As 42.3% of Tamworth Property on the Market is Sold Are there any bargains because of Brexit?

Bargains – well yes and no – and let me explain why. To find a bargain you need to know the ‘market’, yet there is not one ‘property market’ in the UK. In fact, the British property market is like a fly’s eye, it looks one whole but in fact it is split into lots of fragmented pieces and the same goes for the Tamworth property market as that too is split into different patches… in fact it can even come down to two streets adjacent to each other, one street selling like hot cakes for top dollar whilst the next street can stick and at comparatively lower prices (i.e. if there is a school catchment boundary or differing postcode).

According to Coutts, property values in ‘Prime London’ have dropped by 14.7% in the last 5 years … yet look closely at those stats and Prime London is considered anything within a 1,500m radius of Kensington High Street above £4.6m – a totally different world to the average property in Tamworth, which is worth just under £230,000 and has risen in value over those same 5 years by 31.5%  .. a different world!

I have noticed that the top end of the market above £500,000 in Tamworth and the surrounding areas is proving a little tougher to shift than a few years ago, yet this can’t all be blamed on Brexit, as buyers have long been flinching at overestimated asking prices and excessive stamp duty rates.

In Tamworth, 25.3% of properties for sale have reduced their asking price in the last 3 months by an average of 4.5%

A lot less than the reductions that are being seen in central London. In fact, the property market in Tamworth is looking reasonably good with

42.3% of properties on the market in Tamworth being shown as under offer and Sold subject to contract

…Interesting when compared with the aforementioned London Prime market where only 5.86% of the properties for sale are sold .. some bargains to be had there!

So, where are the bargains in Tamworth? Well, to start with, it’s all about knowing the local Tamworth market. It’s all about comparing and contrasting property, so to start with, check out the property web-portals such as Zoopla and Rightmove to see what’s for sale. The art here is to click on the ‘include Sold stc’ in the filters .. then arrange them in price order. Then you will get a feel for what properties are roughly selling for. Also look at recent sales, so in Rightmove click on ‘House Prices’ on the main menu, on the proceeding drop down menu click on ‘Find Sold House prices’ and now you can type in a street, or even a street plus 0.25miles/0.5miles .. click on ‘List View’ and they are in date order. There is a similar function in Zoopla (feel free to contact me if you need a hand with that).

Then once you have found what you think is a bargain .. view it. Ask the agent why the sellers are moving.  By doing your research on the seller, seeing how long it has been on the market, whether they have reduced the asking price (if you ask an agent they have to tell you and by how much)  — you could cut a better deal if they are compelled to sell. Push home your advantage i.e. if you are a first-time buyer, don’t have a property to sell, chain free or cash purchaser it can all make a difference.

Looking at the numbers above, some savvy Tamworth landlords and home buyers are taking advantage of the doom and gloom newspaper headlines as property owners’ expectations are probably at the lowest they have ever been since the Credit Crunch, especially if they are in the ‘got to sell’ category instead of the ‘would like to sell’ category.

Like anything in life .. buying a property bargain comes down to putting the hard-work in, doing your homework and jumping at opportunities.

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How Did Brexit Affect the Tamworth Property Market in 2018 – and its Future for 2019?

A few weeks ago, I suggested property values in Tamworth would be between 1.3% and 2.1% different by the end of the year. It might surprise some people that Brexit hasn’t had the effect on the Tamworth property market that most feared at the start of 2018.

The basis of this point of view can clearly be seen in the number of property transactions (i.e. the number of property sold) that have taken place locally since 2008. The most recent property recession was the Credit Crunch years of 2008/2009/2010.

In property recessions, the headline most people look at is the average value of property. Yet, as most people that sell also go on to buy, for most home movers, if your property has gone down in value, the one you want to buy has also gone down in value so you are no better or worse off. If you are moving up market – which most people do when they move home – in a repressed market, the gap between what yours is worth and what you will buy gets lower … meaning you will be better off.

