Solihull Buy to let –Freehold House or Leasehold Apartment?

Well, my Solihull Property Blog reading friends, as seems to be all the rage with Jeremy Corbyn asking the PM questions emailed in to him at Prime Minister’s Question Time, I too wish to answer a question emailed into me from a potential Solihull landlord last week. A nice gentleman who lives in Elmdon Heath and it turns out after having a coffee with him, he works in IT, has a spare bit of cash (now his children have flown the nest) and wanted to buy his first buy to let property.

His main question was ... Do I buy a freehold house or a leasehold apartment in Solihull?

Most people will say freehold every time, because you own the land. However, it’s not as simple as that (it never would be would it!). The definitive answer though is to research what tenants requirements are in the area of Solihull they are considering! The tenant is ultimately your customer and if they don't want to rent what you decide is the best to buy property, then you are not going to have a successful BTL investment. So, starting with the tenant in mind and working backwards from there, you won’t go far wrong. In a nutshell, find the demand before you think about creating the supply.

Leasehold apartments in Solihull are excellent in some respects as they offer the landlord certain advantages, including the fact an apartment can be initially cheaper to buy. Yields can be quite good, offering better cash flow. The building will already be insured and yes there is a service charge, but it’s still for a service at the end of the day and that cost is spread between many others (i.e. when your freehold house roof goes, its falls 100% on your shoulders) and one of my favourites is that there is often no garden to maintain or blown down fences to replace!

However, some Solihull leasehold apartments can suffer from poor capital growth. Some have no cap on the level of the service charge and it may get out of control. The length of the lease will significantly affect value if not renewed before it gets too short. Thankfully there’s not many, but some Solihull apartments have burdensome clauses. Finally with leases, there can be sub-letting issues – which means you can’t let them out.

So what do the numbers look like? Well, since 2003, the average freehold property in Solihull (detached, semis and terraced) has risen from £216,259 to £347,095, a rise of 38% whilst the average Solihull leasehold property (apartments) has gone up in value from £123,584 to £162,576, a slower rise of 32%. 

I was really interested to note that of the 7,795 rental properties in the Solihull Metropolitan Borough Council area that the Office of National Statistics believe are either let privately or through a letting agency, 3,296 of them (or 42.3%) are apartments. However, there are only 15,360 apartments in the whole council area (be they owned, council rented or privately rented), which represents 17.8% of the whole housing stock in the area. This really intrigued me that, quite obviously, there is a high proportion of Solihull’s leasehold apartments rented to tenants compared to detached, semi’s or terraced. Fascinating don’t you think?

Every Solihull apartment block, every terraced house or semi is different. Like I said at the start, research what your tenants requirements are in the area of Solihull they are considering. Demand for town centre apartments near transport links can be popular and can offer the Solihull landlord very good yields with minimal voids. However, Solihull terraced houses and semis, whilst not always offering the best yields (although not always the case), do offer the Solihull landlord decent capital growth.

My advice to the prospective landlord as it is to you is do your homework.  One such website, which only talks about the Solihull buy to let Property Market, is the Solihull Property Blog. Another source of info many Solihull landlords use is me! Now is a really good time to buy property, as demand is outstripping supply. What many Solihull landlords do, irrespective of whether you are a landlord of ours, a landlord with another agent or a DIY landlord, if you see any property in Solihull, that catches your eye as a potential buy to let property, be it a terraced house, semi or apartment ... is to email me and I will email you back with my thoughts (although I will tell you what you need to hear .. not want to hear!)

Is this the end for buy to let in Solihull?

 Well George Osborne, in his autumn statement last week, caused Solihull landlords to ask whether buy to let is still a viable investment option, when he announced that landlords, when buying another buy to let property from April 2016 will have to pay an additional 3% stamp duty on top of the current rate. So this means for example, the stamp duty bill for a £285,000 buy to let home will rise from the current £4,250 to £12,800 from April next year. 

Will property in Solihull be worth less because potential landlords will not be willing to pay as much for them? If house builders or existing home-owners don't feel they are going to get as much for them, then there will be less motivation to build / sell them... and the person we can blame for this is George himself. Back in 2012, he chose to utilise the British housing market to kick start the UK economy, with subsidies, funding for lending and ‘Help to Buy’. However, whilst that helped the Tory’s get back into power in 2015, some say this impressive growth in the UK property market has been at the expense of pricing out youngsters wanting to buy their first home.

This, some say, may be the straw that breaks the camel’s back, as over the next four years landlords will also slowly lose the ability to offset all their mortgage interest against tax on rental income, after changes announced in the summer budget.  At the moment, landlords can claim tax relief on buy to let mortgage monthly interest repayments at the top level of tax they pay (ie 40% or 45%). However, over the next four years this will reduced slowly to the basic rate of tax – currently 20%.

Surely this is the end of Buy to Let in Solihull? Possibly… however before we all run to hills panicking, let me remind of the situation a year ago.

Stamp Duty rules were changed in December 2014. Prior to this, landlords were eagerly buying up properties under the ‘old slab style Stamp Duty’ system. For example, the stamp duty bill on that £285,000 property was lower on the old slab style duty (pre Dec 2014), at £8,550, yet this wasn’t a million miles away from the £12,800 stamp duty under this new ruling. Interestingly though, George Osborne has left a legal loophole in the new rules, because when it comes to selling up, they can offset purchase costs against any eventual capital gains tax, including stamp duty.

I believe that total returns from buy to let will continue to outpace other investments, such as the stock market, gilts, bonds and even pensions. Also, the best part about investing in property is that it is bricks and mortar. You can touch it, you can feel it, and it isn't controlled by some City whiz kid in Canary Wharf... the British understand property and that says it all!

Buy to let has enough impetus behind it so prospective landlords will continue to buy even with an increased stamp duty bill. Solihull landlords will need to be savy about the type of property they buy to ensure the extra stamp duty costs are mitigated.   Buying a buy to let property is a long term venture. In the past, it didn't matter what property you bought in Solihull or at what price – you would always make money. Now with these extra taxes, the adage of ‘any old Solihull house will make money’ has gone out the window. People wouldn't dream of investing in the stock market without at least looking in the newspapers or asking for advice and opinion from experts in their field, the same should apply when investing in a buy to let property in Solihull?

Solihull Tenants Pay 38.9% of their Salary in rent

I had the most interesting chat with a local Solihull landlord the other day about my thoughts on the Solihull property market. The subject of the affordability of renting in Solihull came up in conversation and how that would affect tenant demand. Everyone wants a roof over their head, and since the Second World War, owning one’s home has been an aspiration of many Brits.  However, with rents at record highs many are struggling to save enough for a house deposit.

Let’s be honest, it’s easy to get stuck in a cycle of paying the rent and bills and not saving, but even saving just a small amount each month will sooner or later add up.  George Osborne announced such schemes as the upcoming Help to Buy ISA, where the Government will top up a first time buyers deposit.

