Tamworth House Prices up 31.5% in the last 5 Years

Over the last 5 years, we have seen some interesting subtle changes to the Tamworth property market as buying patterns of landlords have changed ever so slightly.

The background to this story was the recently published set of buy-to-let (BTL) lending statistics. Roll the clock back 12 months and 6,700 BTL mortgages were granted (in the same month) for £900m, meaning the average BTL mortgage was £134,200. Looking at last month’s figures, and as one might expect with the Brexit issue overhanging the property market, the lending figures were down, yet not by the amount I originally thought. Last month, just over 6,100 new buy-to-let mortgages were granted for a total sum of £800m (meaning the average landlord mortgage was a respectable £131,100). Yet, when I looked back to the boom year of the 2014 property market, in the corresponding same month, only £1,030 million was borrowed on 8,300 buy-to-let properties (meaning the average buy-to-let mortgage was £124,100). It seems Brexit is having no effect on landlords buying habits.

Looking closer to home in Tamworth, throughout 2018, I have been regularly chatting to more and more landlords, be they seasoned professional Tamworth BTL landlords or FTL’s (first time landlords) and their attitude is mostly positive. Instead of reading the scare-papers (oops sorry newspapers), those Tamworth landlords that look with their eyes, will see the Tamworth property market is doing reasonably well, with medium term rents and property values rising; as quite obviously from the mortgage figures .. landlords are still buying.

The question I get asked all the time is .. “What type of buy-to-let property should I buy?  You can make money from property through both the rent (expressed as a yield when compared to the value of the property) and how the actual value of the home itself changes.

Since 2014, property values in Tamworth have risen by 31.5%.

We have records of what each type of property (i.e. Detached/Semi/Terraced/Apartments) has achieved per square metre going back 20 years … and looking back over the last 5 years, these are the numbers ..

They all look to have similar percentage uplifts, however as you can see from the table there is in fact some variation throughout and although only slight this can equate to thousands of pounds in monetary terms.

This has proved that semis and terraced houses have performed the best .. although like the £/Sq.M figures, these are just averages. When investing, whilst Tamworth apartments haven’t been the best performers in terms of capital growth, they do tend to generate a slightly better yield than houses, probably because several sharers can afford to pay more than a single family. But houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built.

Now these are of course averages, but it gives you a good place to start from. The bigger picture here though is this – irrespective of what is happening in the world, be it Brexit/no Brexit, China, Trump, whatever, Tamworth people still need a roof over their heads and we as a Country haven’t built enough homes to keep up with the demand since the late 1980’s. This means even if we have a short term wobble in 2019 when it comes to property values ..in the medium term, demand will always outstrip supply and prices and rents will increase – because, I doubt the local authority, let alone Westminster, have the billions of pounds required to build the one hundred thousand Council houses per year nationally for the next decade to fix this issue – meaning as the population increases, the only people who can fulfil the demand for accommodation in the medium term is the private BTL landlord.

Before I go …on average, housing associations and local authorities have built around 26,500 houses each year since 2010. The Labour government had a lower average, building about 19,000 homes per year, yet in the 1960’s, under both administrations, 180,000 councils were built per year!

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.

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Tamworth Homeowners 73% More Likely To Live in a Home with 3+ Bedrooms than those that Privately Rent

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The conventional way of categorising property in Britain is to look at the number of bedrooms rather than its size in square metres (square feet for those of you over 50!). My intuition tells me that homeowners and tenants are happy to pay for more space. It’s quite obvious, the more bedrooms a house or apartment has, the bigger the property is likely to be. And it’s not only the tangible additional bedrooms, but those properties with those additional bedrooms tend to have larger (and more) reception (living) rooms. However, if you think about it, this isn’t so surprising given that properties with more bedrooms would typically accommodate more people and therefore require larger reception rooms.

