Tamworth Tenant’s Deposits held total £2,458,500

With the Government preparing to control tenant’s deposits at five weeks rent, Tamworth landlords will soon only be protected in the event of a single month of unpaid rental-arrears, at a time when Universal Credit has seen some rent arrears quadrupling and that’s before you consider damage to the property or solicitor costs.

It can’t be disputed that the deposits Tamworth tenants have to save for, certainly raises the cost of renting, putting another nail in the coffin of the dream of home ownership for many Tamworth renters. At the same time, those same deposits being unable to provide Tamworth landlords with a decent level of protection against unpaid rent or damage to the property.

In fact, the total of all the tenants’ deposits in

Tamworth, deposited or protected, is £2,458,500

When you consider the value of all the privately rented properties in Tamworth total £705,361,800, the need for decent landlord insurance to ensure you are adequately covered as a Tamworth landlord is vital.

However, I want to consider the point of view of the Tamworth tenant.  Several housing charities believe spending more than a third of someone’s salary on rent as exorbitant, yet for the tenants they find themselves in that very position.  I feel especially sorry for the Tamworth youngsters in their 20’s who want to rent a place for themselves, as they face having to pay out the rent and try and save for a deposit for a home.

The average 22 to 29-year-old in Tamworth spends 33% of their typical salary on a one bed rental property

….and 39% of their salary for a 2-bed home in Tamworth.

40 years ago, British people who rented spent an average of 10% of their salary on rent, and only 14% in London.  Looking in even greater detail, according to the ONS, over the past 60 years the proportion of total spending on all housing (renting and mortgages) has doubled from 9% in the late 1950’s to 18% today.  Whilst on the other hand, the proportion of total expenditure on food has halved (33% to 16%), as has the proportion of total spending on clothing (10% to 5%) … it’s a case of swings and roundabouts!

Yet landlords also face costs that need to be covered from rents including mortgages, landlord insurance (especially the need for the often-inadequate deposits to cover the loss of rent and damage), maintenance and licensing.  In fact, rents in the last 10 years have failed to keep up with UK inflation. So in real terms, landlords are worse off when it comes to their rental returns (although they have gained on the increase in Tamworth property values – but that is only realised when a property sells).

There are a small handful of Tamworth landlords selling some/or all of their rental portfolio as their portfolios become less economically viable with the recent tax changes for buy to let landlords, which will result in fewer properties available to rent.

However, this will reduce the supply and availability of Tamworth rental properties, meaning rents will rise (classic textbook supply and demand), thus landlords return and yields will rise.  Yet, because tenants still can’t afford to save the deposit for a home (as we discussed above) and we are all living longer, the demand for rental properties across Tamworth will continue to grow in the next twenty to thirty years as we turn to more European ways where the norm is to rent rather than buy in the 20’s and 30’s age range. This will mean new buy-to-let landlords will be attracted into the market, buy properties for the rental market in Tamworth and enjoy those higher yields and returns … isn’t it interesting that things mostly always go full circle?

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Slowing Tamworth Property Market? Yes and No!

My thoughts to the landlords and homeowners of Tamworth…

The tightrope of being a Tamworth buy-to-let landlord is a balancing act many do well at. Talking to several Tamworth landlords, they are very conscious of their tenants’ capacity and ability to pay the rent and their own need to raise rents on their rental properties (as Government figure shows ‘real pay’ has dropped 1% in the last six months). Evidence does suggest many landlords feel more assured than they were in the spring about pursuing higher rents on their properties.

During the summer months, historic evidence suggests that the rents new tenants have had to pay on move in have increased. June/July/August is a time when renters like to move, demand surges and the normal supply and demand seesaw mean tenants are normally prepared to pay more to secure the property they want to live in, in the place they want to be. This is particularly good news for Tamworth landlords as average Tamworth rents have been on a downward trend recently. So look at the figures here…

Rents in Tamworth on average for new tenants moving in have risen 2.7% for the month, taking overall annual Tamworth rents 2.4% higher for the year

However, several Tamworth landlords have expressed their apprehensions about a slowing of the housing market in Tamworth. I think this negativity may be exaggerated.

Before we get the Champagne out, the other side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Tamworth as well as the Tamworth buy-to-let landlords).  I believe the Tamworth property market has been trying to find some level of equilibrium since the New Year.  According to the Land Registry…

Property Values in Tamworth are 8.2% higher than they were 12 months ago, rising by 2.51% last month alone!

Property values and rents in Tamworth
Property values and rents in Tamworth

Yet, I would take those figures with a pinch of salt as they reflect the sales of Tamworth properties that took place in early Spring 2017 and now are only exchanging and completing during the summer months.

The reality is the number of properties that are on the market in Tamworth today has risen by 20% since the New Year and that will have a dampening effect on property values. As tenants have had less choice, buyers now have more choice … and that will temper Tamworth property prices as we head towards 2018.

Slowing property market?

Be you a homeowner or landlord, if you are planning to sell your Tamworth property in the short term, it is crucial, especially with the rise in the number of properties on the market, that you realistically price your property when you bring it to the market … with the increase in choice of properties, the balance of power during negotiation generally sways towards the buyer. Given that everyone now has access to property details, including historic stats for how much property have sold for, they will be more astute during the offer and negotiation stages of a purchase.

