Tuesday, 7 July 2015
Canterbury Buy To Let – Demand and Supply
Following on from my recent article about the state of the Canterbury property market and in particular what had happened to the rents Canterbury tenants have had to pay since the Credit Crunch, if you recall, I said rents in Canterbury are 7.4% higher than they were in 2008. A Canterbury landlord has since rung me after reading the Canterbury Property Blog, wanting to know more of the story of what was happening to current rents in the City. The reason he asked was that his current agent hadn’t increased his rent for a number of years and was concerned if he was getting the best return from his buy to let investment.
The Canterbury rental market is all about supply and demand (isn’t it so in all parts of the economy?). On the supply side, 408 rental properties have come up for let in the last 31 days in Canterbury. That is a lot when you consider there are 5,955 rental properties in Canterbury, meaning 6.85% of the rental stock of properties in Canterbury are coming onto the market each month (it is normally around 5% around the UK). However, when you strip out the student properties, which account for around 50% to 55% from these numbers (because by definition each student property changes its tenants each year), the remaining rental properties (in what is called the professional lets sector), the percentage is much lower than the norm. One reason for this lack of new rental properties coming on the market is the fact that professional tenants seem to be staying in properties longer.
With this lack of supply, newer tenants have to pay more to secure the property they want. And this is the crux of the matter ...properties they want. Older properties in Canterbury, that haven’t been maintained, still retain their wood chip wallpaper from the 1970’s and thread bare carpets have seen their rents drop. Tenants want either modern properties with all the mod cons or older style properties that have been presented to an exceptional standard – and they are prepared to pay for the privilege. Rents for top quality properties in Canterbury have risen by 0.5% in the last month Any properties, old or modern, put on the market in good or excellent condition will rent in a matter of days.
Interestingly, looking at Canterbury property values, the Land Registry have just released their latest set of data on property values. Throughout April 2015 (the latest set of data), property values rose in Canterbury, with 0.4% growth, meaning they are now 8.9% higher than they were a year ago. When one looks at the regional picture, the South East average property values rose by 0.8% in the last month. The difference doesn’t concern me, as the regional and local property values always even themselves out over the months.
Looking forward, after considering all the statistics and talking to other property professionals, I expect property values in Canterbury to rise by 3% to 5% over the coming 12 months, following the Conservative victory. In a forthcoming article, I will discuss how the number of properties changing hands each month has dropped considerably in the last 10 to 15 years in the City.
...And so back to our landlord. Each property is unique and so as his tenancy agreement allows him to inspect the property with notice to the tenant, we will be visiting the property next week. For more in depth thoughts and opinions like this on the Canterbury Property market ...visit the Canterbury Property Blog www.canterburypropertyblog.com