How Would a Hard Brexit Affect Tamworth House Prices?

I have been asked a number of times recently what a hard Brexit would mean to the Tamworth property market. To be frank, I have been holding off giving my thoughts, as I did not want to add fuel to the stories being banded around in the national press. However, it’s obviously a topic that you as Tamworth buy to let landlords and Tamworth homeowners are interested in … so I am going to try and give you what I consider a fair and unbiased piece on what would happen if a hard Brexit takes place in March 2019.

After the weather and football, the British obsession on the UK property market is without comparison to any other country in the world. I swear The Daily Mail has the state of the country’s property market on its standard weekly rotation of front-page stories! Like I have said before on my blog, there are better economic indexes and statistics to judge the economy (and more importantly) the property market. If you recall, I said the number of transactions was just as important, if not more, as a bellwether of the state of the property market.

Worries that the Brexit referendum would lead to a fast crash in Tamworth (and national) property values were unfounded, although the growth of property values in Tamworth has reduced since the referendum in the summer of 2016.

Now, it’s true the Tamworth property market is seeing less people sell and move and the property values are rising at a slower rate in 2018 compared to the heady days of the first half of this decade (2010 to 2015), but before we all start panicking, let’s ask ourselves, what exactly has happened in the last couple of years since the Brexit vote?

Tamworth house prices have risen by 14.77% since the

EU Referendum… 

…and yes, in 2018 we are on track (and again this is projected) to finish on 1,128 property transactions (i.e. the number of people selling their home) … which is less than 2017 … but still higher than the long term 12 year average of 975 transactions in the local council area.

So, it appears the EU vote hasn’t caused many major issues so far, however, if there was a large economic jolt, that could be a different game, yet how likely is that?

The property market is mostly influenced by interest rates and salaries.

A hard Brexit would subdue wage growth to some degree, yet the level of the change will depend on the undetermined type of Brexit deal (or no deal). If trade barriers are imposed on a hard Brexit, imports will become more expensive, inflation will rise and growth will fall, although at least we are not in the Euro, meaning this could be tempered by the exchange rate of the Pound against the Euro. In plain language, a hard Brexit will be worse for house prices than a deal.

So why did the Governor of the Bank of England suggest a disorderly hard Brexit would affect house prices by up to 35%?

I mean it was only nine years ago we went through the global financial crisis with the credit crunch. Nationally, in most locations including Tamworth, property values dropped in value by 16% to 19% over an 18-month period. Look at the graph and if we had a similar percentage drop, it would only take us back to the property value levels we were achieving in 2015.

And let’s not forget that the Bank of England introduced some measures to ensure we didn’t have another bubble in any future property market. One of the biggest factors of the 2009 property crash was the level of irresponsible lending by the banks. The Bank of England Mortgage Market Review of 2014 forced Banks to lend on how much borrowers had left after regular expenditure, rather than on their income. Income multipliers that were 8 or 9 times income pre-credit crunch were significantly curtailed (meaning a Bank could only offer a small number of residential mortgages above 4.5 times income), and that Banks had to assess whether the borrower could afford the mortgage if interest rates at the time of lending rose by three percentage points over the first five years of the loan … meaning all the major possible stumbling blocks have been mostly weeded out of the system.

So, what next?

A lot of Tamworth homeowners might wait until 2019 to move, meaning less choice for buyers, especially in the desirable areas of Tamworth. For Tamworth landlords, Tamworth tenants are also likely to hang off moving until next year, although I suspect (as we had this on the run up to the 2015 General Election when it was thought Labour might get into Government), during the lull, there could be some Tamworth buy to let bargains to be had from people having to move (Brexit or No Brexit) or the usual panic selling at times of uncertainty.

Brexit, No Brexit, Hard Brexit … in the whole scheme of things, it will be another footnote to history in a decade. We have survived the Oil Crisis, 20%+ Hyperinflation in the 1970’s, Mass Unemployment in the 1980s, Interest Rates of 15% in 1990’s, the Global Financial Crash in 2009 … whatever happens, happens. People still need houses and a roof over their head. If property values drop, it is only a paper drop in value … because you lose when you actually sell. Long term, we aren’t building enough homes, and so, as I always say, property is a long game no matter what happens – the property market will always come good.

Growth in UK property values as well as in Tamworth seems fated to slow over the next five to ten years, whatever sort of Brexit takes place.

If you are thinking of getting into the property rental market and don’t know where to start, speak to us for impartial advice and guidance to get the best return on your investment. For more information about other potential investment properties that we could introduce you to, or to ask about our thoughts on your own investment choices, call us now on 01827 425195, you can always email me on Lorraine@hallandthompson.co.uk

Don’t forget to visit the links below to view back dated deals and Tamworth Property News.

