Tuesday, 29 March 2016

£250,000 inheritance - Is buying Canterbury Property still the best place for my windfall?

I had an interesting email from someone in Canterbury a few weeks ago that I want to share with you (don’t worry I asked his permission to share this with you all). In a nutshell, the gentleman lives in Sturry, he is in his mid 60’s and still working. He has a decent pension, so that when he does retire in a couple of years’ time, it will give him a comfortable life. He had recently inherited £250,000 from an elderly aunt. One option he told me was put it into a savings account. The best he could find was a 2 year bond with the Post Office which paid 1.9%; meaning he would get £4,750 in interest a year. One of his other options was to buy a property in Canterbury to rent out and he wanted to know my thoughts on what he should buy, but he had concerns as he didn’t want to take a mortgage out at his time of life. He was also worried about all the tax changes he had read about in the papers for landlords.

Notwithstanding the war on Canterbury landlords being waged by George Osborne, the attraction of bricks and mortar endures for many. As our man is a cash buyer, he would not have to deal with the intricate cut to mortgage interest tax relief that will diminish, or even eradicate, the profits of many Canterbury landlords. It’s true he would face the extra 3% in stamp duty to buy a second property, but with some good negotiation techniques, that could soon be mitigated.

I told him that buying a Canterbury buy to let property is all about the total return on investment. True, he could put the money in the Post Office bond and receive his interest of £4,750 a year or, as he rightly suggested, invest in property in Canterbury. The average yield (yield being the equivalent of the interest rate on the property) at the moment in Canterbury is 3.74% per annum, meaning our potential F.T.L (First Time Landlord) should be able to, depending on what he bought in the city, earn before costs £9,350 a year. (However, I told him there are plenty of landlords in Canterbury earning half as much again (if not more), if he was willing to consider more specialist investment types of properties – again, if you want to know where – look at my blog or drop me an email).

The bottom line is that the success of investing in Canterbury buy to let property versus a savings account with the Post Office (or whatever Bank or Building Society is offering the best rate) will depend on the performance of those assets. Unlike with a savings account, with property the capital you invested can also go up (and yes, it can go down as well – more of that in second). Property values in Canterbury have risen in the last twelve months by 8.4% meaning, that if our chap had bought a year ago, not only would he have received the £9,350 in rent, but also seen an uplift of £21,000 …meaning his overall return for the year would have been £30,350 (not bad when compared to the Post Office!).

..  but the doom mongers amongst you will say, property values can go down, as they did in 2008, and in 1988 and 1979. Yes, but after 1979 prices had bounced back to their ’79 levels by 1984 and went on to grow an additional 58% in the following four years. Then again, they dropped in 1988 and did take 13 years to reach back to those ’88 figures, but the following six years (between 2001 and 2007) they then increased by an additional 66%. Now, according to the Land Registry, average property values in Kent currently stand 10.42 below the January 2008 level, and anecdotal evidence suggests that in the nicer parts of Canterbury, we are well above these sorts of levels. Therefore, all this talk of property crashes is unfounded.

… and what would that £250,000 get you in Canterbury? A decent 2 bed terrace in St Dunstans, a lovely 3 bed end terrace in Harbledown or a nice 2 bed apartment in Flagstaff Court, South Canterbury .. in fact, the world is your oyster. But which Oyster? Well, my blog reading friends, if you want to read similar articles like this and what I consider to be the very best of buy to let deals in Canterbury, irrespective of which agent is selling it, then you need to visit the Canterbury Property Blog www.canterburypropertyblog.com

Wednesday, 23 March 2016

8.4% rise in Canterbury Property Values adds weight to the City’s Housing Crisis

Canterbury’s continuing housing shortage is putting the City’s (and the Country’s) repute as a nation of homeowners ‘under threat’, as the number of houses being built continues to be woefully inadequate in meeting the ever demanding needs of the growing population in the City.   In fact, I was talking to my parents the other day at a family get together; the subject of the Canterbury Property market came up in the conversation (as I am sure it does at many family parties in Canterbury) after the weather and politics. My parents said it used to be that if you went out to work and did the right thing, you would expect that relatively quickly over the course of your career you would be buying a house, you would go on holiday every year, and you would save for a pension.   But now things seem to have changed?

Back in the autumn, George Osborne, used the Autumn Statement to double the housing budget to £2bn a year from April 2018 in an attempt to increase supply and deliver 100,000 new homes each year until 2020.  The Chancellor also introduced a series of initiatives to help get first time buyers on the housing ladder, including the contentious Help to Buy Scheme and extending Right to Buy from not just Council tenants, but to Housing Association tenants as well.

