Doom and Gloom for Canterbury Property Market?

One of my landlords from Rough Common rang me today, after he had spoken to a friend of his. Over the weekend, they were discussing the Canterbury property market and neither of them could make their mind up if it was time to either sell or buy property. If you read the newspapers and the landlord forums on the internet, there is a good slice of doom and gloom, especially with changes in the taxation towards landlords, the new legislation on checking tenants and the general uncertainty in the world economic situation.

I would admit, there are certain landlords in Canterbury who have over exposed themselves in the last few years with high percentage loan to value mortgages. Those mortgages, with their current (yet artificially low) interest rates, will start to suffer, as their modest monthly positive cash flow/profit, i.e. income (rent) less costs (mortgage, fees, tax); will become negative when the tax and mortgage rates rise throughout 2017 and beyond.

It appears to me these landlords seem to have treated the Canterbury Buy to Let market as a sure bet and have not approached this as a business and, as a result, they will suffer as they thought "Buy a house - rent it out so it covers the mortgage and make a few quid on top".  These are the people who will be thinking twice. I see opportunity everywhere and won't be stopping, I’m here to stay. It’s going to be an exciting new year.

Gone are the days when you could buy any old house in Canterbury and it would make money.  Yes, in the past, anything in Canterbury that had four walls and a roof would make you money because since WW2, property prices doubled every seven years … it was like printing money – but not anymore.

True, since January 1997, the average price paid for a Canterbury flat/apartment has risen from £50,990 to today’s current average of £201,867 in the city, an impressive rise of 296% and terraced/town house have risen in the same time frame, from £65,679 to £252,147, an similar rise of 284%. However, look back to 2005, and in that year, the average flat was selling for £152,071, meaning our Canterbury landlord would have seen a modest rise of 33% and the terraced owner would have seen an increase of 43%, as they were selling for on average £176,885 ... not bad until you consider inflation.

Since 2005, then inflation, i.e. the cost of living, has increased by 33.4%. That means to retain its value, Canterbury terraced property bought for £176,885 in 2005 needs to be worth £235,909 today. Therefore, our landlord has seen the ‘real’ value of his property only increase by 9.6% (i.e. 43% less 33.4% inflation).

The reality is, since around 2004/2005 we haven’t seen anything like the capital growth in property we have seen in the past and it’s not predicted to grow at the rates it has previously done either. So it is high time anyone considering investing in property stopped believing the hype and did some serious research using independent investment expertise. You can still make money by buying the right Canterbury property at the right price and finding the right tenant. However, remember, investing in Canterbury property is not only about capital growth, but also about the yield (the return from the rent). It’s also about having a balanced property portfolio that will match what you want from your investment – and what is a ‘balanced property portfolio’? Well we discuss such matters on the Canterbury Property Blog ... if you haven’t been, then it might be worth a few minutes of your time?  www.canterburypropertyblog.com

34.7% of Canterbury tenants in the private rented sector are on Housing Benefit

“What does the ideal Canterbury tenant look like?”, asked one of my landlords from Harbledown the other day, to which he carried on before I could reply, “Let me guess, a professional couple, both in their 30’s, flawlessly tidy, pays their rent early, doesn’t complain or fuss, who has no plans to move and cheerfully accepts annual rent rises”.

Before I can answer that question properly, I have always believed all a landlord wants (and expects) of their tenants is to pay their rent on time and look after the property as if it were their own. In return, the landlord should provide a property that is warm, clean, modern and damp free and sort any issues (such as repairs) quickly and without fuss. 

Back to the tenants – tenants tend to fall into several groups ... 20 something professionals; young and middle aged families; corporate tenants (i.e. their employer finds their employee a house to live in); students; older singles/couples and housing benefit claimants – and they come with different needs and wants. So choosing who best suits your Canterbury property – and steering clear of bad tenants – is a big factor in making property investment a success.

One topic that I am often asked is should they, as a landlord, accept tenants on housing benefit?

It might interest the landlords of Canterbury that of the 10,665 private rented properties in the local council area, 34.7% of the tenants of those properties are on some form of housing benefit.

(3,709 properties to be exact). I know many landlords have suffered late rent payments with tenants on benefits, especially since 2008, when local authorities started paying housing benefit to tenants rather than directly to the landlords, but you can’t ignore the fact that housing benefit tenants make up a significant proportion of the Canterbury rental population. My opinion is that the final choice of accepting such tenants has to be the landlords but you can’t tar every tenant with the same brush (I will always give you a balanced opinion if ever asked).

