22% increase in Property Values in Solihull since the Millennium

Solihull house prices since the Millennium have risen by 122.38%, whilst average salaries in Solihull have only grown by 51.27% over the same time frame. This has served to push homeownership further out of reach for many Solihull people as they have to battle against raising considerable deposits and meeting stricter lending criteria, as a result of new mortgage regulations introduced in 2014/5.  The private rental market in Solihull has grown throughout the last twenty years with buy-to-let investors purchasing a high proportion of newly built residential properties that were built and designed for the owner occupier sales markets.  For example, in Solihull, roll the clock back 20 years and there were 38,631 properties in the constituency, whilst the most recent set of figures show there are 50,798 properties - a growth of 12,167 properties. Of these 12,167 properties evidence indicates that over this 20-year period the number of rental properties has grown from 1,553 to 5,242 in the constituency - a rise of 3,689 properties.

Nevertheless, some say this historic growth of the Solihull rental market might start to change with the new tax rules for landlords introduced by Mr. Osborne over the last seven or eight months. Yet the numbers tell another story. Across the board, mortgage borrowing climbed to a 9 year zenith in March this year as the British property markets traditional Easter rush corresponded with landlords hurrying to beat George Osborne’s new stamp duty changes – buy-to-let landlords borrowed £7.1bn in March 2016 (the latest set of figures released) which was 163% up on the £2.7bn borrowed in the previous March.

I don’t think things will get worse in the buy-to-let market in Solihull for the following:

Firstly, what else are Solihull landlords going to invest in if it isn't property - the stock market? Since the millennium, the stock market has risen by an unimpressive total of 5.54%, quite different to the 122.38% rise in Solihull property prices?

Secondly, although the 3% stamp duty is the first blow on top of a number of other tax changes to be phased in between 2017 and 2021, others include a constraint on landlords in their ability to offset mortgage interest.  If a sizeable number of landlords do take the decision to sell their portfolios, this will lead to a substantial amount of second hand properties being put up for sale; which might not be a bad thing, as I have mentioned in previous articles, there is a serious shortage of properties to buy at the moment in Solihull: the stock of property for sale being at a six-year all-time low.  So an influx of sales properties will be a positive for the Solihull property market.

Thirdly, if there are fewer rental properties in Solihull, as supply drops and demand remains the same this will create a squeeze in the Solihull rental market and as a result rents will rise. In fact, I predict even if landlords don’t sell up, Solihull rents will rise as Solihull landlords seek to compensate for increased costs, which means more landlords will be attracted back.