The Unfairness of the Rugby Baby Boomer’s £2,891,690,000 Windfall? (Part 1)

Recently I was having a chat with one of my second cousins at a big family get-together. The last time I had seen them their children were in their early teens. Now their children are all grown up, have partners, dogs and children. Wow – how time flies!

So, I got talking over a glass of lemonade with my 2nd cousins and a couple of their children, about the times of 15% interest rates and how the more mature members of our family had to endure the 3 day week, 20% inflation and the threat of nuclear annihilation in 4 minutes .. so, foolishly, I said what with all the opportunities youngsters had today, they had never had it so good!

Trust one of my cousin’s children to have gained some financial/economics qualifications before going to Law School, as they debated with me the genuine economic predicament of Millennials and how a combination of student debt, unemployment, global proliferation, EU migration and rising house values is reducing the salaries and outlook of masses of the UK’s younger generation, causing an unparalleled disparity of wealth between the generations. So of course I asked why that was?

They said Millennials were paying the price for the UK’s most spectacular bookkeeping catastrophe to date (bigger than the Bank bailout after the Credit Crunch). Back in the 1950’s and 1960’s, nobody predicted us Brit’s would live as long as we do today, and in such abundant numbers. The OAP pensions that were promised in the past (be that Government State Pension or Company Final Salary Schemes) which appeared to be nothing fancy at the time, are now burdensomely over-lavish, and that is hurting the Millennials of today and will do so for years to come.

Bringing it back to property, the young 2nd cousin once removed ‘soon to be’ lawyer, stated that baby boomers born between 1945 and 1965 have been big recipients of the vast rising house prices over the 1970’s/80’s/90’s and 2000’s. Add to that their decent pensions, meaning cumulatively, their wealth has grown exponentially through no skill of their own.

This disparity of wealth between the older and younger generations could have unparalleled consequences for the living standards of younger Millennials…. So Houston Rugby – do we have a problem??

Well Rugby Property Blog readers, you know I like a challenge. I can’t disagree with some of what the younger family member said, but there are always two sides to every story, so I thought I would do some homework on the matter ..

Since 1990, the average value of a property in Rugby has risen from £84,700 to its current level of £246,500. As there are a total of 17,872 homeowners aged over 50 in Rugby; that means there has been a £2.89bn windfall for those Rugby homeowners fortunate enough to own their own homes during the property boom of the 1990s and early 2000’s.

I must admit that the growth in property values in the 1990’s and 2000’s certainly helped many of Rugby’s baby boomers. The figures do appear to put into reverse gear the perceived wisdom that each generation gets wealthier than the previous one  … and so with all this wealth, the figures do back up the youngsters argument that Millennials are being priced out of home ownership.

Or do they? Are they?

Next week, I will carry on this discussion where I will give the Baby Boomer’s defence to the prosecution’s case!

Stamp Duty Hike Means Act Fast for Investment Buyers!

The Chancellor of the Exchequer announced a 3% hike in Stamp Duty Land Tax (SDLT) on buy-to-let properties and second homes in the 2016 Autumn Statement. This was met with “outrage” from various quarters, such as the Association of Residential Letting Agents (ARLA) and others who describe it as “the nail in the coffin of the buy-to-let and holiday home market. Shares in some major estate and letting agency firms fell on the news.

Certainly if you are in a fortunate enough position to be able to buy an investment property or second home, then yes, an average £250,000 purchase will cost you an extra £7,500. This additional expense might ultimately have to be absorbed by the vendor, who may have to accept a lower offer than expected, as the investment buyer will have less in their pocket.

Nevertheless, a further frustration for investors is that the extra money may have to be found in cash if the additional amount pushes the buyer over their Loan-to-Value ratio as purchase “costs” may not be included in any mortgage borrowing.

