Warminster Millennials Have Spent £99,300 On Rent By The Age of 35

The Millennials were born between the mid 1980’s and late 1990’s thus making them between the age of around 22 to late 30’s. They are the imaginative, artistic youngsters who grew up with the newest tech and computers and who are huge aficionados of music festivals, gourmet pizzas, emoji’s, selfies and old skool nostalgia. Also known as Generation Rent, many Millennials have discovered that renting is a good choice for their accommodation needs without the hassle that comes from buying a home. Nonetheless, that is not the only reason they don’t buy property. When they should be concentrating on their profession, putting down roots and starting a family, Millennials are still going through the pressure and strain of student loan liabilities whilst, at the same time, finding it tough to pay rent.

The hot topic at the moment is the cost of renting, as both political parties have seen mileage in wooing these Millennial Generation Renters. The average rent in Warminster is currently £707 per month making this a big-ticket item on the monthly budget. I was inquisitive to find out exactly how much Warminster Millennials will spend on rent by the time they reach their mid 30’s. The average age people leave home in the UK is 22; so looking at a Warminster 22-year-old (or Millennial) who left home in 2005 then between 2005 and today that Warminster Millennial will have shelled out £99,300 in rent.

It’s no wonder local Millennials can’t afford to buy a Warminster home given their tremendous debt. This means younger Warminster Millennials will probably carry on renting for the foreseeable future, simply because the prospect of buying a home is not yet achievable.. that is until you look more deeply at the numbers…

Looking at the chart above, the average rent of a Warminster property in 2005 was £572 per month (pm)  … if it had risen by inflation, today, that would be £806 pm. As I have already mentioned in the article, today it only stands at £707 per month. Looking over the last 12 years, adding up all the differences between what the average actual rent was compared to what it should have been if rent had gone up by inflation, the average Warminster Millennial tenant would have paid £86,628.

This means that an average 35-year-old Warminster Millennial tenant, who has been renting since 2005, is better off by £8,890 when comparing the actual rent paid compared to what it would have been if it had risen by inflation. In a nutshell, tenants have done well due to the sub-inflation growth in rents.

In fact, if you recall I mentioned in an article a few weeks ago, the older Warminster Millennials are starting to use those savings and are gradually shifting towards home ownership. They are finally catching up with the British homeownership dream as Bank of Mum and Dad help with the deposit. Also, the scrapping of Stamp Duty from the Government starts to kick in together with the realisation that if the 5% mortgage deposit can be scrapped together (yes, 95% first time buyer mortgages have been available since 2009), it is still a lot cheaper to buy than rent, meaning this will unquestionably drive demand for Warminster homes for sale – good news for Warminster homeowners.

… and what does this mean for Warminster landlords?

Well the vast majority of younger Millennials are still renters and I foresee this to be the case for at least the next ten to fifteen years. Landlords will need to keep improving their properties to ensure they get the best tenants and they will see a much higher rent achieved. Millennials will pay top dollar for a top dollar property. It is important to do things correctly as making money won’t be as easy as it has been over the last twenty years.  With a greater number of properties on the market .. comes greater choice. Don’t buy the first thing you see, buy with your head as well as your heart … because as I promised a few weeks ago, the first rule of Buy To Let Investment ….. “You are not going to live in the property yourself”

Slowing Warminster Property Market? Yes and No!

My thoughts to the landlords and homeowners of Warminster…

The tightrope of being a Warminster buy-to-let landlord is a balancing act many do well at. Talking to several Warminster landlords, they are very conscious of their tenants’ capacity and ability to pay the rent and their own need to raise rents on their rental properties (as Government figure shows ‘real pay’ has dropped 1% in the last six months). Evidence does suggest many landlords feel more assured than they were in the spring about pursuing higher rents on their properties.

During the summer months, historic evidence suggests that the rents new tenants have had to pay on move in have increased. June/July/August is a time when renters like to move, demand surges and the normal supply and demand seesaw mean tenants are normally prepared to pay more to secure the property they want to live in, in the place they want to be. This is particularly good news for Warminster landlords as average Warminster rents have been on a downward trend recently. So look at the figures here...

