Tuesday, 26 January 2016
“Who would want to move to Canterbury in weather like this?”, was what one landlord said to me as we shook hands outside his property, the other afternoon. It was windy, cold, it had been raining most of the day and it was the last appointment of the day at 4.45pm. I will admit, as I had been out of the office all day, I was looking forward to getting home, putting the fire on, and watching telly with a big mug of tea.. but this landlord lived in neighbouring Ashford and this was the earliest he could do.
It turned out he had been self-managing the property himself over the last few years, but was worried with all the new legislation that had been introduced recently. He was particularly concerned about the up and coming ‘Right to Rent’ legislation, so as his tenant had handed in their notice recently, on this new tenancy he called us for our opinion.
For those Canterbury landlords that don’t know, landlords will need to check the immigration status of any new tenants moving into properties from February 2016 or face a £3,000 fine. It is called the 'Right to Rent' rules. However, tenants should also be aware that as well as traditional landlords, tenants who sub-let rooms and homeowners who take in lodgers, must also check the right of prospective tenants to reside in the UK.
Our landlord from Ashford wanted to know how much of a real issue was ‘Right to Rent’ in Canterbury. I was able to tell him, the last available figures (from a couple of years ago) show that 438 people (whom were registered as Non-UK Born Short-term Residents) moved into private rented accommodation in the Canterbury City Council area in one year alone. If all of those people weren’t supposed to be in the UK, that would be a fine of £1,314,000 to the landlords of the City.
It doesn’t sound a lot when you think there are 54,880 residents in Canterbury City Council area, and of those, 43,939 people (or 80.06%) were born in the UK. But Canterbury is a cosmopolitan city as the country of birth of the residents in the Canterbury City Council area can be split down as follows:
Middle East and Asia 6.29%
Americas and Caribbean 1.67%
Australia and Pacific region 0.46%
However, it must also be recognised that landlords, by checking up on tenants, could potentially be accused of discrimination under the Equality Act. This is a real minefield for landlords, especially when you consider that not all of the 4,506 Europeans in the area necessarily have the right to live in the UK either.
In a nutshell, Canterbury landlords will need to check and retain copies of certain documents that show a potential tenant has the right to live in the UK. These include ....
EEA Passport/Identity card
Travel document or Permanent Residence Card showing indefinite leave to remain
Paperwork from Home Office stating their Immigration status
Certificate of registration or naturalisation as a British citizen.
I hope the new law will target dishonest landlords who repeatedly fail to carry out Right to Rent checks by making it a criminal offence. This means they could face imprisonment for failing to check on their tenants. That is why more and more landlords are asking agents to manage their properties, so they can stay the right side of the law.
So what did our landlord do?
Well after our chat, he asked us to find a tenant and manage the property for him - he had been reading the Canterbury Property Blog for a while and because of the knowledge we impart to the landlords of Canterbury, we obviously know what we are talking about. Even better news for him, even though this would cost him agency fees, I was able to get him an additional £75 per month for his property (when we found him a tenant one week later). Now, together with the peace of mind we will keep him the right side of the law and put a stop to midnight phone calls complaining about dripping taps, it was a win-win situation for everyone.
Tuesday, 19 January 2016
I had the most interesting chat with a mature couple (in their early/mid 50’s) from Harbledown the other day, whilst viewing one of our rental properties. The property wasn’t for them, but their son, who wanted a second viewing with his parents to get the parental blessing. Now I know that isn’t the norm, but in this case the parents were going to act as guarantor. We got chatting about the Canterbury property market and how they had bought their first property in the city just after they got married in the late 1980’s when they were in their early/mid 20’s. Anyway, we got chatting about how the youngsters of the UK seem to rent more than buy nowadays and from that the conversation covered a number of similar topics. I want to share the highlights of that conversation with you today.
Their son, like many 20 to 30 year olds in Canterbury, desperately wants to own his own property and the parents said he had read in the Telegraph recently, when you compare house prices to earnings, the current 20 to 30 something’s generation have to spend more of their salary in mortgage payments than any previous generation. The demand for private rental sector accommodation in Canterbury is huge. There are in fact 5,955 private rental properties in Canterbury at the last count, impressive when you consider there are 2,661 council houses in the city. However, let us not forget 9,236 properties are owner occupied (4,088 with a mortgage).
Let us all be honest, private renting doesn’t have the stigma it had a few decades ago and it might surprise people that even though us Brit’s class ourselves as a nation of homeowners, roll the clock back 100 years and over 75% of people rented their own home (and it was all from private landlords as council housing only started to come in with the ‘homes for hero’s’ after the First World War). It might also surprise you to learn that at the time of the 1971 census, still more people rented than owned their own home.
