Rugby Buy To Let Annual Returns Hit 12.18% in Last 10 Years

Many Rugby people ponder the best places to invest their hard-earned savings and the best piece of advice I can give you is to do your homework and speak to lots of people. It depends on your attitude to risk versus reward. Normally, the lower the risk, the lower the reward whilst a higher risk is normally associated with the possibility of higher returns, yet nothing is guaranteed. At the same time, higher risk also means higher possible losses on your investment – yet if one looks at the bigger picture, the biggest threat to investing, predominantly when the investment is made in the short term, isn’t risk but actually volatility.

So where should you invest? Building society, the stock market, gold or property are options. This article isn’t designed to give you advice – just show you how different investments have performed over the last decade.

Let me start with the humble semi-detached house in Rugby … which in 2009 was worth £157,300 … so assuming I bought that property for that figure, then I looked at what if I had invested the same amount of money in a building society, into gold and finally the stock market…

Putting your money into the stock market (FTSE100) would have brought a return of 30.2% on your capital over those 10 years and an average of 3.79% a year in dividends (making an overall increase of 74%).

Gold doesn’t earn interest – yet it has increased in value by 26.9% over the same 10 years whilst putting your money in the building society, the money hasn’t increased in value, but would have earned you interest of 24.46% or the equivalent of 2.21% per year.

Investing in an average semi-detached house in Rugby over the last 10 years has seen the capital increase by 50% (an equivalent of 4.14% per annum) and the income (i.e. the rent) has provided a return, based on the original purchase price, of 116.78% or the annual equivalent of 8.04% … meaning the overall return, based on the original purchase price of an average semi-detached property in Rugby, is 12.18% per annum.

Notwithstanding No.11 Downing Street’s grab at the profits of buy to let landlords by hitting the buy to let sector with several fiscal punishments with a 3% stamp duty level, a decrease in high rate tax relief for landlords and an increase in rate of CGT on residential property profits, the facts remain that ‘bricks and mortar’ is still one of the preeminent and most constant investments available.

The bottom line is, the buy to let investment remains the mainstay of the British property market, serving to support aspiring homeowners as they work to conquer the, sometimes difficult, financial obstacles of home ownership. With Central Government over the last 30 years only paying lip service to address the lack of new homes being built or tackling the affordability on a consequential scale, it is highly probable this will continue for the next 5/10/15 years as there will always be a call for a respectable, and above all, honest buy to let landlords delivering decent housing to those that need it.

Which Rugby Properties are Selling the Best?

Moving home is said to be the third most stressful life event, following a member of your family dying or getting divorced. So it is always best to keep your stress levels down by investigating and doing your homework on both the particular area of Rugby (or nearby conurbations) where you live (i.e. where you are selling) and where you want to search for your next Rugby home. Being mindful of how fast (or slow) the different aspects of the Rugby property market is moving is key.. because it could save you much heartache and many thousands of pounds.

You see, if you know you are selling a property in a sluggish price range and buying in a faster moving price range in Rugby then putting your property on the market first is vital, otherwise you will always find the one you want to buy tends to sell before your property sells – there is nothing worse than pondering over a property only to find that someone else has bought it. Being primed with all the knowledge is key. On the other side of the coin, if you are selling in a fast moving market and buying in a sluggish market .. you can probably get a better deal on the one you are buying.

For buy to let landlords in Rugby, this evidence is particularly critical as purchasing a high-demand property in a well-liked area of Rugby will safeguard a surfeit of availability of tenants, as well as respectable house price growth. 

Being an agent in Rugby, I like to keep an eye on the Rugby property market on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Rugby; be that a buy to let property for a landlord or an owner occupier house.  So, I thought, how could I scientifically split the Rugby housing market into sections, so I could analyse which part of the Rugby property market was doing the best (or the worst).

I took the decision that the preeminent way was to fragment the Rugby property market into roughly four uniform size price bands (in terms of properties for sale). Each price band would have roughly around 25% of the property in Rugby available for sale .. then add up all the sold (stc) properties and see which sector of the Rugby property market was performing best? … And these were the results ..

