A landlord with a small property portfolio came into our office on Vale Road (near the Train Station) last week. He in lives in Bidborough, near the Southborough Common and has properties in both Royal Tunbridge Wells and Tonbridge. He wanted to ask our opinion on the property markets in both towns and where he should purchase his next buy-to-let property. Looking at Royal Tunbridge Wells, the average property price is an impressive £376,150 and the average rent is equally high at £979 per month. In Tonbridge, an average property is £358,800 but the average rent is higher at £1,090 per month. That makes the annual yield / annual return in Royal Tunbridge Wells 3.1% per year, compared to Tonbridge, where as a landlord, you could achieve a sixth more return (or 16.1% more if we are being precise) annual yield /return of nearer 3.6% per year. So on the face of it Tonbridge has outperformed RTW
However, investing in property is not just about yield. One must also consider the increase in value of the property. This is because there is generally an inverse relationship between yield and capital growth, so the higher the yield, the lower the capital growth and the higher the capital growth, the lower the yield. This means property investment becomes all about balancing the scales. Quite interestingly, property values over the last year in Tonbridge have risen by 3.2%, whilst in Royal Tunbridge Wells, in the same period; they rose by an impressive 7.4%. That would mean the landlords of Tonbridge would have an overall return of 6.8% last year, but Royal Tunbridge Wells’ landlords would have seen overall returns of 10.5% last year, that over half as much again!
Therefore, I would say both towns can be a good area for an investment property, but it is a decision that shouldn't be taken lightly. These are only averages, so the yields for some 2 bed apartments in some areas of Royal Tunbridge Wells can achieve yields of nearly 5% per year, so adding the capital growth, existing landlords have seen a very good return in 2013.. much better than the Building Society!
Over the last few months, many first time landlords have contacted me for my thoughts and opinions on what (and not) to buy for their first time buy to let investment. I can give an objective opinion on the whole of the Royal Tunbridge Wells property market. Some landlords want high yields, some want no hassle, some good capital growth; some don't know what they want!
I don't charge for my advice because if I offer you the best opinion and we build a relationship, then you might (and there is no obligation or expectation to this) just use me to manage those properties and so I have plenty of time to earn money from you by looking after your buy to let property for years to come, a property that we jointly decided met your requirements for the investment .. because that is what it is .. an investment. So, feel free to pop into our offices near the Railway Station for a chat about the property market in our town.