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

 

 

‘Taxing’ Time for the 1,883 Tamworth Buy To Let Landlords

Over the last twenty years, there has been a shift in the way the Tamworth (and the UK’s) property market works. In the 1960’s, 70’s, 80’s and 90’s, a large majority of twenty somethings saved up their 5% deposit, went without life’s luxuries of going out and holidays etc., for a couple of years and then bought their first home with their hard earned savings.

By 2000, 57.6% of Tamworth 25 to 29 years owned their own home (compared to 46% Nationally (and 80.5% of Tamworth 30 to 34 year olds in 2000 owned their own home – again compared to 64.2% nationally) whilst the remaining youngsters mostly rented from the Council and in some rare cases, privately rented.

Now it’s 2018, and those levels of homeownership have slipped dramatically and now only 30.7% of Tamworth 25 to 29 year olds own their own home and 54.2% of Tamworth 30 to 34 year olds own their own home (interestingly mirroring the National picture of 24.5% for the younger age cohort and 64.2% for the older 30 to 34 year cohort).

There was concern in Government since the late Noughties that this shift from homeownership to private renting wasn’t good for the well-being of the Country and things needed to change, to make it a more level playing field for first time buyers. House prices needed to be more realistic and there needed to be a carrot and stick for both landlords and first time buyers.

In the 1980’s and 1990’s, interest rates were the weapon of choice of Government to cool or heat up the UK housing market – and it did work – up to a point. It’s just interest rates also affected so many other sectors of the UK economy (and not always a in good way). The policy of interest rates to control the economy is called ‘Monetary Policy’. Monetary policy is primarily concerned with the management of interest rates (and the supply of money) and is carried out by the Bank of England (under direction from the Government).

It’s just in this post Credit Crunch, Brexit environment, the use of higher interest rates wouldn’t directly affect landlords (as around two thirds of buy to let properties are bought without a mortgage). Therefore, an increase in interest rates would have hardly any effect on landlords and hit the first time buyers – the people the Government would be trying to help!

Also, given muted growth of real income (i.e. real income being the growth salaries after inflation) in the past few years, an uplift in interest rates (from their ultra-low 0.5% current levels) would have a massive effect on Brit’s household disposable income. Yet, over 90% of new mortgages in 2018 being taken are fixed rate and with such low rates, it has made buying a property comparatively attractive.

Instead, over the last 8 years, the Government has encouraged first time buyers and clipped the wings of landlords with another type of economic policy – Fiscal Policy (Fiscal Policy is the collective term for the taxing (and spending) actions of the Government).  First time buyers have had the Help to Buy Scheme, Stamp Duty Exemption and contributions to their deposit by HMRC. On the other side the coin, landlords have had the way they are able to offset the tax relief of their mortgage payments against income change (for the worse), an increase in Stamp Duty (for the worse) and they will be hit with additional costs as the Government will be phasing out fees to tenants in the next 12 to 18 months.

So, what does this all mean for the 1,883 Tamworth landlords?

The days of making money in Tamworth buy to let with your eyes closed are long gone. There are going to be testing times for Tamworth landlords, yet there is still a defined opportunity for those Tamworth landlords who are willing to do their homework and take guidance from specialists and experts.

It’s all about looking at your Tamworth portfolio (or getting a property professional to do so) and ascertaining if your current portfolio, mortgage and gearing are designed to hit what you want from the investment (because that is what it is – an investment) in terms of income now and income in the future, capital growth and when you plan to dispose of your assets.

I have seen many Tamworth landlords (both who use me and my competitors) to manage their rental property or find them tenants – and on many occasions recently, I have told them to SELL – yes sell some of their portfolio to either reduce mortgage debt or buy other types of property that match what they want in the short and long-term from their investments. I know that sounds strange – but my role isn’t just to collect the rent  .. it’s also to give strategic advice and opinion on the landlord’s portfolio to help them meet their current and future investment goals.

The opportunities will appear in the Tamworth property market for Tamworth landlords from gentler growth in property values linked with a restrained Tamworth property market, meaning if you put in the time, there will be deals and great bargains to have. Many landlords in Tamworth (both clients and non-clients) send me Rightmove links each week, asking my opinion on the suitability of the investment. Some are exceptional – whilst others are duds. The bottom line is, private renting will continue to outgrow first time buyers in the next 5 to 10 years and as we aren’t building enough homes in the UK, which means rents can only go in one direction – upwards!