In todays Tamworth property market, the Tamworth homeowners and Tamworth landlords I talk to are always asking me which attributes and features are likely to make their property comparatively more attractive and which ones may detract from the price. Over time buyers’ and tenants’ wants and needs have changed.

In Tamworth, location is still the No. 1 factor affecting the value of property, and a property in the best neighbourhoods can achieve a price almost 50% higher than a similar house in an ‘average’ area. Nevertheless, after location, the next characteristic that has a significant influence on the desirability, and thus price, of property is the number of bedrooms and the type (i.e. Detached/Semi/Terraced/Flat).

The number of bedrooms for owner-occupiers very much depends on the size of the family and the budget, whilst Tamworth landlords have to consider the investment opportunity. In this article, I have analysed Tamworth’s housing stock into bedrooms and tenure. Initially looking at Tamworth homeowners..

And now the Private rented sector …

It can quite clearly be seen that Tamworth owner-occupiers tend to occupy the larger properties with more bedrooms. This would be expected due to the demographic of homeowners and people that privately rent.

However, this shows there could be opportunities for Tamworth buy to let landlords to purchase larger properties with more bedrooms to attract tenants requiring properties with more bedrooms. However, before you all go buying larger 4 bed and 5 bed mansions to rent them out, a lot of bigger properties in Tamworth don’t make financial sense when it comes to buy to let.

For numerous years Tamworth buy to let landlords have been the lone buyers at the smaller one and two bed starter homes of the market, as they have been lured by elevated tenant demand and eye-catching returns. Some Tamworth landlords believe their window of opportunity has started to close with the new tax regime for landlords, whilst it already appears to be opening wider for first time buyers. This is great news for first time buyers .. but one final note for Tamworth landlords .. all is not lost .. you can still pick up bargains, you just need to be a lot more savvy and do your homework ..one source of such information with articles like this is the Tamworth Property Market Blog https://www.Tamworthpropertyblog.co.uk

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Live in Tamworth? About to Retire and Privately Rent? You Could be £4,100 a Year Worse Off!

You read the personal finance pages of the newspapers and it all seems to be the impending pensions crisis … where people aren’t saving enough for their retirement. But it’s not the lack of Tamworth peoples’ future pension incomes that are my immediate concern. The fact is that so many of the future retirees in Tamworth over the coming decade, who never bought their home in the Millennial years of the 1990’s and 2000’s, will have to make some tough decisions regarding what house they live in when they retire anytime between now and 2038.

In Tamworth, there are 488 privately rented households, where the head of the household is between 50 years and 64 years of age (meaning they will be retiring anytime between now and 2038). They are working now and easily paying the rent, yet what happens when they retire?

A Tamworth retired couple, who currently privately rent and who have paid their fully qualifying NI stamp over the last few decades are likely to retire with the couples State Pension of £1,091 per month plus a tiny bit of private pension if they are lucky. Given that the average rent in Tamworth is £741 a month – a lot of that pension will be lost in rent. This means taxpayers will have no alternative but to step in and top up the rent payments with Housing Benefit, yet…

The maximum housing benefit for a couple in Tamworth is currently £393.90 per month … leaving a significant gap when you consider the average rent in Tamworth is £741 per month

It is most people’s opinion that retirees are either council tenants or own their home outright. Looking at these figures though, it looks like both these ‘mature’ private renters could be having to make some decisions on their lifestyle and where they live, possibly looking at downsizing the home they rent to make things more affordable in their old age. Also, the government will be in for a horrible surprise as more of Tamworth people retire and continue to rent from a private landlord. Numerous Tamworth private renters, with little or no savings, will have to rely on Housing Benefit, which will put greater pressure on the public purse.

The average Tamworth retiree will need to find £4,165 pa to stay in their privately rented home after retirement

A recent report from Scottish Widows suggested that 1 in 8 OAP’s will be privately renting by 2032, up from the current one in 15.47 OAP’s whom currently private rent (or 6.47%). In fact, in that report they said the equivalent of more than one-third of the whole annual NHS budget would be spent on Housing Benefit for OAP’s in retirement living in private rented property.

