Monday, 10 July 2017

Investment Spot

We are departing from our normal blog article by presenting a versatile investment opportunity to our readers.
As a Directorship, we have had a link with this one bedroom property since it was built approximately 12 years ago. The current owners have decided to emigrate to Australia and are reluctant to sell what has been their permanent home and long-term investment let.
It is well cared for throughout and comprises hallway, double bedroom, bathroom and open plan living, dining room and kitchen. Slide doors from the dining area lead to a rather neat concealed balcony which has been ‘cut’ into the roof. It is south facing and offers immediate 180 degree views up river towards old Penryn and down river to Penryn Bridge and the main estuary.
Kitchen 10' 2" x 7' 3" (3.1m x 2.21m)
Lounge / Dining Area 14' 1" x 11' 4" (4.30m x 3.47m)
Bedroom 12' 5" x 11' 7" (3.80m x 3.55m) 
It currently returns £625 per calendar month to a professional long-term tenant.
If re-marketed for rent in our opinion it would return £650-675 PCM.
The management fees which include block insurance are £ TBC.
We can thoroughly recommend this investment for its rental potential and also historical capital growth. If this property appeals to you please give us a call!

Friday, 23 June 2017

How the rented sector has transformed the Falmouth Property Market

The Falmouth housing market has gone through a sea change in the past decades with the Buy-to-Let (B-T-L) sector evolving as a key trend, for both Falmouth tenants and Falmouth landlords.


A few months ago, the Government released a White Paper on housing. I have had a chance now to digest the report and wish to offer my thoughts on the topic. It was interesting that the private rental sector played a major part in the future plans for housing. This is especially important for our growing Falmouth population.


In 1981, the population of Cornwall stood at 424,500
and today it stands at 549,400.

Currently, the private rented (B-T-L) sector accounts for 20.8% of households in the town.  The Government wants to assist people living in the houses and help the economy by encouraging the provision of quality homes for those unable to buy their own property. Interestingly, when we look at the 1981 figures for homeownership, a different story is told.


67.45% Falmouth people owned their own home in 1981

19.56% Falmouth people rented from the Council or Housing Association in 1981

and 13.0% Falmouth rented from a Private Landlord    

The significance of a suitable housing policy is vital to ensure suitable economic activity and create a vibrant place where people want to live. The population of Cornwall is estimated to grow to 636,000 by 2037. It is imperative that Cornwall County Council and Central Government all work actively together to ensure the residential property market encourages the provision of quality homes for all types of residents.

One idea the Government has proclaimed is a variety of measures aimed at encouraging the Build-to-Rent (B-T-R) sector (instead of the B-T-L sector). These include allowing local authorities to proactively plan for B-T-R schemes, and making it simpler for B-T-R developers to offer inexpensive private rented homes.


To do this, the government will invent a distinct affordable housing class for B-T-R, called ‘Affordable Private Rent’, which will oblige new homes builders to provide at least 1 in 5 of a new home developments at a 20% discount on open-market rents and three year tenancies for tenants. In return, the new homebuilders will get better planning assurances.
Private landlords will not be expected to offer discounts, nor offer 3 year tenancies. however it is something that Falmouth landlords need to be aware of as there could be greater competition for tenants. 
Over the last ten years, home ownership has not been a primary goal for young adults as the world has changed. These youngsters expect ‘on demand’ services from click and collect, Amazon, Dating Apps and TV with the likes of Netflix. Many Falmouth youngsters see that renting more than meets their accommodation needs, as it combines the freedom from a lifetime of property maintenance and financial obligations, making it an attractive lifestyle option.


Private rented housing in Falmouth and Cornwall, whether it is B-T-L or B-T-R, has the potential to play a very positive role.
1981, 2017 and 2037 population figures are from the Office of national Statistics.
1981 Tenure figures are from the Census. 

Tuesday, 30 May 2017

What will the General Election do to 6,180 Falmouth Home Owners?

There are 9895 households in Falmouth. Of these 3,585 homes are owned without a mortgage and 2,595 homes have a mortgage on them.

Many homeowners have made contact asking what the General Election will do to the Falmouth property market?  The best way to tell the future is to look at the past.

 I have looked over the last five general elections and analysed in detail what happened to the property market on the lead up to and after each one. Some very interesting information came to light.

 Of the last five general elections (1997, 2001, 2005, 2010 and 2015), the two elections that weren’t certain were the last two (2010 with the coalition and 2015 with the largely unexpected Tory majority).

Therefore, I wanted to compare what happened in 1997, 2001 and 2005 when Tony Blair was almost guaranteed to be elected/re-elected against the last more close-run elections of 2010 and 2015 ... in terms of the number of houses sold and the prices achieved.

Look at the first graph below comparing the number of properties sold and the dates of the general elections


It is clear, looking at the number of monthly transactions (the blue line), that there is a certain rhythm or seasonality to the housing market. That rhythm/seasonality has not changed since 1995 (seasonality meaning the periodic fluctuations that occur regularly based on a season) For instance you can see how the number of properties sold dips around Christmas, rises in Spring and Summer and drops again at the end of the year.