The upside is that first time buyers – who often have to compete with the spending power of buy-to-let investors, will find themselves in a much stronger relative buying position, which is generally regarded as good for the economy as well as socially. Indeed, a recent study discovered that people in their 30’s who cannot get a foot on the property ladder are more likely to delay starting a family.

Investors have been hard hit recently as the increase in SDLT follows on the heals of the staged reduction in mortgage tax relief on investment properties. The old adage of “not letting the tax tail wag the investment dog” is probably worth recalling as property nevertheless remains one of the most reliable investments available.

4,771 Rugby Landlords – Is This a Legal Tax Loop-Hole?

In November 2015, George Osborne disclosed plans to restrain the buy-to-let (BTL) market, implying its growing attractiveness was leaving aspiring first time buyers contesting with landlords for the restricted number of properties on the market.  One of things he brought in was that tax relief on BTL mortgages would be capped, starting in April 2017.  Before April 2017, a private landlord could claim tax relief from their interest on their BTL mortgage at the rate they paid income tax – (i.e. 20% basic /40% higher rate and 45% additional rate).

 

So, for example, let’s say we have a Rugby landlord, a high rate tax payer who has a BTL investment where the rent is £900 a month and the mortgage is £600 per month.  In the tax year just gone (16/17), assuming no other costs or allowable items …

 

  • Annual rental income £10,800.
  • Taxable rental income would be £3600 after tax relief from mortgage relief
  • Meaning they would pay £1,440 in income tax on the rental income

 

And assuming no other changes … the landlord would have income tax liability’s (at the time of writing May 2017) in the tax years of …

 

  • (17/18) £1,800
  • (18/19) £2,160
  • (19/20) £2,520
  • (20/21) £2,880

 

Landlords who are higher rate tax payers are going to have be a lot smarter with their BTL investments and ensure they are maximising their rental properties full rental capability.  However, there is another option for landlords.

 

The Rugby landlords who own the 4,771 Rental properties

in the town could set up a Limited Company and sell their

property personally to that Limited Company

 

In fact, looking at the Numbers from Companies House – many landlords are doing this.  In the UK, there are 93,262 Buy To Let Limited Companies, and since the announcement in November 2015 – the numbers have seen a massive rise.

 

  • Q2 2015 / Q3 2015 – 4,193 Buy to Let Limited Companies Set Up
  • Q4 2015 / Q1 2016 – 5,403 Buy to Let Limited Companies Set Up
  • Q2 2016 / Q3 2016 – 3,007 Buy to Let Limited Companies Set Up
  • Q4 2016 / Q1 2017 – 7,149 Buy to Let Limited Companies Set Up

 

So, by selling their buy to let investments to their own limited company, owned 100% by them, these landlords could then offset the costs of running their BTL’s as an ‘allowable expense’ – effectively writing off the cost of 100% of their mortgage outgoings, wear and tear and upkeep, letting agent’s fees etc.

 

I am undeniably seeing more Rugby landlords approach me for my thoughts on setting up a BTL limited company, so should you make the change to a limited company?

 

 

In fact, I have done some extensive research with companies house in the 15 months (1st January 2016 to 31st March 2017 and 166 Buy To Let Limited Companies have been set up in the CV postcode alone).

 

Well if you are looking to hold your BTL investments for a long time it could be very favourable to take the short-term pain of putting your BTL’s in a limited company for a long-term gain.  You see, there are huge tax advantages to swapping property ownership into a limited company but there are some big costs that go with the privilege.

 

As the law sees the new Limited Company as a separate entity to yourself, you are legally selling your BTL property to your Limited Company, just like you would be selling it on the open market. Your Limited company would have to pay Stamp Duty on the purchase and if you (as an individual) made a profit from the original purchase price, there could be a capital gains tax liability of 18% to 28%.  The mortgage might need to be redeemed and renegotiated (with appropriate exit charges).

