Value of Tamworth Property Market falls £82.8m

The combined value of Tamworth’s housing market has fallen by £82,781,160 in the last 6 months, meaning the average value of a Tamworth property has decreased in value by an average of £3,162.

This is great news for Tamworth first time buyers and Tamworth buy to let landlords, as there is a slight hesitation in the market because of the uncertainty over Brexit. As I have always said, investing in Tamworth property, be it for you to live in or as a buy to let investment, is a long-term game. In the grand scheme of things, this minor change over the last 5 or 10 years is nothing.

The RICS’s latest survey of its Chartered Surveyor members showed that nationally the number of properties actually selling has dropped for the 16th month in a row. Locally in Tamworth, certain sectors of the market are matching that trend, yet others aren’t. It really depends which price band and type of property you are looking for, as to whether it’s a buyers or sellers market.

The RICS also said its member’s lettings data showed a lower number of rental properties coming on to the market. Anecdotal evidence suggests that (and this is born out in the recent English Housing Survey figures) Tamworth tenants over the last few years are stopping in their rental properties longer, meaning less are coming onto the market for rent. I have noticed locally, that where the landlord has gone the extra mile in terms of decoration and standard of finish, this has certainly helped push rents up (although those properties where the landlord has been remiss with improvements and standard of finish are in fact seeing rents drop). Tamworth tenants are getting pickier – but will pay top dollar for quality. So much so, I believe there will be a cumulative rise of around fourteen to sixteen per cent over the course of the next five years in private rents for the best properties on the market.

Back to the Tamworth Property Values though …

This drop in Tamworth property values doesn’t particularly concern me. The fact is that over the last 6 months 390 properties have sold for a combined value of £83,199,870. You see, that drop must be seen in perspective in that 6 months ago, the total value of Tamworth property stood at £5,701,349,500 (£5.70bn), and today it stands at £5,618,568,340 (£5.62bn) .. this change is a drop in the ocean.

In the short term, say over the next six months and assuming nothing silly happens in Korea, the Middle East or Brexit negotiations, it will be more of the same until the end of the year. In the meantime, the on-going challenges ensuring we as a Country build more homes (although the Office of National Statistics figures released in July showed nationally the number of new homes started to be built over the second Quarter of 2018 had dropped dramatically) makes me think that Tamworth (and Nationally) property value is likely to recommence an upward trajectory as we go into 2019.

One final thought for all the buy to let landlords in Tamworth (and indirectly this does affect all you Tamworth homeowners too). I do hope the recent tax changes towards buy to let landlords don’t bite as deep as it is possibly starting to with certain landlords I know.  We talked about this in an article a few weeks ago and I know why the Government wanted to change the balance by taxing landlords and providing a lift for first time buyers .. however, this may well come at the expense of higher rents for those Tamworth tenants that don’t become first time buyers, as the appeal of buy to let potentially weakens.

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.

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More Than Eighteen Babies Born for Every New Home Built in the Past Five Years in Tamworth

More than 18 babies have been born for every new home that has been built in Tamworth since 2012, deepening the Tamworth housing shortage.

This discovery is an important foundation for my concerns about the future of the Tamworth property market – when you consider the battle that todays twenty and thirty somethings face in order to buy their first home and get on the Tamworth property ladder. This is particularly ironic as these Tamworth youngsters’ are being born in an age when the number of new babies born to new homes was far lower.

This will mean the babies being born now, who will become the next generation’s first-time buyers will come up against even bigger competition from a greater number of their peers unless we move to long term fixes to the housing market, instead of the short term fixes that successive Governments have done since the 1980’s.

Looking at the most up to date data for the area covered by Tamworth Council, the numbers of properties-built versus the number of babies born together with the corresponding ratio of the two metrics …

 

It can be seen that in 2016, 7.68 babies had been born in Tamworth for every home that had been built in the five years to the end of 2016 (the most up to date data). Interestingly, that ratio nationally was 2.9 babies to every home built in the ‘50s and 2.4 in the ‘70s. I have seen the unaudited 2017 statistics and the picture isn’t any better! (I will share those when they are released later in the year).

Our children, and their children, will be placed in an unprecedented and unbelievably difficult position when wanting to buy their first home unless decisive action is taken. You see it doesn’t help that with life expectancy growing year on year, this too is also placing excessive pressure on homes to live in availability, with normal population growth nationally (the number of babies born less the number of people passing away) accumulative by two people for every one home that was built since the start of this decade.

Owning one’s home is a measure many Brits to aspire to. The only long-term measure that will help is the building of more new homes on a scale not seen since the 50’s and 60’s, which means we would need to aim to at least double the number of homes we build annually.

