Canterbury Landlords could be fined £1,314,000 per year

“Who would want to move to Canterbury in weather like this?”, was what one landlord said to me as we shook hands outside his property, the other afternoon. It was windy, cold, it had been raining most of the day and it was the last appointment of the day at 4.45pm. I will admit, as I had been out of the office all day, I was looking forward to getting home, putting the fire on, and watching telly with a big mug of tea.. but this landlord lived in neighbouring Ashford and this was the earliest he could do. 

It turned out he had been self-managing the property himself over the last few years, but was worried with all the new legislation that had been introduced recently. He was particularly concerned about the up and coming ‘Right to Rent’ legislation, so as his tenant had handed in their notice recently, on this new tenancy he called us for our opinion.

For those Canterbury landlords that don’t know, landlords will need to check the immigration status of any new tenants moving into properties from February 2016 or face a £3,000 fine. It is called the 'Right to Rent' rules. However, tenants should also be aware that as well as traditional landlords, tenants who sub-let rooms and homeowners who take in lodgers, must also check the right of prospective tenants to reside in the UK.

Our landlord from Ashford wanted to know how much of a real issue was ‘Right to Rent’ in Canterbury. I was able to tell him, the last available figures (from a couple of years ago) show that 438 people (whom were registered as Non-UK Born Short-term Residents) moved into private rented accommodation in the Canterbury City Council area in one year alone. If all of those people weren’t supposed to be in the UK, that would be a fine of £1,314,000 to the landlords of the City.

It doesn’t sound a lot when you think there are 54,880 residents in Canterbury City Council area, and of those, 43,939 people (or 80.06%) were born in the UK. But Canterbury is a cosmopolitan city as the country of birth of the residents in the Canterbury City Council area can be split down as follows:

UK                                                         80.06%

Ireland                                                     0.73%

Europe                                                     8.21%

Africa                                                       2.48%

Middle East and Asia                                  6.29%

Americas and Caribbean                             1.67%

Australia and Pacific region                        0.46% 

 

However, it must also be recognised that landlords, by checking up on tenants, could potentially be accused of discrimination under the Equality Act. This is a real minefield for landlords, especially when you consider that not all of the 4,506 Europeans in the area necessarily have the right to live in the UK either.

In a nutshell, Canterbury landlords will need to check and retain copies of certain documents that show a potential tenant has the right to live in the UK. These include ....

UK Passport

EEA Passport/Identity card

Travel document or Permanent Residence Card showing indefinite leave to remain

Paperwork from Home Office stating their Immigration status

Certificate of registration or naturalisation as a British citizen.

I hope the new law will target dishonest landlords who repeatedly fail to carry out Right to Rent checks by making it a criminal offence. This means they could face imprisonment for failing to check on their tenants. That is why more and more landlords are asking agents to manage their properties, so they can stay the right side of the law.

So what did our landlord do?

Well after our chat, he asked us to find a tenant and manage the property for him - he had been reading the Canterbury Property Blog for a while and because of the knowledge we impart to the landlords of Canterbury, we obviously know what we are talking about.  Even better news for him, even though this would cost him agency fees, I was able to get him an additional £75 per month for his property (when we found him a tenant one week later). Now, together with the peace of mind we will keep him the right side of the law and put a stop to midnight phone calls complaining about dripping taps, it was a win-win situation for everyone.

Will the young people of Canterbury ever own their own home?

I had the most interesting chat with a mature couple (in their early/mid 50’s) from Harbledown the other day, whilst viewing one of our rental properties. The property wasn’t for them, but their son, who wanted a second viewing with his parents to get the parental blessing. Now I know that isn’t the norm, but in this case the parents were going to act as guarantor. We got chatting about the Canterbury property market and how they had bought their first property in the city just after they got married in the late 1980’s when they were in their early/mid 20’s. Anyway, we got chatting about how the youngsters of the UK seem to rent more than buy nowadays and from that the conversation covered a number of similar topics. I want to share the highlights of that conversation with you today.

Their son, like many 20 to 30 year olds in Canterbury, desperately wants to own his own property and the parents said he had read in the Telegraph recently, when you compare house prices to earnings, the current 20 to 30 something’s generation have to spend more of their salary in mortgage payments than any previous generation. The demand for private rental sector accommodation in Canterbury is huge. There are in fact 5,955 private rental properties in Canterbury at the last count, impressive when you consider there are 2,661 council houses in the city. However, let us not forget 9,236 properties are owner occupied (4,088 with a mortgage).

Let us all be honest, private renting doesn’t have the stigma it had a few decades ago and it might surprise people that even though us Brit’s class ourselves as a nation of homeowners, roll the clock back 100 years and over 75% of people rented their own home (and it was all from private landlords as council housing only started to come in with the ‘homes for hero’s’ after the First World War). It might also surprise you to learn that at the time of the 1971 census, still more people rented than owned their own home.

Looking at the affordability issue, I have proved time and time again, it is in fact cheaper to buy a property than rent, when one looks at starter homes for first time buyers. 95% mortgages have been available to first time buyers for over four years and whilst you could certainly find better properties in better condition in better areas, terraced houses can be bought for as little as the early to mid £170,000’s close to the city centre in Canterbury (meaning a modest deposit of £8,500 would be required).

When it came to affordability, I was able to tell them that when they bought their first house in Canterbury in 1988, the ratio of house prices to salary was 7.54 to 1 in Canterbury ... and here was the surprise for both of us, today’s ratio is only 6.53 to 1!