What does this mean for mature Tamworth homeowners? I see many using equity release schemes to stay in their homes to pay for a better retirement and others more open to downsizing, selling their large home to a family that needs it and moving into a smaller apartment or bungalow … yet lets be frank – they aren’t building bungalows in large numbers in Tamworth anymore.

And for the Tamworth landlords? Well with the younger Millennials showing no appetite in jumping onto the homeownership bandwagon anytime soon, it can only result in the demands on the buy to let market from Tamworth tenants rising substantially. Of course, many Millennials will inherit money from their home owning parents in the coming few decades, yet a lot won’t as it will be spent on nursing home care and any leftovers (if any) split between siblings.

The solution to all this is to build more homes, of course. Last year we created/built just over 217,000 households in the UK, up from a post Millennial average of just under 150,000 households a year. We need to get back to the building booms of the late 1960’s and early 1970’s when on average 300,000 households were built … but back to reality … that won’t happen so it looks like we are turning into a nation of renters, which is of course good news for Tamworth buy to let landlords!

For those retiring in post 2050/2060, there is better news as official reports suggest those retirees will enjoy a State Pension approximately similar to today’s pensioners with auto-enrolment into top-up private pensions through their employer.

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Tamworth ‘Home Owning’ Movers and Shakers in 2018

It’s now commonly agreed amongst economists and the general public that the dramatic rise in Tamworth property prices of the last six years has come to an end.

Read the National newspapers, and they talk of doom and gloom in the British housing market with such things as strained buyer affordability (as property prices have increased over the past six years at a far faster pace than average salaries), a lack of new properties being built and the Brexit uncertainties over the last two and half years being blamed for the slow down – yet in the last 12 months, people have still been moving, buying and selling in Tamworth at levels similar to the last six years – something tells me we have a case of ‘bad news selling newspapers’.

So instead, let me share with you what, exactly, is happening in the Tamworth property market, and more specifically, who is moving and why in Tamworth. The majority of sales in Tamworth during the last twelve months were semi-detached properties, selling for an average price of £187,200. Detached properties sold for an average of £294,800, with terraced properties fetching on average £157,100.

In Tamworth, in the homeowner sector in 2018 (i.e. owner occupation), 528 households moved within the tenure (i.e. sold the home they owned and bought another one) and 103 new households were created (i.e. they moved from living with family/friends and bought their first home without privately renting).

What does this mean for Tamworth buy to let landlords? Well looking at the graph, it appears bad news for landlords. There were 246 households that moved into the home owning (owner occupation) tenure from the private rented sector, whilst on the other side of the coin, 193 Tamworth households moved to the private rented sector from owner occupation … which appears on the face of it, a reduction in the private sector.

My research has calculated that in 2018, an additional 256 new households in the Tamworth private rental sector were created

…and it will continue to grow at those levels for the foreseeable future.

I have one final thought and opportunity for you Tamworth property investors. 127 owner occupied households in Tamworth sold in last year where the homeowners had passed away. These properties can be a potential goldmine and offer great returns. The reason being is some members of the older generation who have owned these homes for decades have spent money on high capital items (double glazing / central heating etc.) but not spent money on more superficial low-ticket items such as up to date carpets, kitchen, bathroom and decorating (vital if you want to sell your property for top dollar). These properties can often be bought cheaply because most buyers can’t see past the avocado or brown bathroom suite from the 1970’s and the dated decor, so if you were to buy wisely and do the works, you could sell it on for a healthy profit.

So, whatever is happening in the world with Brexit, Trump, China, and the Stock Market … the Tamworth housing market is in decent shape for the medium to long term. If we do have small corrections in values in the next 12 to 18 months, in the long term, house prices have always returned … and returned with vengeance. Like I say to anyone buying a property, be they a first time buyer, landlord or homeowner … property is a long game … and if you play the long game, you will always win (although isn’t that true in most aspects of life?).

