Over the last twenty years, there has been a shift in the way the Warrington (and the UK’s) property market works. In the 1960’s, 70’s, 80’s and 90’s, a large majority of twenty somethings saved up their 5% deposit, went without life’s luxuries of going out and holidays etc., for a couple of years and then bought their first home with their hard earned savings.
By 2000, 58% of Warrington 25 to 29 years owned their own
home (compared to 46% Nationally (and 81% of Warrington 30 to 34 year olds in
2000 owned their own home – again compared to 64.2% nationally) whilst the
remaining youngsters mostly rented from the Council and in some rare cases,
privately rented.
Now it’s 2018, and those levels of homeownership have
slipped dramatically and now only 30.9% of Warrington 25 to 29 year olds own
their own home and 54.5% of Warrington 30 to 34 year olds own their own home
(interestingly mirroring the National picture of 24.5% for the younger age
cohort and 64.2% for the older 30 to 34 year cohort).
There was concern in Government since the late Noughties
that this shift from homeownership to private renting wasn’t good for the
well-being of the Country and things needed to change, to make it a more level
playing field for first time buyers. House prices needed to be more realistic
and there needed to be a carrot and stick for both landlords and first time
buyers.
In the 1980’s and 1990’s, interest rates were the weapon of
choice of Government to cool or heat up the UK housing market – and it did work
– up to a point. It’s just interest rates also affected so many other sectors
of the UK economy (and not always a in good way). The policy of interest rates
to control the economy is called ‘Monetary Policy’. Monetary policy is primarily concerned with the management of interest
rates (and the supply of money) and is carried out by the Bank of England
(under direction from the Government).
It’s just in this post Credit Crunch, Brexit environment,
the use of higher interest rates wouldn’t directly affect landlords (as around
two thirds of buy to let properties are bought without a mortgage). Therefore,
an increase in interest rates would have hardly any effect on landlords and hit
the first time buyers - the people the Government would be trying to help!
Also, given muted growth of real income (i.e. real income
being the growth salaries after inflation) in the past few years, an uplift in interest
rates (from their ultra-low 0.5% current levels) would have a massive effect on
Brit’s household disposable income. Yet, over 90% of new mortgages in 2018
being taken are fixed rate and with such low rates, it has made buying a property
comparatively attractive.
Instead, over the last 8 years, the Government has encouraged
first time buyers and clipped the wings of landlords with another type of
economic policy – Fiscal Policy (Fiscal
Policy is the collective term for the taxing (and spending) actions of the
Government). First time buyers have
had the Help to Buy Scheme, Stamp Duty Exemption and contributions to their
deposit by HMRC. On the other side the coin, landlords have had the way they
are able to offset the tax relief of their mortgage payments against income
change (for the worse), an increase in Stamp Duty (for the worse) and they will
be hit with additional costs as the Government will be phasing out fees to
tenants in the next 12 to 18 months.
So, what does this all mean for the 4,673 Warrington
landlords?
The days of making money in Warrington buy to let with your
eyes closed are long gone. There are going to be testing times for Warrington landlords,
yet there is still a defined opportunity for those Warrington landlords who are
willing to do their homework and take guidance from specialists and experts.
It’s all about looking at your Warrington portfolio (or getting a property professional to do so) and ascertaining if your current portfolio, mortgage and gearing are designed to hit what you want from the investment (because that is what it is – an investment) in terms of income now and income in the future, capital growth and when you plan to dispose of your assets.
I have seen many Warrington landlords (both who use me and my competitors) to manage their rental property
or find them tenants – and on many occasions recently, I have told them to SELL
– yes sell some of their portfolio to either reduce mortgage debt or buy other
types of property that match what they want in the short and long-term from their
investments. I know that sounds strange – but my role isn’t just to collect the
rent .. it’s also to give strategic
advice and opinion on the landlord’s portfolio to help them meet their current
and future investment goals.
The opportunities will appear in the Warrington property
market for Warrington landlords from gentler growth in property values linked
with a restrained Warrington property market, meaning if you put in the time,
there will be deals and great bargains to have. Many landlords in Warrington
(both clients and non-clients) send me Rightmove links each week, asking my
opinion on the suitability of the investment. Some are exceptional – whilst
others are duds. The bottom line is, private renting will continue to outgrow
first time buyers in the next 5 to 10 years and as we aren’t building enough
homes in the UK, which means rents can only go in one direction – upwards!
I have a steady stream of Warrington landlords every week asking me my opinion on the future of the Warrington property market and their individual future strategy and, whether you are a landlord of mine or not, if you ever want to send me an email or pop into my office to chat on how you could navigate these new Buy to Let waters ... it will be good to speak to you (because you wouldn’t want other landlords to have an advantage over you – would 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.
Don't forget to visit the links below to view back dated deals and Warrington Property News.