Therefore, I thought I would do some research into the Solihull property market and share with you my findings.  Solihull tenants spend on average just over a third of their salary to have a roof over their head.  According to my latest monthly research, the average cost of renting a home in Solihull is £1,056 per month.  When the average annual salary of a Solihull worker stands at £32,503 per year, that means the average Solihull tenant is paying 38.9% of their salary in rent.  

You see one the reasons for rents being so high is property prices being high.  As I have mentioned before, there is a severe lack of new properties being built in Solihull.  It’s the classic demand vs supply scenario where demand has increased, but the number of houses being built hasn’t increased at the same level.  Also Solihull people aren’t moving home as often as they did in the 80’s and 90’s, meaning there are fewer properties on the market to buy.  If you recall, a few weeks ago I said back in Spring 2008, there were over 1,240 properties for sale in Solihull and since then this has steadily declined year on year, so now there are only 356 for sale in the town.

So, the planners in Solihull haven’t allowed enough properties to be built in the town and existing Solihull homeowners are not moving home as much as they used to, thus creating a double hit on the number of properties to buy.  This is a long term thing and the continuing diminishing supply of housing has been happening for a number of decades and there simply aren’t enough properties in Solihull to match demand, these are the reasons houses prices in Solihull have remained quite buoyant, even though economically, over the last 5 years it was one of the worst on record for the country and the East Midlands region as a whole.

With fewer people able to save up the deposit required by mortgage lenders, more and more people are continuing to rent.  This delay in moving up the property ladder has driven rents across the UK up as more people were seeking rental properties.

 It is often said that more people in central Europe rent for longer or never own their own property. The last two census in 2001 and 2011 show that proportionally the percentage of people who own their own home in Britain is slowly reducing and as a country, we are becoming more and more like Germany. That isn’t a bad thing as Germany is considered to have a more successful economy, one of the main stays often quoted is because they have a much more flexible and mobile workforce, (which renting certainly gives) and from that they have a higher personal income than in the UK.      

Therefore, if we are turning into a more European model and the youngsters of Solihull and the Country have changed their attitudes, demand for rental properties will only and can only go from strength to strength, good news for Solihull tenants as wages will start to rise and good news for Solihull landlords, especially as property values in Solihull are now 4.9% higher than year ago!

Solihull Property Market Crisis as New House Building slumps by 84.52%

One of the key factors that influences the price of anything is the demand for and supply of the item that is being bought and sold. When it comes to property, demand can change overnight, but it takes a lot longer to build new properties and increase the supply.

The Conservatives have pledged to build over 1 million homes by 2020. I am of the opinion that as a country, irrespective of which party, we have not built enough homes for decades, and if the gap between the number of ‘new’ households and the number of new homes being built continues to widen, we are in danger of not being able to house our children or grand children. I believe this country has gone beyond the need for another grand statement of ambition by yet another Housing Minister. Surely it’s time to give Solihull families back the hope of a secure home, be that rented or owned? As a town, we need to make sure Westminster is held accountable, to ensure there is a comprehensive plan, with enough investment, that can actually get these homes built.

To give you an idea of the sorts of numbers we are talking about, in the Solihull Metropolitan Borough Council area in 2005, 550 properties were built. In 2006 that number peaked at 840 and a year later in 2007, was still at 680. By 2014, the figure had dropped by a massive 84.52% to 130 properties built.

The outcome of too few homes being built in Solihull means the working people of the town are being priced out of buying their first home and renters are not getting the quality they deserve for their money. The local authority isn't building the estates they were and housing associations are having their budgets tightened year on year, meaning they have less money to spend on building new properties. I know of many Solihull youngsters, who are living with their parents for longer because they cannot afford to get onto the housing ladder and growing families are unable to buy the bigger homes they need.

I talk to many Solihull business people and they tell me they need a flexible and mobile workforce, but the high cost of moving home and lack of decent and affordable housing are barriers to attracting and retaining employees. Furthermore, building new homes is a powerful source of growth, creating jobs across the county and supporting hundreds of Solihull businesses. It is true that landlords have taken up the mantle and over the last 15 years have bought a large number of properties. The Government need to be thankful to all those Solihull landlords, who own the 5,242 rental properties in the town. Most local landlords only have a handful of rented properties (to aid their retirement), and without them, I honestly don’t know who would house all the extra people in Solihull!

Moving forward, those Solihull landlords have new legislation to be aware of, with the introduction of the deregulation act this year including for example: the introduction of right to rent checks and serving of serving notice to vacate as well as carbon monoxide detector requirements.  Many of these new rules came in to play from the 1^st October 2015 there is of course also the planned phased change in the tax relief on buy to let properties.

More than ever, the days of buying any old property in Solihull and being set for life are gone. Now, it’s all about ensuring you stay the right side of the law, buying the right property (and that might mean even selling some to buy others), so you build the right portfolio for you as a landlord. Talking to your agent to get the right advice, is now even more important than ever.  A further source of information and where you will find other articles similar to this one on the Solihull property market, is the Solihull Property Blog http://solihullpropertyblog.blogspot.co.uk/

How EU Migration has changed the Solihull Property Market

The argument of migration and what it does, or doesn't do, for the country’s economic well-being is something that has been hotly contested over the last few years and more so recently. In my article today, I want to talk about what it has done for the Solihull Property market.

Before we look at Solihull though, let us look at some interesting figures for the country as a whole. Between 2001 and 2011 971,144 EU citizens came to the UK to live and of those, 171,164 of them (17.68%) have bought their own home. It might surprise people that only 5.07% of EU migrants managed to secure a council house. However, 676,091 (69.62%) of them went into the private rental sector.  This increase in population from the EU has no doubt added great stress to the UK housing market.

Looking at the figures, the housing market as a whole is undoubtedly affected by migration but it has been the private rented housing sector, especially in those areas where migrants come together that is affected the most.  Indeed I have seen that many EU migrants often compete for such housing not with UK tenants but with other EU migrants. In 2001, 3.68 million rented a property from a landlord in the UK.  Ten years later in 2011, whilst EU migration added an additional 676,091 people renting a property from a landlord, there were actually an additional 4.14 million people who became tenants and were not EU migrants, but predominately British!

As a landlord it is really important to gauge the potential demand for your rental property, especially if you are a landlord who buys property in areas popular with the Eastern European EU migrants.  To gauge the level of EU migration (and thus demand), one of the best ways to calculate the growth of migrants is to calculate the number of people who ask for a National Insurance number (which EU members are able to obtain).

