Tuesday, 24 November 2015

How EU Migration has changed the Canterbury Property Market

The argument of migration and what it does, or doesn’t do, for the country’s economic wellbeing is something that has been hotly contested over the last few years. In my article today, I want to talk about what it has done for the Canterbury Property market.
Before we look at Canterbury though, let us look at some interesting figures for the country as a whole. Between 2001 and 2011, 971,144 EU citizens came to the UK to live and of those, 171,164 of them (17.68%) have bought their own home. It might surprise people that only 5.07% of EU migrants managed to secure a council house. However, 676,091 (69.62%) of them went into the private rental sector.  This increase in population from the EU has, no doubt, added great stress to the UK housing market.
Looking at the figures, the housing market as a whole is undoubtedly affected by migration but it has been the private rented housing sector, especially in those areas where migrants come together, that is affected the most.  Indeed, I have seen that many EU migrants often compete for such housing not with UK tenants but with other EU migrants. In 2001, 3.68 million rented a property from a landlord in the UK.  Ten years later in 2011, whilst EU migration added an additional 676,091 people renting a property from a landlord, there were actually an additional 4.14 million people who became tenants and were not EU migrants, but predominately British!
As a landlord, it is really important to gauge the potential demand for your rental property, especially if you are a landlord who buys property in areas popular with the Eastern European EU migrants.  To gauge the level of EU migration (and thus demand), one of the best ways to calculate the growth of migrants is to calculate the number of people who ask for a National Insurance number (which EU members are able to obtain).
In Canterbury, migration has risen over the last few years. For example, in 2007 there were 1,389 migrant national Insurance cards (NIC) issued and the year after in 2008, 1,510 NIC cards were issued. However, in 2014, this had increased to 2,126 NIC’s. However, if the pattern of other migrations since WW2 continues, over time there will be an increasing demand for owner occupied property, which may affect the market in certain areas of high migrant concentration. On the other hand, over time some households move into the larger housing market, reducing concentrations and pressures.
In essence, migration has affected the Canterbury property market; it couldn’t fail to because of the additional 14,868 working age migrants that have moved into the Canterbury area since 2005. However, it has not been the main influence on the market. Property values in Canterbury today are 22% higher than they were in 2005. According to the Office of National Statistics, rents for tenants in the South East have only grown on average by 0.95% a year since 2005 .... I would say if it wasn’t for the migrants, we would be in a far worse position when it came to the Canterbury property market. This was backed up by the then Home Secretary Theresa May back in 2012 - more than a third of all new housing demand in Britain is caused by inward migration and there is evidence that without the demand caused by such immigration, house prices would be 10% lower over a 20 year period.
If you want to know more about the Canterbury property market, then for more articles like this, please visit the Canterbury Property Blog www.canterburypropertyblog.com .

Saturday, 21 November 2015

Herne Bay - potential 5.82% yield at £165K - 2 bed apartment

Blinking flip!………..Is it cold or is it cold!! Winter is certainly with us. Whilst keeping warm and checking Rightmove this morning, I found a great investment has just come onto the property market in Herne Bay. It’s a two bed apartment for £165K with Kimber Woodward and it’s a real cracker.

Let’s start with the asking price. At £165K it’s a great bargain and at this price will not be around long. The location is brilliant, as it’s close to the major road infrastructure of the Thanet Way, creating easy access for young professional tenants. It’s age / condition is also excellent, so it’s ‘good to go’ from an investment viewpoint.

Turning to the rental aspect of the property, I’ll take a real conservative viewpoint and state that the rental figure would be (at the very worse!) £750 per month, which will give you a good yield of 5.45% and at £800 per month, it would take the yield to a cracking 5.82%.

What about the capital growth? Well, these apartments in Weyman Terrace were built circa 2013 and the growth in the past year has been circa 7.81%. Try getting that at a building society!

Again, this is proving my view on the Herne Bay market, i.e. great area to invest in, with an good capital growth!