Blog  – https://www.Tamworthpropertyblog.co.uk

Facebook – – https://www.facebook.com/hallandthompsonestateagents

Twitter – https://twitter.com/hallandthompson

Website  –  https://www.hallandthompson.co.uk

My Tamworth tenant is claiming 3 times the deposit after he has moved out!

Ask Lorraine

My old tenant is trying to claim back 3 x his original deposit due to him stating that I was 22 days late in protecting it.

My annual family holiday happended to fall the following day  after the tenancy started and I had no time in which to lodge the deposit.

The tenancy ended 9 months ago, so how can he bring this claim against me now?

Any advice will be gratefully received.

Thanks Ron

Lorraine’s Answer 

Changes made by the Localism Act in 2012 did clarify that ex-tenants can make a claim for a deposit penalty. Unfortunately, they have 6 years to make a claim.

The penalty is between  1 and 3 times deposit, however this is at the discretion of the court. (The court must give at least 1 x deposit).

I cannot say how the judge will rule as there are no mitigating circumstances for not lodging a deposit within the 30 day timescale, so the 3 x deposit may be awarded to the tenant.

With over 200 pieces of legislation on renting property, if not already, you should join an organisation for example “The National Landlords Association” they offer advice and assistance to landlords. Or you may want to think about letting an agency manage the property!

Until next week.

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34 Days to Sell a Property in Tamworth

welcome to Tamworth
welcome to Tamworth

Whether you are a Tamworth landlord looking to liquidate your buy to let investment or a homeowner looking to sell your home, finding a buyer and selling your property can take an annoyingly long time. It is a step-by-step process that can take months and months. In fact, one of the worst parts of the house selling process is the not knowing how long you might be stuck at each step. At the moment, looking at every estate agent in Tamworth, independent research shows it is taking on average 34 days from the property coming on the market for it to be sold subject to contract.

But trust me … that is just the start of a long journey on the house selling/buying process. The journey is a long one and therefore, in this article, I want to take you through the standard itinerary for each step of the house selling procedure in Tamworth.

Step 1 – Find a Buyer

You need to instruct an estate agent (of course we can help you with that) who will talk through a marketing strategy and pricing strategy to enable you to find a buyer that fits your circumstances. 34 days might be the average in Tamworth, yet as I have said many times, the Tamworth property market is like a fly’s eye, split up into lots of little micro markets.

Looking at that independent research, (which only focused on Tamworth), it was interesting to see how the different price bands (i.e. different micro markets) are currently performing, when it comes down to the average number of days it takes to find a buyer for a property in Tamworth.

Asking Price (Tamworth) Average Time to Find a Buyer in Tamworth (days)
Under £100,000 64
£100,000 to £200,000 24
£200,000 to £300,000 35
£300,000 to £400,000 62
£400,000 to £500,000 33
£500,000 to £1,000,000 57
Over £1,000,000

 

Interestingly, I thought I would see which price band had the highest proportion of properties sold (stc)… again – fascinating!

So, now you have a buyer … what next?

There are a variety of distinctive issues at play when selling your property in Tamworth, together with the involvement of a wide and varied range of professionals who get involved in that process. That means there is are enormous differences in how long it takes from one property to another. Moving forward to the next steps, these are the average lengths of time it takes for each step to give you some idea of what to expect.

Step 2  – Sort Solicitors (and Mortgage)

Again, something we can point you in the right direction to, but it will take a good few weeks for your buyer to apply and sort their mortgage and for your solicitors to prepare the legal paper work to send to the buyer.

Step 3 – Legal Work and Survey

Once you buyer’s solicitor receives the paperwork from your solicitor, then your buyer’s solicitor applies for local searches from the local authority (to ensure no motorways etc., are going to be built in the back garden!).  These Searches can take a number of weeks to be returned to the buyer solicitors from the council, from which questions will be raised by the buyer’s solicitor to your solicitor (trust me – you don’t see a tenth of the work that goes on behind closed doors to get the sale through to completion). Meanwhile, the surveyor will check the property to ensure it is worth the money and structurally sound. Overall, this step can take between 3 and 6 weeks (sometimes more!).

Step 4 – Exchange of Contracts

Assuming all the mortgage, survey and legal work comes back ok, both the buyer and solicitor sign contracts, the solicitors then perform “Exchange of Contracts”. When contracts are exchanged, this is the first time both buyer and seller are tied in. Before then, they can walk away … and you are probably 4 or 5 months down the line from having put up the for sale board – this isn’t a quick process! BUT hold on … we aren’t there yet!

Step 5 – Completion

Between a week and up to six weeks after exchange of contracts, the buyer solicitor sends the purchase money to the seller’s solicitor, and once that arrives, the keys will be given to the buyer … phew!