The best performing price range in Rugby is the lower market up to £200,000 where 61.0% of all property in that price range has a buyer and is sold stc.

 

The best performing price range in Rugby is the lower market up to £200,000 where 61.0% of all property in that price range has a buyer and is sold stc.

The middle to upper range of the property market (£280,000 to £360,000) in Rugby is finding things a little tougher compared to the others. Even though the number of first time buyers in 2018 did increase over the 2017 levels, it was from a low starting point and the large majority of 20 to 30yo’s don’t want to or can’t buy their first home and the local authority has no money to build Council houses meaning an increase in demand as private landlords take up the slack – because everyone needs a roof over their head!

If you would like to pick my brains on the Rugby Property Market – pop in for a coffee or drop me a line on social media or email.

Rugby Tenant’s Deposits held total £3,697,525

With the Government preparing to control tenant’s deposits at five weeks rent, Rugby landlords will soon only be protected in the event of a single month of unpaid rental-arrears, at a time when Universal Credit has seen some rent arrears quadrupling and that’s before you consider damage to the property or solicitor costs.

It can’t be disputed that the deposits Rugby tenants have to save for, certainly raises the cost of renting, putting another nail in the coffin of the dream of home ownership for many Rugby renters whilst at the same time, those same deposits being unable to provide Rugby landlords with a decent level of protection against unpaid rent or damage to the property.

In fact, the total of all the tenants’ deposits in Rugby, deposited or protected, is £3,697,525

When you consider the value of all the privately rented properties in Rugby total £1,259,744,382, the need for decent landlord insurance to ensure you are adequately covered as a Rugby landlord is vital.

However, I want to consider the point of view of the Rugby tenant.  Several housing charities believe spending more than a third of someone’s salary on rent as exorbitant, yet for the tenants they find themselves in that very position.  I feel especially sorry for the Rugby youngsters in their 20’s who want to rent a place for themselves, as they face having to pay out the rent and try and save for a deposit for a home.

The average 22 to 29-year-old in Rugby spends 36% of their typical salary on a one bed rental property

….and 40% of their salary for a 2-bed home in Rugby.

40 years ago, British people who rented spent an average of 10% of their salary on rent, and only 14% in London.  Looking in even greater detail, according to the ONS, over the past 60 years the proportion of total spending on all housing (renting and mortgages) has doubled from 9% in the late 1950’s to 18% today.  Whilst on the other hand, the proportion of total expenditure on food has halved (33% to 16%), as has the proportion of total spending on clothing (10% to 5%) … it’s a case of swings and roundabouts!

Yet landlords also face costs that need to be covered from rents including mortgages, landlord insurance (especially the need for the often-inadequate deposits to cover the loss of rent and damage), maintenance and licensing.  In fact, rents in the last 10 years have failed to keep up with UK inflation, so in real terms, landlords are worse off when it comes to their rental returns (although they have gained on the increase in Rugby property values – but that is only realised when a property sells).

There are a small handful of Rugby landlords selling some/or all of their rental portfolio as their portfolios become less economically viable with the recent tax changes for buy to let landlords, which will result in fewer properties available to rent.

However, this will reduce the supply and availability of Rugby rental properties, meaning rents will rise (classic textbook supply and demand), thus landlords return and yields will rise.  Yet, because tenants still can’t afford to save the deposit for a home (as we discussed above) and we are all living longer, the demand for rental properties across Rugby will continue to grow in the next twenty to thirty years as we turn to more European ways where the norm is to rent rather than buy in the 20’s and 30’s age range. This will mean new buy-to-let landlords will be attracted into the market, buy properties for the rental market in Rugby and enjoy those higher yields and returns … isn’t it interesting that things mostly always go full circle?

Rugby Homeowners 87% More Likely To Live in a Home with 3+ Bedrooms than those that Privately Rent

The conventional way of categorising property in Britain is to look at the number of bedrooms rather than its size in square metres (square feet for those of you over 50!). My intuition tells me that homeowners and tenants are happy to pay for more space. It’s quite obvious, the more bedrooms a house or apartment has, the bigger the property is likely to be. And it’s not only the tangible additional bedrooms, but those properties with those additional bedrooms tend to have larger (and more) reception (living) rooms. However, if you think about it, this isn’t so surprising given that properties with more bedrooms would typically accommodate more people and therefore require larger reception rooms.

