Last weekend I had a meeting with a professional landlord who has an extensive portfolio of properties. By his own admission, he confirmed that he has somewhat neglected the portfolio which he has kind of left to look after itself. In recent years his focus was his family-run business so the portfolio wasn’t a priority. He wanted to change this attitude and become more aggressive with his Walsall property ambitions by expanding on a healthy and varied portfolio.
During our meeting he asked me where in Walsall and what type of property he should purchase to create the best capital growth and great rental yields. This got me thinking about our property market in Walsall and what has actually happened to rents and property prices..and more importantly for him..projections for the future.
Some fascinating changes are in the air in the Walsall property market. Just to give you a flavour of the full article below, upon conclusion of my research I found that the rent private tenants pay will rise faster than property prices over the next five years. Creating further issues to Walsall’s growing multitude of renters. In fact, my examination of statistical forecasts found that –
By 2022, rents will increase by 21%, whereas property values will only grow by 17%.
To explain further:
Property values over the past 5 years in Walsall have risen by 21.25%, whilst rents have only risen by 11.5%.
Throughout the last few years, and compounded in 2016, tenant demand for rental properties continued to go up. Whilst the media predicted some landlords expect to reduce their portfolios in the next couple of years, Walsall tenants will have fewer properties to choose from. The lack of choice and supply will inevitably push rents higher. In fact when talking to fellow property professionals in Walsall they all confirm the same that there appears to be a shortage of new rental properties coming on to the Walsall lettings market.
Landlords have some intriguing challenges ahead of them in the coming years. Most notably in that the Tory’s have changed the taxation rules for landlords in the way buy to let properties are to be taxed. On top of that, there is the ban on letting agent fees which is still to come into force (probably in 2018 – click here to see my previous article on the Tenant Fee Banning Order). When that happened in Scotland in 2012, Scottish letting agents passed on those fees to their landlords, who in turn increased the rent they charged to their tenants.
All I would say to Theresa May and Philip Hammond is that they must be cautious about indicating both ‘STOP’ and ‘GO’ lights at the same time to the private rented sector. They can’t expect the armies of small private landlords to continue to house around a fifth of the population and then tax the living daylights out of them. They didn’t invest in buy to let as a charity or to satisfy any humanitarian urges..something has to give. There will be significant rent rises over the coming few years for sure as landlords look to cover their costs (and before anyone gives me any disparaging comments about landlords … if it wasn’t for landlords buying all these buy to let properties over the last 15 years I’m not sure where everyone would be living today – because as we all know, most of the Council houses were sold off in the 1980’s!).
There are challenges ahead with the ‘B’ word (that’s budget if you wondered!), house price inflation will be tempered over the coming five years in Walsall. As I have discussed in previous articles, the number of properties on the market in Walsall remains close to historic lows. Which is both good as it keeps houses prices relatively flat, yet not so good as it hampers choice for buyers. Hence why I believe property values in Walsall will only be 17% higher in five years’ time.
Whilst on the other side of the coin, with the challenges facing landlords and the major shortage of new homes being built Walsall people still need somewhere to live. If those people aren’t buying houses and the local authority aren’t building any more council houses in there thousands (because they have no money)…where will the supply come from…?
The average Walsall rental property currently stands at £613 per month.
Over the next five years, I predict the average rent in Walsall will rise to £741 per month.
So, back to my landlord and the question…which really becomes a matter of either cashflow (rental yield) or capital gains. Depending on your long-term goal – what is it that you would like to achieve from your investments? Uncertain about what and where to invest when it comes to property in Walsall? Contact me by phone/ email or request a meeting face-to-face. I promise not to charge you for sharing my opinion and I certainly don’t play any hard-sell cards.
Phone: 01922 311016