Yet, most property commentators, including myself, suggest (and I have mentioned this before in some of my other blog articles) a better measure of the health of the property market is the transaction numbers (i.e. the number of people selling and buying). So, I decided to look at the 2018 statistics, and compare them with the Credit Crunch years (2008 to 2010) and the boom years (2014 to 2017). The results can be seen in the table below.

Then, I looked at the average quarterly figures for those chosen date ranges … and created this graph …

In that 2008 to 2010 property Credit Crunch recession, the average number of properties sold in the Tamworth area were 59 per month. Interesting when we compare that to the boom years of 2014 to 2017, when an average of 93 properties changed hands monthly … yet in the ‘supposed’ doom laden year of 2018, an impressive average of 91 properties changed hands monthly … meaning 2018 compared to the boom years of 2014 to 2017 saw a drop of 1.6% – yet still 55.1% higher than the Credit Crunch years of 2008 to 2010.

The simple fact is, the fundamental problems of the Tamworth property market are that there haven’t been enough new homes being built since the 1980’s (and I don’t say that lightly with all the new homes sites dotted around the locality). Also, the cost of buying your first home remaining relatively high compared to wages and to add insult to injury, all those issues are armor-plated by the tougher mortgage rules which were introduced in 2014 and the current mortgage market conditions.

It is these issues which will ultimately determine and form the rather unexciting, yet still vital, long term outlook for the Tamworth (and national) housing market, as I feel the Brexit issue over the last few years has been the ‘current passing diversion’ for us to worry about. Assuming something can be sorted with Brexit, in the long term property values in Tamworth will be constrained by earnings increases with long term house price rises of no more than 2.5% to 4% a year.

 Fundamentally, the question I am asked by many Tamworth buy to let landlords and Tamworth homebuyers is … “should I wait to buy or not?”

As a Tamworth homebuyer, one shouldn’t be thinking of what is happening in Westminster, Brussels, Irish Backstop, China or Trump and more of your own personal circumstances. Do you want to move to get your child in ‘that’ school or do you need an extra bedroom for your third child? For lots of people, the response is a resounding yes – and in fact, I feel many people have held back, so once we know what is finally happening with Brexit and the future of it, there could a be a release of that pent-up demand to move home as people humbly just want to get on with their lives.

There is little to be lost in postponing a house purchase until there is better clarity on the situation. If it isn’t Brexit it will something else – so just get on with your lives and start living. We got through the global financial crisis/Credit Crunch in ‘08/’09, Black Wednesday in ’92 where mortgage interest rates went from 8.5% to 15% in one day, we got through the worst stock market crash with Black Monday in ’87, hyperinflation, power shortages, petrol quadrupling in price in less than a year and a 3 day week in the ‘70’s … need I go on?

Tamworth Landlords? Well, where else are you going to invest your money? Like I said earlier in the article, we aren’t building enough homes to keep up with demand … so as demand outstrips supply, house values will continue to grow. Putting the money in the building society will only get you 1% to 2% if you are lucky. In the short term though, there could be some bargains to be had from shortsighted panicking sellers and in the long term … well, the same reasons I gave to homeowners also apply to you.

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Your pricing strategy; Have you got it right?

Before you are ready to launch your home on the sales market, there are several things to consider when setting your price:

Does your agent support it? If you set your asking price way above that which the agents recommends, their lack of support could well be evident in the way they talk about your property to their team and to potential buyers. If they are strongly against your preferred asking price, it may be time to rethink your choice of agent or your price.

Is there precedent? If you home is unique, there may well be a lack of comparable properties, therefore you may well have more flexibility in the price your decide to market your home at. However, if you are in a row of similar properties, chances are that there will be plenty of historical evidence to guide you into choosing an asking price that fits in with those of your neighbouring properties.

Does it fit in with an online search? Nowadays more than 90% of property searches are conducted online, so you need to select an asking price that will ensure your home is found by the maximum number of buyers searching the property portals. To maximise the number of buyers who will see your property, stay clear of the 9’s such as £199,999, instead choose a rounded figure that fits in with the price banding the online portals all use, such as £200.000.