In the meantime, what does this mean for Tamworth landlords and homeowners? Well the demand for rental properties in Tamworth in the short term will remain high and until the rate of building grows substantially, this means rents will remain strong and correspondingly, property values will remain robust.

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 First Time Buyers Mortgages taking 28.6% of their Wages

I received a very interesting letter the other day from a Tamworth resident. He declared he was a Tamworth homeowner, retired and mortgage free. He stated how unaffordable Tamworth’s rising property prices were and that he worried how the younger generation of Tamworth could ever afford to buy? He went on to ask if it was right for landlords to make money on the inability of others to buy property and if, by buying a buy to let property, Tamworth landlords are denying the younger generation the ability to in fact buy their own home.

Whilst doing my research for my many blog posts on the Tamworth Property Market, I know that a third of 25 to 30 year olds still live at home. It’s no wonder people are kicking out against buy to let landlords; as they are the greedy bad people who are cashing in on a social woe. In fact, most people believe the high increases in Tamworth’s (and the rest of the UK’s) house prices are the very reason owning a home is outside the grasp of these younger would-be property owners.

Age Distribution of First Time Buyers in UK since 1990
Age Distribution of First Time Buyers in UK since 1990

 

 

 

 

 

 

 

 

 

However, the numbers tell a different story. Looking of the age of first time buyers since 1990, the statistics could be seen to pour cold water on the idea that younger people are being priced out of the housing market. In 1990, when data was first published, the average age of a first time buyer was 33, today it’s 31.

Nevertheless, the average age doesn’t tell the whole story. In the early 1990’s, 26.7% of first-time buyers were under 25, while in the last five years just 14.9% were. In the early 1990’s, four out of ten first time buyers were 25 to 34 years of age and now its six out of ten first time buyers.

Although, there are also indications of how un-affordable housing is, the house price-to-earnings ratio has almost doubled for first-time buyers in the past 30 years. In 1983, the average Tamworth home cost a first-time buyer (or buyers in the case of joint mortgages) the equivalent of 2.5 times their total annual earnings, whilst today, that has escalated to 4.5 times their income (although let’s not forget, it was at 5.0 times their income for Tamworth first time buyers in 2007).

Again, those figures don’t tell the whole story. Back in 1983, the mortgage payments as percentage of mean take home pay for a Tamworth first time buyer was 25.9%. In 1989, that had risen to 55.5%. Today, it’s 28.6% … and no that’s not a typo .. 28.6% is the correct figure.

Mortgage payments as a percentage
Mortgage payments as a percentage

So, to answer the gentleman’s questions about the younger generation of Tamworth being able to afford to buy and if it was right for landlords to make money on the inability of others to buy property? It isn’t all to do with affordability as the numbers show.

And what of the landlords? Some say the government should sort the housing problem out themselves, but according to my calculations, £18bn a year would need to be spent for the next 20 or so years to meet current demand for households. That would be the equivalent of raising income tax by 4p in the Pound. I don’t think UK tax payers would swallow that.

So, if the Government haven’t got the money… who else will house these people? Private Sector Landlords and thankfully they have taken up the slack over the last 15 years.

Some say there is a tendency to equate property ownership with national prosperity, but this isn’t necessarily the case. The youngsters of Tamworth are buying houses, but buying later in life. Also, many Tamworth youngsters are actively choosing to rent for the long term, as it gives them flexibility – something our 21st Century society craves more than ever.

 

Whatever property type you are thinking of adding to your portfolio this year year I am sure it will let readily as the market remains strong with a lack of supply continuing to feed strong rental prices. If you are in town and would like to discuss any plans you may have, give me a call to meet for coffee on 07531484956 or email me lorraine@hallandthompson.co.uk

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Tamworth’s housing affordability hits a ratio of 6.75 to 1

A Tamworth homeowner emailed me last week, following my article posted in the Tamworth Property Blog about the change in attitude to renting by the youngsters of Tamworth and how they thought it was too expensive for first time buyers to buy in Tamworth.  There can be no doubt that buy to let landlords have played their part in driving up property values in Tamworth (and the UK) and from that made housing a lot less affordable for the 20 and 30 somethings of Tamworth.

In the email, they said they thought the plight of the first-time buyers in Tamworth was like a novice tennis player, playing tennis with Andy Murray. If you played him once you will unquestionably lose and if you were to play him 100 times you would lose 100 times. That is what they thought it was like for all the 20 something’s first time buyers of Tamworth going against all the buy to let landlords.

