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.

Warminster rents rise by 19.6% since 2005

The Warminster Property Market is a very interesting animal and has been particularly fascinating over the last 12 years when we consider what has happened to Warminster rents and house prices.

There’s currently much talk of what will happen to the rental property market following Brexit. To judge that, I believe we must look what happened in the 2008/9 credit crunch (and what has happened since) to judge rationale and methodically, and the possible ramifications for long-term investors in the Warminster property market. You see, an important, yet overlooked measure is the performance of rental income vs house prices (i.e. the resultant yields over time). In Warminster (as for the rest of Great Britain), notwithstanding a slight drop in 2008 and 2009, property rentals have been gradually increasing.

The income from rentals has been progressively increasing over the last 12 years. Today, they are 19.6% higher than they were at the beginning of 2005. In fact, over the last five years, the average growth has been 1.7% per annum. From a landlord’s point of view, increase in average rental income is not to be sneered at. However, the observant readers will be noting that we are ignoring an important factor – our friend inflation.

Turn the clock back to 2005, and we have a property being rented for say £900 a month and that is still being rented at £900 a month today, in Spring of 2017. While the landlord is not getting any less income, this £900 is no longer worth as much. Let me explain, in 2005, £900 may have bought a two-week 4* holiday in Italy. Yet, holidays have increased in line with inflation (which has been 38.5% since 2005), so our holiday would cost today £1,246 (£900 + 38.5% inflation = £1,246). Therefore, the landlord could no longer afford the same holiday, even though having the same amount in pound notes from their rental property.

This means when we compare rents in Warminster to inflation since 2005, Warminster landlords are worse off today, when they receive their monthly rental income, than they were in 2005 by 18.9% in real terms (rents increased by 19.6% since 2005, less the 38.5% inflation since 2005 – net affect 18.9% drop) 

However, rental income is not the only way to generate money from property as property values can increase. Although in the short term, cash flows are diminishing, many Warminster landlords may be content to accept that for a colossal increase in capital value.

Property values in Warminster have risen by 30.7% since 2005

This equates to a reasonably salubrious 2.56% per annum increase over the last 12 years. Even more interesting that this includes the 2008/9 property crash, this will make those Warminster landlords and investors feel a little better about the information regarding rents after inflation.

Moving forward, the prospects of making easy money on buy to let in Warminster have diminished, when compared to 2005. Last decade, making money from buy to let was as easy as falling off a log – but not anymore.

It would be true to say, my rental income verses property prices study does lead to noteworthy thoughts. I am often asked to look at my landlord’s rental portfolios, to ascertain the spread of their investment across their multiple properties. It’s all about judging whether what you have will meet your needs of the investment in the future. It’s the balance of capital growth and yield whilst diversifying this risk.

If you are investing in the Warminster property market, do your homework and do it well. While some yields may look attractive, there are properties in many areas that do not have the solid rudiments in place to sustain them. If you are looking for capital growth, you might be surprised where the hidden gems really are. Take advice, even ask your agent for a portfolio analysis like I offer my landlords. 

What will the General Election do to 4,927 Warminster Homeowners?

In Warminster, of the 7,543 households, 2,606 homes are owned without a mortgage and 2,321 homes are owned by a mortgage. Many homeowners have made contact me with asking what the General Election will do the Warminster property market?  The best way to tell the future is to look at the past.

I have looked over the last five general elections and analysed in detail what happened to the property market on the lead up to and after each general election. Some very interesting information has come to light.

Of the last five general elections (1997, 2001, 2005, 2010 and 2015), the two elections that weren’t certain were the last two (2010 with the collation and 2015 with unexpected Tory majority). Therefore, I wanted to compare what happened in 1997, 2001 and 2005 when Tony Blair was guaranteed to be elected/re-elected versus the last knife edge uncertain votes of 2010 and 2015 ... in terms of the number of houses sold and the prices achieved.

Look at the first graph below comparing the number of properties sold and the dates of the general elections

It is clear, looking at the number of monthly transactions (the blue line), there is a certain rhythm or seasonality to the housing market. That rhythm/seasonality has never changed since 1995 (seasonality meaning the periodic fluctuations that occur regularly based on a season - i.e. you can see how the number of properties sold dips around Christmas, rises in Spring and Summer and drops again at the end of the year).

To remove that seasonality, I have introduced the red line. The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers, whilst the yellow arrows denote the times of the general elections. It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (i.e. number of properties sold).

Next, I wanted to consider what happened to property prices. In the graph below, I have used that same 12-month average, housing transactions numbers (in red) and yellow arrows for the dates of the general elections but this time compared that to what happened to property values (pink line).

It is quite clear none of the general elections had any effect on the property values.  Also, the timescales between the calling of the election and the date itself also means that any property buyer’s indecisiveness and indecision before the election will have less of an impact on the market.

So finally, what does this mean for the landlords of the 1,471 private rented properties in Warminster? Well, as I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Warminster will be more subdued in the coming few years for reasons other than the general election. The growth of rents has taken a slight hit in the last few months as there has been a slight over supply of rental property in Warminster, making it imperative that Warminster landlords are realistic with their market rents. But, in the long term, as the younger generation still choose to rent rather than buy ... the prospects, even with the changes in taxation, mean investing in buy-to-let still looks a good bet. 

‘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.