At Hall and Thompson, this is a strategy that we embrace fully. All our properties, wherever possible, are priced to show an the maximum number of online property searches. All the better to sell houses!

Until next time Happy House Hunting

How to add value to your Tamworth home without dropping your asking price

If your home is on the market already, and you`re not getting serious interest from buyers, one option most estate agents will suggest to their client is to drop the asking price of your property. However, it`s not always the only option: there are some improvements that can help you sell more effectively without spending a fortune and often can be implemented easily and not that costly:

New flooring in ‘wet` rooms – By ‘wet` rooms, I mean kitchens, utility rooms, cloakrooms and bathrooms. The general rule of thumb with the flooring in these rooms is that it needs to be ‘moppable` – in other words, a hard floor.  It doesn`t need to be expensive, in fact there are some fabulous reasonably priced vinyls available.   The difference in how a buyer will see your home is high. A bathroom that is carpeted will look dated to a modern buyer, regardless of whether it is or not. These are also the rooms buyers expect to be super clean and by having new flooring will immediately confirm to them that they are.

Updating your soft furnishings – Cushions, bedding, even curtains, can radically improve and update your home for a relatively moderate spend. Why not purchase some new cushions and bedding which can be put out just for viewings and then put away after? This way you will always have that brand new showroom look.

New carpets  – Carpets can make a house look dated more than any other area, and they can also give a buyer a reason to make a low offer.  A good quality, neutral carpet throughout the house can add several times its cost in the perception that the house has been kept up to date.  Re-carpeting an average-sized house will not be cheap but it will almost certainly be a very worthwhile investment.

Declutter more – Sometimes it might just be that people cannot see the true potential and space of your property. If you have a lot of furniture or personal items it might be a good idea to see if you can remove some into storage whilst your property is on the market. Remember, the larger you can make your property feel the more appealing it will be to a buyer, not just because they feel they are getting more property for their money but often it also allows them to work out exactly where their own furniture would go if they bought your home.

So, as you can see, giving the buyer what they need is not always about price. A few changes may result in increasing its value and you may even get your home sold for more!. It is also worth noting that if you do decide to drop the price your agent would have to drop it by at least £10,000 to make any real impact, so perhaps trying a few basic changes first could be the best route to try before changing the price.

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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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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 Property Market – Outlook for 2019

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Tamworth property values are unexpectedly 4.8% higher than at the end of 2017, notwithstanding the uncertainty and threats over the potential impact of Brexit in 2019. This has exceeded all the predictions (aka guesses) of all the City of London economists, in an astonishing sign of strength for the local Tamworth and wider national economy.

Nevertheless, the statistics from the Land Registry come after a lethargic year for the number of properties in Tamworth compared to the actual prices achieved for those properties.  All this against a framework of amplified political ambiguity and ensuing years of rising Tamworth property values that have reduced the affordability of homes in the locality.

The average value of a Tamworth property today

Currently stands at £225,400

Looking in finer detail, it isn’t a surprise that 1,216 property sales in Tamworth over the last 12 months is somewhat lower than the long-term average over the last 20 years of 1,550 property sales per year in Tamworth as the long-term trend of people moving less has meant a decline in the number of property transactions.

I believe locally, Tamworth property value growth will be more reserved in 2019 after two decades of weaker wage rises. One of main drivers in the demand (and thus the price people are prepared to pay for a home) is the growth of peoples wage packets. Interestingly, wage inflation over the last six months has risen from 2.4% in the late summer to its current level of 3.3% (which is higher than the average since the Millennium, which has been a modest 2.1%). One of the reasons why wages are growing in the short term is the unemployment rate in the country currently only stands at 4.1%, continuing to stay close to its lowest level since the 1970’s.

