Friday 4 March 2016

Private Renting in Solihull increases by 237.5% in 20 years



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.

The advice I give to my landlords, and to you my blog reading friends is this; these changes will panic or scare some landlords, but this also means that competition for decent Solihull buy to let bargains will reduce, as fear of change kicks in and amateur investors choose alternative investments. These opportunities will provide a more stable platform for knowledgeable and experienced Solihull landlords to thrive in. If you would like to learn more about the Solihull Property Market, feel free to pop into our property lounge on the High St for a drink and a chat with me.

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