I said I believed there had been a cultural attitude change towards renting property in Britain and that this quiet revolution was likely to be permanent. In the 60’s, 70’s and 80’s, saving for the deposit was everything and buying a house was everything. Youngsters today have far much more disposal income today than people had in the Callaghan and Thatcher years, but choose to spend it upgrading their mobile phones every 12 months, the newest tablet or PC, a newest 50” plasma LCD TV and two sun drenched holidays a year, than go without and save for a deposit.

Yes, there are horror stories of tenants living in rat infested properties with landlords who charge massive rents and don’t repair their properties. But that is very much the exception as most tenants rent homes of a quality they couldn’t ever to afford to buy. Twenty years ago, if you said you rented a property, you were considered the lowest of the low ... but now it’s the norm.

So with mortgage affordability being well within the bounds of most first time buyers, the level of deposit required for a 95% being surprisingly modest (starting off at c.£8,500 in Canterbury as mentioned above) until we change our attitudes, the UK housing market is slowly but surely turning into a more European model, where people rent for long periods of their life, then eventually inherit their parents properties and subsequently become homeowners themselves, albeit later in life.

Hence, I cannot see the demand for decent, high quality rental properties ever dropping in the next 10 to 20 years, but only ever increasing as the population continues to soar. Just make sure you buy the right property, at the price, in the right location. One source of information on such matters would be the Canterbury Property Blog ... www.canterburypropertyblog.com

Canterbury House Price Monopoly: How do Prices vary?

 

On the dark winter nights, if there is nothing on the telly, the significant other and myself like to play the board game Monopoly. The buying and renting of property, it’s like a busman’s holiday for me! Interestingly, the game was originally invented at the turn of the 20th Century (in 1903) and the game was initially called ‘The Landlord’s Game’!  Anyway, after a few years in the wilderness, the current owners of the game renamed it in 1935 and so began Monopoly as we know it today.

So whether you are a homeowner or landlord in Canterbury, what would a Monopoly board look like today in the city? Property prices over the last 80 years have certainly increased beyond all recognition, so looking at the original board, I have substituted some of the original streets with the most expensive and least expensive locations in Canterbury today.

Initially, I have focused on the CT1 postcode only, looking at the Brown Squares on the board, the ‘new’ Old Kent Road in Canterbury today would be Godwin Road, with an average value £127,400 (per property) and Whitechapel Road would be Rhodaus Close, which would be worth £147,500. What about the posh dark blue squares of Park Lane and Mayfair? Again, looking at CT1, Park Lane would be Ethelbert Road at £484,300 and Mayfair would be St Augustine’s Road at £592,700. However, look a little further afield from the CT1 postcode, and such roads as Harbledown Park in Harbledown would claim the Mayfair card at £664,200! Also, I can’t forget the train stations (my favourite squares), and over the last 6 months, the average price that property within a quarter mile of the Canterbury West Station sold for was £305,000.

So that got me thinking what you would have had to have paid for a property in Canterbury back in 1935, when the game originally came out?

• The average Canterbury detached house today is worth £480,900 would have set you back 870 Pounds 1 shillings and 10 old pence.
• The average Canterbury semi detached house today is worth £270,680 would have set you back 489 Pounds 14 shillings and 10 old pence.
• The average Canterbury terraced / town house today is worth £252,800 would have set you back 457 Pounds 7 shillings and 9 old pence.
• The average Canterbury apartment today is worth £206,500 would have set you back 373 Pounds 12 shillings and 5 old pence.

If that sounds like another currency, you must be in your 20’s or 30’s, because it was back in February 1971, that Britain went decimal and hundreds of years of everyday currency was turned into history overnight. On 14th of February of that year, there were 12 pennies to the shilling and 20 shillings to the pound. The following day all that was history and the pound was made up of 100 new pence.

Anyway, I hope you enjoyed this bit of fun, but underlying all this is one important fact. Property investing is a long game, which has seen impressive rises over the last 80 years. In my previous articles I have talked about what is happening on a month by month or year by year basis and if you are going to invest in the Canterbury property market, you should consider the Canterbury property you buy a medium to long term investment, because Buy to let is pretty much what it sounds like – you buy a property in order to rent it out to tenants.

As I reminded a soon to be first time landlord from Tyler Hill the other week, Buy to let in Canterbury (as in other parts of the Country) is very different from owning your own home. When you become a Canterbury landlord, you are in essence running a small business – one with important legal responsibilities. On that note, I want to remind landlords of the recent and future changes in legislation when it comes to buy to let. Last year, rules have changed about tenant deposits, carbon monoxide detectors and early in the New Year, landlords will have responsibilities to do immigration checks on all their tenants. Failure to adhere to them will mean a minimum of heavy fines in the thousands or in some cases, prison ... it’s a mine field!  That’s why I write the Canterbury Property Blog, where it has an extensive library of articles like this one, where I talk about what is happening in the Canterbury property market, what to buy (and sometimes not) in Canterbury and everything else that is important to know as a Canterbury landlord. Please visit the Canterbury Property Blog www.canterburypropertyblog.com

The Canterbury Property Market and £1,300,000,000,000,000,000 in loose change

The 5th of March 2009 was the date Mervyn King, the then Bank of England Governor, slashed UK interest rates to the unparalleled figure of 0.5%. In just under five months, starting on 8th October 2008, the rate had come down from 4.5% to that low figure, all in an attempt to ensure the British economy survived the worldwide credit crunch. Nobody expected that, over six years later, rates would still be at that low level.


Last summer, people were predicting a rise in the New Year, yet now, some forecast it may remain the same for years to come the due to the issues in China. Now, I am not some City Whiz kid with a hotline to Mr Carney at Threadneedle Street, but merely a humble letting agent from Canterbury, so I cannot profess to know what will happen to interest rates. However, what I do know, speaking to my Canterbury friends and Canterbury landlords is that these low interest rates have hit savers really hard.