However, even though Tamworth salaries and wages are rising comparatively higher than they were last year, looking over the long term, Tamworth property values are 139.61% higher than they were in January 2002, yet average salaries are only 76.1% higher over the same time frame. This means over the last few years, with average property values so high comparative to salary/wages, many Tamworth potential buyers have been priced out of being able to purchase their first home.

At first glance, these stats are actually rather positive during this reported time of political uncertainty and the height of Brexit commotion … because I genuinely believe that to be the case. The press have always looked for the bad news (well they do say it is that that sells newspapers), and whilst I am not entering into the pros and cons of Brexit itself, the numbers do stack up quite well since the Brexit vote took place nearly 3 years ago.

Moving forward, when taken with the recent reduction in short to medium term number of property transactions (i.e. the number of Tamworth properties sold), it should be noted that a lot of the this buoyant house price increase has a lot more to do with a shortage of properties on the market rather than an uplift in the Tamworth housing market generally.

And we can’t forget that Tamworth isn’t in its own little bubble, as there are noteworthy differences across the UK in property value inflation. House prices in London and the South East have hardly risen or even fallen in some places, whilst in the Midlands, North and other parts of the country they have generally increased. 

Looking forward, I would say to the homeowners and buy to let landlords of the locality that I expect Tamworth house price growth to remain stable between 1.3% and 2.1% by the end of this year (although they could dip slightly during the summer) … as long as nothing unexpected happens in the world economically or politically of course.

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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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Should you buy a new-build property in Tamworth?

The government has pledged to build 300,000 new build homes to try and tackle the national property shortage, they are even giving incentives when you buy a new build home.

For as little as a deposit of 5% and a government loan of between 15% and 40%, depending on where in the UK you live, using the Help to Buy equity loan scheme  you can get on the property ladder.

The added benefit is, new-build properties should be better insulated than period homes so your energy bills could well be cheaper than buying a period home.

If you’re buying off-plan ( before it’s been built), you may be able to choose certain aspects of the design i.e your kitchen or whether you have a fireplace of not.

However, there are some disadvantages to buying new-build homes, including the fact that it can sometimes be more difficult to get a mortgage. 


What’s included in a new-build property?

Exactly what’s included varies depending on the developer and what they are offering. You may get the white goods – washing machines or dishwashers thrown in, as well as wooden flooring. Others may offer to install flooring or carpet but at an additional cost. 

One of the great advantages of buying a brand-new property is that, often, many of the fixtures and fittings you’d otherwise have to fork out for are included in the price.

Developers often try to upsell you extra items. Be wary here – the price of these could be inflated, and it may be much cheaper for you to source and pay for them yourself.

Today’s building rules and regulations mean that there are standards developers have to meet to make your property as energy efficient as possible. Energy-efficient features could include double or even triple-glazed windows, insulated walls, roofs, and doors, and energy-efficient heating.

Can you negotiate on new-build prices?

Prices for a development’s one, two and three-bedroom properties are often plastered all over the hoardings when properties are being built. 

Of course, the developers will tell you that this is the price you’ll have to pay nethertheless it is only an asking price, and you should be prepared to try and negotiate.

The likelihood of success will depend on a number of things, such as where the property is and the level of demand, as well as how far along the development is.

It pays to do your research, looking at sale prices of similar properties nearby using online sites like Rightmove and Zoopla.

If your attempt at getting a discount fails, there are other ways to potentially reduce your costs. You could ask the developer to cover your stamp duty costs or negotiate ‘extras’, such as flooring or furniture, for free. 

Is there a new-build premium?

You might have heard of the ‘new-build premium’, a term used to describe the fact that new-build properties tend to be pricier than older, but otherwise similar, properties. The reason for this difference is that everything is new and unused, energy efficient and built to  a high-quality specification.

Some people believe that, on top of the standard new-build premium, developers have been charging an even greater ‘Help to Buy premium’ to those using the government’s equity loan scheme.

Try to stay level-headed and don’t be too wowed by a new-build show home. Do your research, find out about similar properties in the area and on developments, and make sure you don’t offer more than you can afford. 