 

On a more positive note, what I have seen though by incorporating (setting up the Limited Company) is landlords can roll up all their little buy to let mortgages into one big loan, often meaning they obtain a lower interest rate and the ability to advance new purchase capital.  Finally, if the tax liability is too high to swap to a limited company, some savvy buy to let investors are leaving their existing portfolios in their personal name whilst purchasing any new investment through a limited company?  Just an idea (not advice!).

 

It’s vital that landlords get the very best guidance and information from tax consultants with the right qualifications, experience and insurance.  Whatever you do, always get the opinions from these tax consultants in writing and you shouldn’t hurry into making any hasty decisions.  The modifications to BTL tax relief are being progressively eased in over the next three years so there is no need to be unnerved and rush into any decisions before finding out the specifics as they relate precisely to your personal situation, because with decent tax planning (from a tax consultant) and good rental / BTL portfolio management (which I can help you with) … whatever you do – let’s keep you the right side of the line!

 

For more of my thoughts on the Rugby property market visit my blog – http://www.rugbypropertyblog.wordpress.com

 

Iain Havell

Council House Waiting List in Rugby Drops by 73.3% in last 5 years

Should you buy or rent a house? Buying your own home can be expensive but could save you money over the years. Renting a property through a letting agent or private landlord offers less autonomy to live by your own rules, with more flexibility if you need to move.

Yet, there is third way that many people seem to forget, yet it plays an important role in the housing of Rugby people. Collectively known as social housing, it is affordable housing, which is let by either Rugby Borough Council or a housing association to those considered to be in specific need, at rents below those characteristic in the private rental market.

In Rugby, there are 4,819 social housing households, which represent 16.08% of all the households in Rugby. There are a further 721 families in the Rugby Borough Council area on their waiting list, which is similar to the figures in the late 1990’s. The numbers peaked in 2011, when it stood at 2,702 families, so today’s numbers represent a drop of 73.3%.

Nevertheless, this doesn’t necessarily mean that more families are being supplied with their own council house or housing association property. Six years ago, Westminster gave local authorities the authority to limit entitlement for social housing, quite conspicuously dismissing those that did not have an association or link to the locality.

Interestingly, the rents in the social rented segment have also been growing at a faster rate than they have for private tenants. In the Rugby Borough Council area, the average rent in 1998 for a council house/housing association property was £162.63 a month, whilst today its £403.56, a rise of 148% in 19 years.

When comparing social housing rents against private rents, the stats don’t go back to the late 1990’s for private renting, so to ensure we compare like for like, we can only go back to 2005. Over the last 12 years, private rents have increased nationally by a net figure of 19.7%, whilst rents for social housing have increased by 59.1%.

So, what does this all mean for the homeowners, landlords and tenants of Rugby?

Rents in the private rental sector in Rugby will increase sharply during the next five years. Even though the council house waiting list has decreased, the number of new council and housing association properties being built is at a 70 year low. The government crusade against buy-to-let landlords together with the increased taxation and the banning of tenant fees to agents will restrict the supply of private rental property, which in turn using simple supply and demand economics, will mean private rents will rise – making buy to let investment a good choice of investment again (irrespective of the increased fees and taxation laid at the door of landlords).  It will also mean property values will remain strong and stable as the number of people moving to a new house (and selling their old property) will continue to remain restricted and hence, due to lack of choice and supply, buyers will have to pay decent money for any property they wish to buy.

Interesting times ahead for the Rugby Property Market!

As always for more of my thoughts on the Local Rugby Property market please visit the blog – http://www.rugbypropertyblog.wordpress.com

Iain Havell

Rugby First Time Buyers Mortgages taking 28.6% of their Wages

I received a very interesting email the other day from a Rugby resident. He declared he was a Rugby homeowner, retired and mortgage free. He stated how unaffordable Rugby’s rising property prices were and that he worried how the younger generation of Rugby could ever afford to buy? He went on to ask if it was right for landlords to make money on the inability of others to buy property and if, by buying a buy to let property, Rugby landlords are denying the younger generation the ability to in fact buy their own home.

