Canterbury Property Market in Crisis : Who is to blame?

‘An Englishman’s Home is his Castle’ is the phrase that was coined in Victorian times as the UK has a reputation for being a country of home owners  .. but the truth could be further from the point, because in a league of the top 46 economic nations of the world, where owning your property is permissible, the UK is only ranked no.37.

 

As I mentioned a couple of weeks ago, at the end of the First World War, 77% of people rented their home (the vast majority renting from a private landlord as Council Housing was still very much in its infancy). Homeownership rose very slowly in the 1920’s and started to grow as the economy grew after the Great Depression. However, after the Luftwaffe had flattened huge swathes of housing in the early 40’s, the priority was to get people into clean and decent accommodation .. so Local Authority’s (Councils) took up the baton and they built large council estates in the 1950’s and 1960’s.

 

As the UK economy got back on its feet in the middle part of the 20th Century and wages rose, people decided they wanted to own their own home instead of renting. Throughout the post war decades, it became easier to secure a mortgage. Interestingly, by 1977, 61.6% of 30 to 34 year olds were owner occupiers with a mortgage compared to 8.7% of 30 to 34 year olds being in private rented accommodation (the remaining either being in council housing or living with friends or family). Ten years later, in 1987, we saw some significant growth in homeownership, as 68.2% of 30 to 34 year olds had a mortgage and only 4.6% of people privately rented. A decade later and there wasn’t much change as, in 1997, the homeownership figure was 68.3% but private renting had jumped to 12.1% in the same 30 to 34 year old age group.

 

Move on another ten years to the 2007 figures, and this showed a slight drop in homeownership to 65.8% but renting had continued to increase to 18.7% (in the 30 to 34 year old age group). The latest set of figures is for 2014, and only 47.2% of 30 to 34 year olds had a mortgage and an eye watering 33.4% of 30 to 34 year olds privately rent.

 

When we look at the Canterbury figures of homeownership, looking back to 1991, 68.33 % of Canterbury households were owned by the homeowner, whilst 8% of Canterbury households were privately rented, whilst the 2011 census showed home ownership in Canterbury had dropped to 62.97% and private rented had increased to 20.8%. Much of the recent rise in the occurrence of private renting in Canterbury since the turn of the Millennium is not because property has become more expensive, but the fact these 30 somethings haven’t got a council house to move into (because they were all sold off) – so they have to rent. The selling of council housing in the 1980’s (a subject I have talked about in a previous article in the Canterbury Property Market Blog) artificially grew homeownership in the 1980’s, but as these people have got older, the younger generation didn’t have the same opportunity to buy their council house in the 1990’s, 2000’s or 2010’s. That is why, unless the council start building council houses by the acre, and hundreds of acres, private renting will continue to grow in Canterbury.

 

So if you want blame anyone .. blame the Grocer’s daughter from Grantham – Mrs T …. but before you do – do remember in the 1970s, the UK was called the "sick man of Europe" by critics of the UK government, because of industrial strife and poor economic performance compared to other European countries culminating with the Winter of Discontent of 1978/9 and if it hadn’t been for her we wouldn’t be where we are today.

Rents in Canterbury rise by 2.9% in the last year

I was reading the Sunday Papers, as is my want and, when reading the financial pages, it was announced UK inflation had increased to its highest level in a year. Inflation, as calculated by the Government’s Consumer Prices Index, rose by 0.3% over the last 12 months.  The report said it had risen to the those ‘heady’ levels by smaller falls in supermarket and petrol prices than a year ago. If you recall, in early 2015, we had deflation where prices were dropping!

 

So what does this mean for the Canterbury property market ... especially the tenants?

 

Back in November, the Office of National Statistics stated average wages only rose by 1.8% year on year, so when adjusted for inflation, Canterbury people are 1.5% better off in ‘real’ terms.   Great news for homeowners, as their mortgage rates are at their lowest ever levels and their spending power is increasing, but the news is not so good for tenants.

 

The average rent that Canterbury tenants have to pay for their Private Rental Properties in Canterbury (i.e. not housing association or council tenants) rose by 2.9% throughout 2015, eating into most of the growth.  2015 wasn’t a one off either.  In 2014, rents in Canterbury rose by 2.2% (where salaries only rose by only 0.2%) However, it’s not all bad news for Canterbury tenants, because in 2013 rents rose by 1.8%, (but salaries rose by 2.2%).