In todays Rugby property market, the Rugby homeowners and Rugby landlords I talk to are always asking me which attributes and features are likely to make their property comparatively more attractive and which ones may detract from the price. Over time buyers’ and tenants’ wants and needs have changed.

In Rugby, location is still the No. 1 factor affecting the value of property, and a property in the best neighbourhoods can achieve a price almost 50% higher than a similar house in an ‘average’ area. Nevertheless, after location, the next characteristic that has a significant influence on the desirability, and thus price, of property is the number of bedrooms and the type (i.e. Detached/Semi/Terraced/Flat).

The number of bedrooms for owner-occupiers very much depends on the size of the family and the budget, whilst Rugby landlords have to consider the investment opportunity. In this article, I have analysed Rugby’s housing stock into bedrooms and tenure. Initially looking at Rugby homeowners..

And now the Private rented sector …

It can quite clearly be seen that Rugby owner-occupiers tend to occupy the largerproperties with more bedrooms. This would be expected due to the demographic of homeowners and people that privately rent.

However, this shows there could be opportunities for Rugby buy to let landlords to purchase larger properties with more bedrooms to attract tenants requiring properties with more bedrooms. However, before you all go buying larger 4 bed and 5 bed mansions to rent them out, a lot of bigger properties in Rugby don’t make financial sense when it comes to buy to let.

For numerous years Rugby buy to let landlords have been the lone buyers at the smaller one and two bed starter homes of the market, as they have been lured by elevated tenant demand and eye-catching returns. Some Rugby landlords believe their window of opportunity has started to close with the new tax regime for landlords, whilst it already appears to be opening wider for first time buyers. This is great news for first time buyers .. but one final note for Rugby landlords .. all is not lost .. you can still pick up bargains, you just need to be a lot more savvy and do your homework

Live in Rugby? About to Retire and Privately Rent? You Could be £4,300 a Year Worse Off!

You read the personal finance pages of the newspapers and it all seems to be the impending pensions crisis … where people aren’t saving enough for their retirement. But it’s not the lack of Rugby peoples’ future pension incomes that are my immediate concern. The fact is that so many of the future retirees in Rugby over the coming decade, who never bought their home in the Millennial years of the 1990’s and 2000’s, will have to make some tough decisions regarding what house they live in when they retire anytime between now and 2038.

In Rugby, there are 653 privately rented households, where the head of the household is between 50 years and 64 years of age (meaning they will be retiring anytime between now and 2038). They are working now and easily paying the rent, yet what happens when they retire?

A Rugby retired couple, who currently privately rent and who have paid their fully qualifying NI stamp over the last few decades are likely to retire with the couples State Pension of £1,091 per month plus a tiny bit of private pension if they are lucky. Given that the average rent in Rugby is £768 a month – a lot of that pension will be lost in rent. This means taxpayers will have no alternative but to step in and top up the rent payments with Housing Benefit, yet…

The maximum housing benefit for a couple in Rugby is currently £410.89 per month … leaving a significant gap when you consider the average rent in Rugby is £768 per month

It is most people’s opinion that retirees are either council tenants or own their home outright. Looking at these figures though, it looks like both these ‘mature’ private renters could be having to make some decisions on their lifestyle and where they live, possibly looking at downsizing the home they rent to make things more affordable in their old age. Also, the government will be in for a horrible surprise as more of Rugby people retire and continue to rent from a private landlord. Numerous Rugby private renters, with little or no savings, will have to rely on Housing Benefit, which will put greater pressure on the public purse.

The average Rugby retiree will need to find £4,285 pa to stay in their privately rented home after retirement

A recent report from Scottish Widows suggested that 1 in 8 OAP’s will be privately renting by 2032, up from the current one in 15.47 OAP’s whom currently private rent (or 6.47%). In fact, in that report they said the equivalent of more than one-third of the whole annual NHS budget would be spent on Housing Benefit for OAP’s in retirement living in private rented property.