Whilst doing my research for my many blog posts on the Rugby Property Market, I know that a third of 25 to 30 year olds still live at home. It’s no wonder people are kicking out against buy to let landlords; as they are the greedy bad people who are cashing in on a social woe. In fact, most people believe the high increases in Rugby’s (and the rest of the UK’s) house prices are the very reason owning a home is outside the grasp of these younger would-be property owners.

However, the numbers tell a different story. Looking of the age of first time buyers since 1990, the statistics could be seen to pour cold water on the idea that younger people are being priced out of the housing market. In 1990, when data was first published, the average age of a first time buyer was 33, today it’s 31.

Nevertheless, the average age doesn’t tell the whole story. In the early 1990’s, 26.7% of first-time buyers were under 25, while in the last five years just 14.9% were. In the early 1990’s, four out of ten first time buyers were 25 to 34 years of age and now its six out of ten first time buyers.

Although, there are also indications of how un-affordable housing is, the house price-to-earnings ratio has almost doubled for first-time buyers in the past 30 years. In 1983, the average Rugby home cost a first-time buyer (or buyers in the case of joint mortgages) the equivalent of 2.5 times their total annual earnings, whilst today, that has escalated to 4.5 times their income (although let’s not forget, it was at 5.0 times their income for Rugby first time buyers in 2007).

Again, those figures don’t tell the whole story. Back in 1983, the mortgage payments as percentage of mean take home pay for a Rugby first time buyer was 25.9%. In 1989, that had risen to 55.5%. Today, it’s 28.6% … and no that’s not a typo .. 28.6% is the correct figure.

So, to answer the gentleman’s questions about the younger generation of Rugby being able to afford to buy and if it was right for landlords to make money on the inability of others to buy property? It isn’t all to do with affordability as the numbers show.

And what of the landlords? Some say the government should sort the housing problem out themselves, but according to my calculations, £18bn a year would need to be spent for the next 20 or so years to meet current demand for households. That would be the equivalent of raising income tax by 4p in the Pound. I don’t think UK tax payers would swallow that.

So, if the Government haven’t got the money… who else will house these people? Private Sector Landlords and thankfully they have taken up the slack over the last 15 years.

Some say there is a tendency to equate property ownership with national prosperity, but this isn’t necessarily the case. The youngsters of Rugby are buying houses, but buying later in life. Also, many Rugby youngsters are actively choosing to rent for the long term, as it gives them flexibility – something our 21st Century society craves more than ever.

As always, for more of my thoughts on the Rugby housing market visit my blog – http://www.rugbypropertyblog.wordpress.com

Iain Havell

1 in 16 Rugby Properties are Leasehold

There are 23.36 million properties in England and Wales with 64% being owner occupied and 36% being rented either from a private landlord, local authority or housing association.

Over nine out of ten of those English and Welsh owner-occupied properties are a whole house or bungalow. Now, most people would assume they would be freehold – however, of those renting nearly half of rental properties, 44% to be precise, lived in other leasehold apartments and flats.

It might be wise to quickly explain the difference between freehold and leasehold. When someone owns the freehold of a property they own it outright, including the land it is built on, whilst with a leasehold property the leaseholder owns the property for the length of their lease agreement. Leaseholders must pay the person who owns land (the freeholder) ground rent and other fees. When the leasehold ends, ownership returns to the freeholder although the leaseholder can extend the lease or they can buy the freeholder out, but there are rules and regulations with regards doing that.

Therefore, it would be safe to assume that houses are freehold and flats are leasehold .. wouldn’t it? Not necessarily! Most houses are freehold but some might be leasehold – usually through shared-ownership schemes – but more and more new homes builders are selling houses on a leasehold as well. The protection of the law afforded to leaseholders who own a flat is massive, but sadly lacking to leasehold houses sold privately.