Rents in Warminster on average for new tenants moving in have risen 2.9% for the month, taking overall annual Warminster rents 2.4% higher for the year

However, several Warminster landlords have expressed their apprehensions about a slowing of the housing market in Warminster. I think this negativity may be exaggerated.

Before we get the Champagne out, the other side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Warminster as well as the Warminster buy-to-let landlords).  I believe the Warminster property market has been trying to find some level of equilibrium since the New Year.  According to the Land Registry…

Property Values in Warminster are 7.09% higher than they were 12 months ago, rising by 2.06% last month alone!

Yet, I would take those figures with a pinch of salt as they reflect the sales of Warminster properties that took place in early Spring 2017 and now are only exchanging and completing during the summer months.

The reality is the number of properties that are on the market in Warminster today has risen by 3.41% since the New Year and that will have a dampening effect on property values. As tenants have had less choice, buyers now have more choice ... and that will temper Warminster property prices as we head towards 2018.

Be you a homeowner or landlord, if you are planning to sell your Warminster property in the short term, it is crucial, especially with the rise in the number of properties on the market, that you realistically price your property when you bring it to the market ... with the increase in choice of properties, the balance of power during negotiation generally sways towards the buyer. Given that everyone now has access to property details, including historic stats for how much property have sold for, they will be more astute during the offer and negotiation stages of a purchase.

However, even with this uplift in the number of properties for sale in Warminster, property prices will remain stable and strong in the medium to long term. This is because the number of properties on the market today is still way below the peak of summer of 2008, when there were 246 properties for sale compared to the current level of 91 (if you recall, prices dropped by nearly 20% in Credit Crunch years of ‘08 and ‘09).

Compared to 2008, today’s lower supply of Warminster properties for sale will keep prices relatively high...and they will continue to stay at these levels for the medium to long term.

Less people are moving than a few years ago, meaning less property is for sale. Fewer properties for sale mean property prices remain relatively high and this is because of a number of underlying reasons. Firstly, buy-to-let landlords tend not sell their properties as often than owner-occupiers, consequently removing the property out of the housing market selling cycle. Secondly, Stamp Duty is much higher compared to 10 years ago (meaning it costs more to move). Next, there is a dearth of local authority rental housing so demand for private rented housing will remain high. Then we have the UK’s maturing owner occupier population, meaning these older people are less likely to move (compared to when they were younger). Another reason is the lack of new homes being built in the country (we need 240k houses a year to be built in the UK and we are currently only building 145k a year!) and finally, the new mortgage rules introduced in 2014 about how much a person can borrow on a mortgage has curtailed demand.

Some final thought’s before I go – to all the Warminster homeowners that aren’t planning to sell – this talk of price changes is only on paper profit or loss. To those that are moving ... most people that sell, are buyers as well, so as you might not get as much for yours, the one you will want to buy won’t be as much, (swings and roundabouts as Mum used to say!)

To all the Warminster landlords – keep your eyes peeled – I have a feeling there may be some decent buy-to-let deals to be had in the coming months

The most recent set of data from the Land Registry has stated that property values in Warminster and the surrounding area were 7.09% higher than 12 months ago and 19.39% higher than January 2015.

Despite the uncertainty over Brexit as Warminster (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 Warminster property market can also be seen from those two sides of the story.

Looking at the supply issues of the Warminster 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 rolling Wiltshire countryside, nor blot the landscape with the building of massive 1,000 home housing estates out of town around the beautiful countryside of such villages as Dilton Marsh, Upton Scudamore and Heytesbury.

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 Warminster badly need, aren’t being built in the quantity needed. Now I appreciate that the West Warminster Urban Extension is underway, with the first of the new Tascroft Rise properties being marketed but put simply we still need more housing. 

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 and many people are uncertain about 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 Warminster saw in property values was just 18.18% in the 2008/9 credit crunch.

Despite the slowdown in the rate of annual property value growth in Warminster to the current 7.09%, from the heady days of 11.62% annual increases seen in mid 2010, it can be argued the headline rate of Warminster 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 Warminster (and the UK).

Warminster Buy-To-Let Predictions up to 2037

On several occasions over the last few months, in my Warminster Property Blog, I predicted that the rate of rental inflation (i.e. how much rents are rising by) had eased over the last year. At the same time I felt that in some parts of the UK rents had actually dropped for the first time in over eight years. Recent research backs up this prediction.

