Tuesday, 31 March 2015

Canterbury - 5.56% yield - new build

Good morning. So who said ‘lightning doesn’t strike twice in the same place’?? After a drought of properties over the past few weeks, we not only get another property in Canterbury, but it’s another one on the London Road estate!
Today, we are looking at a type of property that doesn’t come onto the market that often and it’s an affordable, one bedroom flat. Not only is it a good price, it’s also brand new, which should make it an attractive proposition to the rental market.
It’s come on the market at £135K with Regal and looks very good. This type of property is in constant demand and should rent out for circa £625 per month, which in turn will deliver a yield of 5.56%. Check it out at http://www.rightmove.co.uk/property-for-sale/property-51440783.html and give them a call.

Should you wish to discuss any other specific properties or just a general chat re the current market, please feel free to contact me on 01227 455717 or call in and see me at 23 Watling Street in Canterbury.

Monday, 30 March 2015

London Road Estate - 4.74% yield, with good capital growth

Good afternoon folks! Well after a fairly quiet couple of weeks on the investment front, we are now starting to see a few ‘spring shoots’, which certainly confirms that Spring is here and the investment properties are starting to flourish!

Our first property of the week is in Canterbury and it’s a three bedroom property on the London Road estate. Whilst it would appear to be ideal territory for a student let and those ‘tasty’ student yields, for the purpose of this exercise I will look at it on the basis of a standard family let. ‘Shock’ ‘horror’ I hear you shout, ‘not a student property?????’. Well, yes and no, it could be a student property, but with the current ‘over supply’ of student properties and again, a large number of such properties will not be let due to the lack of student supply, I would rather be honest and say take great care!

The property is a three bedroom semi, on the market for £215K with Miles & Barr. Whilst a bit dated, it’s only cosmetic and not a huge expense to ‘freshen up’ for the rental market. Such three bed properties will rent out at circa £850 / £875 per month, which will give you a yield of circa 4.74%. Whilst not quite our target figure of +5%, it’s still solid as these properties are in good demand for young families and will rent out easily.

‘So that’s the rent’ I hear you say, ‘but what about the capital growth for the area’. Well, over the past year and five years we start to see some interesting figures. If we look at the whole of Canterbury, the past year has only seen a growth of 1.65% and the past five 12.5%, but this area has seen a one year / 5 year growth of 3.55% and 14.07% respectively!!!!!!!

That’s surprised you! Check it out at http://www.rightmove.co.uk/property-for-sale/property-34059054.html and give the agent a call.

It’s just that looking at the Canterbury property market in more depth enables me to give you the best advice and opinion to help you find the best investment property. It is in our interest that you buy a property which will rent well, and for long periods of time. If you would like any advice on choosing properties, please come and see me at our office in Watling Street in Canterbury.

Thursday, 26 March 2015

Your Pension could now buy a Buy to Let property in Canterbury

In a recent article, I mentioned that pension rules are changing this April. It certainly created a few emails, with people asking questions about it. Therefore, this week, I want to look a little deeper into the subject of your pension and the Canterbury property market. George Osbourne, in last years’ Budget, announced pension reforms that come into effect this April, which will give people with pension’s unprecedented access to their pension pot and the freedom to look for alternatives. In a nutshell, after the 6th of April, anyone aged over 55 will be allowed to withdraw all or part of their pension pot and spend it as they wish. Until now, you were allowed to take out a quarter of it and were forced to buy an annuity policy with the rest.
However, my readers always know that I like to tell it ‘as it is’. There are always two sides to a story, good and bad. Let me tell you the bad news first. There are some hefty tax implications by taking money from your pension pot. As before, as per the old rules, the first 25% can still be withdrawn from the pension pot tax free but, here is the sting in the tail, if you take more than a quarter of your pot (25%), anything above that initial 25% level will be taxed as income. So if you took the whole lot out, the first 25% will be tax free but the remaining 75% will be taxed at your income tax rate of 20%, 40% (or even 45% if you earn over £150,000 a year).
.. and now the good news!
Under the old scheme, if you bought an annuity, when you died your annuity normally died as well. You would have no asset to pass on to your family. Also, the returns from pensions are awful at the moment. The best rates according to Hargreaves and Lansdown (big wigs in the City) state if you were 55 years old, the best rate you would get on your annuity pension would be 4.4% fixed for life (so it would never go up) or 2.2% but the payment would go up with inflation.  The sort of rates (also known as yields in the property investing game) being achieved in Canterbury are in the order of 3% to 6%.
The other aspect of property investment is how the fact property values have risen consistently over the last 50 years.  According to the Office of National Statistics, the life expectancy of a 65 year old male in Canterbury is 19 years and 3 months (its only 17 years 9 months in Thanet). If we roll the clock back 19 years 3 months to January 1996, property values in Canterbury have risen by 229.4% to today .. you wouldn’t have had that with your pension!   But this is the biggest win, even by taking a hit in income tax now,  by buying a property, you buy an asset that you can pass on to your family when you die.... (or the cats home if they aren’t nice to you!).
So where next? It totally depends which strategy you are going to look at, one strategy is to look to achieve relatively small rental returns (i.e. low yields) in an up market area which has decent capital growth or, alternatively, another strategy is to buy properties in not so good areas known to produce a high returns (i.e. high yields) but low capital growth (i.e. how much the value of the property goes up). Now, I am not financial advisor, so cannot offer financial advice on what the best thing for you with your pension is. However, I can share my knowledge and experience of the Canterbury property market, what to buy, what not to buy and where to buy etc etc.  My thoughts on the Canterbury Property market can always be found on the Canterbury Property Blog www.canterburypropertyblog.com .