Looking at the affordability issue, I have proved time and time again, it is in fact cheaper to buy a property than rent, when one looks at starter homes for first time buyers. 95% mortgages have been available to first time buyers for over four years and whilst you could certainly find better properties in better condition in better areas, terraced houses can be bought for as little as the early to mid £170,000’s close to the city centre in Canterbury (meaning a modest deposit of £8,500 would be required).
When it came to affordability, I was able to tell them that when they bought their first house in Canterbury in 1988, the ratio of house prices to salary was 7.54 to 1 in Canterbury ... and here was the surprise for both of us, today’s ratio is only 6.53 to 1!
I said I believed there had been a cultural attitude change towards renting property in Britain and that this quiet revolution was likely to be permanent. In the 60’s, 70’s and 80’s, saving for the deposit was everything and buying a house was everything. Youngsters today have far much more disposal income today than people had in the Callaghan and Thatcher years, but choose to spend it upgrading their mobile phones every 12 months, the newest tablet or PC, a newest 50” plasma LCD TV and two sun drenched holidays a year, than go without and save for a deposit.
Yes, there are horror stories of tenants living in rat infested properties with landlords who charge massive rents and don’t repair their properties. But that is very much the exception as most tenants rent homes of a quality they couldn’t ever to afford to buy. Twenty years ago, if you said you rented a property, you were considered the lowest of the low ... but now it’s the norm.
So with mortgage affordability being well within the bounds of most first time buyers, the level of deposit required for a 95% being surprisingly modest (starting off at c.£8,500 in Canterbury as mentioned above) until we change our attitudes, the UK housing market is slowly but surely turning into a more European model, where people rent for long periods of their life, then eventually inherit their parents properties and subsequently become homeowners themselves, albeit later in life.
Hence, I cannot see the demand for decent, high quality rental properties ever dropping in the next 10 to 20 years, but only ever increasing as the population continues to soar. Just make sure you buy the right property, at the price, in the right location. One source of information on such matters would be the Canterbury Property Blog ... www.canterburypropertyblog.com
Tuesday, 12 January 2016
On the dark winter nights, if there is nothing on the telly, the significant other and myself like to play the board game Monopoly. The buying and renting of property, it’s like a busman’s holiday for me! Interestingly, the game was originally invented at the turn of the 20th Century (in 1903) and the game was initially called ‘The Landlord’s Game’! Anyway, after a few years in the wilderness, the current owners of the game renamed it in 1935 and so began Monopoly as we know it today.
So whether you are a homeowner or landlord in Canterbury, what would a Monopoly board look like today in the city? Property prices over the last 80 years have certainly increased beyond all recognition, so looking at the original board, I have substituted some of the original streets with the most expensive and least expensive locations in Canterbury today.
Initially, I have focused on the CT1 postcode only, looking at the Brown Squares on the board, the ‘new’ Old Kent Road in Canterbury today would be Godwin Road, with an average value £127,400 (per property) and Whitechapel Road would be Rhodaus Close, which would be worth £147,500. What about the posh dark blue squares of Park Lane and Mayfair? Again, looking at CT1, Park Lane would be Ethelbert Road at £484,300 and Mayfair would be St Augustine’s Road at £592,700. However, look a little further afield from the CT1 postcode, and such roads as Harbledown Park in Harbledown would claim the Mayfair card at £664,200! Also, I can’t forget the train stations (my favourite squares), and over the last 6 months, the average price that property within a quarter mile of the Canterbury West Station sold for was £305,000.
So that got me thinking what you would have had to have paid for a property in Canterbury back in 1935, when the game originally came out?
- The average Canterbury detached house today is worth £480,900 would have set you back 870 Pounds 1 shillings and 10 old pence.
- The average Canterbury semi detached house today is worth £270,680 would have set you back 489 Pounds 14 shillings and 10 old pence.
- The average Canterbury terraced / town house today is worth £252,800 would have set you back 457 Pounds 7 shillings and 9 old pence.
- The average Canterbury apartment today is worth £206,500 would have set you back 373 Pounds 12 shillings and 5 old pence.
If that sounds like another currency, you must be in your 20’s or 30’s, because it was back in February 1971, that Britain went decimal and hundreds of years of everyday currency was turned into history overnight. On 14th of February of that year, there were 12 pennies to the shilling and 20 shillings to the pound. The following day all that was history and the pound was made up of 100 new pence.
