236 Warminster Landlords Plan to Expand Their Buy To Let Portfolios

A noteworthy number of buy to let landlords in Britain plan to buy more properties over the next year notwithstanding the frustrations, challenges and seismic changes in the private rented sector. According to Aldermore, the specialist buy to let lender, their research shows around 41% of portfolio buy to let landlord’s objective is to grow their buy to let portfolio (Portfolio landlords are landlords that own more than one rental property).

So, I thought, “Are Warminster landlords feeling the same?” If so, if these numbers were applied to the Warminster private rental market, what sort effect would it have on the Warminster property market as whole?

Talking to the landlords I deal with, many are feeling optimistic about the future of the Warminster rental market and the prospect it presents even with the doom and gloom prophecies that the property market will shrink. Many of those landlords who are looking to enlarge their portfolio are doing so because they still see the private rental market as a decent investment opportunity.

With top of the range Bank and Building Society Savings Accounts only reaching 1.5% a year, the rollercoaster ride of crypto currency and the yo-yoing of the stock market, the simple fact is, with rental yields in Warminster far outstripping current savings rates, the short term prospect of a readjustment in property prices isn’t putting off Warminster landlords.

The art to buying a Warminster buy to let investment is to buy the profit on the purchase price, not the anticipation of the future sale price.

No matter what the historical economy has thrown at us, with the global meltdown in 2008/9, dotcom crash of 2000, ERM in 1992, the three day week, oil crisis and hyperinflation in the 1970’s (the list goes on) ... the housing market has always bounced back stronger in the long term. That’s the point ... long term. Investing in buy to let is a long-term strategy. The simple fact is, over the long term with the increasing demand for rental properties, predominantly among Millennials as many cannot afford to get on the property ladder, and with councils not building enough properties of any kind, many youngsters are having to resort to the private rental market for their accommodation needs.

So, what of the numbers involved in Warminster?

There are 264 landlords that own just one buy to let (BTL) property in Warminster and 575 Warminster landlords, who are portfolio landlords. Between those 575 Warminster portfolio BTL landlords, they own a total of 1,207 Warminster BTL properties and they can be split down into the size of landlord portfolio in the graph below….

If I apply the Aldermore figures that means 236 Warminster landlords have plans to expand their BTL portfolio in the coming year or so.

However, the Aldermore Research also showed that 8% of private landlords intended to reduce the number of properties they own. They put this down to continuing Government intervention in the housing market (as many landlords mentioned too many limitations and higher taxation) while some believed that tenants are excessively protected to the disadvantage of the landlord.

I would say there is no arguing that the buy to let market has taken a bit of a beating, thanks to a plethora of Government regulation, new mortgage underwriting rules in 2014 and George Osborne’s tax changes. Yet there still remains an overall consciousness of optimism among the vast majority of landlords. Despite these latest changes, many landlords still view buy to let as a good investment.

If you want to buy right and assess your own portfolio on the yield/capital growth seesaw ... drop me a note.

Warminster Property Market – Asking Prices Down 10.9% in the Last 12 Months

The average asking price of property in Warminster dropped by 10.9% or £34,288 compared to a year ago, taking the current average asking price to £280,949 compared with £315,237 this time last year.

The overall drop in asking prices is being put down to sellers being more realistic with their pricing and looking to benefit from the impending mortgage interest rate rises which are likely later in 2018. This is great news for first, second and third time buyers in Warminster starting their property hunting in the active late spring / early summer market this year.

Even better news is that whilst first time buyers also have to pay less for their property, they also have the bonus of the Chancellor stopping Stamp Duty being paid by first time buyers!

Looking at the different sectors of the Warminster property market, splitting it down into property types, one can see what is happening to each sector of the market with regard to their average asking prices now compared to a year ago. So looking at the pound note amounts…

Interestingly, when one looks at the percentages, the most movement in average asking price pressure is in the detached property type sector.

Now, I must stress this overall drop in the asking prices of Warminster property doesn’t necessarily mean the value of Warminster property is going down by the same amount.