Wednesday, 18 March 2015

Whitstable – the place to buy a property?

Information is so important when making decisions on what (or not) to buy when investing in Canterbury property. The demand for rental properties is much greater that the supply and some circumstances, we have four to five prospective tenants for each decent property. As always the demand is much greater for properties that are good areas. Also, we are noticing that tenants are staying longer in their chosen property, with some tenants signing for the third and fourth years. This is obviously causing problems from the supply side so we are relying on new investment Landlords to bring in some new properties.
Today, I want to look at Whitstable to the North of Canterbury. By knowing the different areas of Central and North Kent, I can weigh up potential hotspots in the rental market and show potential landlords where there could be an opportunity. The majority of properties sold in Whitstable during the last 12 months were detached properties which on average sold for £370,100. Semi-detached properties had an average sold price of £256,100 and terraced properties averaged at £266,900. The overall average property in Whitstable is worth £282,000, which as one would expect is similar than Tankerton average at £292,400 but was cheaper than next door Chestfield at £334,700.
In Whitstable, there are 31,822 people living in 14,136 properties. It is the home ownership percentages that really got me interested, as it is this information, tied in with our intimate knowledge of the market, where we can match tenant demand to an under supply of rental properties. In Whitstable, of those 14,136 households, 77.2% own their property (compared to the Canterbury average of 65.9%).
There are only 1,660 rented properties in Whitstable are in the private rented sector (11.7% of Whitstable properties are privately rented compared with the Canterbury average of 17.52%). The reason the private rental sector is much lower is that Whitstable has a high proportion of homeowners and hardly any local authority housing. The properties do sell well, in fact 699 properties have changed hands in the last 12 months. However, with such excellent demand from homeowners and tenants, this could be the right area to purchase your next buy to let investment. 
Therefore, if you are considering buying a property for investment in the near future, I am always happy to give you my considered opinion on which property to buy (or not as the case may be) to give you what you want from your investment. If you are a landlord, new or old, I am certainly more than happy for you to pick up the phone or visit the CanterburyProperty Blog  www.canterburypropertyblog.com .

Thursday, 12 March 2015

Canterbury - 6% yield

Morning all, on this bright and sunny morning here in Canterbury! A bit of a chill in the air, but should warm up nicely!
Today, we are back into Canterbury for today’s hot investment tip and this morning I have found a good property in an area that does not come onto the market that often.
It's been put on the market by Kent Estate Agencies and is being offered for a figure of just under £160K. I suspect that it's also quite likely that there is an offer to be made, so the purchasing price could drop a few more thousand.
From the agents photos, it looks in good condition and should be OK to rent upon completion.
As previously mentioned in other blogs, these two bed properties, in Canterbury, are in good demand and will rent out for circa £800 per month, all day long, with good quality tenants.
The above being the case, calculated on the above figures, this property should give you a yield of circa 6%, which again is above the benchmark 5%.
Should you wish to discuss any other specific properties or just a general chat re the current market, please feel free to contact me on 01227 455717 or call in and see me at 23 Watling Street in Canterbury.


Wednesday, 11 March 2015

Massive drop in Homeownership in Canterbury

An Englishman’s home is his castle but when it comes to the UK the ‘Brit’s are still a nation of homeowners ‘(although wasn’t it Napoleon who thought we were all shop keepers!). It is interesting to note that up until the mid to late 1960’s, more people rented their home (albeit mostly from the local council) than owned their own. In fact, I was surprised to read that in 1921, over 75% of homes in England and Wales were privately rented with the remaining 25% being owner occupied. 