 

… and it must be noted that the private rents Canterbury tenants have had to pay for Canterbury property since 2005 are only 20.1% higher, not even keeping up with inflation, which over the same time frame, rose at 27.8% (although salaries were only 22.3% higher over the same time period)

 

More and more, talking to 20 and 30 somethings who rent – it’s a choice.  Gone are the days where owning your own property was a guaranteed path to wealth, affluence and prosperity.    I know keep mentioning Europe, but some of the highest levels of home ownership are in Romania at 96.1%, Hungary at 88.2% and Latvia at 80.9% (none of them European economic dynamos) and even West European countries like Spain at 78.8% and Greece at 74% (and we know both of those countries are on their knees, riddled with national debt and massive youth unemployment).

 

At the other end of the scale, whilst we in the UK stand at 64.8% homeownership, in Europe’s powerhouses, only 52.5% of Germans own a home and only 44% of Swiss people are homeowners.  Looks like eating chocolate, sauerkraut, renting and good economic performance go hand in hand.  Yet, joking aside, home ownership has not always been the rule in the UK.   In 1918, only 23% of people were homeowners, with no council housing, meaning in fact, 77% were tenants.

 

Tenants have choice, flexibility to move, they don’t have massive bills when the boiler blows up, it’s a choice.  Canterbury rents are growing, but not as much as incomes. To buy or not to buy is an enormously difficult decision.   For while buying a Canterbury home is a dream for the majority of the 20 and 30 something’s of Canterbury have, it might not leave them better off in the long run and it isn’t necessarily the best option for everyone.  That is why, demand for renting is only going in one direction – upwards.

Canterbury Property Values rise by 0.8% month on month

I do like to have a coffee at The Sandwich Bar on St Margaret’s Street in Canterbury. Whilst in there, a suited gentleman approached me and asked if I was the person who wrote the newsletters about the Canterbury property market. We ended up having an interesting chat about the local property market, as he was concerned his daughter would never be able to buy her own property, a place in Canterbury she herself can call home.

 

My latest analysis, using the Land Registry and Office of National Statistics, shows that overall, month on month, Canterbury property values increased by 0.8%. The year on year figures showed the value of residential property in Canterbury has increased by 9.0% in the year to the end February 2016, taking the average value of a property in the council area to £227,500.

 

It gets even more interesting when we look at the last few months’ figures and see the patterns that seem to be emerging.

 

February 2016             - a rise of 0.8%

January 2016               - a rise of 0.6%

December 2015            - a rise of 0.7%

November 2015            - a rise of 0.6%

 

We have talked in many recent articles about the lack of properties being built in Canterbury over the last 30 years. This lack of new building has been the biggest factor that has contributed to Canterbury property values still being 246.59% higher than in 1995. At the risk of repeating myself, until the Government addresses this issue, and allows more properties to be built, things will continue to get worse as the UK population grows at just under 500,000 people a year (which is a combination of around 226,000 people because of higher birth rates/people living longer and 259,000 net migration) whilst the country is only building 152,400 properties a year – no wonder demand is outstripping supply.

 

Another reason intensifying the current level of property values in Canterbury, is the fact that people aren’t moving home as much as they used to, meaning fewer properties are coming onto the market for sale, so in consequence, there is a lack of choice of property to buy, meaning people thinking of moving are discouraged from putting their property on the market ... thus perpetuating the problem, as the scarcity of possible properties to buy in order to move also deters people from offering their home for sale. This unevenness between demand from would-be purchasers and the number of properties coming on to the market for sale is causing pressures in Canterbury (and the rest of the UK).

 

So what of the future of the Canterbury property market and this man’s daughter? I firmly believe the property market in Canterbury and the country as a whole is changing its attitude about homeownership. Back in the 1960’s, 70’s, 80’s and 90’s, getting on the property ladder was everything. Since the late 1990’s, we as a country (in particular, the young) have slowly started to change our attitude to homeownership. We are moving to a more European model, where people choose to rent in their 20’s and 30’s (meaning they can move freely and not be tied to a property), then inherit money in their 50’s when their property owning parents pass away, allowing them to buy property themselves ... just like they do in Germany and other sophisticated and mature European counties, meaning his daughter will end up owning property, just later in life than we did. So, whatever the vote on the 23rd of June, if you think about it, we might be more European than we think!

 

If you want to read more articles on the Canterbury property market, whether you are Canterbury landlord, Canterbury homeowner, first time landlord or a first time buyer – then visit the Canterbury Property Market Blog… www.canterburypropertyblog.com

55% of Canterbury people Rent - Is that Healthy?