What does this mean for mature Rugby homeowners? I see many using equity release schemes to stay in their homes to pay for a better retirement and others more open to downsizing, selling their large home to a family that needs it and moving into a smaller apartment or bungalow … yet lets be frank – they aren’t building bungalows in large numbers in Rugby anymore.

And for the Rugby landlords? Well with the younger Millennials showing no appetite in jumping onto the homeownership bandwagon anytime soon, it can only result in the demands on the buy to let market from Rugby tenants rising substantially. Of course, many Millennials will inherit money from their home owning parents in the coming few decades, yet a lot won’t as it will be spent on nursing home care and any leftovers (if any) split between siblings.

For those retiring in post 2050/2060, there is better news as official reports suggest those retirees will enjoy a State Pension approximately similar to today’s pensioners with auto-enrolment into top-up private pensions through their employer.

The solution to all this is to build more homes, of course. Last year we created/built just over 217,000 households in the UK, up from a post Millennial average of just under 150,000 households a year. We need to get back to the building booms of the late 1960’s and early 1970’s when on average 300,000 households were built … but back to reality … that won’t happen so it looks like we are turning into a nation of renters, which is of course good news for Rugby’s buy to let landlords!

Rugby Homeowners Have Made an Annual Profit Of £8,194 Since the Millennium

As we go full steam ahead into 2019, it’s certain that the Rugby housing market in 2018 was a little more restrained than 2016 and 2017 and I believe this will continue into 2019. Property ownership is a medium to long term investment so, looking at the long-term, the average Rugby homeowner, having owned their property since the Millennium, has seen its value rise by more than 226%.

This is important, as house prices are a national obsession and tied into the health of the UK economy as a whole. The preponderance of that historical gain in Rugby property values has come from the growth in Rugby property values, while some of it will have been enhanced by extending, modernising or developing their Rugby home.

Taking a look at the different property types in Rugby, and the profit made by each type, makes interesting reading..

However, we can’t forget there has been just over 60% inflation over those 18 years, which eats into the ‘real’ value (or true spending power of that profit) … so if we take into account inflation since 2000, the true spending power of that profit has been lower.​

 So the ‘real’ value of the profit, after inflation, in Rugby has been £5,002 per year.. still nothing to sniff at.

I wanted to show you that even though we had the 2008/09 Credit Crunch property market crash where, depending on the type of Rugby property, property values dropped between 15% and 20% in 18 months … Rugby homeowners over the long term are still better off than those renting.

Moving forward, the question I get asked time and again is what will happen in the future to the Rugby Property market? Irrespective of what is happening in the World, Europe or even Central London, the biggest factor over the medium to longterm to ensure that this level of house price growth is maintained in Rugby is the building of new homes both locally and in the country as a whole. Whilst we haven’t had the 2018 stats yet, Government sources suggest this will be nearer 180,000 to 190,000, a decrease from the 2017 figure of 217,350 new households being created. When you consider that we need to build 240,000 households to equal demand (immigration, people living longer, higher divorce rates and people co-habiting later in life etc) … demand will outstrip supply and unless the Government start to spend billions building council houses .. this trend will continue for years (and decades to come).

Another factor is that whilst Rugby landlords have been hit with higher taxes to enable them to actually be a landlord most, in every national survey, still intends to increase their portfolio in the medium to long term. The youngsters of Rugby see renting as a choice, giving them flexibility and options that being tied to a home cannot give… thus meaning demand will continue to grow and landlords will be able to enjoy increased rents and capital growth, although those very same Rugby buy to let landlords will have to work smarter in the future to continue to make decent returns (profits) from their buy to let investments. Even with the tempering of house price inflation in Rugby in 2018, most Rugby buy to let landlords (and homeowners) are still sitting on a copious amount of growth from previous years.

The question is, how do you, as a Rugby buy to let landlord, ensure that continues?