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

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Tamworth Property Market: Is Sell to Rent the new Buy to Let?

It doesn’t seem two minutes ago that it was 90 degrees Fahrenheit in the shade (32 degrees Celsius for my younger readers), hosepipe bans looked likely and it was simply too hot to sleep at night, yet early indications were, that as the temperatures soared, the Tamworth property market appeared to be doing the reverse and was already starting to cool down.

8.49% less people moved home in the Tamworth area in the first part of 2018, when compared to the average number of people moving home (in the same time frame) between 2014 and 2017

The average number of households who sold and moved locally between 2014 and 2017 in the winter and spring months was 82 homes a month.. yet in the same time frame in 2018, only 75 (on average) sold and moved.

So, what is the issue? Many have cited Brexit as the issue – but I think its deeper than that.

Brexit seems to be the “go to excuse” for everything at the moment – my neighbour even blamed it for the potholes! Anyway a few weeks ago, I was out for a family get together in another part of the UK when one of my extended family said that they were planning on buying their first home this autumn most of those present said they were stupid to do so because of Brexit. Nonetheless, half an hour later, another distant cousin said to the same family crowd that they were planning to sell their home; to which most said they were also daft to do so because of Brexit.

Both sides of the argument can’t be right! So, what exactly is happening?

Well if you have been reading my blog on the Tamworth property market over the last few months, I have been discussing the threats and opportunities of the current state of fluidity in the Tamworth property market, including the issue of OAPs staying in homes that are too big for them as their children have flown the nest, interest rates, inflation, lack of new homes being built and the long term attitude to homeownership.. yet I have noticed a new trend in the last few months.. the emergence of the ‘sell to renter’.

Sell to Renter?

I have seen a subtle, yet noticeable number of Tamworth homeowners that have been selling their Tamworth homes, renting and wagering that, in the next few years, the Tamworth property market will tumble by more than what they spend on their short-term rental home, before they buy another Tamworth home in a couple of years i.e. a ‘sell to renter’. This type of ‘sell to renter’ is mostly predominant at the middle to upper end of the Tamworth property market – so I’m not too sure if it will catch on in the main ‘core’ market?

So, what does this all mean for Tamworth homeowners and Tamworth Buy To Let landlords?

Well, in the short term, demand for middle to upper market Tamworth rental properties could increase as these ‘sell to renters’ demand such properties. I would however give a note of caution to Tamworth landlords buying in this sector of the Tamworth property market as yields in this sector can be quite low. However, for homeowners of middle to upper market Tamworth properties, you might have less people wanting to buy your type of property, as some buyers are turning to renting?

Like I have always said, Tamworth properties are selling if they are realistically priced (realistic for the market – not a rose-tinted version where someone will pay 10% over the odds because everyone has access to the market stats with the likes of Rightmove and Zoopla!).

P.S Notice the spike in the graph, where the number of property sales jumped to 164 in the month of March 2016? That was all the Tamworth buy to let landlords snapping up buy to let properties before the stamp duty rules changed!

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Tamworth House Prices vs Tamworth Rents since 2006

The Tamworth housing market is a fascinating beast and has been particularly interesting since the Credit Crunch of 2008/9 with the subsequent property market crash. There is currently some talk of a ‘property bubble’ nationally as Brexit seems to be the ‘go-to’ excuse for every issue in the Country. Upon saying that, looking at both what we do as an agent, and chatting with my fellow property professionals in Tamworth, the market has certainly changed for both buyers and sellers alike (be they Tamworth buy to let landlords, Tamworth first time buyers or Tamworth owner occupiers looking to make the move up the Tamworth property ladder).

Tamworth house values are 7.67% higher than a year ago, and the rents Tamworth tenants have to pay are 1.6% higher than a year ago

When we compare little old Tamworth to the national picture, national property values have risen by 0.4% compared to last month and risen by 3.0% compared to a year ago, and this will surprise you even more, as nationally, property values are 19.8% higher than January 2015 (compared to 11.4% higher in the EU in the same time frame).

