Monday, 29 February 2016

Doom and Gloom for Canterbury Property Market?

One of my landlords from Rough Common rang me today, after he had spoken to a friend of his. Over the weekend, they were discussing the Canterbury property market and neither of them could make their mind up if it was time to either sell or buy property. If you read the newspapers and the landlord forums on the internet, there is a good slice of doom and gloom, especially with changes in the taxation towards landlords, the new legislation on checking tenants and the general uncertainty in the world economic situation.

I would admit, there are certain landlords in Canterbury who have over exposed themselves in the last few years with high percentage loan to value mortgages. Those mortgages, with their current (yet artificially low) interest rates, will start to suffer, as their modest monthly positive cash flow/profit, i.e. income (rent) less costs (mortgage, fees, tax); will become negative when the tax and mortgage rates rise throughout 2017 and beyond.

It appears to me these landlords seem to have treated the Canterbury Buy to Let market as a sure bet and have not approached this as a business and, as a result, they will suffer as they thought "Buy a house - rent it out so it covers the mortgage and make a few quid on top".  These are the people who will be thinking twice. I see opportunity everywhere and won't be stopping, I’m here to stay. It’s going to be an exciting new year.

Gone are the days when you could buy any old house in Canterbury and it would make money.  Yes, in the past, anything in Canterbury that had four walls and a roof would make you money because since WW2, property prices doubled every seven years … it was like printing money – but not anymore.

True, since January 1997, the average price paid for a Canterbury flat/apartment has risen from £50,990 to today’s current average of £201,867 in the city, an impressive rise of 296% and terraced/town house have risen in the same time frame, from £65,679 to £252,147, an similar rise of 284%. However, look back to 2005, and in that year, the average flat was selling for £152,071, meaning our Canterbury landlord would have seen a modest rise of 33% and the terraced owner would have seen an increase of 43%, as they were selling for on average £176,885 ... not bad until you consider inflation.

Since 2005, then inflation, i.e. the cost of living, has increased by 33.4%. That means to retain its value, Canterbury terraced property bought for £176,885 in 2005 needs to be worth £235,909 today. Therefore, our landlord has seen the ‘real’ value of his property only increase by 9.6% (i.e. 43% less 33.4% inflation).

The reality is, since around 2004/2005 we haven’t seen anything like the capital growth in property we have seen in the past and it’s not predicted to grow at the rates it has previously done either. So it is high time anyone considering investing in property stopped believing the hype and did some serious research using independent investment expertise. You can still make money by buying the right Canterbury property at the right price and finding the right tenant. However, remember, investing in Canterbury property is not only about capital growth, but also about the yield (the return from the rent). It’s also about having a balanced property portfolio that will match what you want from your investment – and what is a ‘balanced property portfolio’? Well we discuss such matters on the Canterbury Property Blog ... if you haven’t been, then it might be worth a few minutes of your time?

