2005, meant we saw double digit growth in the value of UK property.  This inevitably meant all the home owner’s equity grew significantly, meaning people could continue to move up the property ladder (even without the effects of inflation).

This snowball effect of significant numbers moving house continued into the mid noughties (2004 to 2007), as Banks and Building Society’s slackened their lending criteria.  [You will probably remember the 125% loan to value Northern Rock Mortgages that could be obtained with just a note from your Mum!!].  This meant home movers could borrow even more to move up the property ladder.

So, now it’s 2017 and things have changed yet again!

Less people are moving home
Less people are moving home

 

You would think that with ultra-low interest rates at 0.25% (a 320-year low) the number of people moving would be booming – wouldn’t you?  However, this has not been the case.  Less people are moving because:

(1) low wage growth of 1.1% per annum

(2) the tougher mortgage rules since 2014

(3) sporadic property price growth in the last few years

(4) high property values comparative to salaries (I talked about this a couple of months ago)

 What does thistranslate to in pure numbers locally?

 In 2007, 1,629 properties sold in the Tamworth District Council area and last year, in 2016 only 1,079 properties sold – a drop of 33.76%.

 

 

 

 

Therefore, we have just over 550 less households moving in the Tamworth and surrounding Council area each year.  Now of that number, it is recognised throughout the property industry around fourth fifths of them are homeowners with a mortgage. That means there are around 451 mortgaged households a year (fourth fifths of the figure of 550) in the Tamworth and surrounding council area that would have moved 10 years ago, but won’t this year.

The reason they can’t/won’t move can be split down into different categories, explained in a recent report by the Council of Mortgage Lenders (CML). So, of those estimated 451 annual Tamworth (and surrounding area) non-movers, based on that CML report –

  1. There are around 162 households a year that aren’t moving due to a fall in the number of mortgaged owner occupiers (i.e. demographics).
  1. Then, I then estimate another 63 households a year are of the older generation mortgaged owner occupiers. As they are increasingly getting older, older people don’t tend to move, regardless of what is happening to the property market (i.e. lifestyle).
  1. Then, I estimate 27 households of our Tamworth (and surrounding area) annual non-movers will mirror the rising number of high equity owner occupiers, who previously would have moved with a mortgage but now move as cash buyers (i.e. high house price growth).
  1. I believe there are 198 Tamworth (and surrounding area) mortgaged homeowners that are unable to move because of the financing of the new mortgage or keeping within the new rules of mortgage affordability that came into play in 2014 (i.e. mortgage).

The first three above are beyond the Government or Bank of England control.  However could there be some influence exerted to help the non-movers because of financing the new mortgage and keeping within the new rules of mortgage affordability? If Tamworth property values were lower, this would decrease the size of each step up the property ladder. This would mean the opportunity cost of increasing their mortgage would reduce (i.e. opportunity cost = the step up in their mortgage payments between their existing and future new mortgage) and they would be able to move to more upmarket properties.

Then there is the mortgage rules, but before we all start demanding a relaxation in lending criteria for the banks, do we want to return to free and easy mortgages 125% Northern Rock footloose and fancy-free mortgage lending that seemed to be available in the mid 2000’s … available at a drop of hat and three tokens from a cereal packet?

We all know what happened with Northern Rock …. Your thoughts would be welcome on this topic.

If you know a colleague or friend who would like to receive my newsletter, please ask them to email me or, even better, let me have their email address and I will simply add them to my mailing list. I am sure they will thank you for it.
Thanks for reading my thoughts on our local property market.

Read my Tamworth property news here: http://www.Tamworthpropertyblog.co.uk

https://www.facebook.com/Hallandthompsonestateagents/

https://www.youtube.com/channel/UCyF9OUR3g6E8HywCx7tU4DA

http://www.hallandthompson.co.uk

https://twitter.com/hallandthompson

 

Decreasing Numbers of Younger Homeowners in Tamworth

Kelvin Palmer, 35-year-old father of two from Tamworth, was out house hunting. It was a pleasant September Saturday afternoon, and our man cycles along on his bike. He cycles up a street of suburban semis, where he spots a few retired mature neighbours, chatting to each other over the garden fence. He leans his bicycle against a lamp post and launches softly into his property search.

Anyone on the road contemplating moving?” Mark asks, “I am not a landlord or developer, I’m just a Tamworth bloke trying to get out of renting, buy a house, do it up and live in it with my wife and two children

The only way I will leave here is in a box”, answers an 80-something lady, wearing her fading Paisley patterned housecoat from the 1970’s.

I‘ve lived here since before you were born, it’s lovely up here .. we aren’t moving, are we Doris? (as her neighbour sagely shook his head at his wife).

Kelvin, like many Tamworth people born in the late 1970’s to the early 1990’s, is keen to get a slice of prime Tamworth real estate. Yet people like Kelvin in Generation Y (or the Millennials as some people call them i.e. born between 1977 and 1994 and needing family housing now) are discovering, as each year passes by, they are becoming more neglected and ignored when it comes to moving up the property ladder.