However, if we look further back…

Since 2006, Tamworth house values are 35.36% higher, yet the rents Tamworth tenants have had to pay for their Tamworth rental property are 17.7% higher

Rent Vs House Prices
Rent Vs House Prices

 

…which sounds a lot, yet UK inflation in those 12 years has been 42%, meaning Tamworth tenants are 24.3% better off in ‘real spending power terms’.

Looking at the graph, the rental changes have been much gentler than the roller coaster ride of property values. I particularly want to bring to your attention the dip in Tamworth house values (in red) in the years of 2008 and 2009 … yet as Tamworth property values started to rise after the summer of 2009, see how Tamworth rents dipped 6/12 months later (the yellow bars)…. Fascinating!

So, we have a win for tenants and a win for the homeowners, as they are also happy due to the increase in the value of their Tamworth property.

However, maybe an even more interesting point is for the long-term Tamworth buy to let landlords. The performance of Tamworth rental income vs Tamworth house values has seen the resultant yields drop over time (if house prices rise quicker than rents – yields drop).

Whilst, it’s true Tamworth landlords have benefited from decent capital growth over the last decade –with the new tax rules for landlords – now more than ever, it’s so important to maximise one’s yields to ensure the long term health of your Tamworth buy to let portfolio. More and more I am sitting down with both Tamworth landlords of mine and landlords of other agents who might not be trained in these skills – to carry out an MOT style check on their Tamworth portfolio, to ensure your investment will meet your future needs of capital growth and income. If you don’t want to miss out on such a MOT check up, drop me a line – what have you got to lose? 30 minutes of time against peace of mind – the choice is yours.

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7 Reasons Why Tamworth Buy To Let Landlords Shouldn’t Be Criticised

There is no escaping the fact that over the last couple of decades, the rise in the number buy to let properties in Tamworth has been nothing short of extraordinary.  Many in the “left leaning” press have spoken of a broken nation, the fact many youngsters are unable to buy their first home with the rise of a new cohort of younger renters, whom have been daubed ‘Generation Rent’ as landlords hoover up all the properties for their buy to let property empires. Government has been blamed in the past for giving landlords an unfair advantage with the tax system. It is also true many of my fellow professionals have done nothing to avail themselves in glory, with some suspect, if not on some rare occasions, downright dubious practices.

Yet has the denigration and unfair criticism of some Tamworth landlords gone too far?

It was only a few weeks ago, I read an article in a newspaper of one landlord who had decided to sell their modest buy to let portfolio for a combination of reasons, one of which being the new tax rules on buy to let that were introduced last year. The comments section of the newspaper and the associated social media posts were pure hate, and certainly not deserved.

Like all aspects in life, there are always good (and bad) landlords, just like there are good (and bad) letting agents … and so it should be said, there are good tenants and in equal measure bad tenants. Bad letting agents and bad landlords should be routed out … but not at the expense of the vast majority whom are good and decent.

But are the 1,290 Tamworth portfolio buy to let landlords at fault?

The Tories allowed people to buy their own Council house in the 1980’s, taking them out of the collective pot of social rented houses for future generations to rent them. Landlords have been vilified by many, as it has been suggested by some they have an unhealthy and ravenous avarice to make cash and profit at the expense of poor renters, unable to buy their first home. Yet, looking beyond the headline grabbing press, this is in fact ‘fake news’. There are seven reasons that have created the perfect storm for private renting to explode in the 2000’s.

To start with, the Housing Acts of 1988 and 1996 gave buy to let landlords the right to remove tenants after six months, without the need for fault. The 1996 Act, and its changes, meant banks and building societies could start to lend on buy to let properties, knowing if the mortgage payments weren’t kept up to date, the property could be repossessed without the issue of sitting tenants being in the property for many years (even decades!) … meaning in 1997, buy to let mortgages were born… and this, my blog reading friends, is where the problem started.