If you added up everyone’s bank and building society savings in the UK, they would add up to £1,300,000,000,000,000,000 (that’s £1.3 trillion), most of which is earning a pittance in interest.  That is why more and more 40 and 50 year old Canterbury landlords have been investing some of that cash into Canterbury bricks and mortar, as they search for a low risk investment opportunity.


Buying a Canterbury buy to let property isn’t risk free, but there are certainly things you can do to mitigate and lower one’s exposure to risk. You see by buying a rental property, it potentially offers an enigmatically decent proposition in terms of being able to obtain attractive returns that beat inflation and savings accounts, yet without taking the levels of risk associated with stock markets.


The UK residential property market has long been the safest form of collateral for lenders of all varieties. Against a backdrop of a greatly changing economic environment, Canterbury house prices have been extraordinarily robust, increasing by over 2148% between 1974 and today. Some will say there have been significant property price falls, namely in 1975, 1988 and 2008, yet each time after this has been followed by an upturn in property values. For the record, the stock markets in the same time frame only rose by 432.5%!


...and that is the best thing about buy to let property. Unlike the stock market, with its unfathomable equities, shares and bonds, that nobody really understands (as they are controlled by some faceless whizzkid in Canary Wharf!) with a buy to let property, landlords can take control and understand their investment .. in fact you can touch and feel the bricks and mortar investment.


...but before you go out and buy any old Canterbury property, plenty of landlords still get it wrong. You have to be aware of your legal responsibilities when it comes to tenant safety, tenants deposits, energy certificates and in the New Year, landlords will have the added responsibility of checking the immigration status of prospective tenants. Get it wrong and big fines and even prison is an option – but that’s why many agents use a letting agent to manage their property for them.


Next, you have to buy the right property at the right price. Recently I have seen some really heart breaking situations in Canterbury and the immediate area, of people paying way too much for a property, only to lose out when they came to sell. One example that comes to mind is that of a property owner in one of those apartments on the highly desirable location of The Old Tannery which is in close proximity of Canterbury City Centre .. a wonderful top floor three bed apartment, 96 sq metres inside (1033 sq ft in old money) sold in July 2014 for £335,000. In the summer, it only obtained £315,000, a drop of 6% in just one year - a very disappointing result.


I cannot stress enough the importance of doing your homework. One source of information and advice is the Canterbury Property Blog where I have similar articles to this about the Canterbury property market and what I consider to be the best buy to let deals around at any one time in the City, irrespective of which agent it is on the market with. If you haven’t visited and you are interested in the local property market in Canterbury .. you are missing out! .. www.canterburypropertyblog.com

Values of Canterbury Terraced Houses smash through the £285/sqft barrier

The Council of Mortgage Lenders (CML) latest snapshot of the buy to let mortgage market shows us that buy to let landlords haven’t been put off by the Chancellors announcementson the way buy to let’s are taxed.

 

Last month, the CML stated £1.4billion was borrowed by UK landlords to purchase 10,500 buy to let properties, up 26.5% from the same month in 2014, when only 8,300 properties were bought with a buy to let mortgage. Go back two years and the number of buy to let mortgages used for purchasing (again not re-mortgaging) is 36.4% higher! Even more interesting has been the fact that the average amount borrowed has risen as well. The average buy to let mortgage last month was £133,330, up from £128,480 a year ago.

 

In Canterbury, I am speaking to more and more landlords, be they seasoned professional landlords or FTL’s (first time landlords), as they read reports that the Canterbury rental market is doing reasonably well, with rents and property values rising.  Interestingly, one landlord recently asked how much he should be paying per square foot (more of that in a second).

 

The first thing you have to decide is whether you want great capital growth or great rental yield, as every knowledgeable landlord knows, you can’t have both. Over the last twenty years, property values in Canterbury have risen by 232.29%, compared to Greater London’s 436.2%. This has proved that capital growth increases faster in the more expensive Capital, but your investment money doesn’t go very far, meaning there won’t be as much rental yield from a 1 bed flat in Chelsea (2% per year at best with a fair wind) as a 2 bed semi in Canterbury. However, whilst the figure of 232.29% is an average for the area, certain areas of Canterbury have seen capital growth much higher than that and others areas much worse (we have talked about those in previous articles).

 

If you recall in an earlier article, my research reveals that Canterbury apartments tend to generate a better yield than houses, probably because several sharers can afford to pay more than a single family. But houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built.

 

So what should you be buying in Canterbury, and more importantly, how much?

 

The average apartments in the city are currently selling for approximately £292 per square foot.

 

Terraced houses in Canterbury are currently obtaining, on average, £247,200 or £289 per square foot.

 

An average semi in Canterbury is selling for £262,900 (and achieving £264 per square foot). 

 

Now these are of course averages, but it gives you a good place to start from. In the coming weeks, I will look at rents being achieved on Canterbury houses and apartments, and the yields that can be obtained, depending how many bedrooms there are. In the meantime, if you would like to read more articles like this, then can I suggest you visit the Canterbury Property Blog at www.canterburypropertyblog.com .

Canterbury Buy To let –Freehold House or Leasehold Flat?

As seems to be all the rage with Jeremy Corbyn asking the PM questions emailed in to him at Prime Minster Question Times, I to wish to answer a question emailed into me from a potential Canterbury landlord last week. Nice chap, lives in Tyler Hill, and it turns out, after having a coffee with him, he works in IT, has a spare bit of cash (now the kids have flown the nest) and wanted to buy his first buy to let property.