Looking at the graph for the UK as whole …

Percentage of each age group that are home owners 1981 to today
Percentage of each age group that are home owners 1981 to todayOver 75 percent of Brits aged 65 and above (the baby boomers) are owner-occupiers, the biggest share since records began and a proportional rise of over 48.3% since the early 1980’s. Looking at those Baby Boomers (the current 65+year olds).. moreover roll the clock back 36 years (to when they were in their 30’s and 40’s and two thirds (65.6%) of them owned their own home.

Whilst today, just under a half of 25 to 49 year olds (47.3%) own their own home.

 

However, the biggest drop has been in the 18 to 24-year old’s, where homeownership has dropped from a third (32%) in the 1980’s to less than one in ten (8.9%) today. Looking at the Tamworth statistics, the numbers make even more interesting reading.

Tamworth statistics
Tamworth statistics

 

Government policy contributes to the generational stalemate. Stamp Duty rules prevent older Brits from moving as the price of land and planning rules make it harder to build affordable bungalows that are attractive to members of the older generation who want to move.

variable graph
variable graph

 

The average value of an acre of prime building land in the UK is between £750,000 and £800,000 per acre. Bungalows are the favoured option for the older generation, but the problem is bungalows take up too much land to make them profitable for new homes builders. The housing market is gridlocked with youngsters wanting to get on (then move up) the property ladder whilst the older generation, who want to move from their larger houses to smaller, more modern bungalows, can’t. The problem is – there simply aren’t enough bungalows being built and the high price of land, means they are prohibitive to build.

So, what is my point? Well, all I would say to the homeowners of Tamworth is that one solution could be to start to talk to your local councillors, so they can mould the planners’ thoughts and the local authority thinking in setting land aside for bungalows instead of two up two down starter homes? That would free the impasse at the top of the property ladder (i.e. mature people living in big houses but unable to move anywhere), releasing the middle aged gridlocked people in the ladder to move up, thus releasing more existing starter homes for the younger generation.

… and to you Kelvin … the wandering new home searcher – if things are going to change, it will be years before they do .. so keep going out and spreading the word of your search for a new home for your family.

Many of you reading my blog ask why I say these things. I want to share my thoughts and opinions on the real issues affecting the Tamworth property market, warts and all. If you want rose tinted glasses articles – then my articles are not for you. However, if you want someone to tell you the real story about the Tamworth property market, be it good, bad or indifferent, then maybe you should start reading my blog regularly. https://www.tamworthpropertyblog.co.uk

https://www.youtube.com/channel/UCyF9OUR3g6E8HywCx7tU4DA

https://www.facebook.com/Hallandthompsonestateagents/

https://twitter.com/hallandthompson

http://www.hallandthompson.co.uk

Ask Lorraine – My Tamworth tenants want a new AST!

Ask Lorraine –

Good morning,

ask lorraine new ast
ask Lorraine – new AST

Some advice please, on a rather delicate matter.

My wife and I own a 3  bed terraced property  in Tamworth, we have had the same tenants in the property since purchasing it some 5 years ago. They have been good tenants and we are more like friends than landlord and tenant. We have the odd month when rent is up to a week late, however it’s always been received in the end and with little prodding on my part.

Both the husband and wife work for the same company, they have just informed my wife that the company is closing down with the loss of all jobs.

Our tenants have asked if we would  give them a new tenancy agreement so that they are able to claim housing benefit.

I have agreed to give them a new 1 year tenancy agreement.

dilemma
dilemma

My dilemma is this, at the moment the tenants are a few days late with this months rent, what happens if they are not able to pay and the council are not forthcoming. Will we be able to evict or will we have to wait until the new tenancy agreement expires in a years time?

George

Lorraine’s Answer

Hi George,

The tenants do not require a new AST (tenancy agreement)  in order to claim Housing Benefit, the council will accept the original AST or a copy of the original AST.

In the first instance I would suggest checking what the tenants Housing Benefit entitlements are, you can check the LHA rate on the LHA Direct website.

If you have not already given a new tenancy agreement (AST) I would not do so, you could be making it more difficult to evict the tenants and their rights will become much stronger.  There is so much prescribed information to give with a new tenancy agreement and so many regulations that you must comply with i.e a copy of the EPC, protecting the deposit correctly  and giving them the prescribed information. What about the government’s “How to Rent” booklet, the list goes on!

Should the need arise and you find yourselves in a situation where you need to evict, without the correct paperwork having been given at the start of the tenancy, you will find yourself in serious trouble and will have great difficulty evicting.

As always,  I would recommend meeting with the tenants and explain that a new AST is not required. Support them however you can, without it being at your detriment.

You have already mentioned that the rent is payable monthly, once there are over two months arrears you can take action to evict under the  s8 Housing Act, should you wish!

http://www.legislation.gov.uk/ukpga/1988/50/schedule/2

You may wish to seek legal advice if you do ever decide to go down the route of evicting under the  s8 Housing Act. The professionals can do this on your behalf.

I hope things do work out for you and your tenants.

until next week