Wednesday, 14 December 2016

£15m paid in Stamp Duty by Canterbury Residents

“A pound saved is worth two pounds earned . . . after taxes” is what my Grandfather used to say. He loved his irony, yet was always a wise man, and it is tax I want to talk about today, in particular, property taxation .. Stamp Duty in fact.
Apart from some minor exemptions, Stamp Duty is paid by anyone buying a property over £125,000 in the UK. It presently raises £10.68bn a year for the HM Treasury (interesting when compared with £27.6bn in fuel duty, £10.69bn in alcohol duty and £9.48bn in tobacco duty).
In the latest set of data from HMRC, in the MP constituency that covers Canterbury, property buyers paid £15m stamp duty in one year alone – a lot of money in anyone’s eyes (although not as much as the £232m in income tax that all of us in the same area paid last year).
However, as you may know, George Osborne introduced an additional tax for landlords and from 1st April 2016 they had to pay an additional 3% stamp duty surcharge on top of the normal stamp duty rate when purchasing a buy to let property. There were tales of woe and Armageddon with a report by Deutsche Bank suggesting that the new surcharge could see house prices fall by as much as 20%.
HMRC data released in the Summer for Quarter 2 (Q2) of 2016 did seem to back up those fears as they published some worrying figures; only one in seven properties purchased was a second home or buy-to-let (in real numbers, only 30,300 of the 207,900 properties in Q2 were bought by landlords).
In previous articles, I spoke about the slump of property transactions after the 1st of April (as landlords rushed through their property purchases in March to beat the April deadline). In Q2 of 2016, £1.976bn was raised in Stamp Duty from Residential Property. Of that £1.976bn, £652m was paid by buy to let landlords (£424m in normal stamp duty and £228m in the additional 3% surcharge).
However, looking at Q3, the numbers have improved significantly. Of the 235,000 property sales, nearly one in four of them (56,100 to be precise) were bought by buy to let landlords and of the £2.208bn in stamp duty, £864m was paid in ‘normal’ stamp duty by BTL landlords and an impressive £442m paid by those same landlords in the additional stamp duty surcharge.
The statistics suggest buy to let investors have thankfully not been deterred by the stamp duty surcharge introduced in April this year. The figures also show that 65.4% of "buy to let" purchases cost less than £250,000, 23.7% of properties were in the £250k to £500k range and 10.9% (or 6,100 additional properties) of buy to let properties bought cost over £500k – interestingly nearly one in four (22.2%) of £500k properties purchased in Q3 were buy to let properties.
It just goes to back up what I stated a few weeks ago when I suggested that many investors had rushed to make purchases before 31st March, making figures in the following months (Q2) artificially low when the 3% supplement was introduced, but in Q3 the number of buy to let properties purchased increased by 85%.
It just goes to show you shouldn’t believe everything you read in the newspapers! I can assure you the Canterbury property market is doing just fine. For more thoughts on the Canterbury Property Market like this .. visit the Canterbury Property Market Blog

Monday, 5 December 2016

Average Rent Paid by Tenants in Canterbury rise to £1,246 per month

Back in the Spring, there was a surge in Canterbury landlords buying Buy-to-Let property in Canterbury as they tried to beat George Osborne’s new stamp duty changes which kicked in on the 1st April 2016. To give you an idea of the sort of numbers we are talking about, below are the property statistics for sales either side of the deadline in CT1.

Jan 2016 – 47 properties sold
Feb 2016 – 56 properties sold
March 2016 – 84 properties sold
April 2016 – 24 properties sold
May 2016 – 23 properties sold

Normally, the number of sales in the Spring months is very similar, irrespective of the month. However, as one can see, this year was a completely different picture as landlords moved their purchases forward to beat the stamp duty increase. You would think that even with a basic knowledge of supply and demand economics, rents would be affected in a downwards direction?

However, there appears to be no apparent effect on the levels of rent being asked in Canterbury - and more importantly achieved - and this direction of rents is not likely to inverse any time soon, particularly as legislation planned for 2017 might reduce rental stock and push property values ever upward. The decline of Buy-to-Let mortgage interest tax relief will make some properties lossmaking, forcing landlords to pass on costs to tenants in the form of higher rents just to stay afloat. Even those who can still operate may be deterred from making further investments, reducing rental stock at a time of severe property shortage.

