Thursday, 18 April 2019

Warrington Buy To Let Annual Returns Hit 11.54% in Last 10 Years



Many Warrington people ponder the best places to invest their hard-earned savings and the best piece of advice I can give you is to do your homework and speak to lots of people. It depends on your attitude to risk versus reward. Normally, the lower the risk, the lower the reward whilst a higher risk is normally associated with the possibility of higher returns, yet nothing is guaranteed. At the same time, higher risk also means higher possible losses on your investment - yet if one looks at the bigger picture, the biggest threat to investing, predominantly when the investment is made in the short term, isn’t risk but actually volatility.

So where should you invest? Building society, the stock market, gold or property are options. This article isn’t designed to give you advice – just show you how different investments have performed over the last decade.

Let me start with the humble semi-detached house in Warrington ... which in 2009 was worth £135,400 … so assuming I bought that property for that figure, then I looked at what if I had invested the same amount of money in a building society, into gold and finally the stock market…


Putting your money into the stock market (FTSE100) would have brought a return of 30.2% on your capital over those 10 years and an average of 3.79% a year in dividends (making an overall increase of 74%).

Gold doesn’t earn interest – yet it has increased in value by 26.9% over the same 10 years whilst putting your money in the building society, the money hasn’t increased in value, but would have earned you interest of 24.46% or the equivalent of 2.21% per year.

Investing in an average semi-detached house in Warrington over the last 10 years has seen the capital increase by 44% (an equivalent of 3.71% per annum) and the income (i.e. the rent) has provided a return, based on the original purchase price, of 112.48% or the annual equivalent of 7.83% … meaning the overall return, based on the original purchase price of an average semi-detached property in Warrington, is 11.54% per annum.


Notwithstanding No.11 Downing Street’s grab at the profits of buy to let landlords by hitting the buy to let sector with several fiscal punishments with a 3% stamp duty level, a decrease in high rate tax relief for landlords and an increase in rate of CGT on residential property profits, the facts remain that ‘bricks and mortar’ is still one of the preeminent and most constant investments available.

The bottom line is, the buy to let investment remains the mainstay of the British property market, serving to support aspiring homeowners as they work to conquer the, sometimes difficult, financial obstacles of home ownership. With Central Government over the last 30 years only paying lip service to address the lack of new homes being built or tackling the affordability on a consequential scale, it is highly probable this will continue for the next 5/10/15 years as there will always be a call for a respectable, and above all, honest buy to let landlords delivering decent housing to those that need it.


If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.

Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on G5, Warrington Business Park, Long Lane, WA2 8TX. There is plenty of free parking and the kettle is always on.
Don't forget to visit the links below to view back dated deals and Warrington Property News.

Friday, 5 April 2019

What Has Happened to the Warrington Property Market Since the Last Property Market Crash?



A handful of Warrington landlords and homeowners have been asking me what would happen if we had another property crash like we did in 2008/9?

The UK property crash in 2008/9 caused property prices in the UK to drop by an average of 18.37% in a period of 16 months.

On the run up to the Parliamentary vote on Brexit scheduled for March, a number of people asked what a no-deal Brexit would do to the property market and if there would be a crash as a result. I have discussed in a previous article on the chances of that (slim but always a possibility) … but assuming it happens, it is my opinion the outcome of a no-deal Brexit would be no worse than the country’s 2008/9 credit crunch property crash, the late 1988 property crash, the 1974 property crash, 1951 property crash … I could go on. The British economy would bounce back from the shock of a no-deal Brexit with lower property values and a continued low interest rate environment (together with an additional round of Quantitative Easing) and that would mean we would see a similar bounce back as savvy buyers saw it as a fantastic buying opportunity.

So, let me explain the reasons I believe this...

Many said after the Brexit vote in June 2016, we were due a property crash - but we all know what happened afterwards.

Initially, let’s see what would happen if we did have a crash, how quickly it would bounce back and then finally discuss how the chances of a crash are actually quite minimal.

Therefore, to start, I have initially split down the types of property in Warrington (Det/Semi etc.) and in the red column put the average value of that Warrington property type in 2009. Next in the orange column what those average values are today in 2019.


Now, assuming we had a property crash like we did in 2008, when average property values dropped nationally by 18.37%, I applied a similar drop to the current 2019 Warrington figures (i.e. the green column) to see what would happen to property values by the middle 2020 (because the last crash only took 13/14 months).

…and finally, what would subsequently happen to those same property prices if we had a repeat of the 2009 to 2014 property market bounce back. 
  
Of course, these are all assumptions and we can’t factor in such things as China going pop on all its debt ... yet either way, the chance of such a crash coming from internal UK factors are much slimmer than in another of the four property crashes we have experienced in the last 80 years. Why, you might ask?

The seven reasons I believe are these …

1.      The new Bank of England mortgage rules on lending 2014 to stop reckless lending that fuelled that last crash.

2.      Low inflation.

3.      Low mortgage rates (the average Brit’s fixed rate mortgage is currently 2.26% and the variable rate mortgage of 3.07%).

