Warrington Property Blog

Thursday, 24 August 2017

Supply and Demand Issues mean Warrington Property Values Rise by 3% in the Last 12 Months

The most recent set of data from the Land Registry has stated that property values in Warrington and the surrounding area were 3.08% higher than 12 months ago and 13.54% higher than January 2015.

Despite the uncertainty over Brexit as Warrington (and most of the UK’s) property values continue their medium and long-term upward trajectory. As economics is about supply and demand, the story behind the Warrington property market can also be seen from those two sides of the story.

SUPPLY

Looking at the supply issues of the Warrington property market, putting aside the short-term dearth of property on the market, one of the main reasons of this sustained house price growth has been down to of the lack of building new homes.

The draconian planning laws, that over the last 70 years (starting with The Town and Country Planning Act 1947) has meant the amount of land built on in the UK today, only stands at 1.8% (no, that’s not a typo – its one point eight percent) and that is made up of 1.1% with residential property and 0.7% for commercial property. Now I am not advocating building modern ugly carbuncles and high-rise flats in the Cotswolds, nor blot the landscape with the building of massive out of place ugly 1,000 home housing estates around the beautiful countryside of such villages as High Legh, Lowton and Lymm.

The facts are, with the restrictions on building homes for people to live in, because of these 70-year-old restrictive planning regulations, homes that the youngsters of Warrington badly need, aren’t being built. Adding fuel to that fire, there has been a large dose of nimby-ism and landowners deliberately sitting on land, which has kept land values high and from that keeps house prices high.

DEMAND

Looking at the demand side of the equation, one might have thought property values would drop because of Brexit and buyers uncertainty. However, certain commenters now believe property values might rise because of Brexit. Many people are risk adverse, especially with their hard-earned savings. The stock market is at an all-time high (ready to pop again?) and many people don’t trust the money markets. The thing about property is its tangible, bricks and mortar, you can touch it and you can easily understand it.

The Brits have historically put their faith in bricks and mortar, which they expect to rise in value, in numerical terms, at least. Nationally, the value of property has risen by 635.4% since 1984 whilst the stock market has risen by a very similar 593.1%. However, the stock market has had a roller coaster of a ride to get to those figures. For example, in the dot com bubble of the early 2000’s, the FTSE100 dropped 126.3% in two years and it dropped again by 44.6% in 9 months in 2007… the worst drop Warrington saw in property values was just 20.94% in the 2008/9 credit crunch.

Despite the slowdown in the rate of annual property value growth in Warrington to the current 3.08%, from the heady days of 9.23% annual increases seen in mid 2014, it can be argued the headline rate of Warrington property price inflation is holding up well, especially with the squeeze on real incomes, new taxation rules for landlords and the slight ambiguity around Brexit. With mortgage rates at an all-time low and tumbling unemployment, all these factors are largely continuing to help support property values in Warrington (and the UK).

For more thoughts on the Warrington Property Market, please visit the Warrington Property Market Blog.

You can always keep an eye on my blog for any properties I feel will make a good buy to let opportunity, or if you are after a second opinion then 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 6 Bankside, Crosfield St, WA1 1UP. 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.

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Warrington Investment Property Specialist Hamlet Homes Website

Thursday, 17 August 2017

Warrington Vs Morley. Which town should you invest in?

Well we are deep into the children’s summer holidays although we have hardly the typical summer weather this year.

I have had an increase in local Warrington home owners walking into the office, I believe this is because we have the Summer Beach Fair on Bank Park situated just opposite our office.

I had an interesting chat with a Mike, the reason why he stood out to me is because he has never invested before and he must have named several towns he was looking to invest in. Mike is a local guy and knows Warrington well. For some reason he was talking about towns in the North East of the country that seemed to be investable to him.

I am a firm believe that this is a long term strategy usually something to add to the pension pot. So why start your BTL Empire in a town you do not know and miles away. The beauty about investing in bricks and mortar is you can physically hold it and see it unlike stocks and shares.