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

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What Will Happen to Tamworth Property Values Now Interest Rates Have Risen?

welcome to Tamworth
welcome to Tamworth

The current average value of a property in Tamworth currently stands at £214,600 and the base rates at 0.5%. In many of my articles, I talk about what is happening to property values over the short term (i.e. the last 12 months or the last 5 years), but to answer this question we need to go back over 40 years, to 1975.

The average value of a Tamworth property in 1975 was £10,389

However, since 1975, we have experienced in the UK, inflation of 807.5%.

Back in 1975, the average salary was £2,291 and average car was £1,840. A loaf of bread was 16p, milk was 28p a pint and a 2lb bag of sugar was 30p. Inflation has increased prices, so comparing like for like, we need to change these prices into today’s money. In real spending power terms, an average value of a Tamworth house in 1975, expressed in terms of today’s prices is £94,294.

That means in real terms, property costs a lot more today, than in the mid 1970’s, but has it always been that way? Looking at the important dates of the UK property market, you can see from this table, the last two property boom years of 1989 and 2007, show that there was a significant uplift in the cost/value of property (when calculated in today’s prices).

Tamworth House Prices Adjusted for Retail Prices.
1975 1979 1982 1989 1997 2007 2009 Today
£87,229 £102,347 £85,512 £151,946 £95,479 £249,379 £203,263 £214,600
Office for National Statistics Retail Price Index was applied to convert nominal property values to current values

Before we move on, hold onto the thought that you can quite clearly see from the table, in real terms, properties are cheaper today in Tamworth than they were in 2007!

So, it made me wonder if there was a link between house prices, inflation and other external economic factors, such as interest rates? Interest rates have a strong influence on inflation and property values, principally because changes in the interest rate affect the cost of mortgage payments for homeowners and they affect the flow of foreign currency in (or out) of an economy, thus changing the exchange rate and prices we can sell our goods and services abroad and prices we pay on imports.

So how exactly do interest rates affect property values?

When interest rates rise, it has a substantial effect on increasing the monthly cost of mortgages. Higher mortgage payments will discourage prospective homebuyers or people looking to move up market (meaning their mortgage payments go up) – thus making it comparatively cheaper to rent.

Furthermore, the high cost of mortgage payments sometimes also pushes some existing home owners to sell, meaning there is an increase in house sellers and a decline in house purchasers, and as the law of economics state, when supply is increased and demand falls, (house) prices fall.

Another fallout of a rise in mortgage payments is a rise in repossessions. Interestingly, repossessions in the UK rose from 15,000 per annum in the late 1980’s to over 75,000 per annum in the early 1990’s, meaning even more properties came onto the market, exasperating the issue of over supply – pushing property values even lower.

 

High interest rates caused property values to fall in mid 1970’s, early 1980’s and most recently, the early 1990’s (who can remember the 15% mortgage rate!) Conversely though, the drop in property values in 2008/2009 – was not due to interest rates, but due to the credit crunch and global recession.

So, what will happen now interest rates have risen?

It is vital to remember that interest rates are not the only factor affecting property values. It is also possible that when interest rates increase (which they will from the current 0.5%), property values can also continue to rise (it happened throughout the mid to late 1980’s and again between the boom years of 2002 and 2007). When confidence in the economy is good, and we as a Country experience a period of rising real incomes (i.e. after inflation), then the British in the past have continued to buy bricks and mortar, notwithstanding the rise in interest rates.

Another important factor on property values is the supply of housing. A big reason in the current level of Tamworth house prices is due to the shortage of supply, which has kept property values higher than I would have expected.

An additional factor is whether homeowners have a variable or fixed rate mortgage. 90.6% of new mortgages taken in the last Quarter were at a fixed rate, and 66.2% of all mortgaged homeowners are on fixed-rate mortgages, therefore, they will not notice the effects of higher interest rate payments until they re-mortgage in a few year’s time, meaning there is frequently a time-lag between higher interest rates and the effect on property values.

Another factor on mortgages is the ability to get one in the first place. Back in 2014, mortgage providers were told to be stricter on their lending criteria when arranging mortgages following the footloose days of 125% loan to value mortgages with the Northern Rock.  These new rules are a lot more rigorous on borrowers’ ability to repay the payments (although it makes me laugh, when with starter homes it nearer is always cheaper to buy then rent!).

I think the final point is this … affordability is the key. Look at the graph (the red bars) and you will see in REAL HOUSE PRICE terms – it’s cheaper to buy a home today than it was in 2007, yet why aren’t we seeing people buying property at the levels we were seeing in the 2000’s before the credit crunch? Again, looking at the reasons why, I will talk about in future articles.