.. but it’s not all bad news for tenants. Whilst average rents in Canterbury since 2005 have increased by 22.6%, inflation has been 38.5% over the same time frame, meaning Canterbury tenants are 15.9% better off in real terms when it comes to their rent (which is a sizeable chunk of most people’s monthly household budgets)
Average Rent in Canterbury per month
I found it particularly interesting looking at the rent rises over the last five years in Canterbury, as it was five years ago we started to see the very early green shoots of growth of the Canterbury economy.  As a whole, following the Credit crunch (2011), rents in Canterbury have risen by an average of 2.4% a year – fascinating don’t you think?

The view I am trying to portray is that while renting is often portrayed as the unfavorable alternative to home ownership, many young Canterbury professionals like renting as it gives them adaptability with their life. Rents will continue to rise which is good news for landlords as buy to let is an investment but, as can be seen from the statistics, tenants have also had a good deal with below inflation increases in rents in the past. It’s a win-win situation for everyone although on a very personal note, it’s imperative in the future that tenants are not thwarted from saving for a deposit by excessive rental hikes – there has to be a balance.

For more thoughts and opinions on the Canterbury Property Market, if you are a Canterbury Homeowner or Canterbury landlord, please visit the Canterbury Property Blog .

Saturday, 26 November 2016

Canterbury Property Values increase by 1.75% ... good or bad news?

“How's the Canterbury housing market doing?” asked an upbeat Canterbury landlord last week.  “Quite strange”, I replied. Our landlord was perplexed! Let me explain...
Even the Brexit vote has not hindered Canterbury’s steady rise in property value, as Canterbury property values went up 1.75% last month alone, leaving Canterbury values 9.6% higher than a year ago. An increase in demand from buyers and an uninspiring level of supply (i.e. the number of properties on the market) has driven up the value of the Canterbury’s housing.
...And that is where the issue is. With Brexit, the coalition of the 2010-15, a double-dip recession and post credit crunch fallout – I was perplexed that the Canterbury property market (and values) has remained so strong, still 14.75% higher than 20 months ago. That is until you start to consider the real reasons why we find ourselves in such a great place.
The Canterbury (and the UK) housing market is built on the foundations of basic economic rules that any GCSE Economics student should understand. However, at a time when, as a country, we seem eager to uncouple ourselves from all manner of proven facts, anything is up for grabs.
Even the wary RICS said throughout the UK, most of its Chartered Surveyors anticipated house prices to increase in the next six months, which seems contradictory given economic cautions from Mr Hammond and HM Treasury. Even though inflation will rise to around 2% to 3% in 2017 and perhaps a little more in 2018 because of Sterling’s devaluation, together with a high probability of a decelerating GDP and a slight rise in unemployment, how can the RICS and most of my landlords be so confident about the value of our homes?
Well, look at from where we are starting. Nationally, a base of low unemployment, low inflation and preposterously low interest rates, while in Canterbury, the local economy is doing quite well for itself. Confidence also plays a part. Confidence can supersede basic economic facts for a short time at least, which is why actual property market changes tend to be more exaggerated, as confidence can turn both positive and negative very quickly. The fact is, there is a long-term relationship between property values, wages and unemployment. For example, looking at the graph below, you can quite clearly see the ratio of property values to earnings is nowhere near as high as it reached in 2008 and currently is in the middle of the range for the last 30 years. As a country, we are in a good place.
By April 2017, Article 50 will be invoked. This will bring additional political tomfooleries and economic ups and downs. With both purchasers and vendors predisposed by the 24-hour news cycle, which let’s face it, gets more haphazard by the day, it is likely to prove a challenging couple of years … and yes, Canterbury property values might drop slightly in 2017, but based on what we know of the UK plc now, the UK and Canterbury property values are not projected to move that much over 2017 or 2018.  Going into the next two years, we are in much better financial shape as a country compared to the last two crashes of 1987 and 2008.
But, on the other side of the coin, what we also know is that we don't know much about the form of our economic future or indeed many other facets of our lives. Confidence will continue to be the key player in the Canterbury housing market for a while longer - yet this may spur some much-needed second-hand market activity? Now, where is my crystal ball?