Secondly, in the early 2000’s, those same building societies and banks were relaxing their lending criteria, with self-certification (i.e. you did not need to prove your income), mortgages 8 times their annual salary, and very helpful interest only mortgage deals helped to keep repayments inexpensive.

Thirdly, the totally inadequate building of Council Houses (aka Local Authority Housing) in the last two decades and (so I’m not accused of Tory bashing) – can you believe Labour only built 6,510 Council Houses in the WHOLE OF THE UK between 1997 and 2010? Giving the Tories their due, they have built 20,840 Council Houses since they came to power in 2010 (although still woefully low when compared the number of Council Houses built in the 1960’s and 1970’s when we were building on average 142,000 Council Houses per year nationally). This meant people who would have normally rented from the Council, had no Council House to rent (because they had been bought), so they rented privately.

And then 3rd, 4th, 5th, 6th and 7th

 

  • Less of private home building (again look at the graph) over the last two decades.

 

  • A loss of conviction in personal pensions meaning people were looking for a better place to invest their savings for retirement.

 

  • Ultra-low interest rates for the last nine years since the Credit Crunch meaning borrowing was cheap.

 

  • A massive increase in EU migration from 2004, when we had eight Eastern European countries join the EU. That brought 1.4m people to the UK for work from those countries – and they needed somewhere to live.

Thus, we got the perfect storm conditions for an eruption in the Tamworth Private Rented Sector.

Commercially speaking, purchasing a Tamworth property has been undoubtedly the best thing anyone could have done with their hard-earned savings since 1998, where property values in Tamworth have risen by 225.91%…

…and basing it on the average rental in Tamworth, earned £154,440 in rent.

Yet, the younger generation have lost out, as they are now incapable to get on the property (especially in Central London).

The Government have over the last few years started to redress the imbalance, increasing taxes for landlords, together with the Banks being tighter on their lending criteria meaning the heady days of the Noughties are long gone for Tamworth landlords. In the past 20 years, anything but everything made money in property and it was easy as falling off a log to make money in buy to let in Tamworth – but not anymore.

Being a letting agent has evolved from being a glorified rent collector to a trusted advisor giving specific portfolio strategy planning on each landlord’s buy to let portfolios. I had a couple of instances recently of a couple of portfolio landlords, one from Drayton Bassett who wanted income in retirement from his buy to let’s and the other from Elford, who wanted to pass on a decent chunk of cash to his grandchildren to enable them to buy their own home in 15/20 years’ time.

Both of these landlord’s portfolios were woefully going to miss the targets and expectations both landlords had with their portfolios, so over the last six/nine months, we have sold a few of their properties, refinanced and purchased other types of Tamworth property to enable them to hit their future goals (because some properties in Tamworth are better for income and some are better for capital growth) … And that my blog reading friends is what  ‘portfolio strategy planning’ is!

If you think you need ‘portfolio strategy planning’, whether you are a landlord of ours or not (because the Elford landlord wasn’t)  … drop me line or give the office a call. Thank you for reading.

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

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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

 

 

£174,101 – The Typical Profit Each Tamworth Landlord Could Make in The Next 25 Years

I am of the opinion that buy to let investment in Tamworth, in the long-term, will bring substantial returns for landlords, irrespective of latest regulation and tax changes.

Taking a very conservative (with a small ‘c’) view, I believe landlords will see a projected net profit of £295,588 per property over the next 25 years through capital gains and rental. When inflation is taken into account that works out at £174,101 (in today’s money) or around £6,964 per year. The breakdown applies to a basic tax-paying landlord placing a characteristic 25% deposit on a £151,000 terraced/town house property.

Capital gains make up a substantial part of a landlord’s returns. Again, being conservative, I have assumed that Tamworth house prices over the next quarter century (between 2018 and 2043) will rise at half the rate they did between 1993 and 2018 (the preceding 25 years), therefore the example Tamworth property in the previous paragraph would grow in value to £342,921, providing gross capital gains of £191,921.

