After the shock to so many 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 Telford property market. Talking to other agents and solicitors at the recent ARLA event in Stafford, there are signs that the market is picking back up following a subdued six months. Every 5 years we suffer a degree of political uncertainty ahead of the General Election which naturally slows the property market.
Labour’s election promises of rent controls and three year tenancies, did cause buy to let landlords to be vigilant, to wait and see how these new policies would be implemented before they commit 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 local 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. My husband mentioned there was a tracker rate at just 1.95% last week!
You see over the past couple of years, Telford landlords have benefitted from a booming job market. Unemployment has dropped to 5.9%, down from 8.1% as a year ago. The number of persons claiming JSA is 37.8% lower than the previous year! That’s approximately 6% better than the national average. 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 which tenants are willing to pay for good quality accommodation.
Some landlords might be nervous about Tory’s plans for the housing market in 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’ (scheme 1 – New Builds) has helped 330 Telford people complete on a purchase since its launch in April 2013, when you consider 1030 transactions completed last year (2014-2015) It does seem to be making an impact, however not at the level required to underpin the local owner occupier market.
So all in all, despite the Tories great plans for the economy and encouraging signs for home ownership, there will still be a huge demand locally for Private Rented Property. It does seem to me “business as usual”.
If you are an existing landlord in Telford or thinking of becoming one, then I must suggest you seek out specialist advice and opinion. Like many agents in Telford, we will happily give you our opinion on the current state of the market and the advantages/disadvantages to investing in area.