To remove that seasonality, I have introduced the red line. The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers.

The yellow arrows denote the times of the general elections.

It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in the number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (i.e. number of properties sold).

In plain English, it seems to follow that a landslide or clear election result, tends to translate to a more confident market and one where properties sell quicker and in greater volume. Anything less than a clear victory appears to result in a less confident post-election sales environment.

Next, I wanted to consider what happened to property prices. In the graph below, I have used that same 12-month average, housing transactions numbers (in red) and yellow arrows for the dates of the general elections but this time compared that to what happened to property values (pink line).


There is no discernible pattern of increasing house prices in the 12 months following an election. In 1997 and 2001 they did. In 2005 they plateaued. In 2010 they fell away. In 2017 they raced away. The wider economics are more at play perhaps than the politics.

What one can read into both graphs is that while an election might help you sell (more transactions taking place), it does not necessarily mean you will sell for more. 

So finally, what does this mean for the landlords of the 2,054 private rented properties in Falmouth?

Well, as I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Falmouth will be a little more subdued in the next few years for reasons other than the general election.

The growth of rents has taken a very slight hit in the last few months as there has been a slight over supply of some types of rental property in Falmouth. Much of this is due to the seasonal nature of the rental market in Falmouth particularly between November and the beginning of March. During those times Falmouth landlords need to be realistic with their market rents.  Once the winter let season finishes and holidaymakers arrive for Easter those displaced tenants fuel the demand and upward rental cycle until the reverse happens at the end of the season. Twas ever thus here in this part of Cornwall

In the long term, as the younger generation still choose to rent rather than buy ... the prospects, even with the changes in taxation, mean investing in buy-to-let still looks a good bet. Look at the pink line since 1995. At the risk of sounding like a broken record.. where else are you going to place your money – stock, shares, savings accounts or bricks and mortar? Naturally you can gauge our response to that as Landlords ourselves!

If you want to read more about the Falmouth property market – then please visit the Falmouth Property Guru for informed comment and articles not about us or our business but issues and items that we believe are relevant for our fellow Landlords.

Monday, 22 May 2017

Should you still be investing in Falmouth Buy To Let?

If I were a buy to let Landlord in Falmouth today, I might feel a little bruised by the assault made on my wallet after being ransacked (and continuing to be so) over the last 12 months by HM Treasury’s tax changes on buy to let. To add insult to injury, Brexit has caused a tempering of the Falmouth property market with property prices not increasing at the levels we have seen in the last few years.


Could we indeed see a very slight drop in property prices this year?

Falmouth Town Councils bid to introduce (after mid-June) licencing of properties without an existing history of HMO letting in Falmouth is surely likely to have an impact on values of student let properties for example. This is because new Landlords will be cautious over buying a property that does not have a history of HMO letting. It is not a given that they will be granted a licence and will therefore hold off buying properties for HMO letting. Conversely a property with a history of letting might appear to be an even more valuable asset, if the granting of licences is restricted. Watch this space! 


There are some positives of falling house prices.

If Falmouth property prices do drop, this might encourage first time buyers back into the market. This will help the development of sales chains. After all property sales are reliant on new entrants at the bottom end of the market to feed the chain above. Putting it simply for many, we cannot buy unless we sell first.

If prices cool, yields will rise. This in turn will also make it easier to obtain a buy to let mortgage. If property values come down enough, that might persuade landlords to add to their portfolio. These are likely to be marginal things for landlords but nonetheless positive.

Rental demand in Falmouth will remain solid. This is reinforced by a growing sense of the way many young people view their ‘property futures’.

 I have just come back from a visit to my relations after a family get together. I was speaking to a young couple, both are in their mid/late twenties, both have decent jobs, and they rent. They are perhaps typical of ‘generation rent’. Conversations about the possibility of one day being able to buy their own homes bores them. Not because they don’t harbour a desire to be a homeowner but because they see the dream as a hopeless one too distant to contemplate.

 Firstly, they don’t want to put cash into property, they would rather spend it on living and socialising, by going on nice holidays and buying the latest tech and gadgets. They want the flexibility to live where they choose and finally, they don’t like the idea of paying for repairs. All their friends feel the same. Looking through the lenses of a forty something should I be surprised that buying a house is just not top of the list for these youngsters?

Falmouth - Accommodation Type and the Number of Occupiers
Owned outright - Falmouth
Owned with a mortgage - Falmouth
Shared ownership (part owned and part rented) - Falmouth
Social rented (aka Council Housing) -  Falmouth
Private rented - Falmouth
Living rent free - Falmouth

With nearly 23% of Falmouth people already in rented accommodation (and set to grow) now might just be a good time to buy property in Falmouth. After all what else are you going to invest in?  Give your money to the stock market run by sharp suited city whizz kids? A holiday of a lifetime in North Korea perhaps?  Maybe a donation to your favourite political party?


Nothing out there is as good as bricks and mortar!




Friday, 12 May 2017

OAP Renters make for good tenants!