Tuesday, 22 November 2016

Canterbury Housing Crisis? Only 2.1% of Canterbury Homes Are For Sale

The Canterbury Property Market continues to disregard the end of the world prophecies of a post Brexit fallout with a return to business as usual as we head towards Christmas.
The challenge every Canterbury property buyer has faced over the last few years is a lack of choice – there simply hasn't been much to choose from when buying (be it for investment or owner occupation). Levels are still well down on what would be considered healthy levels from earlier in this decade, as there is still a substantial demand/supply imbalance. Until we start to see consistent and steady increases in properties coming on to the market in Canterbury, the market is likely to see upward pressure on property values continue.
For example, last month CT2 saw 71 new properties coming on to the market, not bad when you consider for the last year the average has been predominantly in the 40 to 60 range. With the average Canterbury property value hitting a record high, reaching almost £331,000 according to my research, this shortage of properties on the market over the last two years has contributed to this ‘fuller' average property figure.
As I write this article, 2.1% of Canterbury properties are up for sale. In terms of actual chimney pots, that equates to 320 properties on the market in Canterbury (within 2 miles of the centre of Canterbury) – which, when compared to only a year ago when that figure stood at 317, is a slight increase in the number of properties available to buy. Split down into the type of property, it makes even more fascinating reading...
  • Detached Properties in Canterbury  - 59 on the market a year ago compared to 41 on the market now – a decrease of 31%
  • Semi Detached Properties in Canterbury - 55 on the market a year ago compared to 73 on the market now - an increase of 33%
  • Terraced Properties in Canterbury - 54 on the market a year ago compared to 63 on the market now - an increase of 17% 
  • Flats / Apartments Properties in Canterbury  - 132 on the market a year ago compared to 114 on the market now – a decrease of 14%
This is evidence of strength in the Canterbury housing market that many didn't expect. Many believed that the Canterbury property market wasn't going to be strong enough post Brexit - as what was a sellers' market before the Brexit vote and Buyers' market in the early months after it, may now be somewhere in between and the market might just be coming back into balance.
However, all this will mean property values won't continue to grow at the same extent they have been over the last 12 to 18 months, and in some months (especially on the run up to Christmas and early in the New Year), values might dip slightly. This won't be down to Brexit but a re-balancing of the Canterbury Property Market – which is good news for everyone.
For more thoughts on the Canterbury Property Market, please visit the Canterbury Property Blog

Thursday, 17 November 2016

Private Renting set to grow by 2,500 Canterbury households by 2025

I was having a most interesting chat the other day with a Canterbury landlord when we were looking at a property. We got talking about the Canterbury Property Market and this landlord brought up the subject of a report he had read from the Royal Institution of Chartered Surveyors (RICS) and PricewaterhouseCoopers (PwC) that stated almost 1.8m new rental homes are needed by 2025 to keep up with current demand from tenants. He wanted to know what this meant for Canterbury.
Well my blog reading friends, some commentators said last Winter that buy to let was about to die, what with the new stamp duty changes and how mortgage tax relief will be calculated. Others even said 500,000 rental properties would flood the market nationally in the 12 months after the new Stamp Duty rules came into force on the 1st April 2016 as landlords left the rental market. Well, all I can say is, I wish all the landlords of those half a million properties would hurry up and put them on the market – because I have plenty of other potential landlords wanting to buy them!
Back to the matter in hand.. if the RICS and PwC are indeed correct, what does this mean for Canterbury? The fact is, as a country, we are facing a precarious rental shortage and need to get Canterbury building in a way that benefits a cross-section of Canterbury society, not just the fortunate few. I call on the Prime Minister to drop the higher stamp duty tax on buy to let purchases to ease the pressure on the rental market.
Of the 19,900 households in Canterbury, currently 17,000 tenants live in 6,000 private rented properties. If we apportion those 1.8m households equally around the Country, that means in nine years’ time, the number of rental properties in Canterbury needs to rise by 2,500 (i.e. 42.8%) .. taking the total number of rented properties in the city to 8,500.
That means Canterbury landlords need to buy around 300 properties a year between now and 2025 to meet that demand – because according to my calculations, an additional 7,300 people will want to live in all those 'additional' Canterbury rental properties – so why is the government penalising landlords?
Thankfully the new housing minister Gavin Barwell detached Teresa May's new administration from the Cameron/Osborne laser-like focus of just home ownership to solve our housing issues, saying "we need to build more homes for every single type of person needing a home and not focus on one single tenure". The private rented sector became a stooge under David Cameron's watch and still, with increasingly unaffordable Canterbury house prices, the majority of new Canterbury households will be relying on the rental sector in the future to house them. I can only say Westminster must put in place the measures that will allow the rental sector to flourish. Any restrictions on the supply of rental property will push up rents (bad news for tenants), thus side-lining those members of Canterbury society who are already struggling. Let's hope this new Government continues to see the contribution landlords give to the country as a whole.