In conclusion, interest rates are important – but nowhere near as important on the Tamworth (and British) property market than they were 15 or 20 years ago.

So, before I go, one final thought – how do we measure the success of the Tamworth property market? Well I believe one measure that is a good bellwether is the number of property transactions, as that could show a more truthful picture of the health of the property market than property values. Maybe I should talk about that in an up and coming article?

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

Additional 1,414 Tamworth Rented Homes Required by 2027

I have been doing some research, looking both at National and Regional reports on the demand and supply of property and people together with future projections on the economy, population and family demographics with some interesting results.  According to the Office of National Statistics, in the last financial year nationally, private renting grew by 74,000 households, whilst the owner occupied dwelling stock increased by 101,000 and social (aka council and housing association) stock increased by 12,000 dwellings.

It was the private rental figures that caught my eye.  With eight or nine years of recovery since the Credit Crunch, economic recovery and continuing low interest rates have done little to setback the mounting need for rented housing.  In fact, with house price inflation pushing upwards much quicker than wage growth, this has meant to make owning one’s home even more out of reach for many Millennials, all at a time when the number of council/social housing has shrunk by just over 2.5% since 2003, making more households move into private renting.

There are 7,711 people living in 3,300 privately rented

properties in Tamworth.

In the next nine years, looking at the future population growth statistics for the Tamworth area and making careful and moderate calculations of what proportion of those extra people due to live in Tamworth will rent as opposed to buy, in the next ten years, 3,305 people (adults and children combined) will require a private rented property to live in.

Therefore, the number of Private Rented homes in Tamworth will need to rise by 1,414 households over the next nine years,

That’s 157 additional Tamworth properties per year that will need to be bought by Tamworth landlords, for the next nine years to meet that demand.

… and remember, I am being conservative (with a small ‘c’) with those calculations, as demand for privately rented homes in Tamworth could still rise more abruptly than I have predicted as I would ask if Theresa May’s policies of building 400,000 affordable homes (which would syphon in this 5-year Parliamentary term is rather optimistic, if not fanciful?

% of properties bought as BTL since 2016
% of properties bought as BTL since 2016

So, one has to ask wonder if it was wise to introduce a buy to let stamp duty surcharge of 3% and the constraint on mortgage tax relief could curtail and hold back the ability of private landlords to expand their portfolios?

Well a lot of landlords are taking on these new hurdles to buy to let and working smarter.  Buying the property at the right price and using an agent to negotiate on your behalf (we do this all the time) … and the 3% stamp duty level isn’t an issue.  Incorporating your property portfolio into a Limited Company is also a way to circumnavigate the issues of mortgage tax relief (although there are other hurdles that need to be navigated on that tack), but just look at the growth of proportion of Buy to Let properties in the Country since the Summer of 2016 … something tells me smart Landlords are seeing these challenges as just that … challenges which can be overcome by working smarter.

I have a steady stream of Tamworth landlords every week asking me my opinion on the future of the Tamworth property market and their individual future strategy and, whether you are a landlord of mine or not, if you ever want to send me an email or pop into my office to chat on how you could navigate these new Buy to Let waters … it will be good to speak to you (because you wouldn’t want other landlords to have an advantage over you – would you?).

Until next time, happy house hunting.

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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

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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Extra Funding Is Required for Affordable Homes in Tamworth

In my blog about the Tamworth Property Market I mostly only talk about two of the three main sectors of the local property market, the ‘private rented sector’ and the ‘owner occupier sector’. However, as I often stress when talking to my clients, one cannot forget the third sector, that being the ‘social housing sector’ (or council housing as some people call it).

In previous articles, I have spoken at length about the crisis in supply of property in Tamworth (i.e. not enough property is being built), but in this article I want to talk about the other crisis – that of affordability. It is not just about the pure number of houses being built but also the equilibrium of tenure (ownership vs rented) and therein, the affordability of housing, which needs to be considered carefully for an efficient and effectual housing market.

An efficient and effectual housing market is in everyone’s interests, including Tamworth homeowners and Tamworth landlords, so let me explain ..

An average of only 36 Affordable Homes per year have been built by Tamworth Borough Council in the last 9 years

The requirement for the provision of subsidised housing has been recognised since Victorian times. Even though private rents have not kept up with inflation since 2005 (meaning tenants are better off) it’s still a fact there are substantial numbers of low-income households in Tamworth devoid of the money to allow them a decent standard of housing.