Since the 1990’s, making money from investing in buy to let property was as easy as falling off a log. Looking forward though, with all the changes in the tax regime and balance of power, making those similar levels of return in the future won’t be so easy. Over the last ten years, I have seen the role of the forward thinking agents evolve from a person collecting the rent to a more all-inclusive role; I call it, ‘strategic portfolio leadership’. Thankfully, along with myself, there are a handful of agents in Rugby whom I would consider exemplary at this landlord portfolio strategy where they can give you a balanced structured overview of your short, medium and long-term goals, in relation to your required return on investment, yield and capital growth requirements. If you would like such advice, speak with your current agent – whether you are a landlord of ours or not – without any cost or commitment, feel free to drop me a line.

Rugby Property Market: Is Sell to Rent the new Buy to Let?

It doesn’t seem two minutes ago that it was 90 degrees Fahrenheit in the shade (32 degrees Celsius for my younger readers), hosepipe bans looked likely and it was simply too hot to sleep at night, yet early indications were, that as the temperatures soared, the Rugby property market appeared to be doing the reverse and was already starting to cool down.

17.96% less people moved home in the Rugby area in the first part of 2018, when compared to the average number of people moving home (in the same time frame) between 2014 and 2017

The average number of households who sold and moved locally between 2014 and 2017 in the winter and spring months was 140 homes a month.. yet in the same time frame in 2018, only 115 (on average) sold and moved.

 

So, what is the issue? Many have cited Brexit as the issue – but I think its deeper than that.

Brexit seems to be the “go to excuse” for everything at the moment – my neighbour even blamed it for the potholes! Anyway a few weeks ago, I was out for a family get together in another part of the UK when one of my extended family said that they were planning on buying their first home this autumn most of those present said they were stupid to do so because of Brexit. Nonetheless, half an hour later, another distant cousin said to the same family crowd that they were planning to sell their home; to which most said they were also daft to do so because of Brexit.

Both sides of the argument can’t be right! So, what exactly is happening?

Well if you have been reading my blog on the Rugby property market over the last few months, I have been discussing the threats and opportunities of the current state of fluidity in the Rugby property market, including the issue of OAPs staying in homes that are too big for them as their children have flown the nest, interest rates, inflation, lack of new homes being built and the long term attitude to homeownership.. yet I have noticed a new trend in the last few months.. the emergence of the ‘sell to renter’.

Sell to Renter?

I have seen a subtle, yet noticeable number of Rugby homeowners that have been selling their Rugby homes, renting and wagering that, in the next few years, the Rugby property market will tumble by more than what they spend on their short-term rental home, before they buy another Rugby home in a couple of years i.e. a ‘sell to renter’. This type of ‘sell to renter’ is mostly predominant at the middle to upper end of the Rugby property market – so I’m not too sure if it will catch on in the main ‘core’ market?

So, what does this all mean for Rugby homeowners and Rugby Buy To Let landlords?

Well, in the short term, demand for middle to upper market Rugby rental properties could increase as these ‘sell to renters’ demand such properties. I would however give a note of caution to Rugby landlords buying in this sector of the Rugby property market as yields in this sector can be quite low. However, for homeowners of middle to upper market Rugby properties, you might have lesspeople wanting to buy your type of property, as some buyers are turning to renting?

Like I have always said, Rugby properties are selling if they are realistically priced (realistic for the market – not a rose-tinted version where someone will pay 10% over the odds because everyone has access to the market stats with the likes of Rightmove and Zoopla!).

P.S Notice the spike in the graph, where the number of property sales jumped to 218 in the month of March 2016? That was all the Rugby buy to let landlords snapping up buy to let properties before the stamp duty rules changed!

7 Reasons Why Rugby Buy To Let Landlords Shouldn’t Be Criticised ​

There is no escaping the fact that over the last couple of decades, the rise in the number buy to let properties in Rugby has been nothing short of extraordinary.  Many in the “left leaning” press have spoken of a broken nation, the fact many youngsters are unable to buy their first home with the rise of a new cohort of younger renters, whom have been daubed ‘Generation Rent’ as landlords hoover up all the properties for their buy to let property empires. Government has been blamed in the past for giving landlords an unfair advantage with the tax system. It is also true many of my fellow professionals have done nothing to avail themselves in glory, with some suspect, if not on some rare occasions, downright dubious practices.