The town Mike was looking at is Morley just outside of Leeds, now both Warrington and Morley are of similar size and, taking into account the surrounding villages, have similar average property values.

Now the average property value in Morley is £172,350 and in Warrington it is £159,040, however the rents are slightly different in each town Morley has an average rent of £624 whilst in Warrington the average rent is £574. This gives both towns an almost identical average yield of 4.3% I have done a little research to compare the two seemingly similar towns in more depth.

Investing in property is all about what you buy the property for. You make your money with your buying value, rather than your eventual sale value.

Over the last year, property values in Warrington from June 2016 to June 2017 have risen by 10% on detached houses 12% in Terraced (the most popular rental properties in Warrington). In Morley Detached houses rose by 7% and terrace houses rose by 8%.

This means if you are considering buying now, our town of Warrington is still a great place to invest especially as you can achieve a similar yield on a property without a bigger deposit! And the capital growth is just as competitive.

Don't forget to visit the links below to view back dated deals and Warrington Property News.

Thursday, 10 August 2017

Warrington’s 6,574 Mortgage Time-Bombs

According to my research, of the 70,510 properties in Warrington, 30,433 of those properties have mortgages on them. 91.1% of those mortgaged properties are made up of owner-occupiers and the rest are buy-to-let landlords (with a mortgage).

But this is the concerning part. 6,574 of those Warrington mortgages are interest only.

Each year between 2017 and 2022, 79 of those households with interest only mortgages will mature, and of those, 20 households a year will either have a shortfall or no way of paying the mortgage off. Now that might not sound a lot – but it is still someone’s home that is potentially at risk.

Theoretically this is an enormous problem for anyone in this situation as their home is at risk of repossession if they don’t have some means to repay these mortgages at the end of the term, with the typical term being 25 to 35 years. Banks and Building Societies are under no obligation to lengthen the term of the mortgage and, when deciding whether they are prepared to do so or not, will look at it in the same way as someone coming to them for a new mortgage.

Endowment Mortgages

Back in the 1970s and 1980s, when endowment mortgages were all the rage, having an endowment meant you were taking out an interest only mortgage and then paying into an endowment policy which would pay the mortgage off (plus hopefully leave some profit) at the end of the 25/35-year term. There were advantages to that type of mortgage as the monthly repayments were lower than with a traditional capital repayment and interest mortgage. Only the interest, rather than any capital, is paid to the mortgage company - but the full debt must be cleared at the end of the 25/35-year term.

Historically plenty of Warrington homeowners bought an endowment policy to run alongside their interest only mortgage. However, because the endowment policy was a stock market linked investment plan and the stock market poorly performed between 1999 and 2003 (when the FTSE dropped 49.72%), the endowments of many of these homeowners didn’t cover the shortfall. Indeed, it left them significantly in debt!

Nonetheless, in the mid 2000s, when the word endowment had become a dirty word, the banks still sold ‘interest only’ mortgages. However, this time with no savings plan, endowment or investment product to pay the mortgage off at the end of the term. It was a case of ‘we’ll sort that nearer the time’ as property prices were on the rampage in an upwards direction!

Thankfully, the proportion of interest only mortgages sold started to decline after the Credit Crunch, as you can see looking at the graph below, from a peak of 43.81% of all mortgages to the current 8.71%.

The Future of Mortgaged Properties

Increasing the length of the mortgage to obtain more time to raise the money has gradually become more difficult since the introduction of stricter lending criteria in 2014, with many mature borrowers considered too old for a mortgage extension.

Warrington people who took out interest only mortgages years ago and don’t have a strategy to pay back the mortgage face a ticking time bomb. It would either be a choice of hastily scraping the money together to pay off their mortgage, selling their property, or the possibility of repossession (which to be frank, is a disturbing prospect).

I want to stress to all existing and future homeowners who use mortgages to go in to them with your eyes open.

You must understand, whilst the banks and building societies could do more to help, you too have personal responsibility in understanding what you are signing yourself up to. It’s not just the monthly repayments, but the whole picture in the short and long term.