Check it out at http://www.rightmove.co.uk/property-for-sale/property-56116580.html and give the agent a call.

Tuesday, 17 November 2015

Canterbury Property Market Crisis as New House Building slumps by 55.74%

One of the key factors that determine the price of anything is the demand and supply of the item that is being bought and sold. When it comes to property, demand can change overnight, but it takes years and years to build new properties, thus increasing the supply.
The Conservatives have pledged to build over 1 million homes by 2020. I am of the opinion that as a country, irrespective of which party, we have not built enough homes for decades, and if the gap between the number of households forming and the number of new homes being built continues to grow, we are in danger of not being able to house our children or grand children. I believe the country is past the time for another grand statement of ambition by another Housing Minister. Surely its right to give normal Canterbury families back the hope of a secure home, be that rented or owned? As a city, we need to exert pressure on our local MP Julian Brazier, so they can make sure Westminster is held accountable, to ensure there is a comprehensive plan, with enough investment, that can actually get these homes built.
To give you an idea of the sorts of numbers we are talking about, in the Canterbury City Council area in 2006, 470 properties were built. In 2007 that rose to 570 and a year later in 2008, it peaked at 1,220. By 2014, that figure had dropped by a massive 55.74% to 540 properties built.
The outcome of too few homes being built in Canterbury means the working people of the city are being priced out of buying their first home and renters are not getting the quality they deserve for their money. The local authority isn’t building the estates they were after the war and housing associations are having their budgets tightened year on year, meaning they have less money to spend on building new properties. I know of many Canterbury youngsters, who are living with their parents for longer because they cannot afford to get onto the housing ladder and growing families are unable to buy the bigger homes they need.
I talk to many Canterbury business people and they tell me they need a flexible and mobile workforce, but the high cost of moving home and lack of decent and affordable housing are barriers to attracting and retaining employees. Furthermore, building new homes is a powerful source of growth, creating jobs across the county and supporting hundreds of Canterbury businesses. It is true that landlords have taken up the mantle and over the last 15 years have bought a large number of properties. The Government need to be thankful to all those Canterbury landlords, who own the 5,955 rental properties in the city. Most local landlords only have a handful of rented properties (to aid their retirement), and without them, I honestly don’t know who would house all the extra people in Canterbury!
Moving forward, those Canterbury landlords have many pitfalls, both in the short term and medium term. For instance, were you aware that the rules of changes for new tenancies from the 1st October 2015 (with some imposing penalties including losing the right to require the tenant to vacate, if they are done incorrectly) or in the medium term, the planned change in the way buy to let’s are taxed?
More than ever, the days of buying any old property in Canterbury and you would be set for life are gone. Now, it’s all about ensuring you stay the right side of the law, buying the right property (and that might mean even selling some to buy others), so you build the right portfolio for you as a landlord. One source of info on all of these issues, where you will find other articles similar to this on the Canterbury property market, is the Canterbury Property Blog www.canterburypropertyblog.com 