His main question was ... Do I buy a freehold house or a leasehold flat in Canterbury?

Most people will say freehold every time, because you own the land. However, it’s not as simple as that (it never would be would it!). The definitive answer though is to research what Canterbury tenants want in the area of Canterbury they want! The tenant is ultimately your customer, and, if they don't want to rent what you decide is best to buy, then you are not going to have a successful BTL investment. So starting with the tenant in mind and working backwards from there, you won’t go far wrong. In a nutshell, find the demand before you think about creating the supply.

Leasehold flats and apartments in Canterbury are excellent in some respects as they offer the landlord certain advantages, including the fact a flat can be initially cheaper to buy. Yields can be quite good, offering better cash flow. The building will already be insured and yes there is a service charge, but it’s still for a service at the end of the day and that cost is spread between many others (i.e. when your freehold house roof goes, its falls 100% on your shoulders) and one of my favourites is that there is often no garden to maintain or blown down fences to replace!

However, some Canterbury leasehold flats can suffer from poor capital growth. Some leasehold properties have no cap on the level of the service charge and it may get out of control. The length of the lease will significantly affect value if not renewed before it gets too short. Thankfully there’s not many, but some Canterbury apartments/flats have burdensome clauses. Finally, with leases, there can be sub-letting issues – which means you can’t let them out.

So what do the numbers look like? Well since 2003, the average freehold property in Canterbury (detached, semis and terraced) has risen from £180,657 to £325,748, a rise of 81% whilst the average Canterbury leasehold property (flats and apartments) has gone up in value from £137,329 to £192,668, a more mediocre rise of 40%. 

I was really interested to note that of the 10,665 rental properties in the Canterbury City Council area that the Office of National Statistics believe are either let privately or through a letting agency, 4,143 of them (or 38.8%) are apartments. However, there are only 11,463 apartments in the whole council area (be they owned, council rented or privately rented), which represents 18.9% of the whole housing stock in the area. This really intrigued me that, quite obviously, there is a high proportion of Canterbury’s leasehold apartments/flats rented to tenants compared to detached, semi’s or terraced. Fascinating don’t you think?

Every Canterbury apartment block, every terraced house or semi is different. Like I said at the start, the definitive answer though is to research what Canterbury tenants want in the area of Canterbury they want. Demand for city centre apartments, near the nightlife and transport links can be popular and can offer the Canterbury landlord very good yields with minimal voids. However, Canterbury terraced houses and semis, whilst not always offering the best yields (although sometimes they can), they do offer the Canterbury landlord decent capital growth.

My advice to the prospective landlord, as it is to you, is do your homework.  One such website, which only talks about the Canterbury buy to let Property Market, is the Canterbury Property Blog. Another source of info many Canterbury landlords use is me! What many Canterbury landlords do, irrespective of whether you are a landlord of ours, a landlord with another agent or a DIY landlord, if you see any property in Canterbury, that catches your eye as a potential buy to let property, be it a terraced house, semi or flat ... email me and I will email you back with my thoughts (although I will tell you what you need to hear .. not want to hear!)

Canterbury Tenants Pay 35.9% of their Salary in rent

 

I had the most interesting chat with a local Canterbury landlord the other day about my thoughts on the Canterbury property market. The subject of the affordability of renting in Canterbury came up in conversation and how that would affect tenant demand. Everyone wants a roof over their head, and since the Second World War, owning one’s home has been an aspiration of many Brits.  However, with rents at record highs, many are struggling to save enough for a house deposit.

Let’s be honest, it’s easy to get stuck in a cycle of paying the rent and bills and not saving, but even saving just a small amount each month will sooner or later add up.  George Osborne announced such schemes as the upcoming Help to Buy ISA, where the Government will top up a first time buyers deposit.

Therefore, I thought I would do some research into the Canterbury property market and share with you my findings.  Canterbury tenants spend on average just over a third of their salary to have a roof over their head.  According to my latest monthly research, the average cost of renting a home in Canterbury is £979 per month.  When the average annual salary of a Canterbury worker stands at £32,705 per year, that means the average Canterbury tenant is paying 35.9% of their salary in rent.  I doubt there is much left to save for a deposit towards a house after that, and that my Canterbury Property Blog reading friends is such a shame for the youngsters of Canterbury.

You see one the reasons for rents being so high is property prices being high.  As I have mentioned before, there is a severe lack of new properties being built in Canterbury.  It’s the classic demand vs supply scenario, where demand has increased, but the number of houses being built hasn’t increased at the same level.  Also, Canterbury people aren’t moving home as often as they did in the 80’s and 90’s, meaning there are fewer properties on the market to buy.  If you recall, a few weeks ago I said back in Summer 2008, there were over 560 properties for sale in Canterbury and since then this has steadily declined year on year, so now there are only 284 for sale in the City.

So, the planners in Canterbury haven’t allowed enough properties to be built in the City and existing Canterbury homeowners are not moving home as much as they used to, thus creating a double hit on the number of properties to buy.  This is a long term thing and the continuing diminishing supply of housing has been happening for a number of decades and there simply aren’t enough properties in Canterbury to match demand, these are the reasons houses prices in Canterbury have remained quite buoyant, even though economically, over the last 5 years, it was one of the worst on record for the country and the South East region as a whole.

However, things might not be all doom and gloom as originally thought, as a recent Halifax Survey  (their Generation Rent 2015 Survey) suggested  more and more people may be long term, if not lifelong tenants. In fact there is evidence in the report to suggest that the perception of how difficult it is to get on the housing ladder is vastly different between parents and people aged 20 to 45.  It seems from this survey that the state of the UK economy has shifted priorities quite significantly in quite a short space of time.  With fewer people able to save up the deposit required by mortgage lenders, more and more people are continuing to rent.  This delay in moving up the property ladder has driven rents across the UK up as more people were seeking rental properties.