Looking specifically at the figures for Rugby, at the last count in CV21 there were 17,015 properties. Since 1995, 16,441 properties in CV21 have changed hands and have been sold. Looking further at those 16,441 transactions in CV21 since 1995, using data from Land Registry and solicitors practice My-Home-Move, 6.20% have been leasehold (lower than the national average of 15%).

However, I am concerned about a few new homes builders selling new houses (not flats – houses) as leasehold. There has been a growing (yet small) trend for new-build houses to be sold as leasehold in recent years. While not all house builders use this model, those that do maintain it helps make developments financially viable.

The issue comes when builders sell the freehold separately to an investment company without informing the lease holder  – which they are legally allowed to do without telling the leaseholder. In England and Wales, the “right of first refusal” to buy the freehold is written in law to leaseholders of flats i.e. the freeholder must offer it to the leaseholders of all the flats of the building first), but not leaseholders of houses.

.. and this is the point I am trying to get across. If you are buying a new home and it’s a house (i.e. not a flat) – please check very carefully indeed whether its freehold or leasehold. If it is a leasehold, whilst you do have rights, they are not as strong as for those people buying a leasehold flat. I appreciate I am only talking about a very small percentage of the property market, but potentially this could end up costing thousands of pounds to those affected.

 

Iain Havell

Rugby Flats Out Perform Property Market Average by 42%

According to the Land Registry’s latest House Price Index for Rugby and the surrounding locality, the value of apartments/flats are rising at a faster rate than terraced/town houses, semi-detached properties and even detached property.

 

Values of apartments in Rugby have increased by 4.53% over the past year, which is proportionally 42% more than the Rugby average rise of 3.2%. The last time flats/apartments in Rugby out performed all the other types of property, by such a gulf, was back in the spring of 2003. For comparison, the other property types performed as follows ..

 

  • Detached homes rose by 3.63%
  • Semi-detached homes rose by 3.15%
  • Terraced/Town-Houses rose by 2.43%

 

This moderately increasing rate of property value growth is opportune – but no one should confuse it with a strong and vigorous healthy Rugby property market. Instead, it is somewhat an indicator of the long-lasting lack of property on the market. In fact, I have spoken about the lack of homes for sale in Rugby on a number of occasions in my Rugby Property Blog and whilst it isn’t as bad as it was 12 months ago – choice is quite limited for buyers.

 

The average property value in Rugby

now stands at £245,700.

 

When split down into property types ..

 

  • Rugby Apartments at £138,700
  • Rugby Detached at £366,000
  • Rugby Semi-Detached at £215,100
  • Rugby Terraced/Town-House at £172,600

 

 

So why have Rugby apartments performed so well, and is it just a Rugby thing? When I scrutinised the figures for the rest of the UK, it appears that apartments are pacemakers in the clear majority of the country. Of the 379 local authority areas in the UK, the value of apartments is rising faster than detached, semi-detached and terraced houses in 320 of them.

 

So, should Rugby apartment owners be getting out the Champagne? Well, I would keep it on ice as the Land Registry figures are notorious for short term fluctuations. It’s hard to have faith in the fact that Rugby house values rose rapidly last month given that, in the last six months, the Land Registry has frequently made downward revisions to their first published House Price Index figures.

 

Thankfully, the bigger picture from the Council of Mortgage Lenders (CML) stated that home buying activity last month was up 2% over the same month in 2016 – not bad as we have had the Autumn, Winter and now Spring since Brexit. The CML stated first time buyer’s levels of affordability was being squeezed and that the average amount borrowed by those first-time buyers dropped slightly last month, but the overall amount borrowed (by all buyers) was an impressive 12% higher than the same month in 2016.

 

So, what next for the Rugby Property market? I believe the uplift in the values of apartments is a short-term blip. The real issue is with the way wage growth might not keep up with inflation as the effects of 2016 exchange rate sucks in inflation (meaning real wage growth stagnates). This will mean buyer demand growth will be curtailed and with property values already so full, I believe a renewed hastening in house price growth is unlikely.

