Which is the best month to sell your Canterbury home?

I had a homeowner from Rough Common email me the other day. She said that she had been following my blog (the Canterbury Property Blog) for a while and wanted to pick my brain on when is the best time of the year to sell a property. Trying to calculate the best time to put your Canterbury property on the market can often seem something akin to witchcraft and, whilst I would agree that there are particular times of the year that can prove more productive than others, there are plenty of factors that need to be taken into consideration.

Even if you are putting your property on the market, you don’t know how long it will take to find a buyer - no crystal ball to help with that one. At the moment, the latest set of figures for all 27 estate agents in Canterbury, show the average length of time it takes to find a buyer for any Canterbury property is as follows….

 

Detached                      84 days

Semi                             81 days

Terraced                     102 days

Flat                             160 days

Overall average           124 days

 

 

If we roll the clock back to January 2016, the overall average time it took to find a buyer (again using data from all of the 27 Canterbury Estate Agents) was 118 days.

So, on the face of it, things haven’t vastly improved over the last six months or so. But, when I looked at the data going back to 2008, and every Spring since then, the average length of time it takes to sell a property usually drops between January and the Summer months, for it to rise on the run up to Christmas. For example ..

 

Winter 2008 - 151 days          Summer 2008  - 121 days

and in more recent times …

Winter 2013 - 138 days          Summer 2013  - 128 days

Winter 2014 - 141 days          Summer 2014  - 111 days

Winter 2015 - 118 days          Summer 2015  - 103 days

Coming back to the present, even if you placed your property on the market today in Canterbury, if it takes you on average a little under eighteen weeks to find a buyer, then you can expect solicitors and the chain to take an additional eight and twelve weeks after that, before you move. It comes down to personal choice as to when you place your property on the market. Children often affect the decision. On one side you might delay putting that for sale board in your front garden so you can move in the summer school holidays, but on the other side, you might want to move sooner to be in the catchment area of a preferred school, in plenty of time for the next academic year?

There are times of the year when it's better to sell, and times when waiting a little longer can pay off in the long run. In a nutshell, I would say this is the way of the seasons ..

WHEN TO MARKET?

Spring: Customarily there are more house-buyers as the Daffodils show themselves

Summer: Sellers may miss out on house-buyers being on holiday

Autumn: The enthusiasm for buying homes returns

Winter: Interest diminishes as festive period looms

What this means to buyers and landlord investors is that they often pick up a bargain in later months of the year, as there is less competition from owner occupiers. So, whilst there are better months to achieve a quicker sale, the only piece of advice I can give to every home  owner and landlord in Canterbury, is do the right thing for yourself, do your homework and buy (and sell) with both your head, as well as your heart.

For more thoughts on the Canterbury Property Market – visit the Canterbury Property Market Blog www.canterburypropertyblog.com

164% increase in Property Values in Canterbury since the Millennium

Canterbury house prices since the Millennium have risen by 164.75%, whilst average salaries in Canterbury have only grown by 51.27% over the same time frame. This has served to push home-ownership further out of reach for many Canterbury people as they have to battle against raising considerable deposits and meet sterner lending criteria, as a result of new mortgage regulations introduced in 2014/5.  The private rental market in Canterbury has grown throughout the last twenty years with buy-to-let investors purchasing a high proportion of newly built residential properties that were built and designed for the owner occupier sales markets.  For example, in the Canterbury Constituency, roll the clock back 20 years and there were 38,802 properties in the Constituency, whilst the most recent set of figures show there are 43,070 properties - a growth of 4,268 properties.

However, anecdotal evidence suggests that a large majority of those 4,268 were bought by Canterbury buy-to-let landlords, as over the same 20-year time frame, the number of rental properties has grown from 3,103 to 8,959 in the constituency - a rise of 5,856 properties.