It is often said that more people in central Europe rent for longer or never own their own property. The last two census in 2001 and 2011 show that proportionally the percentage of people who own their own home in Britain is slowly reducing and, as a country, we are becoming more and more like Germany.   That isn’t a bad thing as Germany is considered to have a more successful economy, one of the main stays, often quoted,  is because they have a much more flexible and mobile workforce, (which renting certainly gives) and from that, they have a higher personal income than in the UK.      

Therefore, if we are turning into a more European model and the youngsters of Canterbury and the Country have changed their attitudes, demand for rental properties will only and can only go from strength to strength, good news for Canterbury tenants as wages will start to rise and good news for Canterbury landlords, especially as property values in Canterbury are now 8.4% higher than year ago!

Has Osborne killed buy to let in Canterbury?

 

Well George Osborne, in his Autumn statement last week, caused Canterbury landlords to ask whether buy to let is a viable investment option, when he announced that landlords, when buying another buy to let property from April 2016 will have to pay an additional 3% stamp duty on top of the standard rate. So for example, it means that the stamp duty bill for a £285,000 buy to let home will rise from the current £4,250 to £12,800 from April next year. 

 

Some say property in Canterbury will be worth less because potential landlords will not be willing to pay as much for them, and if house builders or existing homeowners don't feel they are going to get as much for them , then there is less motivation to build / sell them?... and the person we can blame for this is George himself. Back in 2012, he choose to utilise the British housing market to kick start the UK economy, with  subsidies, Funding for Lending and Help to Buy. However, whilst that helped the Tory’s get back into power in 2015, some say this impressive growth in the UK property market has been at the expense of pricing out youngsters wanting to buy their first home.

 

Others say this is the straw that breaks the camel’s back as over the next four years Landlords will slowly lose the ability to offset all their mortgage interest against tax on rental income, after changes announced in the Summer Budget. At the moment, landlords can claim tax relief on buy to let mortgage monthly interest repayments at the top level of tax they pay (ie 40% or 45%). However, over the next four years this will reduced slowly to the basic rate of tax – currently 20%.

Surely this is the end of Buy to Let in Canterbury? Probably.. but before we all run to hills panicking .. let me give you another thought.

Stamp Duty rules were changed in December 2014. Before then, landlords were eagerly buying up properties under the ‘old slab style Stamp Duty’ system. For example, the stamp duty bill on that £285,000 property was lower on the old slab style duty (pre Dec 2014), at £8,550, yet it isn’t a million miles away from new £12,800 stamp duty bill. Interestingly though, George has left a legal loophole in the new rules, because when it comes to selling up, they can offset purchase costs against any eventual capital gains tax, including stamp duty.

I believe that total returns from buy to let will continue to outpace other investments, such as the stock market, gilts, bonds and even pensions. Also, the best part about investing in property is that it is bricks and mortar. You can touch it, you can feel it, and it isn’t controlled by some City whiz kid in Canary Wharf .. the British understand property and that goes a long way!

Buy to let has enough impetus behind it that prospective landlords will continue to buy even with a larger stamp duty bill. Canterbury landlords will need to be savvy with what property they buy to ensure the extra stamp duty costs are mitigated.   Buying buy to let property is a long term venture. In the past, it didn’t matter what property you bought in Canterbury or at what price – you would always make money. Now with these extra taxes, the adage of ‘any old Canterbury house will make money’ has gone out the window.   You wouldn’t dream of investing in the stock market without at least looking in the newspapers or taking advice and opinion from others, so why would you take the same advice and opinion about buying a buy to let property in Canterbury?

One source of information, opinion and advice is the Canterbury Property Blog www.canterburypropertyblog.com .

How EU Migration has changed the Canterbury Property Market

 

The argument of migration and what it does, or doesn’t do, for the country’s economic wellbeing is something that has been hotly contested over the last few years. In my article today, I want to talk about what it has done for the Canterbury Property market.

Before we look at Canterbury though, let us look at some interesting figures for the country as a whole. Between 2001 and 2011, 971,144 EU citizens came to the UK to live and of those, 171,164 of them (17.68%) have bought their own home. It might surprise people that only 5.07% of EU migrants managed to secure a council house. However, 676,091 (69.62%) of them went into the private rental sector.  This increase in population from the EU has, no doubt, added great stress to the UK housing market.

Looking at the figures, the housing market as a whole is undoubtedly affected by migration but it has been the private rented housing sector, especially in those areas where migrants come together, that is affected the most.  Indeed, I have seen that many EU migrants often compete for such housing not with UK tenants but with other EU migrants. In 2001, 3.68 million rented a property from a landlord in the UK.  Ten years later in 2011, whilst EU migration added an additional 676,091 people renting a property from a landlord, there were actually an additional 4.14 million people who became tenants and were not EU migrants, but predominately British!

As a landlord, it is really important to gauge the potential demand for your rental property, especially if you are a landlord who buys property in areas popular with the Eastern European EU migrants.  To gauge the level of EU migration (and thus demand), one of the best ways to calculate the growth of migrants is to calculate the number of people who ask for a National Insurance number (which EU members are able to obtain).

In Canterbury, migration has risen over the last few years. For example, in 2007 there were 1,389 migrant national Insurance cards (NIC) issued and the year after in 2008, 1,510 NIC cards were issued. However, in 2014, this had increased to 2,126 NIC’s. However, if the pattern of other migrations since WW2 continues, over time there will be an increasing demand for owner occupied property, which may affect the market in certain areas of high migrant concentration. On the other hand, over time some households move into the larger housing market, reducing concentrations and pressures.