A typical Tamworth landlord receives, on average, rent of £7,980 per annum per terraced/town house property and so, over a 25-year period, that example property would generate a total rental income of £305,036 (again – very conservatively assuming a compound annual growth rate in the rent of 1.71% per annum).

Nevertheless, there are costs to running a buy to let property (mortgages, void periods, repairs, agents fees etc) .. and over those same 25 years, I have estimated that to be £201,369  .. giving the net profit levels mentioned in the second paragraph.

Now of course I have had to make assumptions to reach these figures, yet I hope you would agree, I have been very unadventurous with my assumptions.

The Tamworth (and UK as a whole) buy to let property market is experiencing a massive sea of change. Regulation and tax changes have altered the dynamic in the property market, diminishing its appeal to inexperienced and amateur landlords, and these new tax changes mean higher tax bills for higher rate tax landlords. Yet, despite these rising costs, there are still healthy returns to be found in Tamworth buy to let investment for knowledgeable and steadfast landlords. Nonetheless, the days of anything making money and idle speculation are long gone.

Buy to let is a long-term business undertaking, necessitating commitment and expertise. Don’t put your head in the sand and think it doesn’t affect you. Tamworth buy to let landlords must be equipped to start business and tax planning, take portfolio management advice to ensure their investments will meet their investment goals, appreciate the risks as well as the rewards, and, most crucially, the obligations they have towards their tenants.

If you are a Tamworth landlord, irrespective of whether you are a client of mine or another agent in Tamworth (or even you do it yourself), feel free to drop me a line or pop into the office for an informal chat on the future direction of the Tamworth rental market and where opportunities may lie.

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

 

Things to consider when buying a Tamworth Buy-to-let property

If you are thinking of becoming a Buy-to-Let Landlord there are many things to consider when looking for a property. The most important – what exactly are you looking to achieve.

welcome to Tamworth
welcome to Tamworth

It may be income, capital growth or an investment that can be passed down to your children or a combination of all of these.

Not all properties meet each of these criteria to the same degree. As a general rule property with a high yield is more likely to suffer low capital growth and the reverse is also true.

Most landlords try to buy a property that has a sensible growth potential with a yield that will at least cover their costs.

Average yield in Tamworth? 4% to 6%

Generally a two bedroom modern house which is in a good location is the best buy.

Victorian may have lots of character and appeal but the maintenance of these properties tend to be higher.

A flat will usually be leasehold so you have the annual service charges to consider. Flats tend to have a lower capital growth as there are usually quite a few on the market.

A three bedroom house  is a good buy however there will be more wear and tear from a family occupying the property so your maintenance charges are generally higher.

If you are sitting on the fence and contemplating when’s the right time to buy ? well it’s a bit like having  kids – when is the right time to start a family. By procrastinating and never committing, your property journey will never start!

Our property journey started some 10 years ago with at least another 10 years spent hesitating. When we finally did dip our toes into the Buy-to-Let market it was the best thing we ever did, that is apart from starting our family.

Don’t forget …You will have to pay stamp duty for second home purchases,. Details here

There are some advantages  of setting up a limited company to purchase the property, but they are limited unless you are buying several properties. An accountant will be able to advise.

Almost certainly  you will need to pay income tax on the income, but you should take advice from an accountant and you will need to complete tax returns annually.

You will need to pay CGT  (capital Gains Tax) when you sell assuming the profit exceeds your annual allowance and purchasing costs. There are things you can do to mitigate this cost which your accountant can help you with.

So like us, if you are in property for the long haul, you won’t get rich quickly however you will make money in years to come and you may even enjoy being a property landlord!

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  –

http://www.Tamworthpropertyblog.co.uk

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

Twitter – https://twitter.com/hallandthompson

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

 

Happy House Hunting