Nevertheless, some say this historic growth of the Canterbury rental market might start to change with the new tax rules for landlords introduced by Mr. Osborne over the last seven or eight months. Yet the numbers tell another story. Across the board, mortgage borrowing climbed to a 9 year zenith in March this year as the British property markets traditional Easter rush corresponded with landlords hurrying to beat George Osborne’s new stamp duty changes – buy-to-let landlords borrowed £7.1bn in March 2016 (the latest set of figures released) which was 163% up on the £2.7bn borrowed in the previous March.

You see, from my point of view, I don’t think things will get worse in the buy-to-let market in Canterbury and these are the reasons why I believe that:

Firstly, what else are Canterbury landlords going to invest in if it isn’t property - the stock market? Since the Millennium, the stock market has risen by an unimpressive total of 5.54%, quite different to the 164.75% rise in Canterbury property prices?

Secondly, its true the 3% stamp duty is the first blow on top of a number of other tax changes to be phased in between 2017 and 2021, such as landlords facing a constraint in their ability to offset mortgage interest and, if sizable numbers of landlords do take the decision to sell their portfolios, this will lead to a substantial amount of second hand properties being put up for sale. Yet that might not be a bad thing, as I have mentioned in previous articles there is a serous shortage of properties to buy at the moment in Canterbury: the stock of property for sale being at a six year all time low.

.. Thirdly, if there are fewer rental properties in Canterbury, as supply drops and demand remains the same (although ask any letting agent in Canterbury and they will say demand is constantly rising) this will create a squeeze in the Canterbury rental market and as a result rents will rise. In fact, I predict even if landlords don’t sell up, Canterbury rents will rise as Canterbury landlords seek to compensate for increased costs, which means more landlords will be attracted back.

Asking Prices of Canterbury Property up 3% since December

I had an interesting question the other day from a property owner in Hales Place who asked me the difference between asking prices and values and why it mattered. When it comes to selling property, there must be agreement between the purchaser (buyer) and seller (vendor) for a property sale to take place. The value a buyer applies to a property can massively differ from the value a seller or mortgage company places upon it. The seller, the buyer and the mortgage company must find an agreeable value to assign to a property so the sale can proceed.

In many of my articles about the Canterbury property market, I talk about values, i.e. what property in Canterbury actually sells for, but I haven’t spoken about asking prices for while. Now asking prices are important as they are one of the four key matters a potential buyer will judge your property on (the others being location, bedrooms and type). Price yourself too high and you will put off buyers. So let’s take a look at the Canterbury numbers.

Over the last 12 months asking prices (i.e. the price advertised in the paper and on Rightmove) in Canterbury have increased by 17%, taking the average asking price in Canterbury to £331,400 (up from £283,300 twelve months ago).

Interestingly though, when we look at, say detached and semi-detached property, a slightly different picture appears. Twelve months ago, the average asking price for a detached house in Canterbury was £480,400 and today its £548,200 (a rise of 14%); whilst over the same 12-month period, the average asking price of a semi-detached property was £319,100 a year ago, and today its £354,400 (a rise of 11%).

However, my research shows that the supply of property for sale in Canterbury is beginning to increase. In December 2015, there were 273 on the market in Canterbury today there are 303 properties on the market (up 11%). This will mean homeowners looking to sell will need to be conscious of how their property compares against others on the Canterbury property market. The Canterbury property market still has substantial momentum and sufficient demand remains to provoke more modest asking price rises. This noteworthy increase in supply since Christmas is currently providing more choice for buyers and is tempering asking price rises - and here is the devil in the detail - only 3% of the overall 17% annual figure (mentioned in para 3) has appeared since December.

… And here is the second point to make. Asking prices are one thing, but what a property sells for (i.e. value) is a completely different matter. These are the average prices achieved (i.e. what they sold for or the average value) for property in Canterbury over the last 12 months...

Overall Average          £283,894

Detached                   £443,600

Semi-detached           £254,500

You can quite clearly see, there is a difference between what people are asking for property and what it is selling for. The underlying fundamentals of low interest mortgages and tight supply remain prevalent in the Canterbury property market however, the number one lesson has to be this ... if you want to sell, be realistic with your pricing.