Rents in Warminster for new tenancies only grew by 1.8% in the last 12 months (i.e. not existing tenants experiencing rental increases from their existing landlord). When we compare that current rate with the historical rental inflation in Warminster, an interesting pattern emerges ..

·         2016 - Rental Inflation in Warminster was 3.2%

·         2015 - Rental Inflation in Warminster was 13.6%

·         2014 - Rental Inflation in Warminster was 6.6%

The reason behind this change depends on which side of the demand/supply equation you are looking from. On the demand side (from the tenants point of view) there is the uncertainty of Brexit and the fact that salaries are not keeping up with inflation for the first time in three years. Critically this means tenants have less disposable income to pay their rent. As an aside, it is interesting to note that nationally, rent accounts for 29% of a tenant’s take home pay (Denton House).

On the supply side of the equation (landlords point of view) Brexit also creates uncertainty. However, the biggest issue was a massive upsurge of new rental properties coming on to the market in late 2016, caused by George Osborne’s new 3% stamp duty tax for landlords in the first part of 2016. This meant a lot of new rental properties were ‘dropped’ on to the rental market all at the same time. The greater choice of rental properties for tenants curtailed rental growth/inflation. A slight softening of Warminster property prices has compounded this.  Figures from The Bank of England suggested that first time buyers rose over the last 12 months as some were more inclined to buy instead of rent. Together, these factors played a part in the ongoing moderation of rental growth.

The lead up to the General Election in May didn’t help: after all people don’t like doubt and uncertainty. So now that we have a mandate for going forward over the next 5 years hopefully that has removed any stumbling blocks stopping tenants making the decision to move home.

Whether it be ‘hard’ or ‘soft’ Brexit negotiations (and with the Election result the Tory’s might have to be ‘softer’ on those negotiations) the simple fact is, we aren’t building enough properties for us to live in. Both in Warminster, the South West and the wider UK, long-term population trends imply that rents will soon be growing faster than inflation again. Look at the projections by the Office of National Statistics.

Population Estimates for Wiltshire Council over the next 20 years
2016 (actual)	2021	2026	2031	2036
489,784	503,925	515,951	526,169	535,633

Tenants will still require a vibrant and growing rental sector to deliver them housing options in a timely manner. As the population grows in Warminster, and wider afield, any restriction to the supply of rental properties (brought about by poor returns for landlords) cannot be in the long-term best interest of tenants. Simply put rents must go up!

The fact is that I see this as a short-term blip and rents will continue to grow in the coming years. With rents only accounting for 29% of a tenants’ disposable income, the ability for most tenants to absorb a rent increase does exist.

Northwood Warminster Wins British Property Awards For Warmisnter!

On the whole I don’t use my blog or newsletter to promote the business. However this week

Northwood Warminster won The British Property Awards for Warminster, and I am immensely proud and honored to work with such a dedicated team of professionals.

After an extensive judging process which involved all the agents in town being mystery shopped Northwood came out in top! We work tirelessly to maintain high levels of customer service and it’s incredibly rewarding when this is recognised.

Northwood Warminster have now been shortlisted for a number of national awards which will be announced later in the year at ceremony British Property Awards in central London.

379,830 People use Warminster Train Station a year - So what’s that got to do with the Market?

It might surprise you that it isn’t always the villages around Warminster or the perceived desirable Warminster streets where properties sell and let the quickest. Quite often, it’s about access to the best transport links. I mean, there is a reason why one of the most popular property programs on television is called Location, Location, Location!

As an agent in Warminster, I am frequently confronted with queries about the Warminster property market, and most days I am asked, “What is the best part of Warminster, or best village to live in these days?”, chiefly from new-comers.  Now the answer is different for each person – a lot depends on the demographics of their family, their age, schooling requirements and interests etc. Nonetheless, one of the principal necessities for most tenants and buyers is ease of access to transport links, including public transport – of which the railways are very important.

Official figures recently released state that, in total, 522 people jump on a train each and every day from Warminster Train station. Of those, 124 are season ticket holders. That’s a lot of money being spent when a season ticket, standard class, to Bristol is £2,252 a year.