Yet has the denigration and unfair criticism of some Rugby landlords gone too far?

It was only a few weeks ago, I read an article in a newspaper of one landlord who had decided to sell their modest buy to let portfolio for a combination of reasons, one of which being the new tax rules on buy to let that were introduced last year. The comments section of the newspaper and the associated social media posts were pure hate, and certainly not deserved.

Like all aspects in life, there are always good (and bad) landlords, just like there are good (and bad) letting agents … and so it should be said, there are good tenants and in equal measure bad tenants. Bad letting agents and bad landlords should be routed out … but not at the expense of the vast majority whom are good and decent.

But are the 1,865 Rugby portfolio buy to let landlords at fault?

The Tories allowed people to buy their own Council house in the 1980’s, taking them out of the collective pot of social rented houses for future generations to rent them. Landlords have been vilified by many, as it has been suggested by some they have an unhealthy and ravenous avarice to make cash and profit at the expense of poor renters, unable to buy their first home. Yet, looking beyond the headline grabbing press, this is in fact ‘fake news’. There are seven reasons that have created the perfect storm for private renting to explode in the 2000’s.

To start with, the Housing Acts of 1988 and 1996 gave buy to let landlords the right to remove tenants after six months, without the need for fault. The 1996 Act, and its changes, meant banks and building societies could start to lend on buy to let properties, knowing if the mortgage payments weren’t kept up to date, the property could be repossessed without the issue of sitting tenants being in the property for many years (even decades!) … meaning in 1997, buy to let mortgages were born… and this, my blog reading friends, is where the problem started.

Secondly, in the early 2000’s, those same building societies and banks were relaxing their lending criteria, with self-certification (i.e. you did not need to prove your income), mortgages 8 times their annual salary, and very helpful interest only mortgage deals helped to keep repayments inexpensive.

Thirdly, the totally inadequate building of Council Houses (aka Local Authority Housing) in the last two decades and (so I’m not accused of Tory bashing) – can you believe Labour only built 6,510 Council Houses in the WHOLE OF THE UK between 1997 and 2010? Giving the Tories their due, they have built 20,840 Council Houses since they came to power in 2010 (although still woefully low when compared the number of Council Houses built in the 1960’s and 1970’swhen we were building on average 142,000 Council Houses per year nationally). This meant people who would have normally rented from the Council, had no Council House to rent (because they had been bought), so they rented privately.

And then 3rd, 4th, 5th, 6th and 7th … 

– Less of private home building (again look at the graph) over the last two decades.

– A loss of conviction in personal pensions meaning people were looking for a better place to invest their savings for retirement.

– Ultra-low interest rates for the last nine years since the Credit Crunch meaning borrowing was cheap.

– A massive increase in EU migration from 2004, when we had eight Eastern European countries join the EU. That brought 1.4m people to the UK for work from those countries – and they needed somewhere to live.

Thus, we got the perfect storm conditions for an eruption in the Rugby Private Rented Sector.

Commercially speaking, purchasing a Rugby property has been undoubtedly the best thing anyone could have done with their hard-earned savings since 1998, where property values in Rugby have risen by 254.25%…

…and basing it on the average rental in Rugby, earned £190,944 in rent.

Yet, the younger generation have lost out, as they are now incapable to get on the property (especially in Central London).

The Government have over the last few years started to redress the imbalance, increasing taxes for landlords, together with the Banks being tighter on their lending criteria meaning the heady days of the Noughties are long gone for Rugby landlords. In the past 20 years, anything but everything made money in property and it was easy as falling off a log to make money in buy to let in Rugby – but not anymore.

Being a letting agent has evolved from being a glorified rent collector to a trusted advisor giving specific portfolio strategy planning on each landlord’s buy to let portfolios. I had a couple of instances recently of a couple of portfolio landlords, one from Braunston who wanted income in retirement from his buy to let’s and the other from Dunchurch, who wanted to pass on a decent chunk of cash to his grandchildren to enable them to buy their own home in 15/20 years’ time.

