What will General Election result do to the Royal Leamington Spa Property Market?

After the shock of the Conservatives returning to power with a majority at Westminster, all the potential issues and possible uncertainties of a hung parliament has lifted the cloud from the Royal Leamington Spa property market.  Talking to other Royal Leamington Spa agents, surveyors and solicitors in the area over the last few days, there are signs this has started a new impetus in the Royal Leamington Spa property market after a subdued six months, when an amalgamation of tougher lending conditions, a natural correction after the strong recovery in Royal Leamington Spa property prices in 2014, and political uncertainty ahead of the General Election slowed demand.

Against the back drop of Labour’s election promises of rent controls and three year tenancies, some Royal Leamington Spa buy to let landlords were waiting to see how these new policies would be implemented before they committed themselves to buying more property for their buy to let portfolio. Now that uncertainty has been removed, the long term picture is very positive.

So, with all that uncertainty now removed, where next for the Royal Leamington Spa property market?  Well with inflation at zero and with the Money markets happy David Cameron is still at No.10, the Bank of England have no reason to raise interest rates until 2016 at the earliest. As mortgage rates are at their lowest levels since 2010, landlords with large deposits will now be wooed by the mortgage companies in the coming months with low rates.

You see over the past couple of years, Royal Leamington Spa landlords have benefitted from a booming Royal Leamington Spa job market. Unemployment in Royal Leamington Spa and Warwick has dropped to 1.1%

A year ago, 1,021 people were claiming unemployment benefit compared to today’s  586. With more jobs and better pay, as the level of rents is directly linked to tenant’s wages, there has been an increase in the rental prices tenants are willing to pay for good quality Royal Leamington Spa properties.

Some landlords might be nervous about Tory’s plans for the housing market over the next five years in terms of tenant demand for their rental properties. One plan is for Housing Association tenants to have the right to buy their property. These kind of tenants were never in the private rented sector and will actually increase the supply of properties in the housing stock in decades to come. The Government ‘Help to Buy Scheme’ has only helped to buy 52 Royal Leamington Spa and Warwick properties since April 2013. Considering 998 properties have changed hands in the last year alone in Royal Leamington Spa and 902 in Warwick, I don’t think it has made a huge difference to our local property market.

The biggest matter, when it comes to tenant demand of rental property going forward, comes from the shift in the mindset and attitudes towards renting itself. Twenty years ago you were seen as a second class citizen if you rented a property. In Royal Leamington Spa, as in the rest of the UK (apart from Central London), renting continues to offer good value for money for tenants.  If you are an existing landlord in Royal Leamington Spa or thinking of becoming one (or as we like to call you .. a FTL .. a ‘first time landlord’), then I must suggest you seek out specialist advice and opinion. Like many agents in Royal Leamington Spa, we will happily give you our opinion on the current state of the  market and the advantages/disadvantages to investing in the Royal Leamington Spa property market if you pop into our offices.2

 

Two Speed Royal Leamington Spa Property Market?

Even with the General Election on the horizon, property values in Royal Leamington Spa are still 0.39% higher than they were 3 months ago, the diversion and ambiguity of an election typically makes house sellers who need to sell, price their property more realistically (although this only lasts a couple of months). Looking specifically at it from a Royal Leamington Spa landlord’s point of view, the Royal Leamington Spa properties favoured by investors are in short supply in many parts of the town because of a number of factors. One of the factors has been that we seen the number of first time buyers coming to buy their first home increase over the last 12 months in Royal Leamington Spa. 

  Another factor has been the fact that the banks have been pushing ‘let to buy’ (yes ‘let to buy’ is different to ’buy to let’) to homeowners (more of ‘let to buy’ in an up and coming article). Next, because of the banks, who are chasing low risk landlords with high deposits with very low mortgage rates- and the low risk landlords with high deposits tend to be attracted to the safer modern two and three bed town houses and semis in Royal Leamington Spa.

As I mentioned a few weeks back, the pension rules are changing which means buy to let landlords can use some, or all, of their pension pot to buy a property.  It shouldn’t be forgotten there are tax implications taking more than a quarter of your pension pot out (see the article from a couple of weeks ago) , so whilst many pension pots may not be able fund a suitably big enough tax free lump sum to buy the property outright, for most

it will provide enough for the 25% deposit (required by most BTL mortgage providers). It shouldn’t be forgotten landlords that the interest paid on the mortgage is tax deductible against the rent, thus lowering your income tax paid.

In the last 12 months, I have noticed a particular uplift in interest from ‘50 something’ Royal Leamington Spa people wanting to become landlords for the first time. In Royal Leamington Spa, the highest returns for the lowest investment are at the lower end of the market eg the classic apartment . Unfortunately one/two bedrooms apartments are coming to the market in smaller numbers than the larger four bed’s in  top end sectors of the Royal Leamington Spa property market. When looking at the actual numbers, in the later part of the Summer of 2014 in Royal Leamington Spa, in one month alone 121 one/two bed properties were on the market in Royal Leamington Spa.

However, in January this year, a notoriously excellent bumper month for properties coming on to the market, there were only 71 one/two bed properties on the market in Royal Leamington Spa to choose from. Today, that figure stands at only 91 ..whilst the number of four and five beds has increased significantly ...  interesting don’t you think?

At that lower end of the property market in Royal Leamington Spa, (ie where first time buyers and landlord investors compete with each other to buy those smaller properties), I believe throughout 2015, there will be a slow and steady tipping of the scales between supply and demand. In fact, from what I am seeing and hearing, early anecdotal evidence has suggested over the last few months, we are beginning to see a polarised Royal Leamington Spa property market, where we have high demand but low supply at the bottom end of the property market, yet high supply but lower demand at the top of market .. and that can only mean one thing ... prices will go up quicker on the smaller properties than the larger ones in Royal Leamington Spa, thus narrowing the gap for people looking to move up market!