Tuesday, 23 February 2016

34.7% of Canterbury tenants in the private rented sector are on Housing Benefit

“What does the ideal Canterbury tenant look like?”, asked one of my landlords from Harbledown the other day, to which he carried on before I could reply, “Let me guess, a professional couple, both in their 30’s, flawlessly tidy, pays their rent early, doesn’t complain or fuss, who has no plans to move and cheerfully accepts annual rent rises”.
Before I can answer that question properly, I have always believed all a landlord wants (and expects) of their tenants is to pay their rent on time and look after the property as if it were their own. In return, the landlord should provide a property that is warm, clean, modern and damp free and sort any issues (such as repairs) quickly and without fuss. 
Back to the tenants – tenants tend to fall into several groups ... 20 something professionals; young and middle aged families; corporate tenants (i.e. their employer finds their employee a house to live in); students; older singles/couples and housing benefit claimants – and they come with different needs and wants. So choosing who best suits your Canterbury property – and steering clear of bad tenants – is a big factor in making property investment a success.
One topic that I am often asked is should they, as a landlord, accept tenants on housing benefit?
It might interest the landlords of Canterbury that of the 10,665 private rented properties in the local council area, 34.7% of the tenants of those properties are on some form of housing benefit.
(3,709 properties to be exact). I know many landlords have suffered late rent payments with tenants on benefits, especially since 2008, when local authorities started paying housing benefit to tenants rather than directly to the landlords, but you can’t ignore the fact that housing benefit tenants make up a significant proportion of the Canterbury rental population. My opinion is that the final choice of accepting such tenants has to be the landlords but you can’t tar every tenant with the same brush (I will always give you a balanced opinion if ever asked).
Interestingly, it might surprise some readers of the Canterbury Property Blog, when we compare Canterbury to the national picture, Canterbury’s Housing benefit claimants are lower, as nationally a higher proportion of private tenants claim the benefit. Nationally, 39.2% of the tenants of the 3,891,467 rental properties in Great Britain claim some form of housing benefit (i.e. 1,526,915 properties).
Now, let us look at the occupations of Canterbury tenants, which makes even more fascinating reading. Of the 10,665 privately rented properties in the Canterbury area, 7,681 head tenants (the head tenant being classified as the head of the household) are in employment (the other 2,984 rental property head tenants either being retired, long term sick, students or job seekers).
Splitting those 7,681 head tenants down into their relevant professions, 3,076 of them are Managers, Directors, Senior Officials, Professional or Technical Professions, 551 in Administrative and secretarial occupations, 857 in Skilled Trades, 823 in the Caring, Leisure and other service occupations, 886 Sales and Customer Service Occupations, 421 Process, Plant and Machine Operatives and finally, 1,067 in Elementary Occupations.
The one thing I have always known anecdotally, but until I did my research, never had anything to back it up with, was the high proportion of professionals and skilled trades renting property in Canterbury – intriguing! Maybe in future articles, I will look deeper into the corporate tenant market, young and middle aged families, students and older persons rental markets.... but in the meantime, if you want more news, views and commentary about the Canterbury property market, there are many similar articles like this on the Canterbury Property Blog .

Thursday, 18 February 2016

Are the streets of Canterbury paved with gold?

Whilst I sometimes ‘harp on’ about the merits of the Canterbury property market and why it’s such a great place to invest, it’s a real (and pleasant) surprise to get another endorsement by none other than the property correspondent at The Times, Ruth Bloomfield!

Whilst I would love to say that it was my ‘eagle eyes’ that spotted this ground breaking revelation, I am delighted to say that it was one of my blog readers, (whom may I also add is one of our long established Canterbury Landlords) who brought the article to my attention.
In the recent article (Friday 12th February) Ruth Bloomfield looks further afield than London and offer her ‘top tips’ for growth, based upon various pieces of research that she has been studying.
One piece of research, from JLL, first of all looks at Manchester, predicting property prices will increase by 5.5% this year. The researcher, Adam Challis also points out that Manchester is the ‘out and out’ second economic city of the UK. This it may be, but at 5.5% growth I’m not too sure that many investment Landlords are going to get very excited at such a prospect! Interesting to note that Mr Challis, then takes a punt at Southampton, where again he has ‘high hopes’ and again, will rise by 5.5%. We then get another ‘drum roll’ as we head back up North to Liverpool and (wait for it)…….. it’s a growth of 5%. I know what you’re thinking…..”does it get any better than this, because these figures don’t quite excite me”.
Ruth Bloomfield then takes a look at further research that’s been made by the esteemed agent Savills, who recommends focusing on the 20 key cities and they say that the ones to watch are the ‘southern university cities. Now it gets interesting I hear you say! Quite rightly they first pick up on the two main University cities in the UK, i.e. Cambridge and Oxford, whose property values have increased by 10.4% and 9.3% respectively. What is of further interest, the lovely lady from Savills, Sophie Chick (what a great name!) then starts to look further afield and she tips Canterbury as “within commuter distance of London, a beautiful city and, comparatively, excellent value, with average property prices of  £269,000.00”. This is further endorsed with a property value growth of 8.6% in the past 12 months.
So there you have it! Great city, great place to invest in. That’s being said, rest assured that despite what others maybe telling you, the streets of Canterbury are not ‘paved with gold’….. tread with care and if you need any advice, give me a call!

