‘Flipping’ Heck - Crawley Property Values Rise by £48.08 a day

Investing in Crawley buy to let property is different from investing in the stock market or depositing your hard-earned cash in the Building Society. When you invest your money in the Building Society, this is considered by many as the safe option but the returns you can achieve are awfully low (the best 2-year bond rate from Nationwide is a whopping 0.75% a year!). Another investment is the Stock Market, which can give good returns, but unless you are on the phone every day to your Stockbroker, most people invest in stock market funds, making the investment quite hands off and one always has the feeling of not being in control.

However, with buy to let, things can be more hands on. One of the things many landlords like is the tactile nature of property - the fact that you can touch the bricks and mortar. It is this factor that attracts many of Crawley’s landlords – they are making their own decisions rather than entrusting them to city whizz kids in Canary Wharf playing roulette with their savings.

I always say investing in property is a long-term game. When you invest in the property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as 'capital growth'. Capital growth, also known as capital appreciation, has been strong in recent times in Crawley, but the value of property does go up as well as down just like shares do but the initial purchase price rarely decreases.  Rental income is what the tenant pays you - hopefully this will also grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return. So, over the last 5 years, an average Crawley property has risen by £87,750 (equivalent to £48.08 a day), taking it to a current average value of £318,100. Yields range from 5% a year and can reach double digits’ percentages (although to achieve those sorts of returns, the risks are higher).

However, something I haven’t spoken of before is the more specialist area of flipping property to make money. (flipping - buying a property, carrying out some minor cosmetics and re selling it quickly).  I have seen several investors recently who have made decent returns from this strategy. 

For example …

·         One Crawley Investor paid £217,000 for a 2 bed terrace on Binney Court in December 2015. It appears some cosmetic work was done to the property and it was resold a few months ago (October 2016) for £277,000 … 27.65% return before costs (or compound annual return equivalent of 34.85% AER) http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=54837262&sale=4633438&country=england

·         Another Crawley Investor flipped a lovely 3 bed end terrace on Ifield Road, paying £226,000 in June 2015 and selling it again after some doing some basic cosmetic works, sold it for £305,000 a few months ago (December 2016) … 34.96% return before costs (or equivalent 21.79% AER)  http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=52510402&sale=89090673&country=england

This demonstrates how the Crawley property market has not only provided very strong returns for the average investor over the last five years but how it has permitted a group of motivated buy to let Crawley landlords and investors to become particularly wealthy.  As my article mentioned a few weeks ago, more and more Crawley people may be giving up on owning their own home and are instead accepting long term renting whilst buy to let lending continues to grow from strength to strength. If you want to know what (and what would not) make a decent buy to let property in Crawley, then one place for such information would be the Crawley Property Blog.

How The Rented Sector Has Transformed The Property Market In Crawley

The Crawley 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 Crawley tenants and Crawley landlords.

A few weeks 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 Crawley population.

In 1981, the population of the Crawley Borough Council area stood at 82,100 and today it stands at 110,900.

Currently, the private rented (B-T-L) sector accounts for 14.7% of households in the town.  The Government want to assist people living in the houses and help the economy by encouraging the provision of quality homes, in a housing sector that has grown due to worldwide economic forces, pushing home ownership out of the reach of more and more people. Interestingly, when we look at the 1981 figures for homeownership, a different story is told.

39.93% Crawley people owned their own home in 1981

56.26% Crawley people rented from the Council or Housing Association in 1981

 and 3.81% Crawley rented from a Private Landlord

The significance of a suitable housing policy is vital to ensure suitable economic activity and create a vibrant place people want to live in. With the population of the Crawley area set to grow to 134,000 by 2037 – it is imperative that Crawley Borough Council and Central Government all work actively together to ensure the residential property market doesn’t hold the area back, by encouraging the building and provision of quality homes for its inhabitants.

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 – but it is something Crawley landlords need to be aware of as there will 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 Crawley 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 Crawley, be it B-T-L or B-T-R, has the prospective to play a very positive role.

Crawley’s ‘Generation Trapped’ and the £6.57bn legacy

Last week, I wrote an article on the plight of the Crawley 20 something’s often referred to by the press as ‘Generation Rent’. Attitudes to renting have certainly changed over the last twenty years and as my analysis suggested, this change is likely to be permanent. In the article, whilst a minority of this Generation Rent feel trapped, the majority don’t – making renting a choice not a predicament. The Royal Institution of Chartered Surveyors (RICS) predicted that the private rental sector is likely to grow substantially by 1.8m households across the UK in the next 8 years, with demand for rental property unlikely to slow and newly formed households continuing to choose the rental market as opposed to buying.

However, my real concern for Crawley homeowners and Crawley landlords alike, as I discussed a couple of months ago, is our mature members of the population of Crawley. In that previous article, I stated that the current OAP’s (65+ yrs in age) in Crawley were sitting on £2.47bn of residential property ... however, I didn’t talk in depth about the ‘Baby Boomers’, the 50yr to 64yr old Crawley people and what their properties are worth – and more importantly, how the current state of affairs could be holding back those younger Generation Renters.

In Crawley, there are 7,552 households whose owners are aged between 50yrs and 64yrs and about to pay their mortgage off. That property is worth, in today’s prices, £2.40bn. There are an additional 5,305 mortgage free Crawley households, owned by 50yr to 64yr olds, worth £1.68bn in today’s prices, meaning...

Crawley Baby Boomers and Crawley OAP’s are sitting

on £6.57bn worth of Crawley Property

These Crawley Baby Boomers and OAP’s are sitting on 20,633 Crawley properties and many of them feel trapped in their homes, and hence I have dubbed them ‘Generation Trapped’.

Recently, the English Housing Survey stated 49% of these properties owned by the Generation Trapped, as I have dubbed them, are ‘under-occupied’ (under-occupied classed as having at least two bedrooms more than needed). These houses could be better utilised by younger families, but research carried out by the Prudential suggest in Britain it’s estimated that only one in ten older people downsize while in the USA for example one in five do so.

The growing numbers of older homeowners who want to downsize their home are often put off by the difficulties of moving. The charity United for all Ages, suggested recently many are put off by the lack of housing options, 19% by the hassle and cost of moving, 14% by having to declutter their possessions and 14% by family reasons such as staying close to children and grandchildren.

Helping mature Crawley (and the Country) homeowners to downsize at the right time will also enable younger Crawley people to find the homes they need – meaning every generation wins, both young and old. However, to ensure downsizing works, as a Country, we need more choices for these ‘last time buyers’.

Theresa May and Philip Hammond can do their part and consider stamp duty tax breaks for downsizers, our local Council in Crawley and the Planning Dept. should play their part, as should landlords and property investors to ensure Crawley’s ‘Generation Trapped’ can find suitable property locally, close to friends, family and facilities.