1,544 Canterbury Properties lie empty– An injustice for the 2,269 people on the Canterbury Council House Waiting List?

Easy problems should have easy solutions  - shouldn’t they?

Problems like Canterbury’s housing crisis, where we have a rudimentary numerical problem of too few homes for too many people ... the answer is clearly to build more property in Canterbury - but that, unfortunately for those desperately seeking to purchase or let a property, takes a lot of time and huge amounts of money. So what of other solutions?

Whilst at a dinner with friends recently, the subject of property was mentioned (as I am sure it does at most dinner parties up and down the country). Normally someone always mentions empty properties as the solution to the problem. On the face of it, it seems so obvious. Now quite interestingly, I had recently done some research on this topic, which I want to share with you (as I did with those at the dinner table).

The most recent set of figures from 2015 state there are 1,544 empty homes in the Canterbury City Council area. So it begs the question ... why not put them back onto the system and help ease the Canterbury housing crisis? Whilst they stand empty, 2,269 Canterbury households (not people – households) are on the Council House Waiting List for council houses. Surely, we can undoubtedly all agree that property left empty for years and years isn’t morally right with the burgeoning Council House Waiting List, not to also mention the issue of homelessness.

But a different story emerges when you look deeper into the numbers. Of those 1,544 homes lying empty, only 396 properties were empty for more than six months. The local authority has to report a property being empty, even if its for a week. So many of the Canterbury properties are either awaiting new homeowners or, in the case of rental properties, new tenants. Also most certainly, some properties are being refurbished and renovated, while others properties have homeowners who are anxious to sell but cannot find a buyer.

And this is where its gets even more interesting. Of the 396 long-term vacant properties (those empty more than six months), 21 belong to the council. However, before we all go Council-bashing, anecdotal evidence suggests these empty council houses are habitually in need of so much restoration that it’s not worth the Council’s while to do and are in the roughest parts of the council estates, they are properties that even the Council find difficult to fill.

The fact is that the number of genuinely long term empty properties is only a tiny drop in the ocean of the 60,771 properties in the area covered by Canterbury City Council and, even if every one of those empty homes were filled with happy cheerful tenants tomorrow, it would only meet a small fraction of Canterbury housing needs.

So what does this mean for all the homeowners and landlords of Canterbury? Well it means with demand being so high, especially for rental properties, the certainty of the rental market growing is an inevitability because young people cannot buy and councils don’t have the money to build new council houses. This in turn bolsters property prices as landlords continue to buy at the lower end of the market (starter homes, etc), which in turn sustains the rest of the market as those sellers move up the property ladder, releasing others in turn to buy on again.

These are interesting times in the Canterbury property market!

£7,600 boost to Canterbury First time buyers

There’s a whole legion of wannabe Canterbury first-time buyers keen to get on the property ladder and they now have a 3% price advantage over the previously quicker responding army of Canterbury landlords with cash at the ready. Since the start of April, buy to let landlords have had to pay an additional 3% stamp duty so whilst demand from some Canterbury buy to let landlords has dropped away, in the interim, it offers Canterbury first time buyers (FTB’s) a chance to fill the vacuum with less competition from cash rich landlords (over two thirds of BTL properties were purchased without a mortgage in the last 7 years) who could bid more and complete quicker.

Looking at the average value of a terraced house in Canterbury currently standing at £253,400, that means if our Canterbury FTB went up against a Canterbury landlord, the landlord would have to pay an additional £7,602 in stamp duty. Early antidotal evidence from fellow property professionals in the city is suggesting landlords are reducing their offers slightly on Canterbury properties to reflect the extra stamp duty.  

Whilst on the face of it, it appears landlords are being punished by No.11 Downing Street, I actually believe this increase in stamp duty for landlords is a good thing for the Canterbury property market as a whole.