Interestingly in Solihull, migration has stayed quite static over the last few years. For example, in 2006 there were 612 migrant National Insurance Cards (NIC) issued and the year after, in 2007, 688 NIC cards were issued.  In 2014 this was 660 NIC’s. However, if the pattern of other migrations since WW2 continues, over time there will be an increasing demand for owner occupied property, which may affect the market in certain areas of high migrant concentration. On the other hand over time some households move into the larger housing market, reducing concentrations and pressures.

In essence, migration has affected the Solihull property market; it couldn't fail to because of the additional 5,410 working age migrants that have moved into the Solihull area since 2005. However, it has not been the main influence on the market. Property values in Solihull today are only 8.41% higher than they were in 2005. According to the Office of National Statistics, rents for tenants in the West Midlands have only grown on average by 0.75% a year since 2005.... I would say if it wasn't for the migrants, we would be in a far worse position when it came to the Solihull property market. This was backed up by the then Home Secretary Theresa May back in 2012 - more than a third of all new housing demand in Britain is caused by inward migration and there is evidence that without the demand caused by such immigration, house prices would be 10% lower over a 20 year period.

If you want to know more about the Solihull property market, please pop into property lounge for a drink, chat and to meet the lovely time. 

Could your Solihull property save you from Pension oblivion?

If you were born in the early 1970s or late 1960s, if you haven’t started to think about it yet, retirement is closer than you think. In fact the number of years you have left to work is less than the number of years you have worked. The basic state pension is worth £115.95 a week for a single person in 2015/16 (or £6,029 a year) and £231.90 a week for a couple (£12,118 a year) as long as your partner has paid their stamp (although there are certain get of jail cards if they haven’t).

As a household, could you live on just over £12k a year?

Could the property you are living in, in Solihull save you from the breadline poverty when you reach retirement? You see, a regular income is vital in retirement and the bricks and mortar you own could provide a way for you to finance life when you retire.

If you are in your 30’s, instead of saddling yourself with bigger and bigger mortgages, going from your first time buyer flat, to a terraced, to the semi and then the large detached house, you could instead keep your terraced or small semi, turning it into a buy to let property, let the rent pay the mortgage and then rely on capital growth to provide you with a lump sum when you retire.  One of the biggest plus points of buy to let is what is known as leverage, say you have a deposit of 25% and the value of the property rises by 3% a year, your gains in fact multiply to 12%.  However, if property prices drop 'leverage' can be catastrophic, as losses will also be multiplied. Property values have dropped a number of times in the last 50 years, but they always seem to bounce back ... property must be seen as a long term investment.

Let me explain how leverage could work for you. If you had bought a Solihull house in spring of 1983 for £30,000, using a 75% mortgage and 25% deposit (meaning your deposit would be £7,500). Today that Solihull property would have risen in value to £188,567, a rise of 528.6%. However when you look at the growth on just your deposit, the rise is even better ... instead of 528.6%, we see a rise of 2414% (remember that the mortgage will have been paid off).

However, buy to let is not all about capital growth and in retirement, income is more important than capital growth, as rent is the key to a steady income.

So surely the best strategy is to buy those Solihull properties with the high rents. These are called high yield properties in the buy to let world because the monthly return is so much greater. So surely they are the best in Solihull? Possibly, the properties that offer these higher yields (in the order of 6% to 9% per year) tend to be in areas such as Olton, Lode Lane and Hobbs Moat, historically they haven’t offered such good capital growth when compared to the town average and tend to attract tenants that have a greater propensity to be high maintenance.

If a high maintenance rental portfolio isn’t for you, another strategy could be to buy a property with relatively smaller rental returns of 4% to 5% per year (i.e. lower yields), but in a more up market area such as Dorridge. Properties such as these tend to suffer from less void periods (i.e. when there is no tenant in the property paying you rent) and historically have had better long term capital growth when compared to the town average.

Every landlord is different and every property is different, I can only suggest that you do your homework.

As regular readers will know, I am happy to share my knowledge and experience of the Solihull property market, high yields, high capital growth, what to buy, what not to buy and where to buy in the Solihull Property market can always be found on the Solihull Property Blog http://solihullpropertyblog.blogspot.co.uk/

Solihull Property Market - Asking Prices Drop but Values rise

Those of you who regularly read my weekly articles in the Solihull Property Blog will know that I like to keep abreast of the Solihull property market. Something attracted my attention this week about the local property market, something I wanted to share with you.

 Over the last month asking prices in the town have dropped, yet property values have increased.  The average asking price of a Solihull property, according to Rightmove fell 0.1% this month yet the average value of a Solihull property rose by 0.3%.

So how does this relate in monetary terms?  The average asking price of a Solihull property is down slightly to £283,800 whilst the average value is now £332,000. You will note the average value is higher than the average asking price. This is because in Solihull there are more properties on the market for sale, at this moment in time, which are in the lower to middle market, than the middle to upper market, thus reducing the overall average asking price.

So why the difference? Technically an ‘asking price’ can be any price that a homeowner wants to place his or her property on the market for. In the summer months, the market is normally slightly quieter, so those left on the market wanting to sell often temper their asking prices in these months to try and generate interest in their property.

On the other side of the coin, the property ‘value’ is the price that a willing buyer is prepared to pay and a willing seller is prepared to sell at.   Therefore in a nutshell, Solihull property values are continuing to rise and those homeowners in Solihull who have properties on the market last month on average, reduced their asking prices ... great news for buyers!

In previous articles, I have written about the continued fundamental shortage of property coming on to the market compared to buyer demand. That is especially true for homeowners wanting to upgrade to a better house/location.  I can appreciate Solihull home owners are reluctant to put their own property on the market speculatively and wait for the right property to become available this can mean that some high demand locations could suffer from a property stalemate.

‘Most homeowners don’t want to sell and have nothing to buy.’

But that’s the beauty of the much maligned English and Welsh house buying process; vendors can find a purchaser for their property, then ask them to wait. By agreeing a sale (subject to contract) before you try to buy sounds concerning to many, but with fewer properties for sale you need to find a buyer for your property or it is likely you will not be deemed in a ‘proceed-able’ position and may be treated as a less serious buyer yourself. As long as your buyer is aware, if you cannot find the right home for you, you can delay the deal with your purchaser until it you can find the right property for you, or you could rent for short term. If nothing suitable comes along and you lose your buyer then the worst outcome is that you have to find another purchaser or take your property off the market and stay put for the time being; as long as you mention this at the start they should not have committed to any costs until you have agreed your onward purchase.

However, for the landlord/buy to let investors, these potential problems are nothing further from the truth. As I write this article, there are 270 flats for sale, over 62 terraced houses and over 200 semis for sale in Solihull.  Landlord/buy to let investors can usually pick up some bargains in the autumn months, as sellers who are selling their homes often have a pressing need to sell by this time of the year.