Wednesday, 9 November 2016

Trump and the UK Housing Market

Whilst I don't like the man - the American people have spoken.

.. but this isn't the end of the world for the UK or its Property market!

Cancel the Nuclear Shelter off Amazon and just take a deep breath for a second.

There are questions about the level of competence of Mr Trump but before you all go and panic ... don't forget that Reagan was also regarded as grossly incompetent — by the world's media and the High Brow Washington establishment .. but not by Republican voters in 1980 (and re-elected in 1984) ..
The upper-class Washington types depicted Reagan as some sort of B-rated cowboy film star who was all 'yeaa-haw' and a loose cannon, who might be just tolerable as the governor of California, but who was definitely not sophisticated enough to comprehend, let alone conduct, foreign policy of the US Presidency.If memory serves me well - on most things (not all) - he did a pretty good job
There are plenty of other factors, closer to home, that we need to be concerned about than the President of the US and the effect of the UK Housing Market

.. just my opinion ............

Tuesday, 8 November 2016

House Prices in Canterbury rise by more than 12% in the last 18 months

Over the last month, the Canterbury property market has seen some interesting movement in house prices, as property values in the Canterbury City Council area rose by 1.6% in the last month, to leave annual price growth at 8.2%. These compare well to the national figures where property prices across the UK saw a monthly uplift of 0.42%, meaning the annual property values across the country are 8.3% higher, this is all despite the constraining factors of Stamp Duty changes in the spring and more recently our friend Brexit.
Looking at the figures for the last 18 months makes even more fascinating reading, whereby house prices are 12.5% higher, again thought provoking when compared to the national average figure of 13.6% higher.
However, it gets more remarkable when we look at how the different sectors of the Canterbury market are performing. Over the last 18 months, in the Canterbury City Council area, the best performing type of property was the semi, which outperformed the area average by 0.61% whilst the worst performing type was the apartment, which under-performed the area average 0.84%.
Now the difference doesn’t sound that much, but remember two things, this is only over eighteen months and secondly, the gap of 1.4% (the difference between the semi at +0.61% and apartments at -0.84%) converts into a few thousand pounds’ disparity, when you consider the average price paid for a semi-detached property in Canterbury itself over the last 12 months was £260,800 and the average price paid for a Canterbury apartment was £200,600 over the same time frame.
I know all the Canterbury landlords and homeowners will want to know how each of the property types have performed, so this is what has happened to property prices over the last 18 months in the area...
  • Overall Average                 +12.5%
  • Detached                           +12.6%
  • Semi Detached                   +13.1%
  • Terraced                            +12.4%
  • Apartments                        +11.5%
So, what does all this mean to Canterbury homeowners and Canterbury landlords and what does the future hold? 
When I looked at the month-by-month figures for the area, you can quite clearly see there is a slight tempering of the Canterbury property market over these last few months. I have mentioned in previous articles that the number of properties on the market in Canterbury has increased this summer, something that hasn’t happened since 2008. Greater choice for buyers means, using simple supply and demand economics, that top prices won’t be achieved on every Canterbury property. You see some of that growth in Canterbury property values throughout early 2016 may have come about because of a surge in house purchase activity resulting from the increase in stamp duty on second homes from April, thus providing a temporary boost to prices.
However, it may be possible the recent pattern of robust employment growth, growing real earnings and low borrowing costs will tilt the demand/supply seesaw in favour of sellers and exert upward pressure on prices once again in the quarters ahead.
...And Canterbury property values, assuming that everything goes well with Brexit, I believe in twelve months’ time we should see values in the order of 4% to 7% higher.