4.      Wage rises are forecast to continue to outgrow inflation.

5.      Unemployment figures dropping to 4% (down from 8.4% in 2011).

6.      The high percentage (67.7%) of all British mortgages being on a fixed rate.

7.      And notwithstanding the distractions of Brexit over the last few years, it cannot be denied that the British economy has slowly and steadily been heading in the right direction for a number of years, built on some decent foundations of a steady housing market (unlike the 1988 and 2008 crashes when the housing market got overheated very quickly on the run up to the crashes).

So as the circumstances are much different to the last two crashes, the chances of a crash are much slimmer. Yet if we do have a crash, for the very same 7 reasons above why the chances of a crash are unlikely, those 7 reasons would definitely contribute to making the ensuing recession neither too long nor substantial in scale.

One final thought for the homeowners of Warrington. Most people when they move home, move up market, meaning in a decreasing market you will actually be the winner, as a 10% drop on yours would be much smaller in £notes than a 10% drop on a bigger property ... think about it.
One final thought for the new and existing buy to let landlords of Warrington. Well, the questions I seem to be asked on an almost daily basis by landlords are: -

·         “Should I sell my property in Warrington?”
·         “Is the time right to buy another buy to let property in Warrington and if not Warrington, where?”
·         “Are there any property bargains out there in Warrington to be had?”

Many other Warrington landlords, who are with us and many who are with other Warrington letting agents, all like to pop in for a coffee, pick up the phone or email us to discuss the Warrington property market, how Warrington compares with its closest rivals (Wigan, Widnes and St Helens), and hopefully answer the three questions above. I don’t bite, I don’t do hard sell, I will just give you my honest and straight-talking opinion. I look forward to hearing from you.

If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.



Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on G5, Warrington Business Park, Long Lane, WA2 8TX. There is plenty of free parking and the kettle is always on.



Friday, 22 March 2019

Warrington Property Market vs London Property Market




Anyone would think that national news, especially when it comes to talking about the property market, is just focused on London centric. In fact, over the last 5 years, the London property market has really manipulated the UK on averages to such an extent that many lenders like the Halifax and Nationwide publish two indices, a national one without London and one with.

Now it’s true the London property market has undergone some quite acute property price falls. In the upmarket areas of Mayfair and Kensington, the Land Registry have reported values are 11.3% lower than a year ago, yet in the UK as a whole they are 1.3% higher. Yet look around the different areas and regions of the UK and Northern Ireland, property values are up 5.8% year on year, whilst over the same time frame, the East Midlands is 3.9% up and Yorkshire is 3.7% up. So, what exactly is happening locally in Warrington and what should Warrington landlords and homeowners really be concerned about?

Well, to start with, as I have been saying for a while now, property is a long game, and making decisions on the short-term fluctuations is something that could cause a nervous breakdown.

I wanted to look at how Warrington had performed over the long term, when compared to London and the UK as a whole.  Yet it is hard to compare differing locations when the average value of a property in Warrington differs greatly to one in the capital.  I decided if I wanted to compare like for like, I needed to see what would happen if I had spent £100 on property in London in 1979 and what would that £100 be worth today, and then do the same exercise for the UK. So, looking over the last 40 years …

  
See how the growth of that £100 was broadly similar between 1979 and 2007 on all three strands of the graph and then we had the credit crunch drop between late 2007 and 2009? However, after 2009 London went on a different trajectory to the rest of the UK. Whilst Warrington (and the UK) were generally subdued between 2009 and 2012, London kicked on. All areas of the country had a temporary blip in 2012, yet whilst Warrington and the UK went up a gear again 2013, London went into overdrive and up like a rocket!

Now you can see London has dipped slightly in the last year, so the hot question for everyone has to be - are price falls likely to spread (as they did in the previous property recessions of 1989 and 2007) to Warrington and other places in the UK? The Bank of England’s opinion is that a London house price drop is unlikely to be the beginning of a countrywide trend. Looking at the graph again, it can be seen London has been in decline for 2 years, whilst the rest of the country has been moving forward.

So, what does all this mean for Warrington
homeowners and landlords?

Well what happens in London does have an impact, but there are other issues that will have a bigger impact on the local property market. The simple fact is over the last 40 years, we have had 392.9% inflation, yet looking at a typical Warrington terraced house...

A Warrington terraced house has jumped in
value from an average of £12,974 to £139,600
since 1979 - a rise of 795.1%

Property has in the long term been a good bet. Yes, we might have some short-term blips and as long as you play the long game - you will always win. In the short term, my concern isn’t over monthly up or down property values, Brexit or another General Election. With property values still rising faster than salaries in many parts of the country, what really matters is how much of householder’s take home pay goes into housing costs as opposed to other spending items. If housing gets too expensive - other things will suffer, like holidays and the nice things in life to spend your money on. Only time will tell!

P.S. Wonder what that Warrington terraced would be worth if it had gone by London house prices? Here’s your answer - £203,172.

If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.


Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on G5, Warrington Business Park, Long Lane, WA2 8TX. There is plenty of free parking and the kettle is always on.