Renting used to be a dirty word in the 60’s and 70’s. You either lived in a ‘Rigsby - Rising Damp’ style bedsit with wood chip on the wall and a coin operated electric meter (that buzzed in the night) or you lived in a council house. In the latter part of the 20th Century, the British were persuaded that rent payments were ‘wasted money’. However, owning often makes less financial sense than renting and as the rate of homeownership is starting to drop substantially, as we roll the clock forward to today, there is no stigma at all to renting .. everyone is doing it. In fact, of the 47,941 residents of Canterbury, 26,463 of you rent your house from either the local authority/social provider (i.e. council house or housing association) or private landlords – meaning 55.19% of Canterbury people are tenants.

The idea of homeownership is deeply embedded in the British soul, in fact 20,317 Canterbury people live in an owner occupied property (or 42.37%). Housing is at the heart of Government policy, as George Osborne has promised 200,000 new properties a year so first time buyers can buy their first home whilst recently changing the tax laws for buy to let landlords. To get votes, Thatcher (and everyone since) ran election campaigns promising everybody their own home, and as a country, we seem to equate homeownership the goal of British life.

So as more and more people are renting nowadays, are we turning to a more European way of living? Well, I believe, as a country, we are. In fact, homeownership could be affecting your health! The UK, according to Bloomberg, is only the 21st healthiest country in the world. Germany is at No.10 and Switzerland at No.4 and homeownership is at 52.5% and 44% respectively in those countries (in the UK it is 64.8%).

In the Canterbury City Council area, 70% of homeowners who own their house outright said they were in ‘very good’ or ‘good’ health whilst, at the other end of the scale, 7.52% said their health was ‘bad’ or ‘very bad’. Looking at renting, the census splits tenants into two types – 68.69% of Canterbury local authority/social tenants said they were in ‘very good’ or ‘good’ health and 11.32% were in ‘bad’ or ‘very bad’ health …

… whilst ‘private rented tenants’ in Canterbury, were the healthiest, as 88.76% of them described themselves in ‘very good’ or ‘good’ health and only 2.99% were in ‘bad’ or ‘very bad’ health

I am not suggesting that low homeownership rates in Switzerland and Germany are directly linked to health, nor, do I expect Brits to all go to Berlin, Interlaken or Düsseldorf and realise how happy people are when they don't need to worry about all the stresses which accompany homeownership. The numbers for Canterbury do go some way to back up the argument (and they are the same across the whole of the UK). Nonetheless I do think that substantially all of the upside to homeownership in recent years has been a function of monumental rising house prices. Now that's come to an end, it's hard to see why anybody would want to buy?

Renting is here to stay in Canterbury and it’s growing incrementally each year. Even with the new tax rules for landlords, buy to let is still a viable investment option for most people in the City. There has never been a better time to buy buy to let property in Canterbury, but buy wisely. Gone are the days that you would make profit on anything with four walls and a roof. Take advice, take opinion, do your homework. One place to do more homework, to read more articles on the Canterbury Property market like this, is the Canterbury Property Blog  www.canterburypropertyblog.com

What would Brexit mean to the 9,200 Canterbury Property owners?

I don’t know about you, but I find if you read the Daily Mail, there are only three topics that make the blood boil of ‘Middle England’. Bureaucracy from Brussels, House Prices and the late Princess of Wales. Ignoring the late Princess if I can for this article, but if we as a country were to unshackle ourselves from the chains of Brussels (the first topic), could we inadvertently effect the second topic and make UK house values drop?

 

If you read all the newspapers, the Brexit debate seems to be focused solely on central London. Many commentators have said Brexit would mean central London would have a lower standing in the world, meaning less people would be employed in Central London, with the implication of lower wages, fewer jobs etc., in Central London ... but we are in Canterbury, not Marylebone, Mayfair or any part of Zone 1 London.

 

Now on the run up to the vote on the 23rd of June, I predict the ‘in’ camp will start to scare homeowners with forecasts of negative equity, and the ‘out’ camp will appeal to the 20 somethings, who have been priced out of the property market with the prospect of a new era of inexpensive housing, should the fears of central London estate agents and developers, who believe the bottom will fall out of the market if we do leave, become real. The only reason the Mayfair’s, Knightsbridge’s, and Kensington’s of central London are attractive to foreign buyers are political and economic steadiness, an open and honest legal system and a lively cultural life. None of that is threatened by Brexit.