Since 2011/12, the Canterbury property market has performed very well indeed. Over the last 12 months, £338,161,967 has been spent buying 1,201 Canterbury properties.  Figures from the Land Registry have just been released and month on month in our council area, property values are 0.8% higher, yet 10.2% higher year on year. These figures are nowhere near the heady days of 2003 (April to be exact), when Canterbury property prices rose by 25.4% in 12 months.

So as property values in Canterbury (and the UK as whole) start to stablise and come back to some kind of balance, I am beginning to see savvy landlords view the Canterbury property market in a different light. Even with the Spring rush, gone are the days where you could make limitless money on anything that had a door, a few windows and roof. This stamp duty change has made more and more landlords, after reading the Canterbury Property Market Blog www.canterburypropertyblog.com take advice on what or not to buy and what to pay, meaning Canterbury landlords are being more calculated with their Canterbury BTL purchases. I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Canterbury, this in part reflects amplified uncertainty about the short term economic outlook (eg Brexit, Issues in the Far East etc).

Now I know a lot of Canterbury landlords brought forward their BTL purchases to beat the stamp duty deadline. However, it is probable that hunger from Canterbury investors will return for the right Canterbury property later in the year, especially if it’s at the right price and offers a decent yield. However, in the meantime, Canterbury FTB’s could and should, in the short term, make hay whilst the sun shines plug the gap and grab a bargain!

Brexit and Canterbury Property market – 6% more properties on the market

April Fool’s Day was no joke for some landlords, as they rushed their buy to let property purchases throughout late March to beat the extra 3% stamp duty George Osborne imposed on buy to let properties after the 31st March 2016. Because some investors brought forward their 2016 property purchases to save the extra tax, speaking to fellow property professionals in Canterbury, all of us have noticed, since the clocks went forward, demand to buy in April and May from these landlords has eased.

Then we have the Brexit issue, which is also having a tempering effect on the Canterbury property market – although if you recall I wrote about this a few weeks ago, and whilst an exit will have an effect – it won’t be the end of the world scenario some commentators are suggesting. In another article I wrote previously, I spoke of the growth rate of Canterbury property values, and whilst the rate of growth is slowing, Canterbury property values are still 9% higher year on year, albeit the growth rate month on month has started to moderate when compared to the heady days of month on month rises of 2014 and 2015. Interestingly though, a very recent members survey of the Royal Institution of Chartered Surveyors states that only 17% of members believed property values would increase over the next Quarter compared to 44% at the end of 2015.

All this had led to increase in the number of properties for sale. For example, in the CT1 postcode, which mainly comprises of Canterbury South and the city centre, there were 278 properties for sale in the postcode in December (of which 49 came on to the market for the first time). In January, February and March, 227 properties came onto the market in the postcode district (or an average of 75 per month), meaning by end of the first Quarter, there were 295 properties available for homeowners and landlords alike to buy in CT1 (i.e. a rise of 6.1% more properties for sale). The reason this is important is because I expected the number to be slightly lower because of the normal Spring rush in the property market. Interestingly, these figures are mirrored in neighbouring postcodes throughout the Canterbury area.

Nevertheless, I believe this easing of the Canterbury property market is a good thing, as investment landlords wont have to pay top dollar to secure a property because of the lower competition. On the face of it, this easing should be bad news for the 20,317 Canterbury homeowners, but nothing could be further from the truth. The majority of homeowners that move, move up market, (i.e. from a flat to terrace/town house, then a semi and then detached), so whilst last year you would have achieved a top dollar figure for your property, you would have had to have paid an even higher top dollar to secure the one you wanted to buy. The Swings and Roundabouts of the Canterbury Property Market!

However, all the signals suggest that whatever the aftermath of the approaching EU referendum, in the long term, the disparity between demand for Canterbury property and the supply (i.e. the number of actual properties) will still exercise a sturdy and definitive influence on the Canterbury property market. It would surprise me that if by 2021, whichever way we vote in late June, assuming we don’t have another credit crunch or issues like a major world conflict, property prices will be between 20% to 23% higher than they are today.

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