Tuesday, 1 November 2016

Canterbury Property Market in 2017 and Beyond

As the trees turn from green to hues of red and brown, the Canterbury property market has a confident feel to it. With the underlying fundamentals of a continued lack of properties being built, a shortage of properties (both in terms of quantity and quality) coming to the market and the continued low mortgage rate environment, buyer enquiries from first time buyers and buy to let landlords is strong and motivation is even stronger, given those inexpensive lending rates and general demand caused by under supply.
Now of course, there are a few potential hurdles coming towards us in the coming months that could affect the Canterbury (and UK) property market. Mrs. May has yet to get her teeth into Brexit negotiations and we don’t know what the US Presidential elections might do to the money markets around the world, meaning that on the run up to Christmas, some savvy buyers may take advantage of the lack of certainty by making cheeky offers, but I don’t believe these will have a huge impact on property values (like the 2008 Credit Crunch).
You see, property ownership, whether it’s for yourself as a homeowner or buy to let landlord, is a long-term investment. In fact, focusing on buy to let, a number of landlords who own property in Canterbury have made contact with me recently asking for my thoughts on the future of the buy to let market in Canterbury.  Well, as the Politician Edmund Burke said in the 18th century, "Those who don't know history are destined to repeat it." .. in other words, to see the future you must consider the past.
Since the Millennium, the housing market has had everything thrown at it. The recent Brexit, last year’s General Election, the near melt down of the World Economy with the Credit Crunch, The Dot Com boom and bust, the housing market crisis in 2008, the housing boom of 2001 to 2004 .. the list goes on. In fact, here is a graph (courtesy of the Land Registry) of average Property values since the Millennium in the Canterbury City Council area.

Even though we had the Dot Com bubble burst in 2000, two years later in January 2002, property values in the Canterbury City Council area have risen from £83,500 (in Jan 2000) to £111,500 .. and kept rising to October 2007, when they peaked at £212,700. Then we had the Credit Crunch and property prices continued to fall until June 2009, where they averaged £176,300 .. but look where they are now…  £264,200
The point I am trying to get across is long term future property values are more helpful to landlord investors than the month by month headline grabbing micro movements in the property market.  Look at the graph and you will see the growth in property values is an upward trend BUT, the average darts about as each month goes by.  So, don’t watch the property indexes and panic if values drop next month or the month afterwards, because even in the glory days of 2001 to 2004 and 2012 to 2014, without fail, values always dropped slightly around Christmas, but people will always need a roof over their heads, and if they can’t buy and the council aren’t building anymore  .. only buy to let landlords can meet that demand.
Canterbury landlords are being hit in the pocket with the new up and coming taxation rules and yes we might have a bumpy ride on the run up to Christmas (because of the points raised earlier), Brexit or no Brexit, but the trend will be a slow and steady upward momentum of property values, demand for rental properties and yields in the Canterbury property market into 2017 and beyond.

Monday, 31 October 2016

The 4,897 Canterbury Savers batten down the hatches with low interest rates set to continue into the 2020’s

You might ask, what has the plight of the Canterbury savers to do with the Canterbury Property Market … everything in fact.  Read the newspapers, and every financial wizard is stating that with the decision of the Bank of England’s Monetary Policy Committee in early August to cut the Bank of England base rate to an all-time low of 0.25 per cent, savers should prepare themselves for interest rates to stay low well into the early 2020’s.
... And this isn’t some made up story to capture the headlines of newspaper editors. The yield (posh word for interest rate or return) on 10-year Government bonds is currently 0.61 per cent. This indicates that the money markets believe that the Bank of England’s base rate will, on average over the next ten years, be below the 0.61% rate they are buying the 10 year bonds at (because they would lose money if the average was over 0.61%). UK Interest rates are going to be low for a long time.
For those who have saved throughout their working lives and are looking for ways to maximise their savings, tying their money into property could prove advantageous. You see as a saver, I did a search of the internet and the best savings rate I could find was a 5-year fixed rate at 2.5% a year with Weatherbys Bank. Your £200,000 nest egg would earn you £5,000 a year – not much. However, on the other side of the fence, growth in Canterbury house prices and princely buy to let yields have made property investment in Canterbury an appealing option for many. According to my research, the...
Average Yield over the last five years for
Canterbury Buy to let property has been 5.6% a year
… and average Property Values in over the same period have risen by 23.3%.
Using these averages, the Canterbury landlord’s property would be worth £246,600 and they would have received a total of £56,000 in rent – making the total return £302,600. Meanwhile, whilst our 4,897 Canterbury Saver’s, using the average savings rates for the last 5 years, even if they had reinvested the interest, their £200,000 would only be £221,184.
There are risks as well as benefits to buy to let though. As my blog readers know, I tell it like it is and investing in buy to let means locking up capital in a property that may fall in value. Another option would be stock market income based investment funds, which are paying around 5%, especially if put your nest egg into a tax free Stocks and Shares ISA. Although you can only add £15,240 a year into an ISA, but you would also have the ability to sell up quickly if you want ... but one last thought…
The other side of the coin is that you cannot buy an unloved ‘stock market income based investment fund’ and set about renovating it and adding value yourself. The investment fund isn’t something that you can touch and feel, isn’t something tangible, isn’t something physical, isn’t something concrete, it isn’t bricks and mortar ... and that is why my fellow Canterbury homeowners and Canterbury landlords, the love affair of the British and Property will continue.
If you are considering becoming a new buy to let landlord in Canterbury, what do you know about the Canterbury property market? Do what many established landlords do and visit the Canterbury Property Blog where there is a catalogue of articles like this and where the best buy to lets deals are in Canterbury

Saturday, 29 October 2016

What is really happening in the Canterbury Property Market?