 

I believe we are starting to return to the housing market we saw in the mid 1990’s, Steady demand, steady supply – nothing silly when it comes to house price growth. Therefore, I believe, with what is happening around us – this isn’t a bad thing at all. HMS Rugby Property Market…. “Nice and steady as she goes”, says the Captain

 

Iain Havell

5.50 Babies Born for Each New Home Built in the Rugby area

As more babies are being born to Rugby mothers, I believe this increase will continue to add pressure to the over stretched Rugby property market and materially affect the local property market in the years to come.

 

On the back of eight years of ever incremental increasing birth rates, a significant 5.50 babies were born for every new home that was built in the Rugby council area in 2016.  I believe this has and will continue to exacerbate the Rugby housing shortage, meaning demand for housing, be it to buy or rent, has remained high.  The high birth rate has meant Rugby rents and Rugby property prices have remained resilient – even with the challenges the economy has felt over the last eight years, and they will continue to remain high in the years to come.

 

This ratio of births to new homes has reach one its highest levels since 1945 (back in the early 1970’s the average was only one and a half births for every household built).  Looking at the local birth rates, the latest figures show we in the Rugby council area had an average of 67.6 births per 1,000 women aged 15 to 44.  Interestingly, the national average is 61.7 births per 1,000 women aged 15 to 44 and for the region its 63.9 births per 1,000 women aged 15 to 44.

 

The number of births from Rugby women between the ages of 20 to 29 are significantly higher than the national average, but those between 35 and 44 were much lower.  However overall, the birth rate is still increasing, and when that fact is combined with the ever-increasing life expectancy in the Rugby area, the high levels of net migration into the area over the last 14 years (which I talked about in the previous articles) and the higher predominance of single person households … this can only mean one thing … a huge increase in the need for housing in Rugby.

 

Again, in a previous article a while back, I said more and more people are having children as tenants because they feel safe in rented accommodation.  Renting is becoming a choice for Rugby people.

 

The planners and Politian’s of our local authority, central Government and people as a whole need to recognise that with individuals living longer, people having more children and whilst divorce rates have dropped recently, they are still at a relatively high level (meaning one household becomes two households) … demand for property is simply outstripping supply.

 

The simple fact is more Rugby properties need to be built

… be that for buying or renting.

Only 1.1% of the Country is built on by houses.  Now I am not suggesting we build tower blocks in the middle of the Cotswolds, but the obsession of not building on any green belt land should be carefully re-considered.

 

Yes, we need to build on brownfield sites first, but there aren’t hundreds of acres of brownfield sites in Rugby, and what brownfield sites there are, building on them can only work with complementary public investment.  Many such sites are contaminated and aren’t financially viable to develop, so unless the Government put their hand in their pocket, they will never be built on.

 

I am not saying we should crudely go ‘hell for leather’ building on our Green Belt, but we need a new approach to enable some parts of the countryside to be regarded more positively by local authorities, politicians and communities and allow considered and empathetic development.  Society in the UK needs to look at the green belts outside their leisure and visual appeal, and assess how they can help to shape the way we live in the most even-handed way.  Interesting times!

 

For more thoughts on the Rugby Property market – visit the Rugby Property Blog

http://www.rugbypropertyblog.wordpress.com

 

Iain Havell

Hard Brexit could cause 1,800 properties to be dumped onto the Rugby Property market.

So all cards up in the air! A general election will be on the books, but one thing is for sure … whoever gets the job to deal with Brexit has a hard job on their hands (I’m just glad its not me!) As it currently stands, by not assuring the rights of EU citizens in the UK, Theresa May has squandered an opportunity to give peace of mind to our EU co-workers working and living in Rugby (and the rest of the UK). No.10 Downing Street’s point of view is that in promising the rights of EU citizens in the UK, it will postpone the same guarantee to the 1.5 million UK citizens living in the other nations of the EU.