So, if up to £279,250 is being spent on rail season tickets each year from Warminster, those commuters must have good jobs and incomes to allow them to afford that season ticket in the first place. That means demand for middle to upper market properties remains strong in Warminster and the surrounding area and so, in turn, these are the type of people whom are happy to invest in the Warminster buy to let market – providing homes for the tenants of Warminster…

The bottom line is that property values in Warminster would be much lower, by at least 1% to 2%, if it wasn’t for the proximity of the railway station and the people it serves in the town

And this isn’t a flash in the pan. Rail is becoming increasingly important as the costs associated with car travel continue to rise and roads are becoming more and more congested. This has resulted in a huge surge in rail travel.  

Overall usage of the station at Warminster has increased over the last 20 years. In 1997, a total of 206,409 people went through the barriers or connected with another train at the station in that 12-month period. However, in 2016, that figure had risen to 379,830 people using the station (that’s 1,043 people a day).

The juxtaposition of the property and the train station has an important effect on the value and saleability of a Warminster property. It is also significant for tenants - so if you are a Warminster buy to let investor looking for a property - the distance to and from the railway station can be extremely significant.

One of the first things house buyers and tenants do when surfing the web for somewhere to live is find out the proximity of a property to the train station. That is why Rightmove displays the distance to the railway station alongside each and every property on their website. 

Should the 2,808 home owning OAP’s of Warminster be forced to downsize?

This was a question posed to me a few weeks ago, after reading one of my articles. After working hard for many years and buying a home for themselves and their family, the children have subsequently flown the nest and now they are left to rattle round in a big house. Many feel trapped in their big homes (hence I dubbed these Warminster home owning mature members of our society, ‘Generation Trapped’).

So, should we force OAP Warminster homeowners to downsize?

Well in a previous article, I suggested that we as a society should encourage, through building, tax breaks and social acceptance that it’s a good thing to downsize. But should the Government force OAP’s?

Well, one of the biggest reasons OAP’s move home is health (or lack of it).

Looking at the statistics for Warminster, of the 2,808 homeowners who are 65 years and older, whilst 1,661 of them described themselves in good or very good health, a sizeable 894 home owning OAPs described themselves as in fair health and 253 in bad or very bad health.

9.01% of Warminster home owning OAP’s are in poor health

But if you look at the figures for the whole of Wiltshire Council (not just Warminster), there are only 2,482 specialist retirement homes that one could buy (if they were in fact for sale) and 3,259 homes available to rent from the Council and other specialist providers (again- you would be waiting for dead man’s shoes to get your foot in the door) and many older homeowners wouldn’t feel comfortable with the idea of renting a retirement property after enjoying the security of owning their own home for most of their adult lives.

My intuition tells me the majority ‘would be’ Warminster downsizers could certainly afford to move but are staying put in bigger family homes because they can't find a suitable smaller property. The fact is there simply aren’t enough bungalows for the healthy older members of the Warminster population, and specialist retirement properties for the ones who aren’t in such good health ... so, we need to build more appropriate houses in Warminster.

The Government's Housing White Paper, published a few weeks ago, could have solved so many problems with the UK housing market, including the issue of homing our aging population. Instead, it ended up feeling annoyingly ambiguous. Forcing our older generation to move with such measures as a punitive taxation (say a tax on wasted bedrooms for people who are retired) would be the wrong thing to do. Instead of the stick – maybe the Government could use the carrot tactics and offer tax breaks for downsizers. Who knows – but something has to happen?

.. and come to think about it, isn’t the word ‘downsize’ such an awful word?  I prefer to use the word ‘decent-size’ instead of ‘down-size’- as the other phrase feels like they are lowering themselves, as though they are having to downgrade themselves in their retirement (and let’s be frank – no one likes to be downgraded).

The simple fact is we are living longer as a population and constantly growing with increased birth rates and immigration. So, what I would say to all the homeowners and property owning public of Warminster is ... more houses and apartments need to be built in the Warminster area. But particular attention needs to be given to providing decent sized accommodation for the older generation, especially more bungalows. The Government had a golden opportunity with the White Paper – and were sadly found lacking.

And a message to my Warminster property investor readers whilst this issue gets sorted in the coming decade(s)  – maybe seriously consider adding bungalows to your portfolio – people will pay handsomely for them – be they for sale or even rent.