The types of houses a Solihull landlord typically buys, are not the same types as the homeowners are wanting to move to; possibly a more up market area of the town as they are attracted by larger semis and detached properties. The best types of properties for buy to let are the smaller flats, terraced and semis (not the big detached ones). There are in fact too many of these smaller properties for sale … just look at the numbers of properties for sale (mentioned in the previous paragraph).

If you are a landlord or thinking of become one for the first time, and you want to read more articles like this about the Solihull Property Market together with regular postings on what I consider the best buy to let deals in Solihull, out of the hundreds of properties on the market, irrespective of which agent is selling it, then you might like to pop into our Solihull property lounge for a drink and a chat. 

Solihull tenants feel the squeeze as rents continue to rise

As my regular readers know, my passion is to talk about the Solihull property market as a property agent, I hope this is of interest to both homeowners and buy to let landlords alike. However, this week, I want to highlight the plight of the tenants of Solihull as more and more of their wages are being taken up by ever increasing rents.

The cost of renting a home in Solihull has nearly broken through the £1000 a month barrier as the average rent for a property in the town, now stands at £980 per month, a rise of 1.2% last month, leaving rents for new lets 4.5% higher than they were 12 months ago.

House price inflation has certainly eased in Solihull from the heady days of 2014, but still with retail price inflation (for goods and services) reducing to 0% any increase in property values, no matter how small, means in real terms property is still getting more expensive. Meanwhile, many tenants have given up saving for a mortgage deposit as rents continue to take more and more of their wage packets leaving nothing to save for a deposit. That means, more and more tenants are deciding to rent for the long term and therefore the desire for decent high quality rental properties continues to exceed the available rental stock.

I would go as far as to suggest that rents are a good barometer to the state of the local economy as a whole and strongly believe that the recent increase in Solihull rents are a sign that the Solihull economy is picking up. 

This means Solihull landlords are continuing to capitalise on the Solihull property market. The most recent Land Registry data suggests the annual property price rises in the town have eased over 2015, leaving property values only 3.76% higher than 12 months ago, so as property price growth is easing off, with the increased rents, rental yields are strengthening for the first time in years to compensate. The mortgage market has become more stable after the mad months of May and June after the Tory’s got back into No.10, and so, everything is set to be good news for landlords; even with the Chancellors change of tax rules in the coming years for buy to let mortgages.

You can get some amazingly low mortgage rate deals at the moment, so with mortgage rates so low and returns still extraordinarily attractive, this is a rare situation and a great opportunity to invest in rental properties.

However, (you knew there would be a however!), it’s all about buying the right property at the right price. Not all property types are seeing equal rises in rents, capital growth and time on the market.  For example, the average length of time the 78 Solihull properties, between £500 to £1000 per month, are up for rent is 43 days, whilst the average length of time the 20 properties at £1000 to £2000 per month is 68 days and 4 properties that fall into the £2000 to £5000 per month price bracket is also 68 days. These average timeframes seem long, I have to say that in our experience they are a lot shorter.

When you start comparing different parts of Solihull, the numbers are even stranger!  The bottom line is that you must take advice and opinion. One source of advice and opinion is the Solihull Property Blog. In the Solihull Property Blog, you will see many more articles like this, discussions and even what I consider to be the best buy to let deals around, irrespective of which agent is selling it.

Whether you are a landlord, ‘Homes Under the Hammer’ addict or just a homeowner who is interested in what is happening to the local property market, then please email me or pop into our Solihull property lounge for and drink and a chat. 

A lot can happen in a decade — looking back 10 years at the Solihull Property Market

Doesn't time fly? I was only saying to my partner the other day, whilst looking over old photos, how time does literally fly by. It doesn't seem like two minutes since we were taking the Christmas Decorations off the tree and now the shops are full of Christmas Trees again… so soon! The years add up and sometimes, it’s just good to take stock of what has happened and where we have got to in life.

In today’s article, I want you to go back ten years. Why ten years?  Well, it’s quite an important birthday for me and the team in Solihull which will tell you about that a little later. So with that in mind, as my regular readers will know, my real passion is everything to do with the Solihull property market, so let’s take a step back ten years and see what has happened to the Solihull property market...

• 3,652 days or ten years is a long time in anyone’s books, especially in the property market. So this is what has happened in Solihull over the last ten years...
•  The population of Solihull has increased by 6,908, there are now 205,087 people living in the Solihull area.
• The value of an average detached house in Solihull has risen from £368,917 to £399,964, a rise of £31,047
•  Roll the clock back 10 years, and 6,288 people lived in 2,951 rental properties in Solihull. Now, there are 18,045 people living in 7,795 rental properties
• The value of an average semi detached house in Solihull has risen from £191 347 to £207,450 an increase of £16,103 increase
• Despite the increase in renting, the number of people who own their own home in the Solihull area has hardly changed. Go back ten years and 63,586 properties were owner occupied. Ten years later and that figure has hardly changed at 63,559
•  The value of an average terraced / town house in Solihull has risen from £139,133 to £150,843 an increase of £11,710
• 30,558 properties have sold and changed hands in Solihull over the last ten years
• The value of an average apartment / flat in Solihull has risen from £130,021 to £140,963 a rise of £10,942
•  Under the ‘Right To Buy’ scheme, exactly 800 Solihull Council tenants bought their own Council House
• 5,126 new properties have been built in Solihul
•  Have you noticed less for sale boards? Less people are moving In Solihull.  Ten years ago, 4,160 properties sold in Solihull area in one year. In the last twelve months only 3,237 properties have sold, meaning there has been a drop 22.18% in the number of properties sold.

... and one final thing, our Chairman James, and old school pal Shane Bland started a property management business soon to be joined by Carina and Centrick Property was born.  James worked in the automotive industry, but always had a passion for property. Ten years later, that newly established agency has grown into Centrick Property group; with offices in central Birmingham, Nottingham, Solihull and London.  James, Carina and Shane run the firm as an extended family:  we care, we are friendly and what’s more we are efficient and always strive to be professional.  Over the last decade, we have been selling, renting and managing residential and commercial property, finding tenants for landlords, looking after purchasers and vendors alike.  Currently looking after over one billion pounds worth of client assets, we must be doing something right, we are all very proud to be part of such a successful and caring business.

So, I hope you can join me in celebrating with James, Carina, Shane and all the Centrick Property family in our 10^th Birthday celebrations, as most of you reading this will know, running your own business is one of the hardest, yet fulfilling things you will ever do and to still be successful after 10 years is an incredible achievement.. here’s to the next 10 years !!!

Solihull’s £2.8 billion Mortgage Powder Keg

Eight years ago in the summer of 2007, hardly anyone had heard of the term ‘credit crunch’, but now the expression has entered our daily language and even the Oxford Dictionary.  It took a few months throughout the autumn of 2007, before the crunch started to hit the Solihull Property market but in November / December 2007 and for the following seventeen months, Solihull property values dropped each and every month like the proverbial stone. The Bank of England soon realised in the late summer of 2008 that the British economy was stalling under the continued pressure of the Credit Crunch. Therefore between October 2008 and March 2009, interest rates dropped six times in six months from 5% to 0.5% to try and stimulate the British economy. 