They went on and asked if the Bank of England (BoE) should be tasked to control house price inflation in the same way as the BoE controls inflation.The BoE has a target for the annual inflation rate of the Consumer Prices Index of 2%, whilst it is also required to support the Government’s economic policy, including its objectives for growth and employment.  So, should BoE be charged with containing buy to let housing market, by possibly changing the rules on the loan-to-value (LTV) ratio’s?

So, let’s look at how affordable Tamworth is?  The best measure of the affordability of housing is the ratio of Tamworth Property Prices to Tamworth Average Wages, (the higher the ratio, the less affordable properties are).   (i.e. looking at the table below, for example in 2014, the average value of a Tamworth property was 6.27 times higher than the average annual wage in Tamworth).

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 (EST)
3.19 3.62 4.62 5.87 6.71 6.21 6.21 6.02 6.27 6.75
Ratio of Tamworth property prices to Tamworth average wages
Ratio of Tamworth property prices to Tamworth average wages

 

 

 

 

 

 

This deterioration in affordability of property in Tamworth over the last couple of years has been one of the reasons why the younger generation is deciding more and more to rent instead of buy their own house.

… but it’s not the only reason.

A quick look on Money Supermarket today found 169 lenders prepared to offer 75% LTV Buy to let Mortgages and none at 85% LTV.  Lenders have self-imposed a high level of entry for buy to let landlords (i.e. putting down at least 25% of the purchase price in cash).  The BoE don’t need to meddle there!  Also, the Tories have certainly done lots to level the playing field in favour of first time buyers.  For nearly a year now, Landlords have had to pay an additional 3% in stamp duty on any buy to let purchase and over the coming four years, tax rules on landlord’s claiming mortgage interest relief will affect their pocket.  Neither, it doesn’t help that the local Authority sold off council houses in the Thatcher years and so for many on low incomes or with little capital, owning a home has simply never been an option (today or in the past).

It’s easy to look at the headlines and blame landlords.  First time buyers have been able to access 95% LTV mortgages since 2010, meaning even today, a first-time buyer could purchase a 2 bed terraced in Tamworth for around £130,000 and only need to find £6,500 deposit.  Yes, a lot of money, but first time buyers need to decide what is important to them.  Either save up for a couple of years to save the deposit and go without two annual foreign holidays, the full Satellite or Cable TV package with Sports and Movies costing three figures a month, the latest mobile phone and out socialising … or not as the case maybe?

I think we as a Country have changed … renting is returning to be the norm.  So my opinion is, landlords have it tough.  Let’s not blame them for the ‘perceived’ woes of the nation … because to be frank … we haven’t always been a country of homeowners.  Roll the clock back to 1964, and nationally, 30% of people rented their home from a private landlord – today – its only 15.3% nationally.

History of tenure in UK - 1918 to today.
History of tenure in UK – 1918 to today.

 

 

 

 

 

 

 

 

If you are an existing landlord or someone thinking of become a first-time landlord looking for advice and opinion and what (or what not to buy in Tamworth), one source of information is the Tamworth Property Blog  www.tamworthpropertyblog.co.uk

Why not join me at the Moathouse, Tamworth for a cuppa and a cosy chat, on the Tamworth property market?

lorraine@hallandthompson.co.uk   or 077531484956

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Tamworth First Time Buyers borrow £55.9m in the last 12 months

Starting with the bigger picture, over the last 12 months in the UK, 1,061,557 properties were sold with a total value of £223.74 bn. To give that some context, ten years ago 1,581,727 properties sold with a total value of £405.56bn, so it can be seen the number of people moving house has dropped by over a third over the last decade.

Whether you are a landlord, homeowner or tenant, it’s always important to keep an eye on the Tamworth property market, not just from your point of view, but also from every player’s point of view. Over the last 12 months, 1,165 properties have sold (and completed) in Tamworth, worth £223.8m. Interestingly the number of properties changing hands in Tamworth has also dropped when compared to a decade ago.

It might surprise you that first time buyers in 2017 will benefit from a slight decline in Tamworth buy-to-let investors.

Those looking to buy a home in the spring and summer of 2017 will face a far less competitive Tamworth property market than the same time of year in 2016, when the urgency to beat the buy-to-let stamp duty hike was in full swing.