Well its been a few months since Brexit and as we settle into the Autumn with Great British Bake Off, Strictly and the Football season ... the newspapers are returning to their mixed messages 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 Kensington and Chelsea, which has seen average prices drop in the last twelve months by 6.2% whilst in our South-East region, house prices are 12.3% higher. But what about Canterbury?

Property prices in Canterbury are 7.8% higher than a year ago

and 0.6% lower than last month.

So what does this mean for Canterbury landlords and homeowners? Not that much unless you are buying or selling in reality. Most sellers are buyers anyway, so if the one you are buying has gone down, yours has gone down.  Everything is relative and what I would say is, if you look hard enough, there are even in this market, there are still some bargains to be had in Canterbury.

However, the most important question you should be asking though is not only is what happening to property prices, but exactly which price band 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 price bands. Each price band would have around 25% of the property in Canterbury, from the lowest in value band (the bottom 25%) all the way through to the highest 25% band (in terms of value).

  • Nil to £220k             90 properties for sale and 65 sold (stc) i.e. 41% sold
  • £220k to £260k         79 properties for sale and 54 sold (stc) i.e. 40% sold
  • £260k to £350k       103 properties for sale and 70 sold (stc) i.e. 40% sold
  • £350k +                    77 properties for sale and 58 sold (stc) i.e. 42% sold

Fascinating don’t you think that it is the whole Canterbury market that is doing well?
The next nine months’ activity will be crucial in understanding which way the market will go this year after Brexit ... but, Brexit or no Brexit, people will always need a roof over their head and that is why the property market has ridden 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!

Tuesday, 11 October 2016

942% - Rise in Canterbury Property Prices since 1981

Roll the clock back 35 years to 1981, and Mrs. T was in power, we had a Royal Wedding, Britain won the Ashes and Bucks Fizz won Eurovision with ‘Making your Mind up’.   Haven’t things changed.  The number of homeowners and property investors who said they wish they had hindsight and bought up every house in Canterbury all those years ago, especially when you consider what has happened to Canterbury property values, as…
Canterbury Property Values since 1981 have risen by 942%.
Not bad when you consider inflation over the same time period has been 271.9%, meaning in real terms (i.e. after inflation), property values in Canterbury are 670.1% higher.   It’s no wonder people can’t afford to buy property anymore and landlords are attracted by bricks and mortar. Yet the changes to the Canterbury Property market run much deeper than property value changes as no one could have predicted how the property market has changed in Canterbury over the last 30 years.
Looking at the Local Authority data for Canterbury City Council in 1981, 19.6% of Canterbury people lived in a Council House, whilst today its 12.2% ... a massive drop which can mostly be attributed to Margaret Thatcher allowing Council tenants the right to buy their Council House.  The private rental sector since 1981 has, as one would have expected, also changed.  The proportion of properties privately rented in the Canterbury area (i.e. through a private landlord or a letting agency) have almost doubled, rising from 12.1% to 19.5% of property.
So, let us consider those people who own their own home, surely that has had a massive drop?  In 1981, the proportion of people who lived in the Canterbury City Council area who owned their own home was 68.1% … and today its … 66%. Not the seismic change most of you were expecting (including myself!).
Homeownership in the 1980’s and 1990’s in Canterbury did in fact rise, but as I have discussed in previous articles in the ‘Canterbury Property Market Blog’, that was because nearly every Council tenant was buying their council house. Now there are hardly any Council houses for the younger generation to move into (because of the Right to Buy scheme) so they have no choice, but to privately rent.
.. and this is why the buy to let market in Canterbury is an investment sector that will continue to grow as councils aren’t building council houses in their thousands each year (like they were in the 1950’s / 60’s and 70’s).  The Canterbury property market is constantly changing and buy to let for too long has been heavily dependent on house price growth, where yield has been almost forgotten.  I see the changes in tax and landlord and tenant law in a different perspective to the sooth-sayers and see it as bringing many opportunities where yield will become more important.  You might need to change your buy to let targets, your methodology to financing or even consider places other than Canterbury in which to invest your money, but this will shine a light on investing in properties with healthier yields and create more realistic long term buy to let opportunities, instead of short term growth bets and wagers.
Like Bucks Fizz said in their song, it’s time to make your mind up. The advice I give to my landlords, and also to you my blog reading friends is this; these changes will make some landlords panic, meaning competition for decent Canterbury buy to let bargains will reduce as fear of change kicks in and amateur investors flee the market.  These opportunities will provide a more stable platform for knowledgeable and wise Canterbury buy to let landlords to thrive in.  If you want to learn more about the Canterbury Property Market, feel free to pop in for a coffee at our office for a chat with me, or failing that, visit the Canterbury Property Blog, where you will find many more articles like this solely on the one topic of the Property Market in Canterbury .