Now that does all sound rather good, but the Country is only building 137,490 properties a year (split down 114,250 built by private builders, 21,560 built by Housing Associations and a paltry 1,680 council houses).    If you look at the graph (courtesy of ONS), you will see nationally, the last time the country was building 230,000 houses a year was in the 1960’s.


How George is going to almost double house building overnight, I don’t know, because using the analogy of a greengrocers; if people want to buy more apples (i.e. houses) in a greengrocers’ shop, giving them more money (i.e. with the Help to Buy scheme) when there's not enough apples in the first place doesn't really help.

Looking at the Canterbury house building figures, in the local authority area as a whole, only 260 properties were built in the last 12 months, split down into 250 privately built properties and 10 housing association with not one council house being built.   This is simply not enough and the shortage of supply has meant Canterbury property values have continued to rise, meaning they are 8.4% higher than 12 months ago, rising 0.7% in the last month alone.

I was taught at school (all those years ago!), that it is all about supply and demand, this economics game.   The demand for Canterbury property has been particularly strong for properties in the good areas of the City and it is my considered opinion that it is likely to continue this year, driven by growing demand among buyers (both Canterbury homebuyers and Canterbury landlords alike). You see Canterbury’s economy is quite varied, meaning activity is expected to remain relatively strong into the early summer of 2016, especially as some Canterbury buy to let landlords try to complete purchases ahead of the introduction of new stamp duty rules in April.

.. and of supply, well we have spoken about the lack of new building in the City holding things back, but there is another issue relating to supply.   Of the existing properties already built, the concern is the number of properties on the market and for sale.   The number of properties for sale last month in Canterbury was 289, whilst 6 months ago, that figure was 315, whilst three years ago it stood at 487… a massive drop!

With demand for Canterbury property rising, minimal new homes being built and less properties coming onto the market, that can only mean one thing ... now is a good time to be a homeowner or landlord in Canterbury.   For more articles like this, please visit the Canterbury Property Market Blog www.canterburypropertyblog.com


Tuesday, 15 March 2016

4,380 Canterbury Homes bought by private landlords in the last 20 years – Is this the end for first time buyers?

There I was, out with friends at Howletts Wild Animal Park last weekend, when a smart gentleman approached me. ‘Hello’, he said, ‘You are the person writes that Property Blog in the Canterbury Times aren’t you? We have met before at the Business Networking event in Canterbury a few months ago’. I did then recognise him and, whilst I won't mention his name, he runs a small but perfectly formed well known independent retailers in the city ... It’s amazing who you see when out walking! Anyway, I was at a loose end for five or ten minutes as the other half was sorting things with our friends, so we had a chat.

He wanted to know my thoughts on the future of the Canterbury property market, and I would now like to share with you that conversation, my Canterbury property Blog reading friends. People are always going to need a roof over their heads and somewhere to live will never go out of fashion – it’s a necessity for every single person. The 22 to 30 year olds of the city have a choice to what type of roof they have ... they rent from the Council, they can rent from a private landlord or finally they can get a mortgage and buy one. In the 1970’s/80’s and 90’s, the expected thing was to save like mad for two years for the deposit (going without luxuries, i.e. mobile phones, ipads, brand new car, two overseas holidays a year etc etc etc) whilst living at home or renting a cheap two up two down, then buy your first house. However, more recently fewer Canterbury youngsters have been buying, choosing to rent instead – mainly from private landlords (as Councils have been selling off council housing on the Right to Buy Schemes). The numbers are truly staggering ... and I want to share them with you.

Roll the clock back 20 years and Canterbury was a different place. There were 16,057 households in Canterbury and 9,029 of those were owner occupied. Move to the present, and with all the building in the city, the total number of households has increased by 23.6% to 19,850 and quite surprising (to me at least), the number of owner-occupiers has only increased to 9,236 (although as a proportion, it is 46.5% compared to 56.2% twenty years ago).