However, even with this uplift in the number of properties for sale in Tamworth, property prices will remain stable and strong in the medium to long term. This is because the number of properties on the market today is still way below the peak of summer of 2008, when there were 1,386 properties for sale compared to the current level of 360 (if you recall, prices dropped by nearly 20% in Credit Crunch years of ‘08 and ‘09).

Compared to 2008, today’s lower supply of Tamworth properties for sale will keep prices relatively high…and they will continue to stay at these levels for the medium to long term.

Less people are moving than a few years ago, meaning less property is for sale. Fewer properties for sale mean property prices remain relatively high and this is because of a number of underlying reasons. Firstly, buy-to-let landlords tend not sell their properties as often than owner-occupiers, consequently removing the property out of the housing market selling cycle. Secondly, Stamp Duty is much higher compared to 10 years ago (meaning it costs more to move). Next, there is a dearth of local authority rental housing so demand for private rented housing will remain high. Then we have the UK’s maturing owner occupier population, meaning these older people are less likely to move (compared to when they were younger). Another reason is the lack of new homes being built in the country (we need 240k houses a year to be built in the UK and we are currently only building 145k a year!) and finally, the new mortgage rules introduced in 2014 about how much a person can borrow on a mortgage has curtailed demand.

Some final thought’s before I go – to all the Tamworth homeowners that aren’t planning to sell – this talk of price changes is only on paper profit or loss. To those that are moving … most people that sell, are buyers as well, so as you might not get as much for yours, the one you will want to buy won’t be as much, (swings and roundabouts as Mum used to say!)

To all the Tamworth landlords – keep your eyes peeled – I have a feeling there may be some decent buy-to-let deals to be had in the coming months. One place for such deals, irrespective of which agent is selling it, is my Tamworth Property Blog … https://www.tamworthpropertyblog.co.uk

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

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

https://www.facebook.com/groups/1627669040852754/

 

Council House Waiting List in Tamworth Drops by 43.7% in last 8 years

Should you buy or rent a house? Buying your own home can be expensive but could save you money over the years. Renting a property through a letting agent or private landlord offers less autonomy to live by your own rules, with more flexibility if you need to move.

Tamworth Council Offices
Tamworth Council Offices

Yet, there is third way that many people seem to forget, yet it plays an important role in the housing of Tamworth people. Collectively known as social housing, it is affordable housing, which is let by either Tamworth Borough Council or a housing association to those considered to be in specific need, at rents below those characteristic in the private rental market.

In Tamworth, there are 5,869 social housing households, which represent 19.31% of all the households in Tamworth. There are a further 1,598 families in the Tamworth Borough Council area on their waiting list, which is similar to the figures in the late 1990’s. The numbers peaked in 2008, when it stood at 2,842 families, so today’s numbers represent a drop of 43.7%.

Number of families on Tamworth's housing list
Number of families on Tamworth’s housing list

Nevertheless, this doesn’t necessarily mean that more families are being supplied with their own council house or housing association property. Six years ago, Westminster gave local authorities the authority to limit entitlement for social housing, quite conspicuously dismissing those that did not have an association or link to the locality.

Interestingly, the rents in the social rented segment have also been growing at a faster rate than they have for private tenants. In the Tamworth Borough Council area, the average rent in 1998 for a council house/housing association property was £181.65 a month, whilst today its £350.05, a rise of 93% in 19 years.

When comparing social housing rents against private rents, the stats don’t go back to the late 1990’s for private renting, so to ensure we compare like for like, we can only go back to 2005. Over the last 12 years, private rents have increased nationally by a net figure of 19.7%, whilst rents for social housing have increased by 59.1%.

So, what does this all mean for the homeowners, landlords and tenants of Tamworth?

Rents in the private rental sector in Tamworth will increase sharply during the next five years. Even though the council house waiting list has decreased, the number of new council and housing association properties being built is at a 70 year low. The government crusade against buy-to-let landlords together with the increased taxation and the banning of tenant fees to agents will restrict the supply of private rental property, which in turn using simple supply and demand economics, will mean private rents will rise – making buy to let investment a good choice of investment again (irrespective of the increased fees and taxation laid at the door of landlords).  It will also mean property values will remain strong and stable as the number of people moving to a new house (and selling their old property) will continue to remain restricted and hence, due to lack of choice and supply, buyers will have to pay decent money for any property they wish to buy.

Interesting times ahead for the Tamworth Property Market!

My advice to the prospective landlord as is to you – is do your homework.  One such website, which only talks about the Tamworth buy to let Property Market, is the Tamworth Property Blog,     https://www.tamworthpropertyblog.co.uk  another source of info many Tamworth landlords use is me! What many Tamworth landlords do, irrespective of whether you are a landlord of ours, a landlord with another agent or a DIY landlord, if you see any property in Tamworth, that catches your eye as a potential buy to let property, be it a terraced house, semi or flat … email me lorraine@hallandthompson.co.uk  I will email you back with my thoughts (although I will tell you what you need to know .. not what you want to hear!)

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

Hall and Thompson Estate Agents Tamworth Youtube Channel

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

Lorraine’s Tamworth Property Market LinkedIn Page

Hall and Thompson Estate Agents Tamworth Facebook Page

Tamworth Hall and Thompson Estate Agents Twitter Page