Monday, 26 September 2016
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 – www.canterburypropertyblog.com
Wednesday, 14 September 2016
A few weeks ago I was asked a fascinating question by a local Councillor who, after reading the Canterbury Property Blog, emailed me and asked me – “Are Canterbury Landlords meeting the challenges of tenanted families bringing up their families in Canterbury?”
What an interesting question to be asked.
Irrespective of whether you are tenant or a homeowner, to bring up a family, the most important factors are security and stability in the home. A great bellwether of that security and stability in a rented property is whether tenants are constantly being evicted. Many tenancies last just six months with families at risk of being thrown out after that with just two months’ notice for no reason.
Some “left leaning Politian’s” keep saying we need to deal with the terrible insecurity of Britain’s private rental market by creating longer tenancies of 3 or 5 years instead of the current six months. However, the numbers seem to be telling a different story. The average length of residence in private rental homes has risen in the last 5 years from 3.7 years to 4 years (a growth of 8.1%), which in turn has directly affected the number of renters who have children. In fact, the proportion of private rented property that have dependent children in them, has gone from 29.1% in 2003 to 37.4% today.
Looking specifically at Canterbury compared to the National figures, of the 6,320 private rental homes in Canterbury, 1,032 of these have dependent children in them (or 16.3%), which is interestingly (although expected) below the National average of already stated 37.4%.
Even more fascinating are the other tenure types in Canterbury…
- 36.3% of Social (Council) Housing in Canterbury have dependent childre
- 38.6% of Canterbury Owner Occupiers (with a Mortgage) have dependent children
- 7.3% of Owner Occupiers (without a Mortgage) have dependent children
Although, when we look at the length of time these other tenure types have, whilst the average length of a tenancy for the private rented sector is 4 years, it is 11.4 years in social (council) housing, 24.1 years for home owners without a mortgage and 10.4 years of homeowners with mortgages.
Anecdotally I have always known this, but this just proves landlords do not spend their time seeking opportunities to evict a tenant as the average length of tenancy has steadily increased. This noteworthy 8.1% increase in the average length of time tenants stay in a private rented property over the last 5 years, shows tenants are happy to stay longer and start families.
So, as landlords are already meeting tenants’ wants and needs when it comes to the length of tenancy, I find it strange some politicians are calling for fixed term 3 and 5 year tenancies. Such heavy handed regulation could stop landlords renting their property out in the first place, cutting off the supply of much needed rental property, meaning tenants would suffer as rents went up. Also, if such legislation was brought in, tenants would lose their ‘Get Out of Jail card’, as under current rules, they can leave at any time with one months’ notice (with a ‘periodic tenancy’) not the three or six-month tenant notice suggested by some commenters.
Finally, there is an extra piece of good news for Canterbury tenants. The English Housing Survey notes that those living in private rented housing for a long periods of time generally paid less rent than those who chopped and changed.
Tuesday, 6 September 2016
Canterbury is already in the clutches of a population crisis that has now started to affect the quality of life of those living in Canterbury. There are simply not enough homes in Canterbury to house the greater number of people wanting to live in the city. The burden on public services is almost at breaking point with many parents unable to send their child to their first choice of primary or secondary school and the chances of getting a decent Dentist or GP Doctor Surgery next to nil.
Well that’s what the papers would say.. but let’s look at real numbers, and in particular my specialist subject of Canterbury Property, with the housing issue in Canterbury. To start with, the UK has roughly 1,065 people per square mile – the second highest in Europe. The total area of Canterbury itself is 4.950 square miles and there are 54,800 Canterbury residents, meaning …
11,000 people live in each square mile of Canterbury, it’s no wonder we appear to be bursting at the seams!
… but yet again, newspapers, politicians and property market bloggers quote big numbers to sell more newspapers, get elected or get people to read their blog (I recognise the irony!). A square mile is enormous, so the numbers look correspondingly large (and headline grabbing). Most people reading this will know what an ‘acre’ is, but those younger readers who don’t, it is an imperial unit of measurement for land and it is approximately 63 metres square.
In Canterbury, only 15.79 people live in every acre of Canterbury … not as headline grabbing, but a lot closer to home and relative to everyday life, and if I am being honest, a figure that doesn’t seem that bad.
Yet, the issue at hand is, we need more homes building. In 2007, Tony Blair set a target that 240,000 homes a year needed to be built to keep up with the population growth, whilst the Tory’s new target since 2010 was a more modest 200,000 a year. However, since 2010, as a country, we have only been building between 140,000 and 150,000 houses a year. So where are we going to build these homes .. because we have no space! Or do we?
Well, let me tell you this fascinating piece of information I found out recently in an official Government report. Looking specifically at England (as it is the most densely populated country of the Union), all the 20 million English homes cover only 1.1% of its land mass. That is not a typo, only one point one per cent (1.1%) of land in England is covered by residential property. In more detail, of all the land in the Country -
- Residential Houses and Flats 1.1%
- Gardens 4.3%
- Shops and Offices 0.7%
- Highways (Roads and Paths) 2.3%
- Railways 0.1%
- Water (Rivers /Reservoirs) 2.6%
- Industry, Military and other uses 1.4%
As a country, we have plenty of space to build more homes for the younger generation and the five million more homes needed in the next 20 years would use only 0.25% of the country’s land. Now I am not advocating building massive housing estates and 20 storey concrete and glass behemoth apartment blocks next to local beauty spots such as Westgate Gardens or the Dane John Gardens, but with some clever planning and joined up thinking, we really do need to think outside the box when it comes to how we are going to build and house our children and our children’s children in the coming 50 years in Canterbury. If anyone has their own ideas, I would love to hear from you.
In the meantime, if you would like to read other articles about Canterbury Property Market, please visit the Canterbury Property Market Blog www.canterburypropertyblog.com