Monday, 9 November 2015

Canterbury house owners desert the housing market with an 8 year low

Even though the housing market is in an upbeat state in many parts of the UK, getting on the property ladder is still challenging for many and regarded as unattainable by some.  However, that goal has become even worse recently in Canterbury as the number of houses available to buy is at an 8 year all time low.
Back in Summer 2008, there were over 560 properties for sale in Canterbury and since then this has steadily declined year on year, so now there are only 284 for sale in the city.  This continuing diminishing supply of housing has been happening over those years for a while and there simply aren’t enough properties in Canterbury to match demand.
According to a recent report by the National Association of Estate Agents, that said, “There are now 11 house hunters fighting after every available house which isn’t sustainable.”   What that means is Canterbury youngsters, who are looking to buy their first home, are finding themselves being squeezed out by the competition.  However, in the meantime, nobody wants to live with parents until they are in their 30’s, so that in turn creates demand for more rental properties, which means landlords have a greater demand for more rental properties so are buying more, resulting in even less smaller properties for the youngsters to buy, it’s a vicious circle.   
Talking to fellow agents, mortgage arrangers, surveyors and solicitors in the City, all of whom have extensive dealings in the Canterbury property market like myself, most of us agree the movement in the Canterbury market is taking place in the middle to upper market, higher up the property ladder and it’s second and third steppers pushing through the properties that are being bought and sold.
That has meant as people tend to move less in the middle to upper market, the number of the properties actually selling has drastically reduced over the last couple of years.
When we look at the individual areas of the city, it paints an interesting picture.
  • CT1 - Canterbury city centre 35 properties sold in May 2015 (the most recent set of figures from the HM Land Registry), whilst over the Summer months of 2014, the number of properties selling in this postcode was always between 51 and 56 per month. (Interestingly the average value of those properties was £233,707).
  • CT2 - Harbledown, Rough Common, Sturry, Fordwich, Blean, Tyler Hill, Broad Oak, Westbere 23 properties sold in May 2015 (with an average value of £279,049), whilst over the Autumn months of 2014, the number of properties selling in this postcode reached into the mid/late 40’s.
  • CT3 - Wingham 14 properties sold in May 2015 (with an average value of £224,428), whilst over the Summer months of 2014, the number of properties selling in this postcode reached into the mid/late 40’s. 
  • CT4 - Chartham, Bridge 65 properties sold in May 2015 (the most recent set of figures from the HM Land Registry), whilst over the Summer months of 2014, the number of properties selling in this postcode was always between 83 and 97 per month. (Interestingly the average value of those properties was £353,688).
So what does this all mean for homeowners and landlords alike in Canterbury?  Demand for Canterbury property is good, especially at the lower end of the market.  However, with fewer properties coming up for sale, it means property prices are proving reasonably stable too.
You see I believe a more stable, consistent Canterbury property market, with less people seeing property as an easy way to make a quick buck (as many did in the early 2000’s when prices were rising at nearly 20% a year so people were buying and selling every other minute), but a property market that has a steady growth of property values in Canterbury, year on year, without the massive peaks and troughs we saw in the late 1980’s and mid/late 2000’s might just be the thing that the Canterbury property market needs in the long term.
For more insights, comments and facts on the Canterbury Property market please visit the Canterbury Property Blog www.canterburypropertyblog.com where you will find many similar articles to this.

Thursday, 5 November 2015

In search of the Holy Grail?

A few days ago, one of our Landlords contacted me with a question regarding one of his other student properties that he owns up in Durham. In a nutshell, the property was being rented out to students and he was looking at his position in the next couple of years, i.e. rent or sell. He also asked if he could achieve a similar return / yield if he sold in Durham and purchased in Canterbury.

Regular readers will know that to achieve the Holy Grail of Lettings of a) a great yield and b) fabulous capital growth can be a real challenge, if not impossible, therefore this required a degree of research on behalf of the Landlord to offer him some sound advice.

To enable me to respond, it was necessary to manage some research and get back to him with some facts and figures.

The property in question in Durham was bought for circa £230K and has a monthly rent of £1646, which in turn gives a respectable gross yield of nearly 8.6%.

My first area of research was the latest Land Registry data, which was published a few days ago on the 28th Oct 2015.

In the table below, we can see two key pieces of information regarding the capital growth, i.e. the South East has grown by 8.5% in the past 12 months, as opposed to the prices in the North East which have decreased by 0.3% in the same period. Interesting to also note that the North East is the only region in England and Wales that has decreased in the past 12 months.