 

... But again, we are in Canterbury and central London is 61 miles away. We are hometown to the Kent County Cricket Club, Canterbury Cathedral and Katie Derham, and whilst the central London property market exploded after 2009, that explosion really and honestly didn’t affect the Canterbury property market. So, putting central London aside, what would an ‘in’ or ‘out’ vote really mean for the 9,200 property owners of Canterbury?

 

Initially, over the coming months, on the run up to referendum, I believe it will be like the run up to last year’s General Election. With the short-term uncertainty in the country, quite often, big decisions are put on ice and people are less likely to make big money purchases i.e. buy a property. However, in the four months up to last year’s Election, property values in Canterbury increased by 1.65%, not bad for a country that thought it would get a hung parliament! So that argument doesn’t hold much weight with me.

 

Post vote, should the UK opt to leave Brussels, there would be a much more noteworthy impact. I believe that a vote to stay in the EU would see the Canterbury property market return to a status quo very quickly, but the contrasting result could lead to some changes. The principal menace to the Canterbury (and UK) housing market could be variation (in an upwards direction) in interest rates as a result of a Brexit, which could theoretically see the cost of mortgages grow swiftly, pricing many out of the market … but then two thirds of landlords buy without a mortgage, so that won’t affect them. Also, according to the Bank of England, 80.33% of all new mortgages taken out in 2015 were fixed rate. Looking at all mortgages as a whole, according to the Bank of England, 44% of all UK mortgagees have a fixed rate mortgage, but 56% don’t, so if you aren’t on a fixed rate ... talk to your mortgage broker now, because they can only go in one direction!

 

So in reality, if I really knew what will happen, I wouldn’t be a letting / estate agent in Canterbury, but a City Whiz Kid in London earning millions. However, I suspect whatever decision the electorate of Canterbury and the country as a whole makes, over the long term it won’t have a major effect on the Canterbury property market. We have seen off ‘the end of the world’ credit crunch of 2008/9 and subsequent property crash, the 1988 Nigel Lawson induced post dual-MIRAS property crash, the 1979 Winter of Discontent property crash, the 1974 oil crisis that stimulated another property crash ... hell, we can even go back nearly a century with the 1926 post General Strike slump in property prices...

 

Today, property prices are 246.59% higher than 21 years ago in Canterbury and are 9% higher than 12 months ago. So, make your own decision on 23rd of June 2016 safe in knowledge that whatever the result, there might be some short term volatility in the Canterbury property market, but in the long term (and property investment is a long term strategy) there aren’t enough houses in Canterbury to live in either to buy or rent … and until the Government allow more properties to be built – the Canterbury property market, will be just fine ... even if it has a little blip in the summer, there could be some property bargains on the run up to Christmas to be had!

 

For more advice and opinion on the Canterbury property market, even where those buy to let bargains could be found now ... visit the Canterbury Property Blog www.canterburypropertyblog.com

Only 2,661 Council Houses in Canterbury left – Opportunity or problem?

The ‘Right to Buy’ scheme was a policy introduced by Maggie Thatcher in 1980 which gave secure council tenants the legal right to buy the Council home they were living in with huge discounts. The heyday of Council ‘Right to Buy’ was in the 80’s and 90’s, when 1,719,368 homes in the country were sold in this manner between October 1980 and April 1998. However, in 1997, Tony Blair reduced the discount available to tenants of council houses and the numbers of properties being bought under the Right to Buy declined.So what does this mean for Canterbury homeowners and landlords? Well quite a lot in fact!

Looking at the figures for our local authority, whilst the number of ‘Right to Buys’ have dwindled over the last few years to an average of only 14 ‘Right to Buy’ sales per year, one must look further back in time. Looking at the overall figures, 3,004 Council properties were bought by council tenants in the Canterbury City Council area between 1980 and 1998. Big numbers by any measure and even more important to the whole Canterbury property market (i.e. every Canterbury homeowner, Canterbury landlord and even Canterbury aspiring first time buyers) when you consider these 3,004 properties make up a colossal 32.5% of all the privately owned properties in our area (because in local authority area, there are only 9,236 privately owned properties).

Canterbury first time buyers and landlords can now buy these ex-council properties second hand (or the PC brigade like to call them ‘pre-loved ex–local authority dwellings’) as those original 80’s and 90’s tenants (now homeowners) have more than passed the time of any claw back of the discount they received (council discount was repayable if the first owner sold within a stipulated time period - usually 5 years).