In essence, migration has affected the Canterbury property market; it couldn’t fail to because of the additional 14,868 working age migrants that have moved into the Canterbury area since 2005. However, it has not been the main influence on the market. Property values in Canterbury today are 22% higher than they were in 2005. According to the Office of National Statistics, rents for tenants in the South East have only grown on average by 0.95% a year since 2005 .... I would say if it wasn’t for the migrants, we would be in a far worse position when it came to the Canterbury property market. This was backed up by the then Home Secretary Theresa May back in 2012 - more than a third of all new housing demand in Britain is caused by inward migration and there is evidence that without the demand caused by such immigration, house prices would be 10% lower over a 20 year period.

If you want to know more about the Canterbury property market, then for more articles like this, please visit the Canterbury Property Blog www.canterburypropertyblog.com .

Herne Bay - potential 5.82% yield at £165K - 2 bed apartment

Blinking flip!………..Is it cold or is it cold!! Winter is certainly with us. Whilst keeping warm and checking Rightmove this morning, I found a great investment has just come onto the property market in Herne Bay. It’s a two bed apartment for £165K with Kimber Woodward and it’s a real cracker.

Let’s start with the asking price. At £165K it’s a great bargain and at this price will not be around long. The location is brilliant, as it’s close to the major road infrastructure of the Thanet Way, creating easy access for young professional tenants. It’s age / condition is also excellent, so it’s ‘good to go’ from an investment viewpoint.

Turning to the rental aspect of the property, I’ll take a real conservative viewpoint and state that the rental figure would be (at the very worse!) £750 per month, which will give you a good yield of 5.45% and at £800 per month, it would take the yield to a cracking 5.82%.

What about the capital growth? Well, these apartments in Weyman Terrace were built circa 2013 and the growth in the past year has been circa 7.81%. Try getting that at a building society!

Again, this is proving my view on the Herne Bay market, i.e. great area to invest in, with an good capital growth!

Check it out at http://www.rightmove.co.uk/property-for-sale/property-56116580.html and give the agent a call.

Canterbury Property Market Crisis as New House Building slumps by 55.74%

One of the key factors that determine the price of anything is the demand and supply of the item that is being bought and sold. When it comes to property, demand can change overnight, but it takes years and years to build new properties, thus increasing the supply.

 

The Conservatives have pledged to build over 1 million homes by 2020. I am of the opinion that as a country, irrespective of which party, we have not built enough homes for decades, and if the gap between the number of households forming and the number of new homes being built continues to grow, we are in danger of not being able to house our children or grand children. I believe the country is past the time for another grand statement of ambition by another Housing Minister. Surely its right to give normal Canterbury families back the hope of a secure home, be that rented or owned? As a city, we need to exert pressure on our local MP Julian Brazier, so they can make sure Westminster is held accountable, to ensure there is a comprehensive plan, with enough investment, that can actually get these homes built.

 

To give you an idea of the sorts of numbers we are talking about, in the Canterbury City Council area in 2006, 470 properties were built. In 2007 that rose to 570 and a year later in 2008, it peaked at 1,220. By 2014, that figure had dropped by a massive 55.74% to 540 properties built.

 

The outcome of too few homes being built in Canterbury means the working people of the city are being priced out of buying their first home and renters are not getting the quality they deserve for their money. The local authority isn’t building the estates they were after the war and housing associations are having their budgets tightened year on year, meaning they have less money to spend on building new properties. I know of many Canterbury youngsters, who are living with their parents for longer because they cannot afford to get onto the housing ladder and growing families are unable to buy the bigger homes they need.

 

I talk to many Canterbury business people and they tell me they need a flexible and mobile workforce, but the high cost of moving home and lack of decent and affordable housing are barriers to attracting and retaining employees. Furthermore, building new homes is a powerful source of growth, creating jobs across the county and supporting hundreds of Canterbury businesses. It is true that landlords have taken up the mantle and over the last 15 years have bought a large number of properties. The Government need to be thankful to all those Canterbury landlords, who own the 5,955 rental properties in the city. Most local landlords only have a handful of rented properties (to aid their retirement), and without them, I honestly don’t know who would house all the extra people in Canterbury!

 

Moving forward, those Canterbury landlords have many pitfalls, both in the short term and medium term. For instance, were you aware that the rules of changes for new tenancies from the 1st October 2015 (with some imposing penalties including losing the right to require the tenant to vacate, if they are done incorrectly) or in the medium term, the planned change in the way buy to let’s are taxed?

 

More than ever, the days of buying any old property in Canterbury and you would be set for life are gone. Now, it’s all about ensuring you stay the right side of the law, buying the right property (and that might mean even selling some to buy others), so you build the right portfolio for you as a landlord. One source of info on all of these issues, where you will find other articles similar to this on the Canterbury property market, is the Canterbury Property Blog www.canterburypropertyblog.com 

 

Canterbury house owners desert the housing market with an 8 year low

 

Even though the housing market is in an upbeat state in many parts of the UK, getting on the property ladder is still challenging for many and regarded as unattainable by some.  However, that goal has become even worse recently in Canterbury as the number of houses available to buy is at an 8 year all time low.

Back in Summer 2008, there were over 560 properties for sale in Canterbury and since then this has steadily declined year on year, so now there are only 284 for sale in the city.  This continuing diminishing supply of housing has been happening over those years for a while and there simply aren’t enough properties in Canterbury to match demand.