Friday, 8 March 2019

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




Whilst chatting with a local landlord a few weeks ago, I suggested property values in Warrington would be between 1.5% and 2.3% different by the end of the year. It might surprise some people that Brexit hasn’t had the effect on the Warrington 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 Warrington area was 185 per month. Interesting when we compare that to the boom years of 2014 to 2017, when an average of 284 properties changed hands monthly … yet in the ‘supposed’ doom laden year of 2018, an impressive average of 242 properties changed hands monthly … meaning 2018 compared to the boom years of 2014 to 2017 saw a drop of 14.8% - yet still 30.6% higher than the Credit Crunch years of 2008 to 2010.

The simple fact is the fundamental problems of the Warrington 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 Warrington (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 Warrington 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 Warrington buy to let landlords and Warrington homebuyers is ... “should I wait to buy or not?”

As a Warrington 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?

Warrington 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.

If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.

Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on G5, Warrington Business Park, Long Lane, WA2 8TX. There is plenty of free parking and the kettle is always on.


Thursday, 21 February 2019

5 Reasons Why Warrington High Street Estate Agents are Better Than Internet Estate Agents



There doesn’t seem to be a week going by that a new online call centre based estate agency opens offering unbelievable services at quarter of the price, implying their service is just as good as the so called ‘expensive’ high street agents.

1. Online Agents are not No Sale No Fee.  

On the face it .. a similar service for a quarter of the price sounds fantastic! Who doesn’t want to spend less on agent fees when trying to sell their Warrington home? Yes, the fee is lower, but you will have to pay it upfront (or defer it for up to 10 months but still have to pay) whether your property sells or not.

2. Online Agents Hidden Extras. 

The eye-catching low fees for these call-centre online agents are, on the outside, attractive but when you dig a little deeper you find that the low fee is not all it appears to be.  Add-ons can include extra for paying accompanied viewings, floor plans, listing on Rightmove or being forced to use their call centre solicitors at the other end of the Country.

3. Experienced Estate Agents

Call centre online agents are what they say they are on the tin – online, and the majority if not all of your negotiations and communications will be with the folks in the agent’s national call centre. Do you want the sale of your largest asset handled by someone sitting in a call centre 200 miles away from the property as they attempt to sell, without that all vital local market knowledge? I have to ask, how can these online agents know about your home, school catchment areas etc.,  and the locality in Warrington?

4. Local Knowledge of Warrington

If you’re selling your home in Warrington it pays to choose an agent with local knowledge of the Warrington market. Every Warrington High Street agent is aware of the Warrington market trends and most importantly sensible pricing structures for the area.

5. Getting the Best Price for Your Home

The High Street agent fee is a huge incentive for them to get it right for you – first time. At Warrington we meet all of our clients to discuss a realistic market price for their Warrington property. We never offer to market properties for more than their true market value – a ploy some online call centre based estate agents do in an attempt to win your property – but this guarantees that when your property does go onto the market for the first time (the most important time), it gets little or no interest as buyers know their prices and can’t be fooled. Our fee ensures that you receive the very best service from us – it is totally in our best interest to find the most suitable buyer for your home and get them to pay the best price for it.

If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.


Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on G5, Warrington Business Park, Long Lane, WA2 8TX. There is plenty of free parking and the kettle is always on.


Thursday, 14 February 2019

Warrington Tenant’s Deposits held total £5,232,771



With the Government preparing to control tenant’s deposits at five weeks rent, Warrington 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 Warrington 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 Warrington renters whilst at the same time, those same deposits being unable to provide Warrington 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
Warrington, deposited or protected, is £5,232,771

When you consider the value of all the privately rented properties in Warrington total £1,776,554,416, the need for decent landlord insurance to ensure you are adequately covered as a Warrington landlord is vital.
However, I want to consider the point of view of the Warrington 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 Warrington 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 Warrington spends 27% of their typical salary on a one bed rental property
….and 33% of their salary for a 2-bed home in Warrington.

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 Warrington property values – but that is only realised when a property sells).
There are a small handful of Warrington 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 Warrington 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 Warrington 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 Warrington and enjoy those higher yields and returns … isn’t it interesting that things mostly always go full circle?

If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.


Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on G5, Warrington Business Park, Long Lane, WA2 8TX. There is plenty of free parking and the kettle is always on.


Thursday, 31 January 2019

Warrington Homeowners 97% More Likely To Live in a Home with 3+ Bedrooms than those that Privately Rent



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 Warrington property market, the Warrington homeowners and Warrington 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 Warrington, 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 Warrington landlords have to consider the investment opportunity. In this article, I have analysed Warrington’s housing stock into bedrooms and tenure. Initially looking at Warrington homeowners..


  
And now the Private rented sector …



It can quite clearly be seen that Warrington 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 Warrington 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 Warrington don’t make financial sense when it comes to buy to let.

For numerous years Warrington 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 Warrington 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 Warrington 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 Warrington Property Market Blog 


If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.

Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area, feel free to pop into the office – we are based on G5, Warrington Business Park, Long Lane, WA2 8TX. There is plenty of free parking and the kettle is always on.