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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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

192 Tamworth Households Occupied by OAP Renters

Recent statistics published by the Office of National Statistics show that there are 267,704 private rented households in the Country that are occupied by people aged 65 and older, meaning 4.39% of OAP’s are living in private rented property.

It got me thinking two things. How many of these OAP’s have always rented and how many have sold up and become a tenant?  In retirement, selling up could make financial sense to the mature generation in Tamworth, potentially allowing them to liquidate the equity of their main home to enhance their retirement income.  I wanted to know why these older people rent and whether there was opportunity for the buy to let landlords of Tamworth?

The Prudential published a survey recently that said nearly six out of ten OAP renters had never owned a home.  Two out of ten OAP renters were required to sell up because of debt, just about one in ten OAP renters sold their property to use the money to fund their retirement and the remaining one out ten OAP renters, rented for other reasons.

Funding retirement is important as the life expectancy of someone from Tamworth at age 65 (years) is 18.4 years for males and 20.7 years for females (interesting when compared to the National Average of 18.7 years for males and 21.1 years for females).  The burdens of financing a long retirement are being felt by many mature people of Tamworth.  The state of play is not helped by rising living costs and ultra-low interest rates reducing returns for savers.

So, what of Tamworth?  Of the 7,239 households in Tamworth, whose head of the household is 65 or over, not surprisingly 5,236 of households were owned (72.33%) and 1,631 (22.53%) were in social housing.  However, the figure that fascinated me was the 192 (2.65%) households that were in privately rented properties.

Tenure: Owned; Tenure: Shared ownership (part owned and part rented); Tenure: Rented from council (Local Authority Tenure: Private rented; Tenure: Living rent free;
72.33% 0.26% 22.53% 2.65% 2.22%

Anecdotal evidence, by talking to both my team and other Tamworth property professionals is that this figure is rising.  More and more Tamworth OAP’s are selling their large Tamworth homes and renting something more manageable, allowing them to release all of their equity from their old home.  This equity can be gifted to grandchildren (allowing them to get on the property ladder), invested in plans that produce a decent income and while living the life they want to live.

These Tamworth OAP renters know they have a fixed monthly expenditure and can budget accordingly with the peace of mind that their property maintenance and the upkeep of the buildings are included in the rent.  Many landlords will also include gardening in the rent! Renting is also more adaptable to the trials of being an OAP – the capability to move at short notice can be convenient for those moving into nursing homes, and it doesn’t leave family members panicking to sell the property to fund care-home fees.

Tamworth landlords should seriously consider low maintenance semi-detached bungalows on decent bus routes and close to doctor’s surgeries as a potential investment strategy to broaden their portfolio.  Get it right and you will have a wonderful tenant, who if the property offers everything a mature tenant wants and needs, will pay top dollar in rent!

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 give me a call on 07531484956. We can always meet up for a chat and a coffee, we can even walk the dog.

My work experience person.

 

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

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