According to a recent report by the National Association of Estate Agents, that said, “There are now 11 house hunters fighting after every available house which isn’t sustainable.”   What that means is Canterbury youngsters, who are looking to buy their first home, are finding themselves being squeezed out by the competition.  However, in the meantime, nobody wants to live with parents until they are in their 30’s, so that in turn creates demand for more rental properties, which means landlords have a greater demand for more rental properties so are buying more, resulting in even less smaller properties for the youngsters to buy, it’s a vicious circle.   

Talking to fellow agents, mortgage arrangers, surveyors and solicitors in the City, all of whom have extensive dealings in the Canterbury property market like myself, most of us agree the movement in the Canterbury market is taking place in the middle to upper market, higher up the property ladder and it’s second and third steppers pushing through the properties that are being bought and sold.

That has meant as people tend to move less in the middle to upper market, the number of the properties actually selling has drastically reduced over the last couple of years.

When we look at the individual areas of the city, it paints an interesting picture.

• CT1 - Canterbury city centre 35 properties sold in May 2015 (the most recent set of figures from the HM Land Registry), whilst over the Summer months of 2014, the number of properties selling in this postcode was always between 51 and 56 per month. (Interestingly the average value of those properties was £233,707).

• CT2 - Harbledown, Rough Common, Sturry, Fordwich, Blean, Tyler Hill, Broad Oak, Westbere 23 properties sold in May 2015 (with an average value of £279,049), whilst over the Autumn months of 2014, the number of properties selling in this postcode reached into the mid/late 40’s.

• CT3 - Wingham 14 properties sold in May 2015 (with an average value of £224,428), whilst over the Summer months of 2014, the number of properties selling in this postcode reached into the mid/late 40’s. 

• CT4 - Chartham, Bridge 65 properties sold in May 2015 (the most recent set of figures from the HM Land Registry), whilst over the Summer months of 2014, the number of properties selling in this postcode was always between 83 and 97 per month. (Interestingly the average value of those properties was £353,688).

So what does this all mean for homeowners and landlords alike in Canterbury?  Demand for Canterbury property is good, especially at the lower end of the market.  However, with fewer properties coming up for sale, it means property prices are proving reasonably stable too.

 

You see I believe a more stable, consistent Canterbury property market, with less people seeing property as an easy way to make a quick buck (as many did in the early 2000’s when prices were rising at nearly 20% a year so people were buying and selling every other minute), but a property market that has a steady growth of property values in Canterbury, year on year, without the massive peaks and troughs we saw in the late 1980’s and mid/late 2000’s might just be the thing that the Canterbury property market needs in the long term.

 

For more insights, comments and facts on the Canterbury Property market please visit the Canterbury Property Blog www.canterburypropertyblog.com where you will find many similar articles to this.

In search of the Holy Grail?

A few days ago, one of our Landlords contacted me with a question regarding one of his other student properties that he owns up in Durham. In a nutshell, the property was being rented out to students and he was looking at his position in the next couple of years, i.e. rent or sell. He also asked if he could achieve a similar return / yield if he sold in Durham and purchased in Canterbury.

Regular readers will know that to achieve the Holy Grail of Lettings of a) a great yield and b) fabulous capital growth can be a real challenge, if not impossible, therefore this required a degree of research on behalf of the Landlord to offer him some sound advice.

To enable me to respond, it was necessary to manage some research and get back to him with some facts and figures.

The property in question in Durham was bought for circa £230K and has a monthly rent of £1646, which in turn gives a respectable gross yield of nearly 8.6%.

My first area of research was the latest Land Registry data, which was published a few days ago on the 28th Oct 2015.

In the table below, we can see two key pieces of information regarding the capital growth, i.e. the South East has grown by 8.5% in the past 12 months, as opposed to the prices in the North East which have decreased by 0.3% in the same period. Interesting to also note that the North East is the only region in England and Wales that has decreased in the past 12 months.

When I ‘drilled down’ to county level, i.e. Kent & Durham, we found the problem was compounded, i.e. Kent has grown by 8.5% in the past 12 months, as opposed to the prices in County Durham which have decreased by 1.9% in the same period. (As per the table below). Of interest, I have left the data of the other counties between Durham at the top and Kent at the bottom, showing the variants between other counties.

 

 

 

 

As my regular readers will note, the most important consideration you will make before investing in property is the balance between annual return/yield and the annual value increase/capital growth. However, what affects those two things (yield and capital growth) in Canterbury or indeed Durham, are very varied and complex. The quantity of property and whether property is owner occupied, social housing (posh words for council housing) or private renting has a big difference on yield and capital growth.

The scenario above is a near perfect example of the dilemma facing investment Landlords regarding yield v capital growth and whilst the Landlord in question has not yet made a decision, by making such research for him we have been able to provide him with some of the tools to make an informed decision.

Therefore, if you are looking for a sound investment, always check the area carefully and try to obtain some honest & sound local advice.

Good hunting!

 

 

Could your Canterbury property save you from Pension oblivion?

If you were born in the early 1970’s or late 1960’s, if you haven’t started to think about it yet, retirement is closer than you think. In fact the number of years you have left to work is less than the number of years you have worked. The basic state pension is worth £115.95 a week for a single person in 2015/16 (or £6,029 a year) and £231.90 a week for a couple (£12,118 a year) as long as your partner has paid their stamp (although there are certain get of jail cards if they haven’t).

As a household, could you live on just over £12k a year?

However, could the property you are living in, in Canterbury, save you from poverty when you reach retirement? You see, a regular income is vital in retirement, and the bricks and mortar you own in Canterbury could provide a way for you to finance life when you retire.