Usually, property in the social housing sector has had rents set at around half the going market rate and affordable shared home ownership has been the main source of new affordable housing yet, irrespective of the tenure, the local authority is simply not coming up with the numbers required. If the local authority isn’t building or finding these affordable homes, these Tamworth tenants still need housing, and some tenants at the lower end of the market are falling foul of rogue landlords. Not good news for tenants and the vast majority of law abiding and decent Tamworth landlords who are tarnished by the actions of those few rogue landlords, especially as I believe everyone has the right to a safe and decent home.

Be it Tory’s, Labour, SNP, Lib Dems, Greens etc, everyone needs to put party politics aside and start building enough homes and ensure that housing is affordable. Even though 2017 was one of the best years for new home building in the last decade (217,000 home built in 2017) overall new home building has been in decline for many years from the heady days of the early 1970s, when an average of 350,000 new homes were being built a year.  As you can see from the graph, we simply aren’t building enough ‘affordable’ homes in the area. 

The blame cannot all be placed at the feet of the local authority as Council budgets nationally, according to Full-Fact, are 26% lower than they have been since 2010.

So, what does this mean for Tamworth homeowners? Well, an undersupply of affordable homes will artificially keep rents and property prices high. That might sound good in the short term, but a large proportion of my Tamworth landlords find their children are also priced out of the housing market. Also, whilst your Tamworth home might be slightly higher in value, due to this lack of supply of homes at the bottom end of the market, as most people move up the market when they do move, the one you want to buy will be priced even higher.

Problems at the lower end of the property market will affect the middle and upper parts. There is no getting away from the fact that the Tamworth housing market is all interlinked .. it’s not called the Property ‘Ladder’ for nothing!

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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Ask Lorraine – My Tamworth HMO and damage.

Ask Lorraine – We have been landlords of 2 apartments for 6 years now and have always had fantastic tenants. My husband talked me into adding to our portfolio and we are now running  a HMO. Wow, what a whole new ball game!

The HMO is our former much loved family home, we always had top of the range fixtures and fittings and it was  possibly much nicer than other HMO’s.

Shared House
Shared house

 

 

 

 

Our problem is that my husband seems to be at the property every week sorting issues out. Last night a tenant texted to say that the corner of the marble worksurface in the kitchen is badly chipped. Infact he states that he found a rather large piece of marble on the kitchen floor which he’s left on the hall table, should we need the piece to repair the worksurface.

We cannot understand how this could possibly have happened, surely this is not down to wear and tear?The problem is that it will be very difficult to prove who actually damaged the worksurface and to charge them.

Best Wishes Lily

Lorraine’s Answer – Hello Lily

You have my every sympathy, renting out your own former home is always a recipe for disaster.  No matter how careful the tenants are, they will they be harder on it than you ever were.

One piece of advice – make it nice for them but don’t go to the same expense as you would your own home. Tenants may not deliberately damage your things but as they haven’t had to pay for them the they won’t normally have the same feelings towards them.

The problem with HMO’s is that you cannot prove which resident damaged anything in the communal areas, so basically the landlord has to carry out the repairs and swallow any costs.

You’ve probably already found that running costs of a HMO are much higher than that of a normal AST type tenancy. If you are carrying out weekly repairs it may be in your best interests if you do your sums and decide if running a HMO is still good for you. After all you are running a business!

With the added costs, come the legislation on HMO’s, these  are a minefiled for even seasoned Landlords, maybe a headache too far?

Whatever you decide, I hope you enjoy your property journey.

Until next week

Thinking of Selling your property now or in the near future? Maybe you’re a landlord with property to Rent?

Contact us NOW for a FREE Valuation and find out what Hall and Thompson Estate Agents can do for you….01827 425195

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Why Tenancy Agreements are Important to Tamworth Landlords

Yes, It is possible to create a tenancy without actually signing a tenancy agreement but who is crazy enough to do that?

Well you would be surprised –  Recently I  have been contacted twice by landlords who allowed tenants to move into their properties without having a tenancy agreement in place.

One of the landlords I am afraid to say does not want me to mention his case in my blog, apparently he is the butt of his friends jokes over his little issue. I have given him my advice and the rest is now up to him!Spit Handshake

The other landlord contacted me when his tenants failed to pay the deposit and rent. He allowed this “lovely” couple to take the keys and move in with the promise of paying the monies owed when they got paid, two days later.

When monies were not forthcoming and the landlord chased, he was told, this “lovely” couple were going to pay their rent in arrears and they knew nothing about any agreement to pay a deposit.