Putting aside the politics for one second, the simple fact is now Article 50 has been triggered, we have two years to make a deal with the EU; otherwise it will be a ‘hard Brexit’. Now you might not think a hard Brexit will affect you in your home in Rugby … but nothing could be further from the truth.

Of the 98,180 people who are resident in the Rugby Borough Council area, 86,799 were born in the UK, 2,098 were born in EU countries from West Europe and 3,217 were born in EU countries from the former Soviet States in East Europe (the rest coming from other countries around the world).

The rights of these EU citizens living in the Rugby area are not guaranteed and will now be part of the negotiation with Europe. It is true a lot of our EU next door neighbours in Rugby will have acquired rights relating to the right to live, to work, to own a business, to possess a property, the right to access health and education services and the right to remain in a UK after retirement… yet those acquired rights are up for negotiation in the next two years.

So, what would a hard Brexit do to the Rugby property market?

Well a hard Brexit could mean the nuclear option when it came to the Rugby housing market. It could mean that every EU citizen would have to leave the UK.

In the Rugby Borough area, 1,339 of the 2,098 Western European EU citizens own their own home and (so they would all need to be sold) and 2,305 of the 3,217 Eastern European EU citizens rent a property, so again all those rental properties would all come on the market at the same time.

Hard Brexit and mass EU Migration would mean c. 1,800 properties being dumped onto the housing market in a short period of time, meaning there would be a massive drop in Rugby property values and rents, causing negative equity for thousands of Rugby homeowners and many buy-to-let landlords would be out of pocket.

While there is no certainty as to what the future will hold, both UK expats in the EU and EU citizens in the UK rights will no longer be guaranteed and will be subject to bilateral renegotiation.

All I ask is that the politicians are sensible with each other in the negotiations. A lot of the success of the Rugby (and UK) property market has been built on high levels of homeownership and more recently in the last 10/15 years, a growth of the rental sector with lots of demand from Eastern Europeans coming to Rugby (and the surrounding area) to get work and provide for their families. Many Rugby people have invested their life savings into buying a buy to let property.

Much will depend on what is politically realistic. Unilateral knee-jerk reactions and measures caused by a hard Brexit would not only likely cause major disruption or suffering to the 3 million EU citizens living in the UK, but also everyone who owns property in the UK … politics aside – a hard Brexit is in no one’s interests.

 

Iain Havell

2,281,588 People use Rugby Train Station a year –

How does that affect the Rugby Property Market?

It might surprise you that it isn’t always the poshest villages around Rugby or the swankiest Rugby streets where properties sell and let the quickest. Quite often, it’s the ones that have the best transport links. I mean, there is a reason why one of the most popular property programmes on television is called Location, Location, Location!

As an agent in Rugby, I am frequently confronted with queries about the Rugby property market, and most days I am asked, “What is the best part of Rugby and its villages 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, 3,134 people jump on a train each and every day from Rugby Train station. Of those, 1,514 are season ticket holders. That’s a lot of money being spent when a season ticket, standard class, to London is £5,760 a year.

So, if up to £8.72m is being spent on rail season tickets each year from Rugby, those commuters must have some impressive 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 Rugby and the surrounding area and so, in turn, these are the type of people whom are happy to invest in the Rugby buy to let market – providing homes for the tenants of Rugby…

The bottom line is that property values in Rugby would be much lower, by at least 3% to 4%, 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 Rugby has increased over the last 20 years. In 1997, a total of 777,598 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 2,281,588 people using the station (that’s 6,268 people a day).

The juxtaposition of the property and the train station has an important effect on the value and saleability of a Rugby property. It is also significant for tenants – so if you are a Rugby 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.

For more thoughts on the Rugby Property market – please visit the Rugby Property Blog http://www.rugbypropertyblog.wordpress.com

Iain Havell