Friday, 7 October 2016

Landlords Information Evening - Monday 24th October 2016 - Canterbury

Running from 17.30hrs until 20.30hrs on Monday 24th October 2016 is a really good information evening in conjunction with the National Landlords Association (NLA). The evening is chaired by Marion Money of the NLA and various guest speakers deliver relevant and useful information regarding the rental market. The event is open to all and free to attend.

It's a great opportunity to hear from a number of guest speakers, plus network with other landlords and suppliers.

Of interest will be a presentation from Phil Eckersley, from the Bank of England, who will be giving an update of the UK Economy

The address of the venue is: Darwin Conference Suite, Darwin College, University of Kent, Canterbury CT2 7NY

Monday, 26 September 2016

What will the 0.25% Interest Rate do to the Canterbury Property Market?

I had an interesting chat last week with a Fordwich landlord who owns a few properties in the city. He popped his head in to my office as his wife was shopping in the area (and let’s be honest talking about the Canterbury Property Market is a lot more interesting than clothes shopping!). We had never spoken before (because he uses another agent in the city to manage his Canterbury properties) yet after reading my blog on the Canterbury Property Market for a while, the landlord wanted to know my thoughts on how the recent interest rate cut would affect the Canterbury property market and I would also like to share these thoughts with you……
Well it’s been a few weeks now since interest rates were cut to 0.25% by the Bank of England as the Bank believed Brexit could lead to a materially lower path of growth for the UK, especially for the manufacturing and construction industries. You see for the country as a whole, the manufacturing and construction industries are still performing well below the pre credit crunch levels of 2008/09, so the British economy remains highly susceptible to an economic shock. This is especially important in Canterbury, because even though we have had a number of local success stories in manufacturing and construction, a number of people are employed in these sectors. In Canterbury, of the 22,210 people who have a job, 712 are in the manufacturing industry and 1,064 in Construction meaning
3.2% of Canterbury workers are employed in the Manufacturing
sector and 4.8% of Canterbury workers are in Construction
The other sector of the economy the Bank is worried about, and an equally important one to the Canterbury economy, is the Financial Services industry. Financial Services in Canterbury employ 391 people, making up 1.8% of the Canterbury working population.
Together with a cut in interest rates, the Bank also announced an increase in the quantity of money via a new programme of Quantitative Easing to buy £70bn of Government and Private bonds. Now that won’t do much to the Canterbury property market directly, but another measure also included in the recent announcement was £100bn of new funding to banks. This extra £100bn will help the High St banks pass on the base rate cut to people and businesses, meaning the banks will have lots of cheap money to lend for mortgages .. which will have a huge effect on the Canterbury property market (as that £100bn would be enough to buy half a million homes in the UK).
It will take until early in the New Year to find out the real direction of the Canterbury property market and the effects of Brexit on the economy as a whole, the subsequent recent interest rate cuts and the availability of cheap mortgages. However, something bigger than Brexit and interest rates is the inherent undersupply of housing (something I have spoken about many times in my blog and the specific effect on Canterbury). The severe undersupply means that Canterbury property prices are likely to increase further in the medium to long term, even if there is a dip in the short term. This only confirms what every homeowner and landlord has known for decades .. investing in property is a long term project and as an investment vehicle, it will continue to outstrip other forms of investment due to the high demand for a roof over people’s heads and the low supply of new properties being built.
For more thoughts on the Canterbury Property Market, please visit the Canterbury Property Market –