Now let us all be honest, some (not all), but some ex-council properties lack the vital KSA that some landlords crave. The new homes builders know all about KSA (or Kerb-Side-Appeal) as they dress up the exteriors of their new homes to make them more appealing to buyers ... and if you don’t believe me ... why do Show homes exist? Going on the exterior looks of a modern property might be a theoretically good way of choosing a Canterbury buy-to-let property, but in a challenging market, some Canterbury investors are finding a more no-nonsense down to earth approach brings the largest returns.

Yes, the modern stuff being built in Canterbury is lovely, but too many landlords purchase buy to let property solely based on where they would choose to live themselves, instead of choosing with a business head and choosing where a tenant would want to live ... because remember the first rule of buy to let property … you aren’t going to live the property yourself. What an ex-council property lack in terms of KSA, they more than make up for in other ways.  Tenants are more worried about how close the property is to a particular school or family members for child care matter to them far more than the look of a property.

Whilst ex-council properties tend to increase in value at a slower rate than more modern properties, that is more than made up in the much higher yields – and those built between the wars or just after are really well built. Tenant demand for such properties is good since Canterbury property values are so expensive, a lot of people can’t get mortgages to buy, so they will reconcile themselves to renting, meaning there is a good demand for that sort of property to rent. Also, the very fact the council were forced to sell these Canterbury properties in the 80’s and 90’s, means that today’s younger generation who would have normally got a council house to live in themselves, now can’t as many were sold ten or twenty years ago.

So to Canterbury landlords I say this … don’t dismiss ex-council houses and apartments – but remember the 1st rule of buy to let (see above). However, those very same Canterbury landlords should go in with their eyes open and take lots of advice. Not all ex-council properties are the same and even though they have good demand and high yields, they can also give you other headaches and issues when it comes to the running of the rental property. One source of advice is the Canterbury Property Blog www.canterburypropertyblog.com … that just leaves the 2,661 council houses still owned by the local authority to be sold to their tenants in the coming years!

Has owning a home become an unattainable dream for the 1,387 Canterbury 28 year olds?

My parents bought their first house in the late 1950’s and they were in their early 20’s. Interestingly, looking at some research by the Post Office from a few years ago, in the 1960’s the average age people bought their first house was 23. By the early 1970s, it had reached 27, rising to 28 in the early 1980’s.

 

This year alone, 1,387 people in Canterbury will turn 28 and 2,115 in 2017 .. and dare I say 3,198 in 2018 .. year in year out the conveyor belt carries on .. where are the Canterbury youngsters going to live?

 

Ask a Canterbury ‘twenty something’ and they will say they do not expect to buy until they are in their mid thirties - seven years later than the 1980’s. Some people even say they will never be able to buy a property and the newspapers have labelled them ‘Generation Rent’ as they are people born in the 1980s who have no hope of getting on the property ladder. One of the major problems facing young Canterbury people is the large deposit needed to get a mortgage .. or is it?

 

The average price paid for an apartment in Canterbury over the last 12 months has been £189,000 meaning our first time buyer would need to save £9,450 as a deposit (as 95% mortgages have been available to first time buyers since 2010) plus a couple of thousand for solicitors and survey costs. A lot of money, but people don’t think anything today of spending a couple of thousand pounds to go on holiday; the latest iPhone upgrade or the latest 4K HD television. That amount could soon be saved if these ‘luxuries’ were withheld over a couple of years but attitudes have changed.

 

Official figures, from the Office for National Statistics, show the average male in Canterbury with a full-time job earns £606.80 per week whilst the average female salary is £492.50 a week, meaning, even if one of them worked part time, they would still comfortably be able to get a mortgage for an apartment.

 

I was reading a report/survey commissioned by Paragon Mortgages from the autumn of last year. The thing that struck me was that when tenants were asked about their long term housing plans, some 35% of participating tenants intend to remain within the rental sector and 24% intended to buy a house in the future, with the proportion of respondents citing the “unaffordability” of housing as the reason for renting privately increasing from 69% to 74%.