Both of these landlord’s portfolios were woefully going to miss the targets and expectations both landlords had with their portfolios, so over the last six/nine months, we have sold a few of their properties, refinanced and purchased other types of Rugby property to enable them to hit their future goals (because some properties in Rugby are better for income and some are better for capital growth) … And that my blog reading friends is what  ‘portfolio strategy planning’ is! 

If you thik you need ‘portfolio strategy planning’, whether you are a landlord of ours or not (because the Dunchurch landlord wasn’t)  … drop me line or give the office a call. Thank you for reading.

Extra Funding Is Required for Affordable Homes in Rugby

In my blog about the Rugby 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 Rugby (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 Rugby homeowners and Rugby landlords, so let me explain ..

An average of only 146 Affordable Homes per year have been built by Rugby Borough 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 Rugby 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 Rugby 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 Rugby 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 home 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 Rugby 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 Rugby landlords find their children are also priced out of the housing market. Also, whilst your Rugby 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 Rugby housing market is all interlinked .. it’s not called the Property ‘Ladder’ for nothing!

Rugby Property Market – Which Houses are Actually Selling?

Beast from the East, Russia, Facebook, Brexit, Trump, House prices up, House prices down … the Press is full of column inches on Brit’s favourite subjects of politics, scandal, weather and not forgetting (and I appreciate the irony of this!) the property market. As an agent belonging a national group of letting and estate agents, talking to my fellow property professionals from around the UK, the one thing that is immediately apparent is the UK does not have one property market. It is a hodgepodge patchwork (almost like a fly’s eye) of lots of small property markets all performing in different ways.  

… And that made me think … is there just one Rugby Property Market or many?

I like to keep an eye on the property market in Rugby on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Rugby, be that a buy-to-let property for a Rugby landlord or an owner occupier house for a home owner.  So, I thought, how could I scientifically split the Rugby housing market into segments, so I could see which part of the market was performing the best and the worst.

I decided the best way was to split the Rugby property market into four equal size price bands (into terms of households for sale). Each price band would have around 25% of the property in Rugby, from the lowest in value (the Lowest Quartile or 25%) all the way through to the highest 25% in terms of value, the Upper Quartile.  Looking at the market, I have calculated that these are the price bands in Rugby are as follows:

· Lowest Quartile (lowest 25% in terms of value) … Up to £160,000

· Lower/Middle Quartile (25% to 50% Quartile in terms of value) …  £160,001 to £230,000

· Middle/Upper Quartile (50% to 75% Quartile in terms of value) … £230,001 to £325,000

· Upper Quartile (highest 25% in terms of value) … £325,001 Upwards

So, having split the Rugby Property Market approximately into four equal sizes, the results in terms what price band has sold (subject to contract or stc) the most is quite enlightening –

The best performing price range in Rugby is the middle market. As I would expect, the upper quartile (the top 25%) is finding things toughest. Interestingly for Rugby landlords, the lower market is also selling well, meaning there are plenty of Rugby landlords buying properties to add to their buy to let portfolios. Even though the number of first time buyers did increase in 2017, it was from a low base and the vast majority of 20 something’s cannot buy, so need a roof over their head (hence the need to rent somewhere).

It is a fact that British (and Rugby’s) housing markets have ridden the storms of Oil crisis in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the Credit Crunch together with the various house price crashes of 1973, 1987 and 2008. No matter what happens to us Brexit or anything else … unless the Government starts to build hundreds of thousands extra houses each year, demand will always outstrip supply … so maybe a time for Rugby landlord investors to bag a bargain?

Want to know where those Rugby buy to let bargains are?  Follow my Rugby Property Blog or drop me an email because irrespective of which agent you use, myself or any of the other excellent agents in Rugby, many local landlords ask me my thoughts, opinion and advice on what (and not) to buy locally … and I wouldn’t want you to miss out on those thoughts … would you?