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 Warrington property market, warts and all. If you want fluffy clouds and rose tinted glasses articles – then my articles are not for you. However, if you want someone to tell you the real story about the Warrington property market, be it good, bad or indifferent, then maybe you should start reading my blog regularly.

Don't forget to visit the links below to view back dated deals and Warrington Property News.

Thursday, 3 August 2017

Ask Andy – ‘What do I need as a Warrington tenant to pass references?’

Question:

‘Hi Andy,

I want to move out of my parents’ house for the first time and into a rented house, but because it’s my first time renting that I’ll struggle with references with landlords and agents. What do agents and landlords want from references and what do I need to pass references?

Thanks,

John’

Andy’s Answer:

First of all, good luck in finding a new home! There are many parts to references but hopefully I can put your mind at ease.

I would say there are four main components to references: affordability, credit checks, income references and landlord references. Obviously if you have never rented a property before then you won’t have a landlord, so this part wouldn’t apply to you at the moment.

Agents and landlords should also check your eligibility to reside in the UK with what’s called a ‘right to rent’ check. This is pretty simple and you can use a range of documents to show this – the simplest being a passport/identification card and visa if applicable.

Affordability

The standard test for affordability is that your annual income must be 30x the monthly rent. For example, a property which is £500pcm would require an income of £15,000 per annum. If you were moving in with someone else, the income between you per year would have to reach that total. This is to ensure that the rent is affordable for you.

Credit Checks

A credit check is normally conducted to check that you have no history of unsatisfied county court judgements (CCJs), insolvency voluntary agreements (IVAs) or bankruptcies.

Dependant on the landlord and on the agent, if an applicant has a CCJ, they may accept your application subject to some criteria – the total is under a certain amount, it isn’t for unpaid rent, even if you have been making regular payments towards the debt and can substantiate that, etc.

In some cases, some agents/landlords will accept a failed credit check with a guarantor. However, in most cases, the guarantor must be a homeowner, pass the same affordability and income references as a tenant and then sign a deed of guarantee for the tenancy.

Income References

Your income references link in to the affordability checks.

If you are employed, your annual income will be checked, your contract length (whether you are permanent or temporary staff and to ensure your contract runs for at least the term of the tenancy). Your employer will also most likely be asked whether they consider you to be a trustworthy individual.

If you are self employed, to pass references you will normally need at least 12 months worth of accounts. Providing your accountants’ details is normally required in conjunction with bank statements and self assessments to evidence your income.

For those applicants who are in receipt of benefits, they will need to produce awards letters to evidence that part of their income.

While this is not an extensive list of applicant’s situations, these are the most common ones.

Landlord References

Landlord references are normally comprised of the following questions:

· Start date of tenancy, length of tenancy and end date of tenancy (if notice has been given)

· Rent during the tenancy

· Were there any rent arrears during the tenancy

· Were there any late payments/issues with rent payments

· Were there any damages during the tenancy/general condition of the property during the tenancy

· Would you rent to this tenant again

· Any other comments

This appears like a lot of information, but your agent or landlord should be able to talk through their specific requirements with you and help you in your applications. I wish you the best of luck house hunting!

If you have any further questions, feel free to drop me an email or give me a call. Email me on andy@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 6 Bankside, Crosfield St, WA1 1UP. 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.

Thursday, 27 July 2017

Don't miss out on a property deal like this in Warrington & join my premier investor list.

It feels like a very long time since I have shared a deal on the Warrington Property Market blog, as these usually go straight to my premier investor list, but it’s better late than never. Today I have been scrolling through the online portals in search of a deal.

It didn’t take too long to come across this lovely 3 bedroom house in Latchford.

This property has so much potential. Although it is on the market for £99,950 with Ashton’s in Stockton Heath, I believe it would go for around £90,000.

Now let’s look at the street.

The last property to sell on that street was 18 Mersey Walk, which sold on the 28th April for (wait for it) – £137,000. This is also a 3 bedroom house very similar to the one I’m writing about.