To conclude, all in all, you are looking at a good four, five even six months from putting the for-sale board up to moving out.

If you are thinking of selling your Tamworth home or if you are a Tamworth landlord, hoping to sell your buy to let property (with tenants in), either way, if you want a chat to ensure you get a decent price with minimal fuss … drop me a message or pick up the phone.

If you are thinking of getting into the property rental market and don’t know where to start, speak to us for impartial advice and guidance to get the best return on your investment. For more information about other potential investment properties that we could introduce you to, or to ask about our thoughts on your own investment choices, call us now on 01827 425195, you can always email me on Lorraine@hallandthompson.co.uk

Don’t forget to visit the links below to view back dated deals and Tamworth Property News.

Blog  – https://www.Tamworthpropertyblog.co.uk

Facebook – – https://www.facebook.com/hallandthompsonestateagents

Twitter – https://twitter.com/hallandthompson

Website  –  https://www.hallandthompson.co.uk

Buying A Tamworth Property With An Existing Tenant

Tamworth Property Market – Summer 2018 Update

I was recently reading a report by Rightmove that a North South Divide has started to appear in the UK property market – so I wanted to see if Tamworth was falling in line with those thoughts.  In the North, there are 7.12% less properties on the market than 12 months ago, whilst in contrast, in the South, there are 14.7% more properties on the market than 12 months ago.

With the decline in the number of properties for sale in the North compared to 12 months ago, that means the North is more of a sellers’ market.  However, on the other side of the coin, there is a significant rise in buyer choice in all of the Southern regions, showing there are signs of a buyers’ market, which in some markets is a driving force for a buyers’ market and some downwards price pressure.

So, looking closer to home at asking prices and the number of homes on the market. In the West Midlands region, according to Rightmove, the average asking prices of new to the market properties are 5.5% higher than 12 months ago and 0.4% higher over the last month.  Now I must stress, this is asking prices – not what is happening to actual property values.  Also, regionally, there are 2.2% less properties on the market than 12 months ago.

Even closer to home, overall, the number of properties and building plots for sale in Tamworth has increased by 37%, going from 362 properties for sale a year ago to 496 properties for sale as I write this article, meaning Tamworth does not in fact match the regional trend.

Looking at the individual types of Tamworth property, you can quite clearly see the different markets within Tamworth.  The two sets of figures that stand out are the increase in Terraced/town houses for sale, rising 68% and the increase in Apartments by just 16%.

 

(NB There are a handful more Building plots and other types of property that can’t be placed into the four category’s … and it’s those that make up the total numbers in the paragraph above the table)

Although these figures don’t tell the whole story because in certain areas of Tamworth, certain types of properties (particular locations and Primary school catchment areas) are in short supply.  This has caused some frustration with buyers of those types of properties with this lack of supply, which in turn has sparked some very localised asking price growth within those hot spot areas, although sometimes to levels where sellers optimism turns into silly over the top asking prices.

This means the property sticks, which isn’t sustainable, therefore as a consequence, there are certain parts of the Tamworth housing market with upward asking price movements being offset in part by intermittent asking price reductions where home owners or their estate agents have been over optimistic with their initial marketing asking price.

What does this mean for homeowners and landlords in Tamworth?

If you are planning to sell your home or buy to let investment, the key for determined sellers is to set your asking price correctly from the start.  It’s so vital to be competitive to attract buyers.  Everyone has access to three main property portals (Rightmove, On the Market and Zoopla) so can easily compare your property against similar ones.  When you do search these portals, make sure you ask the website to show properties that are sold subject to contract as well to check what properties are selling for in your neighbourhood. Unless you have something highly unusual or unique, this perhaps isn’t the best market to set an optimistic asking price in hoping to find someone who would pay that silly price.

And if you are buying in Tamworth?  The numbers of buyers are lower than a few years ago, although those buyers that are in the market have become quite serious.  The times of time wasting “carpet treaders” (estate agency slang for the same type of people car dealers call tyre kickers) are long gone.  Those buyers that are in the market are real buyers, wanting to buy, but only at the right price.  We live in a 21st century society that is “time-poor” so nobody is wanting to even view a house, let alone pay over the odds if they believe the asking price is too high.  So, if you are buying, do your homework, ask plenty of questions of the agent, find out the motivation of the sellers and the real reasons behind why they are moving … and you might just bag a good deal?

If you are interested in the Tamworth Property Market and haven’t signed up to the Tamworth Property Blog you are missing out on critical/ important information that all landlords should consider when renting out their property.  Visit the Tamworth Property Blog at www.tamworthpropertyblog.co.uk