It was only after the Second World War, when the Beatles were rocking, that people started to buy instead of rent .. but instead of owning our property outright, we borrowed money from banks and building society’s to buy them and the roots of the growth of the private rental sector can be drawn back to the late 1970’s early 1980’s, when the council houses began to be sold off under the right to buy scheme.

In 2001, 72.4% of households were owner occupied in Canterbury, Whitstable and Herne Bay, but ten years later, that percentage dropped massively to 65.9%  But here is the interesting part, when you look at the actual numbers of households, 40,277 households in Canterbury (plus Herne Bay and Whitstable) were owner occupied in 2001. Ten years later, in 2011, that number (who owned their own home) had only dropped to 40,107 households.

So why big drop in percentages but not in actual properties? An additional 5,187 properties were built in Canterbury between 2001 and 2011, but a lot of them were bought as buy to let investments, thus more than doubling the number of private rental properties in Canterbury. In fact, the number of properties in Canterbury, which were privately rented, jumped from 6,124 in 2001 to 10,665 in 2011!

With the Canterbury City Council housing waiting lists being in the 5 to 10 year range for a decent property in a decent location. Therefore, with no more council houses being built, and an increasing number of people looking for a roof over their head, private renting is the only option

With every report stating the rental market will continue to grow throughout the rest of this decade and beyond, linked with high demand and limited supply in the Canterbury, then if you are considering buying a property for buy to let investment in Canterbury, I am always happy to give you my considered opinion on which property to buy (or not as the case may be).. If you are a landlord, new or old, I am certainly more than happy for you to pick up the phone or visit the Canterbury office, here in Watling Street.

Wednesday, 4 March 2015

What properties are actually selling in Canterbury?

Prices up, prices down, prices stable... the newspapers are full of good news, bad news and indifferent news about the Brit’s favourite subject after the weather... the property market. The thing is the UK does not have one housing market. Instead, it is a patchwork of mini property markets all performing in a different way.  At one end of scale is London, which has seen average prices grow in the last twelve months by a shade under 19% (and again that is an average because some Borough’s in London have risen by 26%) whilst in the land of Daffodils, by contrast, Wales only saw a 2% increase in property values (although in the Merthyr Valleys they dropped by over 11%).
Well we can’t ignore the rest of the UK, and we can’t forget that the Chancellor’s Stamp Duty reforms have polarised the London property markets above £1,000,000 because at the top end of the market, punitive Stamp Duty charges will dampen demand further. While the Bank of England warned of the growing London property price bubble in the Spring of 2014, even talk of a recovery in some areas was premature. In 2015, irrespective of where you are in the UK, one story will unite the patchwork quilt of markets – really slow property value growth.
But what about Canterbury? Well, we haven’t had the February figures from the Land Registry yet but the last few months’ activity and prices achieved would suggest neither house price growth nor drops.  In fact, most sellers are buyers anyway, so if you need to take less for yours, you won’t have to pay as much for the one you want to buy ... and that is good news for everyone as most move up market when they move. This is even better for landlord investors, as they can bag a bargain as well.
The question you should be asking though is not only is what happening to property prices, but which price band exactly is selling? I like to keep an eye on the property market in Canterbury on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Canterbury. 
If you look at Canterbury and split the property market into four equalled sized (into terms of households) price bands. Each price band would have around 25% of the property in Canterbury, from the lowest in value (the bottom 25%) all the way through to the highest 25% (in terms of value).  Over the last two months (63 days to be precise), in the lowest quartile, (those with asking prices under £180k) 60 properties have come onto the market in Canterbury and 35% of them (21 properties have a buyer and sold stc. The next quartile, between £180k to £230k, of the 63 properties that come on to the market, 38% of them (24 properties) have a buyer. The £230k-£305k price range has seen 47 properties come on to the market, and 42.5% of the properties have a buyer (20 properties). The most expensive 25%, the £305k plus range, has seen 19 of the 58 properties that came on to the market find buyers (32.7%). Fascinating don’t you think?
The next three months’ activity will be crucial in understanding which way the market will go this year and I honestly believe we will not see any house price growth or drops this side of the election. Election or no election, people will always need a roof over their head and that is why the property market has rode the storms of Oil crisis in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the Credit Crunch together with the various house price crashes of 1973, 1987 and 2008.
And why? Because of Britain’s chronic lack of housing will prop up house prices and prevent a post spike crash. ... there is always a silver lining when it comes to the property market!