However, it’s rented sector that is truly fascinating … twenty years ago, only 1,575 properties were privately rented in Canterbury ... and now its 5,955, a rise of 4,380.
The twentysomethings of Canterbury housing difficulties haven’t been helped by the local authority selling off council housing, with the number of council houses dropping from 3,119 to 2,661 over the same twenty-year period. Demand for decent rented property remains high, as Cameron’s much vaunted house building program is years away and has decades of under investment to catch up on before it starts to affect demand. Even with the Buy to Let tax rule changes over the coming few years (which will see the maximum tax relief available to landlords drop from 45% to 20%), private landlords still have an important role to play in housing the people of Canterbury and those who educate themselves and treat it as a business will survive and prosper.
The best way Canterbury landlords can protect their income from property (and mitigate the affects of the tax rises) is to keep the homes they let out in Grade A condition. I have found, especially over the last three or four years, Canterbury tenants have ever growing demands from their rental property, but many are prepared to pay ‘top dollar‘ for houses and apartments that meet their high expectations. You must not forget, letting property in Canterbury (in fact anywhere) is a business, so all private landlords should also seek the advice, opinion and commentary of property professionals.
... And just as the other half had sorted lunch arrangements with our friends, he asked ‘What of the news of Stamp Duty changes for Landlords coming in April?’ My thoughts are with such low supply (i.e. numbers of property for sale), and high demand it is hard to imagine Canterbury property values will see much impact – but I predict, ever so slightly, the proportion of owner occupiers should increase slightly compared to buy to let landlords in the coming decade as the the housing market should return to balance. For more in-depth thoughts on the Canterbury Property Market, which have a library of similar articles like this, all on the Canterbury Property Market, please visit my blog – www.canterburypropertyblog.com

Monday, 14 March 2016

Landlords Information Evening - Monday 21st March 2016 - Canterbury

Running from 17.30hrs until 20.30hrs on Monday 21st March 2016, is a really good Landlords 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.

This event will be covering such issues as Article 4 Direction, Right to Rent plus an all important update on Private Rented Sector Legislation and Regulations

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

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

Monday, 7 March 2016

Private Renting in Canterbury increases by 160% in 20 years

You find me in a reflective mood today as I want to talk about the future of investing in property in Canterbury. The truth is that we have got fat and lethargic, with many people having mistaken the ever rising Canterbury (and in fact the whole of the UK) property market since the 1960’s as the eternal gift that kept giving as property prices constantly rose and doubled every five to seven years.
The days of making money from property
as easy as falling off a log, like taking candy
from a baby, are sadly over my Canterbury Property Blog
reading friends
Whilst George Osborne has decided now is the time to milk the ‘Golden Cow’ of UK’s private landlords, with changes in taxation for buy to let property, many pundits are predicting the end of buy to let as we know it. However, it is still possible to make a reasonable, profitable and safe return on property with these changes. You see, I have always seen investing in the Canterbury buy to let market (as I would anywhere in the UK), as I might see Mother Nature, creating some truly wonderful stunning warm weather but at the same time, she will bite, creating catastrophic situations such as snowstorms and hurricanes.  You need to study the market, take advice and opinions from many people and then decide what the proverbial property weather will be … remember, tenants will always want a roof over their head and I don’t see the HM Government building the millions of houses required to house them?
Nobody knows the future, and yes people can predict but I wouldn’t be afraid of this change .. because as a famous French proverb says, (I told you I was in a reflective mood today), ‘the more things change, the more they stay the same’.  I mean, no one could have predicted how the property market has changed in Canterbury over the last couple of decades? Looking specifically at the Canterbury Parliamentary Constituency, twenty years ago, 26,512 households (meaning 68.33% of property) was owned and only 3,103 households were privately rented (meaning 8% of property was rented out by private landlords). Roll the clocks on twenty years and the change has been seismic …. Now 27,121 of properties in the Constituency are home-owners (a drop to only 62.96% being owner occupied) and the jump in private renting has been out of this world, as 8,959 properties are now privately rented proportionally 20.8%). (NB Neighbouring Constituencies show similar changes as well)
Who would have predicted in 1995 the private rental sector
in Canterbury would have grown by 160% in the proceeding 20 years?
Also, if you had asked someone in 1995 to predict what would happen to property values over the proceeding 20 years (i.e. between 1995 and 2015), they might have predicted similar growth to the growth experienced over the previous 20 years (i.e. between 1975 and 1995), which was a very impressive 351.55%. Yes, property values in Canterbury have increased over the last 20 years (between 1995 and 2015), but by a more modest 240.77% (and most of that can be attributed to house price growth between 2000 and 2006.)
The property market is constantly changing and buy to let for too long has been heavily dependent solely 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 doom-mongers and see it as bringing many opportunities. You might need to change your buy to let benchmarks, your approach 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.
The advice I give to my landlords, and 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 …. www.canterburypropertyblog.com