Back in the Spring, there was a surge in
Warminster landlords buying buy to let property in Warminster as they tried to
beat George Osborne’s new stamp duty changes which kicked in on the 1st April 2016. To give you an
idea of the sort of numbers we are talking about, below are the property
statistics for sales either side of the deadline in BA12.
Jan 2016 – 36 properties sold
Feb 2016 – 37 properties sold
March 2016 – 65 properties sold
April 2016 – 20 properties sold
May 2016 – 19 properties sold
Normally, the number of sales in the
Spring months is very similar, irrespective of the month. However, as one can
see, this year was a completely different picture as landlords moved their purchases
forward to beat the stamp duty increase. You would think that even with a basic
knowledge of supply and demand economics, rents would be affected in a
downwards direction?
However, there appears to be no apparent effect on the levels of rent
being asked in Warminster - and more importantly achieved - and this direction of rents is not
likely to inverse any time soon, particularly as legislation planned for 2017 might
reduce rental stock and push property values ever upward. The decline of buy to
let mortgage interest tax relief will make some properties loss making, forcing landlords
to pass on costs to tenants in the form of higher rents just to stay afloat.
Even those who can still operate may be deterred from making further investments,
reducing rental stock at a time of severe property shortage.
.. but it’s not all bad news for
tenants. Whilst average rents in Warminster since 2005 have increased by 19.6%,
inflation has been 38.5% over the same time frame, meaning Warminster tenants
are 18.9% better off in real terms when it comes to their rent (which is a
sizeable chunk of most people’s monthly household budgets)
I found it particularly interesting looking
at the rent rises over the last five years in Warminster, as it was five years
ago we started to see the very early green shoots of growth of the Warminster
economy. As a whole, following the
Credit crunch (2011), rents in Warminster have risen by an average of 1.7% a
year – fascinating don’t you think?
The view I am trying to portray is that
while renting is often portrayed as the unfavorable alternative to home
ownership, many young Warminster professionals like renting as it gives them adaptability
with their life. Rents will continue to rise which is good news for landlords
as buy to let is an investment but, as can be seen from the statistics, tenants
have also had a good deal with below inflation
increases in rents in the past. It’s a win-win
situation for everyone although on a very personal note, it’s imperative in the
future that tenants are not thwarted from saving for a deposit by excessive
rental hikes – there has to be a balance.
