“The growth of the
private rented sector, and the arrival of an investor class of buy to let
landlords within it, is an issue that won’t be going away anytime soon… no
matter what you read in the Daily Mail.” I said, as I chatted over a coffee
with a landlord client of mine in the town. Whether you are a landlord of mine
(or not, as the case maybe), I am always happy to look over any properties you
are thinking of buying for buy to let purposes – and more so over a coffee!
Some
commentators are saying buy to let is about to die.
With the new stamp duty
changes and how mortgage tax relief will be
calculated, some are saying that 500,000
rental properties will flood the market nationally in the next 12 months as
landlords leave the rental market. Have you heard the phrase ‘bad news sells
newspapers’? Let me explain why buy to let in Warrington
is only going in one direction – and not
the direction the papers say they are going.
Facts and Figures
According to Sheffield
University (a centre of excellence on the
topic), buy to let landlords will continue fuelling the growth of the
private rented sector in the coming decades.
By their estimates, the rate of homeownership nationally will fall to 50% by 2032. Today
it is 63.6% in Warrington. Meanwhile, the
rate of private sector renting will increase to 35%. Interestingly, in
Warrington it currently stands at 16.89%.
Therefore, the
demand for rental accommodation in Warrington will grow by 560+ households in
the next five years. These are the reasons why, irrespective of the
distractions set out in the newspapers.
Generation Rent
Over the last six years, Warrington
property values have risen a lot more than average wages/salaries. As
homeownership and mortgage availability is dependent on your ability to pay a
deposit, this has served to push
home ownership further out of reach for many, at a time when the stock of council houses has actually withered. (Nationally,
the number of council houses in the last ten years has dropped from 3.16m to
2.18m households - a drop of 31.1%.)
Now it’s true the Torys’
efforts to fix the deficiency of affordable housing have focused on those who
want to buy a home – ranging from Help to Buy, the much vaunted Help to Buy Isa
and even the Starter Homes Scheme (an initiative offering a 20% discount for
first time buyers). But if you are unable
to save for the deposit, none of this means anything. Especially to
the ‘20 somethings’ of Warrington and they still need a roof
over their heads!
What is the effect on Warrington Landlords?
These are big numbers and a
sizeable chunk of the electorate. So,
whilst it appears Warrington “Generation Rent” youngsters will continue to rent
and to not to buy, Warrington
buy to let landlords will be lifted by the projections of greater rental demand. Warrington and the area around it still
offers the prospect of strong economic growth forecasts and has a reputation as
a lively and desirable place to live.
With the new rules on tax, more and more
landlords will be looking to move away from the previous ‘honey pot’ of central
Manchester or Liverpool, because its higher prices mean lower rental yields.
With the new tax rules and
central Manchester’s and Liverpool’s cooling of house price inflation, more and
more landlords will look further afield, including Warrington (interestingly,
I have already been chatting to a few central Manchester landlords after reading
the Warrington Property Blog).
This
prediction in growth of the Warrington rental market is even on the back of the
government clamping down on tax relief for landlords. The point is this: gone
are the days of making guaranteed returns on BTL property. For the last 20 to 30 years, irrespective of which
property you bought, making decent money
on buy to let property was like shooting fish in a barrel – anyone could do it…
but not now. You must take a more considered approach to your
existing and future portfolio, especially in Warrington. In order to balance capital growth and
yield, especially in this low interest rate world we live in, Warrington
landlords will need to do more homework to ensure investment in property gives
the desired returns.
One place for Warrington
landlords and homeowners to visit for such information is the Warrington
Property Market Blog.
As always, if
you are an investor in the Warrington property market and would like a second
opinion on a property you have seen then send the URL of the properties you
have seen online over to me. Or if you would like to pop in and have a chat,
then you can either email me on manoj@hamletwarrington.co.uk or call on 01925
235 338. Our address is 6 Bankside, Crosfield Street (opposite Iceland and Aldi
– so plenty of parking available). The kettle is always on and we will even
pull out the posh biscuits!
Don't forget to visit the links below to view back dated deals and Warrington Property News.
Twitter, https://twitter.com/HHWarrington
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