If you are in your 30’s, instead of saddling yourself with bigger and bigger mortgages, going from your first time buyer flat, to a terraced, to the semi and then the large detached house, you could instead keep your terraced or small semi, turning it into buy a buy to let property, let the rent pay the mortgage and then rely on capital growth to provide you with a lump sum when you sell the property and retire.  One of the biggest plus points of buy to let is what is known as leverage. Let me explain ... say you have a deposit of 25% and the value of the property rises by 3% a year, your gains in fact multiply to 12%.  However, if property prices drop, 'leverage' can be catastrophic, as losses will also be multiplied. Property values have dropped a number of times in the last 50 years, but they always seem to bounce back ... property must be seen as a long term investment.

Let me explain how leverage could work for you. If you had bought a Canterbury house in spring of 1983 for £60,000, using a 75% mortgage and 25% deposit, (meaning your deposit would be £15,000). Today, that Canterbury property would have risen in value to £434,274, a rise of 623.8%. However, when you look at the growth on just your deposit, the rise is even better ... instead of 623.8%, we see a rise of 2795% (remembering that the mortgage would have been paid off).

However, buy to let is not all about capital growth and in retirement, income is more important than capital growth, as rent is the key to a steady income.

So surely the best strategy is to buy those Canterbury properties with the high rents (when compared to the value of the property). These are called high yield properties in the buy to let world because the monthly return is so much greater. So surely they are the best in Canterbury? Possibly, but the properties that offer these higher yields (in the order of 5% to 6% per year) tend to be in such areas as Hales Place in Canterbury, historically they haven’t offered such good capital growth when compared to the city average, have a higher tendency for void periods and such properties tend to attract tenants that have a greater propensity to be high maintenance.

Therefore, if a high maintenance rental portfolio wasn’t for you, another strategy could be buy a property with relatively smaller rental returns of 3% to 4% per year (i.e. lower yields), but in a more up market area such as St Dunstans. Properties such as these tend to suffer from less void periods (i.e. when there is no tenant in the property paying you rent) and they historically have had better long term capital growth when compared to the city average.

Every landlord is different and every property is different. All I suggest to you is do your homework.

As regular readers will know, I am happy to share my knowledge and experience of the Canterbury property market, high yields, high capital growth, what to buy, what not to buy and where to buy in the Canterbury Property market can always be found on the Canterbury Property Blog www.canterburypropertyblog.com .

Canterbury Property Market - Asking Prices Drop but Values rise

Those of you who regularly read my weekly articles in the Canterbury Property Blog will know I like to keep abreast of the Canterbury property market. Something attracted my attention this week about the local property market, something I wanted to share with my many readers.

Over the last month, there appears to have been an anomaly in the local property market, whereby asking prices in the city have dropped, yet property values have increased.  The average asking price of a Canterbury property, according to Rightmove, fell 1.2% this month yet the average value of a Canterbury property rose by 0.9%.

So how does this relate in monetary terms?  This anomaly has driven the average asking price of a Canterbury property down slightly to £271,400 whilst the average value is now £299,200.

So why the difference? Technically an ‘asking price’ can be any price that a homeowner wants to place his or her property on the market for. Unfortunately, many times this is done without research and can result in overpriced properties that don't sell. As the Summer months are normally slightly quieter those left on the market wanting to sell often temper their asking prices in these months to try and generate interest in their property.

On the other side of the coin, the property ‘value’ is the price that a willing buyer is prepared to pay and a willing seller is prepared to sell at.   Therefore, in a nutshell, Canterbury property values are continuing to rise and those homeowners in Canterbury who have properties on the market, last month on average, reduced their asking prices .. great news for property owners and buyers alike!

In previous articles, I have spoken about the continued fundamental shortage of property coming on to the market compared to buyer demand. That is especially true for homeowners wanting to upgrade to a better house/better location.  I can appreciate Canterbury home owners are reluctant to put their own property on the market speculatively and wait for the right property to become available and some high demand locations can suffer from a property stalemate.

Most homeowners don’t want to sell their house and then have nothing to buy.

But that’s the beauty of the much maligned English and Welsh house buying process. You can find a purchaser for your property, then ask them to wait. By agreeing a sale (subject to contract) before you try to buy sounds concerning to many, but with fewer properties for sale you need to have a buyer for your property or you will be treated as a less serious buyer yourself. If you cannot find the right home for you, you can slow the deal with your purchaser until it comes along. If nothing suitable does comes along and you lose your buyer then the worst outcome is that you have to find another purchaser or take your property off the market and stay put for now, and as long as you mention this at the start they must not commit to any costs until you have agreed your onward purchase.

However, for the landlord/buy to let investors, these potential problems are nothing further from the truth. As I write this article, there are over 140 flats for sale, over 60 terraced houses and 30 semis for sale in Canterbury.  Landlord/Buy to let investors can normally pick up some bargains in the Autumn months, as sellers who are selling their homes often have a pressing need to sell by this time.

The types of houses a Canterbury landlord typically buys, are not the same types as the homeowners wanting to move to a posher area of the city as they are attracted by larger semis and detached properties. The best types of properties for buy to let are the smaller flats, terraced and semis (not the big detached ones). There are in fact too many of these smaller properties for sale .. just look at the numbers of properties for sale (mentioned in the previous paragraph).

If you are a landlord or thinking of becoming one for the first time, and you want to read more articles like this about the Canterbury Property Market together with regular postings on what I consider the best buy to let deals in Canterbury, out of the many properties on the market,  irrespective of which agent is selling it, then you might like to visit the Canterbury Property Blog www.canterburypropertyblog.com