Wednesday, 17 February 2016

Canterbury Landlords count the cost of a Tory Election win

Can you remember 10.05pm on Thursday, 7th May 2015 ... with the shock news that BBC Exit Polls suggested the Conservatives would be returned with majority? The middle classes in Tyler Hill and Fordwich exhaled a huge sigh of relief, as Canterbury landlords, faced with rent controls from Red Ed and the Labour Party, now had something to cheer about as the Tory’s were always considered to be a political party that accepted the importance of the rental market, supported its development while properly targeting the lawbreaker landlords renting out below standard rental accommodation.
Since May though, George Osborne announced future rises in stamp duty for buy to let landlords and a change in the interest relief on buy to let mortgages, some people have started to question that loyalty. However, things could have been a lot worse for Canterbury landlords as previous ideas of making landlord’s pay more tax was the idea (which was seriously considered) of increasing Capital Gains Tax rates to the landlord’s own income tax levels. If Landlords would have had to pay capital gains tax of 40% to 45% on any uplift in value, I can tell you here and now, that would have made investing in property a non-starter for almost everyone.
However, I will admit the loss of mortgage higher rate tax relief will make a number of properties not stack up financially. The new rules are likely to slow demand in the Canterbury housing market, which is in fact good news for the other landlords, as there is less competition from 'amateur' landlords offering too much.
Just a thought, but making Canterbury landlords think twice and
run their numbers more cautiously is not such a bad thing.
So looking at the numbers, the December figures have just been released and they show a growth of property values in Canterbury of 0.5% over the month of November. That figure doesn’t surprise me due to the time of year. It’s quite dangerous to look at one month in isolation, so looking at a more medium term view, over the last 12 months, property values in Canterbury have risen by 7.7%, not bad when you consider inflation is running at -0.1%.
However, regular readers of the Canterbury Property Blog know my passion for looking deeper into the stats. The really interesting information is the value growth, but what types of property are actually selling in Canterbury?  Looking at all the properties sold, as recorded by the Land Registry, within 2 miles of the centre of Canterbury in September 2015 (this data always runs a couple of months behind the house price data) compared to September 2007 (a couple of months before the credit crunch started to bite and the subsequent property crash).

Sept 2007
Sept 2015
Detached in Canterbury
Semis in Canterbury
Terraced Houses in Canterbury
Apartments / Flats in Canterbury

Now I have mentioned in previous articles that the numbers of properties selling in the city has certainly dropped post 2008, but what amazed me were the drop in the number of terraces and apartments selling in Canterbury compared to the sales of detached and semi’s properties, which have increased considerably.
Less properties are selling than last decade in Canterbury
and the types of properties selling have changed ...
interesting times ahead for the Canterbury Property market!
Therefore, all I can say to the landlords of Canterbury is do your homework, make sure the numbers do stack up, take advice and opinion from professionals and above all, for those of you planning to add to your portfolio, buy the right property at the right price. One place for such advice and opinion on the Canterbury Property market is the Canterbury Property Blog

Tuesday, 9 February 2016

Where will Canterbury Property Prices be by 2021?

I was having lunch the other day at CafĂ© Rouge on Long Market in Canterbury, with a local Canterbury solicitor friend of mine, when the subject of property came up. He asked me my thoughts on the Canterbury property market for the next five years.  Property prices are both a British national obsession and a key driver of the British consumer economy.  So what will happen next in the property market? So here is what I told him, and now wish, my blog reading friends, to share with you.
Before I can predict what will happen over the next five years to Canterbury house prices, firstly I need to look at what has happen over the last five years.  One of the key drivers of the housing market and property values is unemployment (or lack of it), as that drives confidence and wage growth – key factors to whether people buy their first house, existing homeowners move up the property ladder and even buy to let landlords have an appetite to continue purchasing buy to let property.
When the Tory’s came to power in May 2010, the total number of people who were unemployed in City stood at 1,507 (or 3.1% of the working age population in Canterbury parliamentary constituency). Last month, this had dropped to 676 people (or 1.3% of the working age population).
As the Canterbury job market has improved with better job prospects, salaries are rising too, growing at their highest level since 2009, at 3.4% per year in the private sector (as recently reported by the ONS).  That is why, even with the turbulence of the last few years, property values in the Canterbury area are 18.0% higher today than they were five years ago.
Many home occupiers have held back moving house over the past seven to eight years following the Credit Crunch but with the outlook more optimistic, I expect at least some to seize the opportunity to move home, releasing pent up demand as well as putting more stock onto the market. With a more stable economy in the City, this will, I believe, drive a slow but clearly defined five year wave of activity in home sales and continued house price growth in Canterbury.