Thankfully after a period of stagnation the Solihull property market started to recover slowly in 2011, but really took off strongly in late 2013 / early 2014 as property prices started to rocket. However the heat was taken out of the market in late 2014/early 2015 with the new mortgage lending rules and some uncertainty, when some residents had a dose of pre–election nerves.  

With the Conservatives having been re-elected in May the Solihull property market regained its composure and in fact, there has been some ferocious competition among mortgage lenders which has driven mortgage rates to record lows. Whilst I have no actual figures to back this up, I know an awful lot of long serving bank managers, mortgage arrangers and people in the finance industry, all of whom have told me on previous occasions when interest rates rose (1987, 1992, 1997 and 2003), it wasn’t the first rate rise that was the catalyst for many homeowners and landlords to remortgage but the second or third increase.  The reason being that it was only by the time of the third rise in the rates, that it started to hit the wallet.  However, the issue is, by the time of the second or third r rise, the best fixed rates, were in all instances, no longer available as they had been pulled by the banks months before.

But here is the good news for Solihull homeowners and landlords, over the last few months a mortgage price war has broken out between lenders, with many slashing the rates on their deals to the lowest they have ever offered.  I read that the well respected UK financial website Moneyfacts said only a couple of weeks ago, that the average two year fixed rate mortgage has fallen, 12 months ago from 3.6% to just under 2.8%.

Interestingly, according to the Council of Mortgage Lenders, the level of mortgage lending had soared to a seven year high in the UK.  So what about Solihull?  In Solihull, if you added up everyone’s mortgage, it would total £2.8 billion.  Even more interesting is when we look at Solihull and split it down into the individual areas of the town,

• B90 - Shirley, Solihull Lodge, Majors Green, Dickens Heath, Cheswick Green   £825.3m
• B91 - Solihull £742m
• B92 - Olton, Elmdon, Bickenhill, Hampton-in-Arden £604.1m  
• B93 - Knowle £446.3m
• B94 - Hockley Heath, Earlswood £202.4m

Since 1971, the average interest rate has been 7.93%, making the current 0.5% very low.  So, if interest rates were to rise by only 2%, according to my research, the 11,147 Solihull homeowners, who have a variable rate mortgage would, combined, have to pay an approximate additional £31,920,000 a year in mortgage payments. 

That means every Solihull homeowner with a variable rate mortgage, will on average have to pay an additional £2,864 a year or £239 a month in interest payments.

I know over the last couple of posts, I have talked about mortgages a lot however, I am not a mortgage arranger but a letting / estate agent and as regular readers know, I always talk about what I consider to be the most important issues when it comes to the Solihull property market and at the moment, in my humble opinion, this is the most important thing!

Should you require any further assistance on the Solihull Property market feel free to pop into our Solihull Property lounge or email me: jane.morcom@centrickproperty.co.uk

How will interest rate rises affect the Solihull property market?

A couple of weeks ago, I mentioned how the Bank of England has been indicating recently that UK interest rates will be going up in the not too distant future. Therefore if you are one of the 19,556 homeowners in Solihull who has a mortgage, it may be worth considering your options and start to budget for an interest rate rise. However if you are a landlord who owns one of the 4,820 rental properties in the town, whilst your exposure to interest rate rises is lower it is most certainly something you should be aware of.

Since the spring of 2009, British interest rates have been at a record low of 0.5%. It’s not a case of if, but more when, they will rise. Some people think it will be before Christmas, although I believe it will be early in to the New Year around Easter time when they do rise. I also expect that the increase will be slow, steady and limited. It depends on what happens to UK wage rises, UK inflation and the general state of the British economy. Nevertheless as much as we would love to pull the shutters and ignore what’s happening in the world, we have to recognise that we are part of a global economy and global economic issues prevent an abrupt and instantaneous rise in interest rates.

Those Solihull landlords who do have a mortgage, need to remember that as interest rates rise and their monthly mortgage costs rise, it’s easy to say you will look at your mortgage next month, before you know it Christmas will be here!  Don’t forget mortgage lenders will remove the juicy low rate mortgage deals a few months before an interest rate rise. Speak to a qualified mortgage advisor, there are lots of them in Solihull and seriously consider fixing your mortgage rate now.  You didn’t buy your Solihull buy to let property for it to become a millstone around your neck. It’s all about mitigating your risks i.e. your costs and maximising your income to make your buy to let property the investment you want it to be.

However on the other side of the coin, two in three landlords who have bought property since 2007 have done so without a mortgage. A rise in interest rates might be a good thing, I’ll give you some background first, and then I’ll explain why. Solihull landlords have seen the return on investment for their Solihull buy to let property over the last couple of years, perform very well indeed with Solihull property values rising by 21.11% since the Spring of 2009. However when rates do rise,  more expensive mortgage rates will ease the demand for borrowing but on the other hand it may temper house price growth; making the property market more competitive... therefore we should see the return of some bargain property buys in Solihull!

Finally although I can ask all Solihull homeowners and Solihull landlords, who have a mortgage that isn’t fixed to recognise that rates will rise throughout 2016 to 2018 and will continue to move steadily upwards towards more viable and feasible long term levels.  I am not qualified to give mortgage advice and this is my personal opinion, so please speak to a qualified mortgage broker and if appropriate, fix your mortgage before interest rates rise. Don’t say I didn’t warn you!

In the meantime, if you are a landlord looking for a bargain now, don’t despair ... there are plenty out there, if you know where to look! One place is Rightmove, another Zoopla plus other smaller, less popular portals. However sometimes you can’t see the wood for the trees. At the time of writing Rightmove had 877 properties for sale in Solihull, Zoopla 178 properties for sale in the town ... where do you start? A lot of savvy Solihull landlords like to pop into our Solihull property lounge and discuss the property market and how I can help them. 

Is there a crisis in the Solihull Property Market..

I don’t know about you, but if you watch Sky News every waking hour or read the newspapers, it appears we seem to lurch from one crisis to another. Another week, another crisis averted. It was only last summer the soothsayers were predicting the end of the world over the supposed house price bubble that many believed was developing in the South. Property prices were rising at 20%+ per annum in London, however the property market in the Capital started to show a controlled slowdown and a cooling in activity with growth easing to a more realistic 8% / 9% per annum. Interestingly, there was no panic when modest price drops were seen in some of London’s highest priced suburbs.

However, this month’s crisis is the buy to let boom and as always George Osborne likes to be topical. In the emergency budget, Mr Osborne declared that from 2017, he will start to scale back the tax relief that those landlords, on high income tax rate with a mortgage have benefited from. The Daily Mail ran headlines stating it was the end of the private landlord; predicting many will give up on buy to let altogether and we will be inundated with rental properties up for sale as landlords feel the squeeze.