Anyway, I hope you enjoyed this bit of fun, but underlying all this is one important fact. Property investing is a long game, which has seen impressive rises over the last 80 years. In my previous articles I have talked about what is happening on a month by month or year by year basis and if you are going to invest in the Canterbury property market, you should consider the Canterbury property you buy a medium to long term investment, because Buy to let is pretty much what it sounds like – you buy a property in order to rent it out to tenants.
As I reminded a soon to be first time landlord from Tyler Hill the other week, Buy to let in Canterbury (as in other parts of the Country) is very different from owning your own home. When you become a Canterbury landlord, you are in essence running a small business – one with important legal responsibilities. On that note, I want to remind landlords of the recent and future changes in legislation when it comes to buy to let. Last year, rules have changed about tenant deposits, carbon monoxide detectors and early in the New Year, landlords will have responsibilities to do immigration checks on all their tenants. Failure to adhere to them will mean a minimum of heavy fines in the thousands or in some cases, prison ... it’s a mine field! That’s why I write the Canterbury Property Blog, where it has an extensive library of articles like this one, where I talk about what is happening in the Canterbury property market, what to buy (and sometimes not) in Canterbury and everything else that is important to know as a Canterbury landlord. Please visit the Canterbury Property Blog www.canterburypropertyblog.com
Wednesday, 6 January 2016
The 5th of March 2009 was the date Mervyn King, the then Bank of England Governor, slashed UK interest rates to the unparalleled figure of 0.5%. In just under five months, starting on 8th October 2008, the rate had come down from 4.5% to that low figure, all in an attempt to ensure the British economy survived the worldwide credit crunch. Nobody expected that, over six years later, rates would still be at that low level.
Last summer, people were predicting a rise in the New Year, yet now, some forecast it may remain the same for years to come the due to the issues in China. Now, I am not some City Whiz kid with a hotline to Mr Carney at Threadneedle Street, but merely a humble letting agent from Canterbury, so I cannot profess to know what will happen to interest rates. However, what I do know, speaking to my Canterbury friends and Canterbury landlords is that these low interest rates have hit savers really hard.
If you added up everyone’s bank and building society savings in the UK, they would add up to £1,300,000,000,000,000,000 (that’s £1.3 trillion), most of which is earning a pittance in interest. That is why more and more 40 and 50 year old Canterbury landlords have been investing some of that cash into Canterbury bricks and mortar, as they search for a low risk investment opportunity.
Buying a Canterbury buy to let property isn’t risk free, but there are certainly things you can do to mitigate and lower one’s exposure to risk. You see by buying a rental property, it potentially offers an enigmatically decent proposition in terms of being able to obtain attractive returns that beat inflation and savings accounts, yet without taking the levels of risk associated with stock markets.
The UK residential property market has long been the safest form of collateral for lenders of all varieties. Against a backdrop of a greatly changing economic environment, Canterbury house prices have been extraordinarily robust, increasing by over 2148% between 1974 and today. Some will say there have been significant property price falls, namely in 1975, 1988 and 2008, yet each time after this has been followed by an upturn in property values. For the record, the stock markets in the same time frame only rose by 432.5%!
...and that is the best thing about buy to let property. Unlike the stock market, with its unfathomable equities, shares and bonds, that nobody really understands (as they are controlled by some faceless whizzkid in Canary Wharf!) with a buy to let property, landlords can take control and understand their investment .. in fact you can touch and feel the bricks and mortar investment.
...but before you go out and buy any old Canterbury property, plenty of landlords still get it wrong. You have to be aware of your legal responsibilities when it comes to tenant safety, tenants deposits, energy certificates and in the New Year, landlords will have the added responsibility of checking the immigration status of prospective tenants. Get it wrong and big fines and even prison is an option – but that’s why many agents use a letting agent to manage their property for them.
Next, you have to buy the right property at the right price. Recently I have seen some really heart breaking situations in Canterbury and the immediate area, of people paying way too much for a property, only to lose out when they came to sell. One example that comes to mind is that of a property owner in one of those apartments on the highly desirable location of The Old Tannery which is in close proximity of Canterbury City Centre .. a wonderful top floor three bed apartment, 96 sq metres inside (1033 sq ft in old money) sold in July 2014 for £335,000. In the summer, it only obtained £315,000, a drop of 6% in just one year - a very disappointing result.
I cannot stress enough the importance of doing your homework. One source of information and advice is the Canterbury Property Blog where I have similar articles to this about the Canterbury property market and what I consider to be the best buy to let deals around at any one time in the City, irrespective of which agent it is on the market with. If you haven’t visited and you are interested in the local property market in Canterbury .. you are missing out! .. www.canterburypropertyblog.com