So we now have a frustrated landlord asking  “Can they pay their rent in arrears and what about the deposit?

Yes, they can, unfortunatley.

Under common law, rent is payable in arrears unless there is a tenancy agreement in place and the agreement states rent is payable in advance.

With regards to the deposit, the landlord has no recourse, where is the proof.

By using a properly drafted tenancy agreement Landlords go a long way to protecting their position. It is unwise to add and remove clauses without legal advice  as they can be classed as unfair terms .

For example a clause will normally be unfair if it takes away a right which a tenant would normally have in law.

If you want to prohibit something a tenant would normally be able to do, such as re-decorate the property, your clause must contain wording providing for the tenant to request permission to do whatever they are wanting to do and must state that “the permission will not be unreasonably refused”.

Countless landlords have invalidated their pets clauses by removing this wording on the basis that “no pets allowed in this property under any circumstances”.

A tenant can request permission for something but it does not mean that you have got to agree to it. It may be reasonable to refuse your permissionm, that is your right as a Landlord. But if you deny tenants the chance to request permission – this will invalidate the clause, meaning that there is nothing to stop them keeping whatever pets they like.

Tenancy agreements need to be fair and written in plain English, they can include clauses to protect the landlord’s position. i.e. –

Notifying tenants that you will provide their details to utilities if they default on payment. You should also note down that you may also use tracing agents if they leave owing you money.

Everyone living in the property, including all children are named in the tenancy agreement and there should be a clause saying that no one else is allowed to live in the property.

Remember doing business on spit and a hand shake is no longer good practice 🙁

until next week.

Landlords, would you like a second opinion on a potential Buy-to-Let property or do you have nagging concerns – please feel free to contact us on 01827 425195 or 07531484956.We are here to help you on your property journey.

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Tamworth’s £72,380,160 “Rentirement” Property Market Time Bomb

Yes, I said ‘rentirement’, not retirement … rentirement and it relates to the 488 (and growing) Tamworth people, who don’t own their own Tamworth home but rent their home, privately from a buy to let landlord and who are currently in their 50’s and early to mid-60’s.

The truth is that these Tamworth people are prospectively soon to retire with little more than their state pension of £155.95 per week, probably with a small private pension of a couple of hundred pounds a month, meaning the average Tamworth retiree can expect to retire on about £200 a week once they retire at 67.

The average rent in Tamworth is £618 a month, so a lot of the retirement “income” will be taken up in rent, meaning the remainder will have to be paid for out their savings or the taxpayer will have to stump up the bill (and with life expectancy currently in the mid to late 80’s, that is quite a big bill …  a total of £72,380,160 over the next 20 years to be paid from the tenant’s savings or the taxpayers coffers to be precise!

You might say it’s not fair for Tamworth tax payers to pick up the bill and that these mature Tamworth renters should start saving thousands of pounds a year now to be able to afford their rent in retirement.  However, in many circumstances, the reason these people are privately renting in the first place is that they were never able to find the money for a mortgage deposit on their home in the first place, or didn’t earn enough to qualify for a mortgage …and now as they approach retirement with hope of a nice council bungalow, that hope is diminishing because of the council house sell off in the 1980’s!

For a change, the Tamworth 30 to 40 somethings will be better off, as their parents are more likely to be homeowners and cascade their equity down the line when their parents pass away.  For example, that is what is happening in Europe where renting is common, the majority of people rent in their 20’s, 30’s and 40’s, but by the time they hit 50’s and 60’s (and retirement), they will invest the money they have inherited from their parents passing away and buy their own home.

So, what does this all mean for buy to let landlords in Tamworth?

Have you noticed how the new homes builders don’t build bungalows anymore … in fact some would said the ‘bungalow storey’ is over.  The waning in the number of bungalows being built has more to do with supply than demand.  The fact is that for new homes builders there is more money in constructing houses than there is in constructing bungalows.  Bungalows are voracious when it comes to land they need as because bungalow has a larger footprint for the same amount of square meterage as a two/three storey house due to the fact they are on one level instead of two or three.

That means, as demand will continue to rise for bungalows supply will remain the same.  We all know what happens when demand outs strips supply … prices (i.e. rents) for bungalows will inevitably go up.

if you would like to read more articles on my thoughts on the Tamworth property Market – please visit the Tamworth Property Market Blog

If you want to learn about the Tamworth Property Market , one source for information is the Tamworth Property Blog authored by yours truly at https://www.tamworthpropertyblog.co.uk

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