Even Mr Carney, the Governor of the Bank of England, recently cautioned that the buy to let sector could destabilise the whole UK property market. He was concerned landlords who bought with high loan to value mortgages will panic if there is a property crash because of the treat of negative equity, sell cheaply and which will result in large scale house price falls.

End of the world then? Not so..But next week … that’s another story!  Before we all go and live like hermits in the Scottish highlands, let me explain to you my perspective on the whole subject. As I mentioned a few weeks ago, two thirds of buy to let properties bought in the last eight years have been bought mortgage free – so they won’t be affected by the Chancellors’ tax changes and if the right advice is taken from an accountant with sound tax experience there is no need to panic.  Also something I feel is often overlooked but very important, is the fact that landlords could only normally borrow up to 75% of the value of the rental property.  In the last property crash of 2008, property values dropped by the not so insignificant figure of 17.84% in Solihull. However, even then, when we had the credit crunch and the world’s banking sector was on the brink, no landlord would have been in negative equity in Solihull.

I believe we have a case of ‘bad news sells newspapers’ and I believe that buy to let, and the property market as a whole, will carry on relatively intact. It is true, reducing tax relief will affect landlords who pay the higher rate of income tax and this may slightly diminish buy to let as an investment vehicle, but it is a staged policy and taking the right advice will mean reducing the impact; I highly doubt it will push people to sell.  Many landlords have been lazy with their investments, buying with their heart, not their head. Nobody would ever dream of investing in the stock market without doing their homework and talking to other people in the know. If you want to make money in the Solihull property market as a buy to let landlord, it’s all about having the right property and as you grow, the right portfolio mix to offer a balanced investment that will give you both yield and capital growth.

The Solihull buy to let market still offers good investment opportunities to new and old landlords alike. Those who have bought in the last 12 to 18 months have reaped the benefit from buying in Solihull, because the town offered a combination of reasonable house prices with subsequently increasing rents.  Property values have risen by 8.17% in the last 18 months in Solihull, whilst looking at rents, in Q2 2015, average rental values for new tenancies were 4.6% higher than Q2 2014 and they rose by 4.2% between Q2 2013 and Q2 2014.

I cannot stress enough the importance of doing your homework. One source of information and advice is the Solihull Property Blog where I have similar articles to this about the Solihull property market and what I consider to be the best buy to let deals around at anyone time in the City, irrespective of which agent it is on the market with. If you haven’t visited and you are interested in the local property market in Solihull .. you are missing out! .. http://solihullpropertyblog.blogspot.co.uk/

A steady upward momentum of the Solihull property market.

A steady upward momentum of the Solihull property market.
Solihull property values fell by 0.7% last month, however they are still 3.7% higher than 12 months ago. Even though values dropped slightly, overall I expect future property price growth to remain firm, built on the foundations of an improving labour market, strengthening economy and very low mortgage rates. In fact talking to a number of other agents in the town, mortgage arrangers and solicitors, the steady long term growth in Solihull property prices can be attributed to high demand.  Coupled with short supply and the continued low mortgage rate environment.  This all means a slow but steady upward momentum of the Solihull property market which is likely to continue for the remainder of 2015.

However there are a couple points I wish to highlight as all my blog readers will know, I like to give a balanced and honest opinion of what is happening in the Solihull property market.  The two main points being low interest rates and a lack of supply of property.

Firstly – interest rates - Mark Carney (Governor of the Bank of England) indicated in a speech in July at Lincoln Cathedral, that the Bank will be seriously considering raising interest rates. An upward movement in interest rates will temper demand and result in a marked slowdown in house price growth.  Mr Carney said that only six out of ten people had a mortgage (57% to exact) had a variable rate mortgage, compared with more than seven out of ten people  ( 73% to be exact) in the Summer of 2012. Now I am not a mortgage arranger and cannot give advice but rates are only going in one direction, so whether you are a landlord or homeowner this might be a time to consider fixing your mortgage rate?  Don’t say I didn’t warn you!

This as well as the more stringent mortgage lending rules, introduced in 2014 which affected people’s ability to have larger mortgages, means homeowners will need to be realistic in their pricing if they want to sell. Reading other recent reports though, property owners have continued to pay off mortgages at a faster rate while mortgage rates have been low. Therefore when mortgage rates rise, the effect on home movers given the shortage of supply, will be a marked slowdown in the rate of house price growth.

Secondly - shortage of supply – as mentioned in previous articles, the number of houses on the market in Solihull is at an all time low. One reason for this is the large number of buy to let landlords who have bought Solihull property over the past fifteen years, as unlike first time buyers who tend to move on after a few years, landlords tend to keep their properties long term meaning there are less properties coming onto the market.  In fact over the last four months only 856 properties in the Solihull Metropolitan Borough Council area have sold and changed hands, compared to 1,021 within the same time frame in 2014, a not so insignificant drop of 16.16%.
 
If you are planning on investing in the Solihull property market or want advice for a successful buy to let investment, please email me on jane.morcom@centrickproperty.co.uk

My concerns about the Solihull Property market

I am genuinely concerned about the Solihull property market, but in a way that might surprise you.  Rightmove announced that average ‘asking prices’ fell last month by 0.5% in the West Midlands, leaving them 3.2% higher than a year ago.  Whilst it could be said that monthly change is very modest, in the same period a year ago we saw a slight monthly rise of 0.2% in the West Midlands.

Taking in to account all the data on the Solihull property market and putting aside the need for more houses to be built in the next decade to balance out the increase in population (helped in part by inward European migration) but not matched by a similar increase in housing being built, my research shows there is a widening gap between what property buyers want and what is available to buy.  Buyers in Solihull are looking for the larger proportion of the four and five bedroom properties, whilst there are a larger proportion of the smaller one and two bed properties, traditional semi-detached and smaller terraced houses/apartments available.

Demand for smaller properties comes from both first time buyers and the growing number of buy to let landlords, where it is more cost effective and efficient to buy smaller properties to let out compared to larger properties which tend to offer poorer returns.  Also, landlords with larger loans (on those larger more expensive properties) will also be hit harder with the changes in the way tax is paid on buy to let investments which start in 2017.

If you recall a few weeks ago I did some research on how different types of properties had performed in Solihull since the year 2000.  I revisited those calculations and it hit me how different types of properties had performed over the last 15 years.  This mismatch of demand and supply isn’t a new phenomenon, it’s been happening under our noses for years!

In the last 15 years the average detached house in Solihull has risen in value from £205,669 to £528,398, whilst the terraced house has risen in value from £96,879 to £239,700.  This does not seem unusual until you look at the percentage growth.  The detached has grown in value by 157% whilst the terraced by 147% which means that the gap between the inexpensive terraced and expensive detached properties has in percentage terms narrowed (this isn’t just a Solihull thing, it has happened across the Country).