Without actually viewing the property, so just going off the images, I believe it needs around £10,000 - £15,000 worth of work going into it. So, if the property was bought for £90k + £15k refurb costs and extras you are looking at an estimated total of around £105,000.

A property like this
one – done up to a
rent-able condition – can let for around £600pcm. This will achieve and annual yield of around 6.8% - not bad at all.

Looking at the history of the street we can see that by doing the works on property you will be adding a lot of value, especially when the last 3 bedroom house sold this year at almost £140,000.

So, not only does this property offer a fantastic yield, it has great potential for future growth. In Warrington I find that 3 bedroom houses are as popular as 2 bedroom houses… the only difference is that 2 bedroom houses can be picked up very cheap, so it’s rare to get a 3 bedroom house at such a steal. Once you find the right tenants (usually a small to medium family) you tend to have them in for life, as their kids work up the different stages of education.

Click here to view this property

Having found our blog and one of our deal of the day posts, you probably know a little bit more about the Warrington property market and about me. You might be coming to the conclusion that you'd like to start investing, or even growing your portfolio and have found my blogs to be packed full of useful information - all good so far then.

So why wait?

Wouldn't it be great to 'jump the queue' and get the inside info as soon as it's available? We constantly check the market and keep an up to date list of potential buy to let properties in the Warrington area, and we even have a database should you wish to consider a selection of options.

If you want to be the first to know about the next Warrington investment opportunity, call me on 01925 235338 or email me on manoj@hamletwarrington.co.uk. If you are in the area, feel free to pop into the office – we are based on 6 Bankside, Crosfield St, WA1 1UP. 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.

Follow The Buy-To-Let Property Investment Market in Warrington

Warrington Property Market LinkedIn Page

Hamlet Homes Letting Agents Warrington Facebook Page

Hamlet Homes Letting Agents Warrington Twitter Page

Warrington Investment Property Specialist Hamlet Homes Website

Thursday, 20 July 2017

Ask Andy – ‘Help! How do I do Right to Rent checks on my Warrington tenants?’

Question:

‘Hi Andy,

I’ve advertised my property online and have tenants interested in moving in. This isn’t my first time dealing with new tenants, however I read about something online called a ‘Right to Rent check’. Is this something that’s compulsory? How do I carry out a right to rent check?

Thanks,

Mark’

Andy’s Answer:

First of all, good luck with your new tenants in your property!

Right to Rent is part of the Immigration Act 2014. As of 1^st February 2016, Landlords must not allow any adult to occupy a property as their only or main home by creating a tenancy agreement, unless they have the 'right to rent' in the UK.

Someone who has the right to rent is defined as someone who is the following:

a British citizen
a European Economic Area (EEA) or Swiss national
has a right to rent in the UK e.g has a valid visa which expires after the proposed tenancy end date.

All adults who fall under the above criteria must be checked, regardless of ethnicity, nationality, etc.

This responsibly falls on all landlords who are renting privately, have a lodger, sub letting a property, or are an agent appointed by the landlord. These checks must be carried out prior to signing any proposed tenancy.

There is a range of documents which you can use to check this, which can be found on https://www.gov.uk/government/publications/right-to-rent-document-checks-a-user-guide.

The easiest documents to use are passports, identification cards and if necessary, any visas. However, there is a comprehensive list on the link above to a range of documents which can be used to carry out the checks. There are services out there which can carry out the checks for you (many referencing agencies carry out this process for you as an optional extra) or ensure you are using the correct documents in your checks.

Don't forget to visit the links below to view back dated deals and Warrington Property News.

Thursday, 13 July 2017

The Warrington Property Market, the Beatles, Sweden and 50 year Mortgages

Fifty years ago, in 1967, the first human heart transplant was performed by Dr Christian Barnard in South Africa. In the same year, Sweden switched from driving on the left-hand side to the right-hand side of the road. The average value of a Warrington property was £2,746, interest rates were at 5.5%! The Beatles released one of my favourite albums – their Sergeant Peppers album... but what the hell has that to do with the Warrington property market today?