 

However, time and time again, in the starter home category of property (i.e. apartments), nine times out of ten the mortgage payments to buy a Canterbury property are cheaper than having to rent in Canterbury. It is the tenant’s perception that they believe they can’t buy, so choose not to. Renting is now a choice. Tenants can upgrade to bigger and better properties and move up the property ladder quicker than their parents or grand parents (albeit they don’t own the property). Over the last decade, culturally in the UK, there has been a change in the attitude to renting so, unless that attitude changes, I expect that the private rental sector in Canterbury (and the UK as a whole) is likely to remain a popular choice for the next twenty plus years. With demand for Canterbury rental property unlikely to slow and newly formed households continuing to choose the rental market instead of purchasing a property. I also forecast that renting will continue to offer good value for money for tenants and recommend landlords pursue professional advice and adopt a realistic approach to rental increases to ensure that they are in line with inflation and any void periods are curtailed. One such place for advice, comment and opinion is the Canterbury Property Blog www.canterburypropertyblog.com

Canterbury’s ‘Generation Rent’ to grow by 1,221 households by 2021

“The growth of the private rented sector, and the arrival of an investor class of buy to let landlords within it, is an issue that won’t be going away anytime soon, no matter what you read in the Daily Mail”, I said, as I chatted over a coffee with a landlord client of mine at The Sandwich Bar on St Margaret’s Street in the city. Whether you are a landlord of mine (or not as the case maybe), I am always happy to look over any properties you are thinking of buying for buy to let purposes and more so over a coffee!

Some commentators are saying buy to let is about to die, with the new stamp duty changes and how mortgage tax relief will be calculated. Some say 500,000 rental properties will flood the market nationally in the next 12 months as landlords leave the rental market. Have you heard the phrase ‘Bad news sells newspapers’? Let me explain why buy to let in Canterbury is only going in one direction – and not the direction the papers say they are going.

According to Sheffield University, buy to let landlords will continue fueling the growth of the private rented sector in the coming decades. By their estimates (and they are considered a centre of excellence on the topic), the rate of homeownership nationally will fall to 50% whilst the rate of private sector renting will increase to 35% by 2032.  Although in Canterbury homeownership has already dropped below that estimated 2032 national figure, with only 47.6% of properties being occupied by homeowners ... as one would expect because of our high density of rental properties, which interestingly, in Canterbury, currently stands at 30% today.

Therefore, the demand for rental accommodation in Canterbury will grow by 1,221 households in the next five years ... and these are the reasons why, irrespective of the distractions set out in the newspapers

Canterbury property values over the last six years have risen a lot more than average wages/salaries, meaning as homeownership and mortgage availability is dependent on your ability to pay has served to push home ownership further out of reach for many, at a time when the stock of council houses has actually withered. (Nationally, the number of council houses in the last ten years has dropped from 3.16m to 2.18m households - a drop of 31.1%).

Now it’s true the Tory’s efforts to fix the deficiency of affordable housing have focused on those who want to buy a home, ranging from Help to Buy and their much vaunted Help to Buy ISA, and Starter Homes Scheme, an initiative offering a 20% discount for first time buyers … but if you are unable to save for the deposit ... none of this means anything to the ‘20 something’s’ of Canterbury ... and they still need a roof over their heads!

Currently, 16,951 people live in private rented accommodation in Canterbury

These are big numbers and a sizeable chunk of the electorate. So whilst it appears Canterbury “Generation Rent” youngsters will continue to rent and to not to buy for the reasons set out above, Canterbury buy-to-let landlords will be lifted by the projections of greater rental demand. Canterbury and the area around it still offers the prospect of strong economic growth forecasts and has a reputation as a lively and desirable place to live. You see, with the new rules on tax, more and more landlords will be looking to move away from the previous honeypot of central London, because its higher prices meant lower rental yields. With the new tax rules and central London’s cooling of house price inflation, more and more landlords will look further afield, including Canterbury (interestingly, I have already been chatting to a few central London landlords after they read the Canterbury Property Blog).

So, by 2021, the number of rental properties in Canterbury will rise to 8,397

This prediction in growth of the Canterbury rental market is even on the back of the government clamping down on tax reliefs for landlords. The point is this, gone are the days of making guaranteed returns on BTL property. For the last 20 to 30 years, irrespective of which property you bought, making decent money on buy to let property was like shooting fish in a barrel – anyone could do it  - but not now. You must take a more considered approach to your existing and future portfolio, especially in Canterbury. The balance of capital growth and yield, especially in this low interest rate world we live in, means Canterbury landlords need to do more homework to ensure the investment in property gives the desired returns. One place for Canterbury landlords and homeowners to visit for such information is the Canterbury Property Market Blog.

 … www.canterburypropertyblog.com

£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

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

 

 

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

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.

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