I forecast that the value of the average home

in Canterbury will increase by 22.4% by 2021

22.4% might sound optimistic to some, but according to Land Registry, values are currently rising in Canterbury at 8.2% year on year, I believe my forecast to be fair, reasonable and a reflection of both positive (and negative) aspects of the local property market and wider UK economy as whole.
However, it wouldn’t be correct not to mention those potential negative issues as I do have some slight concerns about the future of Canterbury housing market.  The number of properties for sale in Canterbury is lower than it was five years ago, restricting choice for buyers (yet the other side of the coin is that that keeps prices higher). Interest rates were being predicted to rise around Easter 2016, but now I think it will be nearer Christmas 2016 and finally the new buy to let taxation rules which are being introduced between 2017 and 2021 (although choosing the right sort of property / portfolio mix in Canterbury will, I believe, mitigate those issues with the next taxation rules).
I am telling the landlords I speak to, that with interest rates at their current level 0.5%, the cash in your Building Society Passbook is going to grow so slowly that it might as well be kept under their bed. Property prices, by contrast, have rocketed over the years, even after the property crashes, far outstripping bank accounts and inflation.
So my final thought ...  property is a long term investment, it has its ‘up and downs’ but it has always outperformed, in the long term, most investments. Those in their 40’s and 50’s in Canterbury would be mad not to include property in their long term financial calculations. 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 ...

Tuesday, 2 February 2016

What does 2016 have in store for the Canterbury Property Market?

Canterbury house prices up or Canterbury house prices down? ... and if so, by how much? Those of you who read the Canterbury Property Blog will know I am not the sort of person who pulls punches nor someone who ever fails to give a forthright and straight talking opinion – so here are my thoughts for the 9,236 Canterbury homeowners and landlords.
The average Canterbury property is 8.2% higher today than it was a year ago, which doesn’t sound a lot, but when you consider inflation is currently running at -0.1% (i.e. consumer/retail prices are dropping) and average salary growth is only around 2.5% pa, this is bad news for first time buyers as property affordability continues to decrease (although I was reading in The Times the other day that wage inflation (i.e. salary growth) is showing signs of weakening).
Some commentators have said the higher stamp duty taxes announced a few months ago in the Autumn Statement for buy to let landlords, concerns over first time buyer affordability and the outlook of UK interest rate rises in 2016 will really dampen the property market. I hope you all read my previous article about what the new stamp duty rule changes would REALLY mean for Canterbury landlords in my blog, but I believe the real issue in the Canterbury property market is the shortage of property to buy, as people either worry there will be no suitable house to move to, or cannot afford to upgrade. However, on the supply side, Mr Osborne said in his Autumn Statement that he will change the planning laws to ensure the government meets the pledge made at the General Election (back in May) of 200,000 new homes a year.  All I can say is .. good luck George hitting those numbers!
Why? Because houses take years to build .. not months .. so George and his fabled house building aside .... where does that leave us in Canterbury in 2016?
Well, talking of supply ... whilst Mr Osborne builds his properties (and let’s be honest - a week doesn’t go by without him being filmed on a building site with a high viz jacket and hard hat building a house here and there!), let us look at the shortage of properties for sale. Back in February 2011, 443 properties were for sale in Canterbury .. today that figure is 273. On the face of it, this means there is less choice for Canterbury buyers – but it also means with a restricted supply of properties for sale .. it keeps property prices high for Canterbury house sellers.
Everything isn’t all doom and gloom though ... again back in February 2011, the average property in Canterbury took 115 days to find a buyer .. latest figures state this has dropped to 89 days .. a drop of 23% in how long it takes to find a buyer. However, when you delve even deeper, the best performing type of property today in Canterbury is the 4 bed, which only takes 70 days to find a buyer (on average) compared to the 2 bed, which takes 104 days. It just goes to show, even though the average has dropped since 2011, how varied that change has been!
So, back to the question everyone is asking .... What will happen to property values in Canterbury in 2016?  I am going to suggest they will rise between 7% and 8% ... nothing out of the ordinary, but unless something cataclysmic happens in the world, 2016 will be like 2015! For more thoughts, opinions and views on the Canterbury property market, visit the Canterbury Property Blog –