‘Flipping’ Heck - Warminster Property Values Rise by £33.18 a day

Investing in Warminster buy to let property is different from investing in the stock market or depositing your hard-earned cash in the Building Society. When you invest your money in the Building Society, this is considered by many as the safe option but the returns you can achieve are awfully low (the best 2-year bond rate from Nationwide is a whopping 0.75% a year!). Another investment is the Stock Market, which can give good returns, but unless you are on the phone every day to your Stockbroker, most people invest in stock market funds, making the investment quite hands off, and one always has the feeling of not being in control.

However, with buy to let, things can be more hands on. One of the things many landlords like is the tactile nature of property - the fact that you can touch the bricks and mortar. It is this factor that attracts many of Warminster’s landlords – they are making their own decisions rather than entrusting them to city whizz kids in Canary Wharf playing roulette with their savings.

I always say investing in property is a long-term game. When you invest in the property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as 'capital growth'. Capital growth, also known as capital appreciation, has been strong in recent times in Warminster, but the value of property does go up as well as down just like shares do but the initial purchase price rarely decreases.  

Rental income is what the tenant pays you - hopefully this will also grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return. So, over the last 5 years, an average Warminster property has risen by £60,550 (equivalent to £33.18 a day), taking it to a current average value of £289,800. Yields range from 5% a year and can reach double digits’ percentages (although to achieve those sorts of returns, the risks are higher).

However, something I haven’t spoken of before is the more specialist area of flipping property to make money. (flipping - buying a property, carrying out some minor cosmetics and re selling it quickly).  I have seen several investors recently who have made decent returns from this strategy. For example …

·         One Warminster Investor paid £140,000 for a 2 bed terrace on Middleton Close in September 2015.  Some cosmetic work was done to the property and it was resold a few months ago (October 2016) for £165,000 … 17.86% return before costs (or compound annual return equivalent of 16.76% AER) http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=61671398&sale=4437082&country=england

This demonstrates how the Warminster property market has not only provided very strong returns for the average investor over the last five years but how it has permitted a group of motivated buy to let Warminster landlords and investors to become particularly wealthy.

As my article mentioned a few weeks ago, more and more Warminster people may be giving up on owning their own home and are instead accepting long term renting whilst buy to let lending continues to grow from strength to strength. 

How The Rented Sector Has Transformed The Property Market In Warminster

The Warminster housing market has gone through a sea of change in the past decades with the Buy-to-Let (B-T-L) sector evolving as a key trend, for both Warminster tenants and Warminster landlords.

A few weeks ago, the Government released a White Paper on housing. I have had a chance now to digest the report and wish to offer my thoughts on the topic. It was interesting that the private rental sector played a major part in the future plans for housing. This is especially important for our growing Warminster population.

In 1981, the population of Wiltshire stood at 375,200

and today it stands at 486,100.

Currently, the private rented (B-T-L) sector accounts for 19.5% of households in the town.  The Government want to assist people living in the houses and help the economy by encouraging the provision of quality homes, in a housing sector that has grown due to worldwide economic forces, pushing home ownership out of the reach of more and more people. Interestingly, when we look at the 1981 figures for homeownership, a different story is told.

57.2% Warminster people owned their own home in 1981

26.13% Warminster people rented from the Council or Housing Association in 1981

 and 16.67% Warminster rented from a Private Landlord

The significance of a suitable housing policy is vital to ensure suitable economic activity and create a vibrant place people want to live in. With the population of Wiltshire set to grow to 537,000 by 2037 – it is imperative that Wiltshire Council and Central Government all work actively together to ensure the residential property market doesn’t hold the area back, by encouraging the building and provision of quality homes for its inhabitants.

One idea the Government has proclaimed is a variety of measures aimed at encouraging the Build-to-Rent (B-T-R) sector (instead of the B-T-L sector). These include allowing local authorities to proactively plan for B-T-R schemes, and making it simpler for B-T-R developers to offer inexpensive private rented homes.

To do this, the government will invent a distinct affordable housing class for B-T-R, called ‘Affordable Private Rent’, which will oblige new homes builders to provide at least 1 in 5 of a new home developments at a 20% discount on open-market rents and three year tenancies for tenants. In return, the new homebuilders will get better planning assurances.

Private landlords will not be expected to offer discounts, nor offer 3-year tenancies – but it is something Warminster landlords need to be aware of as there will be greater competition for tenants.

Over the last ten years, home ownership has not been a primary goal for young adults as the world has changed. These youngsters expect ‘on demand’ services from click and collect, Amazon, Dating Apps and TV with the likes of Netflix. Many Warminster youngsters see that renting more than meets their accommodation needs, as it combines the freedom from a lifetime of property maintenance and financial obligations, making it an attractive lifestyle option.

Private rented housing in Warminster and Wiltshire, be it B-T-L or B-T-R, has the prospective to play a very positive role.