I am concerned as more houses do need to be built, not only in Solihull but the West Midlands and across the UK as a whole.  In particular, there is specific need for more affordable starter homes for the growing demand created within the rental market by the increasing number of tenants and first time buyers.  The Government needs to face up to the fact that unless they can get the builders, the planners (to release more building land), the banks (to finance it) and they can ensure long term plans can be made and implemented this issue will get worse.

The country needs 200,000 houses a year to be built to keep up with demand, let alone address the imbalance between demand and supply.  Last year only 141,040 properties were built, the year before 135,510 and 146,850 in the year before that.  This means only one thing for Solihull landlords.  Unless David Cameron starts to rip up huge swathes of the British countryside and build on acres and acres of green belt, demand will always exceed supply when it comes to property for the foreseeable future and the rental market will continue to grow.

Therefore investment in the local Solihull property market could be the best move to make, as the stock market hits yet another rocky time and becomes a higher risk investment strategy.  Everyone is different and trust me, there are many pitfalls in buy to let.  You must take plenty of advice and seek out the best opinion.  One source of opinion, specific to the Solihull property market is the Solihull Property Blog http://solihullpropertyblog.blogspot.co.uk/

Solihull – The 10 year Time Bomb on Home Ownership

Many people think the British obsession with owning your own home started with Thatcher in the early 1980s, when she allowed council tenants to buy their council houses under the right to buy scheme. However, the growth actually started just after the Second World War. Looking at the country as a whole in 1951 30% of residential property was owner occupied then, every ten years that rose incrementally to 39% by 1961; 51% by 1971; 58% by 1981 and 68.07% by 2001, by 2013/14 the figures dropped to 63% and continue to drop today.

Young adults tend to start to think about settling down and moving out of the family home in their early-mid twenties.  After a couple of years, they will have a choice of either buying their first house (albeit with a mortgage) or decide to privately rent for the long term (the Council House waiting list is measured in decades at the moment!). The ratio of people owning a house with a mortgage verses privately renting is an extremely important guide as to the behaviour of people in respect of their housing needs and what their attitude to renting vs buying is.  With that in mind, within the next ten years, I predict that more people will privately rent in Solihull compared to those who purchase a property with a mortgage, meaning that the British love affair of property ownership will wane as the decades roll on.

This is a really important change in attitude to the way we live.  Understanding where the demand of tenants is going to come from in the coming decade is just as important as understanding the supply side of the buy to let equation, such as the number of properties built in the town, Solihull property prices and Solihull rental prices.

In the Solihull Borough Council area as a whole there are 7,795 households that are privately rented via a landlord or letting agency and there are 31,859 households that are owned with a mortgage, so my prediction appears to be outrageous. However, when we look deeper 15,776 of those 31,859 households are 35 to 49 year olds and 10,091 are households of 50 to 64 year olds. I would expect all the 50+ years to be paying their mortgage off as they enter retirement as I would with some of the people in their mid/late 40’s. 

Meanwhile in the 25 to 34 age range (the age group most people bought their first home in the 1970s/80s/90s) only 3,762 of the 6,329 households occupied by those 25 to 34 year olds are owner occupiers with mortgages, 2,567 households are privately rented. This means only 59.4% of 25 to 34 year olds have bought their house (with a mortgage). Twenty years ago, that would have a much higher percentage of between 75% and 85%.

It can be concluded therefore that as the older generation approach retirement and pay their mortgages off, the younger generation aren’t jumping on the property ladder like they were 20 or 30 years ago. The private rental sector will take up the slack as more and more people need a roof over their head and will rent rather than buy a property. With the new build by local authorities and housing associations nowhere near the number of houses they were building in the 1950s, 60s and 70s, the private landlord appears to have good demand for their rental properties for many decades to come.

This will create a polarisation in the housing market between those, mostly older householders, who own outright and those, mostly younger householders, who rent. Our housing market is very much turning into the European model. However, all is not lost the younger generation will inherit their parents properties, which in turn will enable them to buy albeit later on in life.

If you are a landlord or thinking of become a landlord, and would like to read more articles like this please visit the Solihull Property Blog   http://solihullpropertyblog.blogspot.co.uk/

George Osborne – The Solihull landlord’s friend?

Well the last few weeks have been rather hectic, Solihull landlords have been sending emails or picking up the phone to me regarding the new rules on buy to let taxation announced in the recent budget. George Osborne confirmed in the recent summer budget that the tax relief given to landlords on mortgage interest payments for their buy to let properties would be reduced over the coming years for higher rate income tax payers. The Chancellor said the current 40%-45% tax relief that private buy to let landlords (who pay the higher rate of income tax) now get would change in 2017 and would steadily reduce over the following four years to 20% by 2020.

With 10.3% of residential property in Solihull being privately rented (5,242 rental properties in total), these changes are potentially something that will not only affect most Solihull landlords, but also the tenants and the wider property market as a whole. The choice of rental properties could decrease, especially at the top end of the market, which could increase rents.

However, Solihull landlords could protect themselves by reassigning one or more rental properties into a company structure (e.g. a Limited Company, Partnership or Sole Trader) and by doing so, the total tax paid is greatly reduced because a company only pays tax on the profit. Nonetheless before everyone goes off setting up companies for their buy to let portfolios, it must also be noted if a sole trader firm is started stamp duty needs to be paid, yet if the owner is in business with a partner they could enjoy some stamp duty relief.  The biggest tax variation is Capital Gains Tax where the tax bill will be much higher when you come to sell your portfolio. In essence by going into business with your buy to let properties, you will potentially have a modest stamp duty to pay when you start but you will have a lot less monthly tax to pay. Irrespective of the interest rate, the Capital Gains Tax bill will be much higher when you come to sell ... as you can see, it is not a ‘get out of jail card’. Now it must be remembered, I am not a tax advisor, so you must take advice from a qualified person.

Those planning to purchase a Buy to let property will have to factor these new rules into their calculations and this could affect the offers they are willing to make. However, I am not that concerned, as the scaremonger reports fail to see the fact that two out of three Buy to let properties that have been bought since 2007 have been purchased without the support of a Buy to let mortgage. With those two thirds of landlords paying cash for the purchase of their rental properties, this means two thirds of landlords will be totally unaffected by the changes.

So what will happen in the future? The British love their Bricks and Mortar, it’s an asset that they can touch and feel and has a 70 year track record of capital growth that has out stripped inflation. Buy to let will still be attractive to Solihull investors and let me explain why. If you invested £40,000 into Solihull property in September 1987, today it would be worth £176,785. If you had invested the same £40,000 into the London Stock Market, it would be only be worth £114,506 today. Whilst inflation would have taken the original £40,000 and pushed it up to £83,127.

