Wednesday, 15 April 2015
Are Canterbury landlords worse than Politician’s and double glazing salesmen?
I was having an interesting chat the other day with a couple of solicitors at a Canterbury business networking event, when the subject of a lack of property for first time buyers came into the conversation. I followed the chat up with an email with my findings, findings which I would like to share with you today.
At the time of the last census in 2011, there are 3,401,675 properties in England that were privately rented, of which it is estimated, were owned by over 1.25 million private landlords. The rapid growth of buy-to-let is hugely controversial, especially as only ten years before that, there were only 1,798,864 properties under private renting in England. Buy to let landlords have been held responsible for forcing up property prices and preventing our younger generations from being able to buy. There is also growing resentment toward the billions of pounds in tax relief (estimated to be nearly £10 billion) landlords claim on their mortgage interest -tax relief not available to homeowners.
They may be asset rich thanks to recently rising property values, but let us not make the landlords the ‘bogiemen’ they could easily be called. Despite all these benefits enjoyed by private landlords, let us not forget the good they have done, especially in Canterbury.
Property values today in Canterbury are still 3.2% above the 2007 property boom levels (2007 being the peak of last property boom before everything dropped in 2008/9), yet inflation has risen by 26% in the same time frame, so in real terms, properties today are 22.8% CHEAPER than they were in 2007. Just think how low they would be without landlords buying all those rental properties in the city. Interest rates are at an all time low and first time buyers only need to save a £8,000 deposit to secure a lovely 3 bed town house in Thanington with a 95% mortgage. Forget what the papers say, first time buyers can borrow money relatively easily on a 95% mortgage and nine times out of ten, it’s cheaper to buy than rent. So why aren’t people buying?
The number of people choosing to rent, either for lifestyle or economic reasons, has grown over the last 15 years. I also believe they will continue to grow for some time to come (as does every report on the subject). In fact I would go as far to predict the number of rental properties in Canterbury will have risen from the 10,665 properties recorded in 2011 to 13,900 by 2021. Sound fanciful? Well in 2001, there were only 6,124 privately rented properties in Canterbury.
It is a fact that we as a Country are more and more turning into a European model when it comes to homeownership, where the norm is renting for the first ten years, as opposed to the norm from the 1960’s to 1990’s, where first time buyers were encouraged to buy as soon as they left school and got a job.
Tenants, in particular, will also feel the benefit from potential changes in the market. The likelihood of interest rate increases in late 2015, existing economic conditions, combined with the uncertainty of new Government manifestos following the General Election in May will result in low demand for people to buy, yet also put a dampening effect on increases in rent. As long as landlords buy the right sort of property, that allows for a reasonable yield, decent capital growth, everyone will be a winner. If you want a chat about what would make the best sort a property that would offer that in Canterbury, then please email me at email@example.com or visit my Canterbury Property Blog www.canterburypropertyblog.com