When I ‘drilled down’ to county level, i.e. Kent & Durham, we found the problem was compounded, i.e. Kent has grown by 8.5% in the past 12 months, as opposed to the prices in County Durham which have decreased by 1.9% in the same period. (As per the table below). Of interest, I have left the data of the other counties between Durham at the top and Kent at the bottom, showing the variants between other counties.
As my regular readers will note, the most important consideration you will make before investing in property is the balance between annual return/yield and the annual value increase/capital growth. However, what affects those two things (yield and capital growth) in Canterbury or indeed Durham, are very varied and complex. The quantity of property and whether property is owner occupied, social housing (posh words for council housing) or private renting has a big difference on yield and capital growth.
The scenario above is a near perfect example of the dilemma facing investment Landlords regarding yield v capital growth and whilst the Landlord in question has not yet made a decision, by making such research for him we have been able to provide him with some of the tools to make an informed decision.
Therefore, if you are looking for a sound investment, always check the area carefully and try to obtain some honest & sound local advice.
Good hunting!

Tuesday, 3 November 2015

Could your Canterbury property save you from Pension oblivion?

If you were born in the early 1970’s or late 1960’s, if you haven’t started to think about it yet, retirement is closer than you think. In fact the number of years you have left to work is less than the number of years you have worked. The basic state pension is worth £115.95 a week for a single person in 2015/16 (or £6,029 a year) and £231.90 a week for a couple (£12,118 a year) as long as your partner has paid their stamp (although there are certain get of jail cards if they haven’t).

As a household, could you live on just over £12k a year?
However, could the property you are living in, in Canterbury, save you from poverty when you reach retirement? You see, a regular income is vital in retirement, and the bricks and mortar you own in Canterbury could provide a way for you to finance life when you retire.
If you are in your 30’s, instead of saddling yourself with bigger and bigger mortgages, going from your first time buyer flat, to a terraced, to the semi and then the large detached house, you could instead keep your terraced or small semi, turning it into buy a buy to let property, let the rent pay the mortgage and then rely on capital growth to provide you with a lump sum when you sell the property and retire.  One of the biggest plus points of buy to let is what is known as leverage. Let me explain ... say you have a deposit of 25% and the value of the property rises by 3% a year, your gains in fact multiply to 12%.  However, if property prices drop, 'leverage' can be catastrophic, as losses will also be multiplied. Property values have dropped a number of times in the last 50 years, but they always seem to bounce back ... property must be seen as a long term investment.
Let me explain how leverage could work for you. If you had bought a Canterbury house in spring of 1983 for £60,000, using a 75% mortgage and 25% deposit, (meaning your deposit would be £15,000). Today, that Canterbury property would have risen in value to £434,274, a rise of 623.8%. However, when you look at the growth on just your deposit, the rise is even better ... instead of 623.8%, we see a rise of 2795% (remembering that the mortgage would have been paid off).
However, buy to let is not all about capital growth and in retirement, income is more important than capital growth, as rent is the key to a steady income.
So surely the best strategy is to buy those Canterbury properties with the high rents (when compared to the value of the property). These are called high yield properties in the buy to let world because the monthly return is so much greater. So surely they are the best in Canterbury? Possibly, but the properties that offer these higher yields (in the order of 5% to 6% per year) tend to be in such areas as Hales Place in Canterbury, historically they haven’t offered such good capital growth when compared to the city average, have a higher tendency for void periods and such properties tend to attract tenants that have a greater propensity to be high maintenance.
Therefore, if a high maintenance rental portfolio wasn’t for you, another strategy could be buy a property with relatively smaller rental returns of 3% to 4% per year (i.e. lower yields), but in a more up market area such as St Dunstans. Properties such as these tend to suffer from less void periods (i.e. when there is no tenant in the property paying you rent) and they historically have had better long term capital growth when compared to the city average.
Every landlord is different and every property is different. All I suggest to you is do your homework.
As regular readers will know, I am happy to share my knowledge and experience of the Canterbury property market, high yields, high capital growth, what to buy, what not to buy and where to buy in the Canterbury Property market can always be found on the Canterbury Property Blog www.canterburypropertyblog.com .