It’s true that some central London landlords rely solely on the tax breaks rather than high yields and may be forced out of the market, but even those landlords could seek to recoup any losses by increasing rents. However, those landlords may leave the market, constricting the availability of rented houses even more than it is already, increasing rents and thus pushing yields even higher for landlords and BTL investors still in the market... thus attracting new landlords into the market because of those higher yields.

The reality is that there is too much demand and not enough supply of homes, for people to live in in the town. This sets up the Solihull and UK property market to continue creating strong and steady returns, irrespective of any tax loophole being there (or not as the case maybe).

For further information and advice on the Solihull property market, feel free to pop into our property lounge or visit my property blog http://solihullpropertyblog.blogspot.co.uk/

Solihull Landlord’s mortgages top £293 million!

The Brits can’t stop talking about property. The hot topic of discussion at dinner parties of  Solihull’s movers and shakers is the subject of the Solihull property market but in particular, buy to let. These people are buying up buy to let properties quicker than an ace Monopoly player ... or so it would seem if you read the Sunday papers. So is the buy to let market a sure fire way to make money?  Is it something everyone should be jumping into? Is it a sure fire way to make money? The answer is ‘Yes’ and ‘No’ to all those questions!

 A landlord has to flick through Rightmove or Zoopla, pick the property of their choice and agree a price. Then find a modest deposit of 25% (often by re-mortgaging their own home) which for an average Solihull terraced house, would mean finding £59,925 for the deposit (as the average Solihull terraced house is currently worth £239,700) and borrow the rest with a low interest rate buy to let mortgage.  Then the final step, rent out the property in a matter of hours for a high price, sit back and live comfortably. The rent will cover the mortgage payments, with an amount of money to spare and come retirement have a portfolio of property that would have quadrupled in value in fifteen years. Sounds wonderful – doesn't it? Or does it?

Let us not forgot that the half of one per cent Bank of England base rate is artificially low. The international money markets can be fickle and if interest rates do rise quicker and higher than expected because of some unforeseen global economic situation, that monthly profit will soon turn into a loss as the mortgage will be more than the rent. Even though tenants are staying longer in their rental property, tenants still come and go and my guidance to landlords is they should allow for void periods, plus the maintenance costs of a rental property and of course agents fees... all things that eat into that profit.

Interestingly by my calculations, there are approximately 1,569 Solihull landlords owing in excess of £293 million in mortgages on those Solihull buy to let properties.  An impressive amount when you consider Solihull only has 0.147% of all the rental properties in the country. It really does come down to a number of important factors going forward to ensure you are water tight for the future. A lot of my existing landlords are fixing their mortgage rates. One told me that the Metro Bank are currently offering a five year fixed BTL re mortgage rate at 3.79% for 5 years (based on a 75% loan). I don’t give financial advice, so you must speak with a qualified mortgage advisor… but that sounds very fair!

However, one thing I do know, is that buy to let is a long term investment it’s a ten, fifteen, twenty year plan and property prices will go down as well as up. You wouldn't dream of investing in the stock market without advice, so why invest in the Solihull Property Market without advice? We give bespoke detailed advice to our landlords to enable them to spot trends in the Solihull Property Market before others, enabling them to buy better properties at better prices. For example, did you know that semi-detached houses are selling for around 7% lower than 12 months ago in Solihull yet detached properties are selling for 24% more (with every other type in between). This means we can advise on which properties will go up in value better (or lose less if property prices drop), we can also advise which have lower voids and which properties have higher maintenance issues.  

Information on the local property market and ability to process it is the strongest asset we can give you. As Lois Horowitz, the famous author says, ”Not having the information you need when you need it leaves you wanting. Not knowing where to look for that information leaves you powerless. In a society where information is king, none of us can afford that”. For further advice on the Solihull property market, please email me on jane.morcom@centrickproperty.co.uk

The ‘Liquorice Allsorts’ Solihull Property market

Despite the UK economy heading in the right direction with record low mortgage rates and unemployment  figures dropping,  the rate of property prices rising in Solihull have tempered since the start of the year. This slow but sure downward trend in the rate of growth has been in evidence since mid-2014.  Property value increases continue to outpace the growth in salaries, however the gap is closing, helped by a lift in salaries over the last 6 months.  Property values in the West Midlands region as a whole are 3.5% higher than a year ago.  Compare this to the neighbouring regions of the East at 2.9% higher and the North West at 3.4%, the majority of the country continue to see annual house price gains - the exception being Wales which recorded a slight decline of -0.6%.

Even with the tempering in house price inflation, it does not necessarily change my outlook that property prices are likely to be firmer over the second half of 2015 amid heightening activity in the Solihull property market.  As I've mentioned before, there is a current shortage of properties on the market, restricting supply, which in turn will provide stability and support to property prices. My overall opinion, therefore, is that Solihull prices will rise by 5% over 2015 and roughly the same in 2016.

Property investment is a long term business, buying the right sort of property is vital. I have recently been speaking with a number of Solihull landlords about the importance of a balanced portfolio, when buying and renting out property. The balance between buying properties that offer good monthly returns but quite often offer poor capital growth. Verses properties that do go up in value quicker but often offer a lower yield.  So, what type of properties have performed best over the last few years in Solihull, especially in terms of their capital growth?

When comparing what the average price of detached, semi detached, terraced and flats were selling for back at the start of the Millennium to the present in Solihull,  the results are quite remarkably different. Almost like a bag of Liquorice Allsorts, as the different types of property have performed poles apart over the last 15 years:

• ·         Detached Houses were selling on average for £193,184 in 2000, but so far in 2015, they have been selling for approximately £449,514 showing a rise of 133%.
• ·         Semi -Detached Houses were selling on an average of £117.033 in 2000 however, in 2015 figures suggest that they have been selling for close to £285,221 with a rise of 144%.
• ·         Terraced Houses were selling on average for £99,525 in 2000, currently in 2015, they have been selling on average for £218,077 suggesting a rise of 119%.
• ·        Flats and Apartments were selling on average for £115,806 in 2000 however, at this present time they are selling on an average of £220,550 giving a rise of 90%.

Moving forward, what should new and existing buy to let landlords do with this information?  Well, the questions I seem to be asked on an almost daily basis by landlords are:

·         “Should I sell my property in Solihull?”

·         “Is the time right to buy another buy to let property in Solihull and if not Solihull, where?”

·         “Are there any property bargains out there in Solihull to be had?”

Many other landlords, who are with both us and other letting agents in Solihull, like to pop in for a coffee,  pick up the phone or email us to  discuss the property market, how it compares with its closest rivals (Birmingham, Sutton Coldfield and Coventry) and hopefully answer the three questions above.  I don’t bite, I don’t do hard sell and I will just give you my honest and straight talking opinion and look forward to hearing from you.