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25.9% of All Tamworth Properties were Bought Without a Mortgage in the Last 7 Years

Tamworth
Tamworth

For most Tamworth people, a mortgage is the only way to buy a property. However, for some, especially Tamworth homeowners who have paid off their mortgage or Tamworth buy to let landlords, many have the choice to pay exclusively with cash. So the question is, should you use all your cash, or could a mortgage be a more suitable option?

Well, looking at the numbers locally…

1,784 of the 6,890 property sales in the last 7 years in Tamworth were made without a mortgage (i.e. 25.9%)

Interesting when compared with the national average of 31.9% cash purchases over the last seven years. Next, I wanted to see that cash percentage figure split down by years. As you can see from the graph, this level of cash purchases vs mortgage purchases has remained reasonably constant over those seven years…

Next, if you are going to go for a mortgage, the next question has to be whether you should fix the rate or have a variable rate mortgage. In the last Quarter, 90.57% of people that took out a mortgage, had a fixed rate mortgage at an average interest rate of 2.27%, although what did surprise me was only 65.79% of the £1.429 trillion mortgages outstanding in the whole of the UK were on a fixed rate.

The level of mortgage debt compared to the value of the home itself (referred to as the Loan to Value rate – LTV) was interesting, as 61.9% of people with a mortgage have a LTV of less than 75%. Although, one number that did jump out at me was only 4.33% of mortgages are 90% and higher LTV – meaning if we do have another property slump, the number of people in negative equity will be relatively small.

Next, looking at the actual number of properties sold, it can be clearly seen the number of house sales has dipped slightly in 2018…

So those are the numbers … let us have a look at the pros and cons of taking a mortgage, with specific focus on Tamworth buy to let landlords.  

Taking a mortgage will help a landlord increase their investment across more properties to maximise the return, rather than putting everything into one Tamworth buy to let property. This will enable the landlord to ensure if there a void in the tenancy, there should still be rent coming from the other properties. The flip side of the coin is that there is a mortgage to pay for, whether or not the property is let.

The other great motivation of taking a mortgage is that landlords can set the mortgage interest against the rental income, although that will only be at the basic rate of tax by 2021 due the recent tax changes. Banks and Building Societies will characteristically want at least a 25% deposit (meaning Tamworth landlords can only borrow up to 75%) and will assess the borrowing level based on the rental income covering the mortgage interest by a definite margin of 125%.

A lot will depend on what you, as a Tamworth landlord, hope to attain from your buy to let investment and how relaxed you would feel in making the mortgage payments when there is a void (interestingly, Direct Line calculated a few months ago that voids cost UK landlords around £3bn a year or an average of £1000 per property per year). You also have to consider that interest rates could also increase, which would eat into your profit … although that can be mitigated with fixing your interest rate (as discussed above).

So, with everything that is happening in the world, does it make sense to buy rental properties? Now we help many newbie and existing landlords work out their budgets, taking into account other costs such as agent’s fees, finance, maintenance and voids
in tenancy.

The bottom line is we as a country aren’t building enough property, so demand will always outstrip supply in the medium to long term, meaning property values will keep rising in the medium to long term. That’s not to say property values might fall back in the short term, like they did in 2009 Credit Crunch, the 1988 Dual MIRAS crash, the recession of the early 1980’s, the 1974 Oil Crisis, the early 1930’s Great Depression … yet every time they have bounced back with vigour. Therefore, it makes sense to focus on getting the best property that will have continuing appeal and strong tenant demand and to conclude, buy to let should be tackled as a medium to long term investment … because the wisest landlords see buy to let investment in terms of decades – not years.

Why don’t you download your FREE Landlord eGuide ‘How To Avoid Tenants From Hell’ now by clicking the link below and then ‘Get Started’ & ‘Send it Now’The eGuide will then be messaged to you instantly after a few clicks and your contact details are not needed.


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