Quite a lot actually. So, with my music turned up loud, let me explain my friends!

First Time Buyers in Warrington

I have been doing some research on the current attitude of Warrington first-time buyers. First-time buyers are so important for both landlords and homeowners. If first-time buyers aren’t buying, they still need a roof over their heads, so they rent (good news for landlords). If they buy, demand for Warrington property goes up for starter homes and that enables other Warrington homeowners to move up the property ladder.

First-time buyers are the lifeblood of the property market. They are, however, the most susceptible to interest rate rises and the affordability of mortgages. With that in mind, let us see what is happening to them…

The average value of a Warrington property is currently standing at £207,055 and UK interest rates at 0.25%. As each year goes by, it appears the age of the everlasting mortgage has started to emerge, prompted by these first-time buyers, eager to get a foot on the housing ladder. I was reading a report a few days ago where some mortgage companies confessed that the battle to gain big returns from the property market has led to mortgages that will take considerably longer than the customary 25 years to pay off.

Over the last few years, it has been commonplace for first-time buyer mortgages to be 30 and 35 years in length as the ‘Bank of Mum and Dad’ have been helping with the deposit (Beatles Sgt Pepper song - “With a Little Help from My Friends”). Now, some high street banks are offering mortgage terms of 40 years. This means first-time buyers could be paying until their mid 60s. I can hear that other great track from the same album "When I'm Sixty-Four" ringing in my ears! So, a 50-year mortgage does not seem as far-fetched now as it would have been back in the 1970s. After all, life expectancy for a male then was exactly 69 years and today its 79 years and 5 months!

Rising Warrington House Prices

Over the last ten years, Warrington property prices have continued to rise more than wages, therefore, first-time buyers are looking for bigger loans. If this development continues, the only way repayments can remain reasonable is by increasing the term of the loan.

However, some have said there are worries the mortgage companies are lending money over such a long term, they threaten leaving some first-time buyers with a generation of debt if the house price bubble bursts. Interestingly, when I looked at what had happened to average property values in Warrington over the last 50 years, there have been bubbles. First-time buyers should take heart, since as a county we have always recovered from it a few years later.

What if interest rates rise? Well looking at historic UK interest rates, the current rate of 0.25% is at a 300-year low. Mortgages will never be cheaper. I would however, seriously consider fixing the rate to cushion any future potential interest rate rises (since they can only go in one direction when they do change). If Warrington first-time buyers see buying a home as a long-term decision, based on the last 50 years, they should be just fine!

Before I go, a final thought for property buyers in Sweden, the land of Volvo and Abba. As Swedish property prices are so high, Swedish Regulators announced last year limits on the length of Swedish mortgage terms. They don’t bother with 50-year mortgages (On and On and On – Abba).

No, our Volvo-loving Swedish friends’ average mortgage length is 140 years (this is not a typo). Although such mortgages have had their Waterloo (Abba), regulators have significantly reduced the maximum term of a Swedish mortgage to 105 years. Either way, that’s a lot of Money, Money, Money (Abba again – Sorry!) to pay back!

Now I will leave you in peace as I listen to the 1980s Madness song ‘Our House’. My apologies to all the Beatles and Abba fans in Warrington - a bit of light hearted fun… albeit on serious topic.

Don't forget to visit the links below to view back dated deals and Warrington Property News.

About Me

I have been in the Warrington property market since 2004, owning and running, the Hamlet Homes office in Warrington with my excellent team.

I have always shared my thoughts on the local property market in Warrington with my landlords, but now I want to share with everyone with an interest in property in Warrington.

In my blog, I will talk about what is happening in the Warrington property market itself, even looking at specific streets or housing estates. At other times, I will post what I consider decent buy to let deals. I like to look at the whole of market and give you, what I consider to be, the best buy opportunities.

If you see a potential deal, and want a second opinion, email the link to manoj@hamletwarrington.co.uk and I will always give you my honest opinion on the property and its investment potential – good or bad.