Recent statistics published by the Office of National Statistics show that there are 267,704 private rented households in the Country that are occupied by people aged 65 and older. This means 4.39% of OAP’s are living in private rented property. There are of course many more than are living in council rented or private housing association rentals.

It got me thinking two things. How many of these OAP’s have always rented and how many have sold up and become a tenant?  In retirement, selling up could make financial sense; after all it potentially allows them to liquidate the equity of their main home to enhance their retirement income.  I wanted to know why these older people rent and whether there was opportunity for the buy to let landlords of Falmouth? This was particularly important since our experience of retired private renters is that they make fantastic tenants.

The Prudential published a survey recently that said nearly six out of ten OAP renters had never owned a home.  Two out of ten OAP renters were required to sell up because of debt, just about one in ten OAP renters sold their property to use the money to fund their retirement and the remaining one out ten OAP renters, rented for other reasons.

Funding retirement is important as the life expectancy of someone from Falmouth at age 65 (years) is 19.4 years for males and 21.4 years for females (interesting when compared to the National Average of 18.7 years for males and 21.1 years for females).  The burdens of financing a long retirement are being felt by many mature people of Falmouth.  The state of play is not helped by rising living costs and ultra-low interest rates reducing returns for savers.

So, what of Falmouth?  Of the 3,028 households in Falmouth, whose head of the household is 65 or over, not surprisingly 2,338 of households were owned (77.21%) and 478 (15.79%) were in social housing.  However, the figure that fascinated me was the 131 (4.33%) households that were in privately rented properties.

Although a small figure, anecdotal evidence from talking to my team and other Falmouth property professionals suggests this figure is rising.  Putting it plainly more and more Falmouth OAP’s are considering selling their homes and renting something more manageable, allowing them to release their equity.  This equity can be gifted to grandchildren (allowing them to get on the property ladder), invested in plans that produce a decent income at the same time as allowing them to live the life they want to live. With early planning it reduces the reality of money earned during a lifetime of working going to the state to fund a care home. 

These Falmouth OAP renters know they have a fixed monthly expenditure and can budget accordingly with the peace of mind that their property maintenance and the upkeep of the buildings are included in the rent.  Many landlords will also include gardening in the rent!

Falmouth landlords should seriously consider low maintenance semi-detached bungalows or apartments close to doctor’s surgeries, bus routes and amenity as a potential investment strategy to broaden their portfolio.  Get it right and you will have a wonderful tenant!

Friday, 21 April 2017

£2.47bn – The total value of all Falmouth Property Market

“How much would it cost to buy all the properties in Falmouth?”


This fascinating question was posed by the 13-year-old son of one of our local landlords when they both popped into my offices recently. I thought to myself, I would sit down and calculate what the total value of all the properties in Falmouth are worth … and just for fun, work out how much they have gone up in value since his son was born back in the autumn of 2003.

In the last 13 years, the total value of Falmouth property has increased by 38% or £679.86 million to a total of £2.47 billion. Interesting, when you consider the FTSE100 has risen by 72.4% and inflation (i.e. the UK Retail Price Index) rose by 38.7% during the same 13 years.

Well what does £2.47 billion allow you to do?

Amongst other things it would be more than enough to wipe out the debt of the NHS which stands at a cool £2.45 billion Guardian (May 2016).

You could buy Bayern Munich or Arsenal football clubs but not Manchester United, Real Madrid or Barcelona. Forbes 2016.

It is also enough to provide the spending money for every tourist that visits Lanzarote in the last year (Wikipedia). Obscure I know but this is where I'm editing this from!

When I delved deeper into the numbers, the average price currently being paid by Falmouth households stands at £270,758.… but you know me, I wasn’t going to stop there, so I split the property market down into individual property types in Falmouth; the average numbers come out like this ..


Falmouth Property Market
Average Value of a Detached Property
Average Value of a Semi-Detached Property
Average Value of a Terraced/Town House Property
Average Value of an Apartment


... it got even more fascinating when I multiplied the total number of each type of property by the average value. This reinforces a previous article where we wrote about Falmouth being the land of the semi-detached property!


Total Value of all the Falmouth Detached Properties
Total Value of all the Falmouth Semi-Detached Properties
Total Value of all the Falmouth Terraced/Town House Properties
Total Value of all the Falmouth Apartments


So, what does this all mean for Falmouth?  Well as we are ploughing the unchartered waters of 2017 and beyond, even though property values are already declining in certain parts of the previously over cooked Central London property market, the outlook in Falmouth remains relatively good. Although clearly unaffordable for many in recent years, this is a different level of ‘ludicrous’ compared to London.


 We still believe Falmouth house values will remain resilient for several reasons. Firstly, demand for rental property remains strong with continued immigration and population growth.  Secondly, with 0.25 per cent interest rates, borrowing has never been so cheap and finally the simple lack of new house building in Falmouth not keeping up with current demand, let alone eating into years and years of under investment. This can mean only one thing – yes it might be a bumpy ride over the next 12 to 24 months but, in the medium term, property ownership and property investment in Falmouth has always, and will always, ride out the storm.