Only time will tell if the current levels of Warminster asking prices is a correction of optimistic house sellers after a couple of months of over enthusiastic asking price rises, or is it an initial sign that property values are slipping. To judge what is really happening to the Warminster property market, I believe these asking prices must be viewed in conjunction with both the values achieved and the length of time it takes to sell the property.

Also, these figures are averages, so it might also mean less expensive types of Warminster semi-detached or Warminster detached, are on the market now, this dragging the average down, compared to a year ago.

One thought I would like to share with the Warminster homeowners and landlords wanting to sell their property, is the fact they need to be aware of the competition of other people selling their homes. One factor that could be contributing to a subdued demand for local property is the progressively strained buyer mortgage affordability (i.e. banks telling people they can only afford so much on a mortgage), meaning more and more buyers are hitting their maximum on the amount they are able to borrow on a mortgage sooner than they thought.

So, what does this all mean, especially for buy to let landlords in Warminster? During these months of flux, there could be some property bargains to be had. Lower asking prices mean you are buying in better yields and potential capital growth at the same time. Many Warminster landlords pick the phone up or email me with Rightmove links, asking my opinion on the BTL potential of property. I don’t charge for that service, so if you don’t want to miss out, follow what they do and make contact ... I don’t bite!

Extra Funding Is Required for Affordable Homes in Warminster

In my blog about the Warminster Property Market I mostly only talk about two of the three main sectors of the local property market, the ‘private rented sector’ and the ‘owner occupier sector’. However, as I often stress when talking to my clients, one cannot forget the third sector, that being the ‘social housing sector’ (or council housing as some people call it).

In previous articles, I have spoken at length about the crisis in supply of property in Warminster (i.e. not enough property is being built), but in this article I want to talk about the other crisis – that of affordability. It is not just about the pure number of houses being built but also the equilibrium of tenure (ownership vs rented) and therein, the affordability of housing, which needs to be considered carefully for an efficient and effectual housing market.

An efficient and effectual housing market is in everyone’s interests, including Warminster homeowners and Warminster landlords, so let me explain ..

An average of only 618 Affordable Homes per year have been built by Wiltshire Council in the last 9 years

The requirement for the provision of subsidised housing has been recognised since Victorian times. Even though private rents have not kept up with inflation since 2005 (meaning tenants are better off) it’s still a fact there are substantial numbers of low-income households in Warminster devoid of the money to allow them a decent standard of housing.

Usually, property in the social housing sector has had rents set at around half the going market rate and affordable shared home ownership has been the main source of new affordable housing yet, irrespective of the tenure, the local authority is simply not coming up with the numbers required. If the local authority isn’t building or finding these affordable homes, these Warminster tenants still need housing, and some tenants at the lower end of the market are falling foul of rogue landlords. Not good news for tenants and the vast majority of law abiding and decent Warminster landlords who are tarnished by the actions of those few rogue landlords, especially as I believe everyone has the right to a safe and decent home.

Be it Tory’s, Labour, SNP, Lib Dems, Greens etc, everyone needs to put party politics aside and start building enough homes and ensure that housing is affordable. Even though 2017 was one of the best years for new home building in the last decade (217,000 homes built in 2017) overall new home building has been in decline for many years from the heady days of the early 1970s, when an average of 350,000 new homes were being built a year.  As you can see from the graph, we simply aren’t building enough ‘affordable’ homes in the area.

The blame cannot all be placed at the feet of the local authority as Council budgets nationally, according to Full-Fact, are 26% lower than they have been since 2010. 

So, what does this mean for Warminster homeowners? Well, an undersupply of affordable homes will artificially keep rents and property prices high. That might sound good in the short term, but a large proportion of my Warminster landlords find their children are also priced out of the housing market. Also, whilst your Warminster home might be slightly higher in value, due to this lack of supply of homes at the bottom end of the market, as most people move up the market when they do move, the one you want to buy will be priced even higher.

Problems at the lower end of the property market will affect the middle and upper parts. There is no getting away from the fact that the Warminster housing market is all interlinked .. it’s not called the Property ‘Ladder’ for nothing!