You find me in a
reflective mood today, as I would like to talk about the future of investing in
property in Solihull. The truth is that we have gotten fat and lethargic, with
many people having mistaken the ever rising Solihull (and for that matter, the
whole of the UK) property market as the eternal gift that kept giving since the
1960’s, as property prices constantly rose and doubled every five to seven
years.
Whilst George Osborne has
decided now is the time to milk the ‘Golden Cow’ of UK’s private landlords,
with changes in taxation for buy to let property, many pundits are predicting
the end of buy to let as we know it. However, it is still possible to make a
reasonable, profitable and safe return on property with these changes. I have
always seen investing in the buy to let market, as one might view Mother Nature.
It has the capacity to create truly wonderful warm weather and balmy summer
climates but still holds the potential to unleash catastrophic storms and
hurricanes in the blink of an eye. You
need to take the time to study the market, obtain advice and opinions from knowledgeable
people and then decide what the proverbial property weather forecast will be…
remember, tenants will always need a roof over their head and I don’t see the government
building the millions of houses required to house them?
Nobody knows the future,
and while people may predict what is yet to happen, I wouldn't be afraid of
this change … because as the French proverb says (or Jon Bon Jovi sang…), ‘The
more things change, the more they stay the same’. I mean, no one could have
predicted how the property market has changed in Solihull over the last couple
of decades? Twenty years ago, in 1995, 31,800 households (meaning 82.31% of
property) were owned and only 1,553 households were privately rented (meaning
4.14% of property was rented out by private landlords). Roll the clocks on to
2016 and 41,098 of properties in the town are owner-occupied (a slight drop to
only 80.9%) and the jump in private renting has been out of this world, as
5,242 properties are now privately rented (10.3% proportionally) with
neighbouring towns showing similar changes.
Who would have predicted in 1995 the
private rental sector in
Solihull would have grown by 237.5% over
the proceeding 20 years?
Also, if you had asked
someone in 1995 to predict what would happen to property values over the next
20 years, they might have predicted similar growth to the that experienced over
the previous 20 years (between 1975 and
1995), which was a very impressive 351.55%. Yes, property values have of
course increased in Solihull between 1995 and 2015 but by a more modest 158.98%
(and most of that can be attributed to house price growth between 2000 and
2006.)
The property market is
constantly evolving and the buy to let market has for too long been solely and
heavily dependent on house price growth, whilst yield has been almost
forgotten. I see the changes in taxes, landlord
and tenant law as opportunities, contrary to the doom-mongers out there. You
may need to change your benchmarks, your approach to financing or even consider
different types of property in which to invest your money, but this will shine
a light on investing in properties with healthier yields and will create more
realistic long term buy to let opportunities, instead of relying on short term
growth bets and wagers.
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