Many landlords brought forward their purchases to beat the tax, and since then, the number of buy-to-let purchases has dropped slightly. First time buyers have taken advantage of that and have increased their buying. In fact, looking at the Bank of England figures, this is what UK lenders have lent on buy-to-let properties versus first time buyers over the last 12 months  …

Q4 2015 – £1bn buy-to-let mortgages vs £1.31bn for first time buyers

Q1 2016 – £1.35bn buy-to-let mortgages vs £1.08bn for first time buyers

Q2 2016 – £760m buy-to-let mortgages vs £1.28bn for first time buyers

Q3 2016 – £827m buy-to-let mortgages vs £1.42bn for first time buyers

When looking at the figures for Tamworth itself, first time buyers have borrowed more than £55.9m in the last 12 months to buy their first home. This is a ringing endorsement of their confidence in their jobs and the local Tamworth economy. Those 20 and 30 something’s who are considering being first time buyers in 2017 will find that the number of properties on the market has never been as good as it has for quite a while, meaning you have more choice of properties and less competition from so many buy-to-let landlords than a year ago.

Rightmove announced nationally that new seller enquiries are 26% up on the same time last year giving the stoutest indication that we may see a slight ease in the lack of properties on the market. When I look at the Tamworth market, at this moment in time there are an impressive 300 properties for sale, so lots of choice. All this will be welcome news amongst Tamworth first-time buyers with a combination of a proportional reduction in new investors and landlords.

2017 will be an interesting year for all homeowners, be they buy-to-let landlords, existing homeowners or future homeowners.  For more thoughts on the Tamworth property market like this, you might want to visit the Tamworth Property Market Property Blog www.tamworthpropertyblog.co.uk

If you are looking for an agent with experience that can help you find the right tenant for your property, then contact us to find out how we can get the best out of your investment property.

Email me on lorraine@hallandthompson.co.uk or call on 01827 425195

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£23m a year black hole in the Tamworth Property Market – Is Buy to Let Immoral? (Part 2)

 

An Englishman’s Home is His Castle as Maggie Thatcher lauded – everyone should own their own home. In 1971, around 50% of people owned their own home and, as the baby-boomers got better jobs and pay, that proportion of homeowners rose to 69% by 2001. Home ownership was here to stay as many baby boomers assumed it’s very much a cultural thing here in Britain to own your own home.

But on the back of TV programmes like Homes Under the Hammer, these same baby boomers started to jump on the band wagon of Tamworth buy to let properties as an investment. Tamworth first time buyers were in competition with Tamworth landlords to buy these smaller starter homes … pushing house prices up in the 2000’s (as mentioned in Part One) beyond the reach of first time buyers. Alas, it is not as simple as that. Many factors come into play, such as economics, the banks and government policy. But are Tamworth landlords fanning the flames of the Tamworth housing crisis bonfire?

I believe that the landlords of the 3,300 Tamworth rental properties are not exploitive and are in fact, making many positive contributions to Tamworth and the people of Tamworth. Like I have said before, Tamworth (and the rest of the UK) isn’t building enough properties to keep up the demand; with high birth rate, job mobility, growing population and longer life expectancy.

According to the Barker Review, for the UK to standstill and meet current demand, the country needs to be building 8.7 new households each and every year for every 1,000 households already built. Nationally, we are currently running at 5.07 per thousand and in the early part of this decade were running at 4.1 to 4.3 per thousand.

It doesn’t sound a lot of difference, so let us look at what this means for Tamworth …

For Tamworth to meet its obligation on the building of new homes, Tamworth would need to build 264 households each year. Yet, we are missing that figure by around 110 households a year.

For the Government to buy the land and build those additional 110 households, it would need to spend £23,199,927 a year in Tamworth alone. Add up all the additional households required over the whole of the UK and the Government would need to spend £23.31bn each year … the Country hasn’t got that sort of money!

The bottom line is that, as the population grows, there aren’t enough properties being built for everyone to have a roof over their head. Rogue landlords need to be put out of business, whilst tenants should expect a more regulated rental market, with greater security for tenants, where they can rely on good landlords providing them high standards from their safe and modernised home. As in Europe, where most people rent rather than buy, it doesn’t matter who owns the house – all people want is a clean, decent roof over their head at a reasonable rent.

So only you, the reader, can decide if buy to let is immoral, but first let me ask this question – if the private buy to let landlords had not taken up the slack and provided a roof over these people’s heads over the last decade .. where would these tenants be living now? ….. because the alternative doesn’t even bear thinking about!

If you are a landlord or thinking of becoming one for the first time and you want to read more articles like this about the Tamworth Property Market, together with regular postings on what I consider the best buy to let deals in Tamworth (out of the many of properties on the market, irrespective of which agent is selling it) then feel free to get in touch!

Email me on Lorraine@hallandthompson.co.uk or call on 07531484956.

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