Interestingly, it might surprise some readers of the Canterbury Property Blog, when we compare Canterbury to the national picture, Canterbury’s Housing benefit claimants are lower, as nationally a higher proportion of private tenants claim the benefit. Nationally, 39.2% of the tenants of the 3,891,467 rental properties in Great Britain claim some form of housing benefit (i.e. 1,526,915 properties).

Now, let us look at the occupations of Canterbury tenants, which makes even more fascinating reading. Of the 10,665 privately rented properties in the Canterbury area, 7,681 head tenants (the head tenant being classified as the head of the household) are in employment (the other 2,984 rental property head tenants either being retired, long term sick, students or job seekers).

Splitting those 7,681 head tenants down into their relevant professions, 3,076 of them are Managers, Directors, Senior Officials, Professional or Technical Professions, 551 in Administrative and secretarial occupations, 857 in Skilled Trades, 823 in the Caring, Leisure and other service occupations, 886 Sales and Customer Service Occupations, 421 Process, Plant and Machine Operatives and finally, 1,067 in Elementary Occupations.

The one thing I have always known anecdotally, but until I did my research, never had anything to back it up with, was the high proportion of professionals and skilled trades renting property in Canterbury – intriguing! Maybe in future articles, I will look deeper into the corporate tenant market, young and middle aged families, students and older persons rental markets.... but in the meantime, if you want more news, views and commentary about the Canterbury property market, there are many similar articles like this on the Canterbury Property Blog www.canterburypropertyblog.com .

Are the streets of Canterbury paved with gold?

Whilst I sometimes ‘harp on’ about the merits of the Canterbury property market and why it’s such a great place to invest, it’s a real (and pleasant) surprise to get another endorsement by none other than the property correspondent at The Times, Ruth Bloomfield!

Whilst I would love to say that it was my ‘eagle eyes’ that spotted this ground breaking revelation, I am delighted to say that it was one of my blog readers, (whom may I also add is one of our long established Canterbury Landlords) who brought the article to my attention.

In the recent article (Friday 12th February) Ruth Bloomfield looks further afield than London and offer her ‘top tips’ for growth, based upon various pieces of research that she has been studying.

One piece of research, from JLL, first of all looks at Manchester, predicting property prices will increase by 5.5% this year. The researcher, Adam Challis also points out that Manchester is the ‘out and out’ second economic city of the UK. This it may be, but at 5.5% growth I’m not too sure that many investment Landlords are going to get very excited at such a prospect! Interesting to note that Mr Challis, then takes a punt at Southampton, where again he has ‘high hopes’ and again, will rise by 5.5%. We then get another ‘drum roll’ as we head back up North to Liverpool and (wait for it)…….. it’s a growth of 5%. I know what you’re thinking…..”does it get any better than this, because these figures don’t quite excite me”.

Ruth Bloomfield then takes a look at further research that’s been made by the esteemed agent Savills, who recommends focusing on the 20 key cities and they say that the ones to watch are the ‘southern university cities. Now it gets interesting I hear you say! Quite rightly they first pick up on the two main University cities in the UK, i.e. Cambridge and Oxford, whose property values have increased by 10.4% and 9.3% respectively. What is of further interest, the lovely lady from Savills, Sophie Chick (what a great name!) then starts to look further afield and she tips Canterbury as “within commuter distance of London, a beautiful city and, comparatively, excellent value, with average property prices of  £269,000.00”. This is further endorsed with a property value growth of 8.6% in the past 12 months.

So there you have it! Great city, great place to invest in. That’s being said, rest assured that despite what others maybe telling you, the streets of Canterbury are not ‘paved with gold’….. tread with care and if you need any advice, give me a call!

Canterbury Landlords count the cost of a Tory Election win

Can you remember 10.05pm on Thursday, 7th May 2015 ... with the shock news that BBC Exit Polls suggested the Conservatives would be returned with majority? The middle classes in Tyler Hill and Fordwich exhaled a huge sigh of relief, as Canterbury landlords, faced with rent controls from Red Ed and the Labour Party, now had something to cheer about as the Tory’s were always considered to be a political party that accepted the importance of the rental market, supported its development while properly targeting the lawbreaker landlords renting out below standard rental accommodation.

Since May though, George Osborne announced future rises in stamp duty for buy to let landlords and a change in the interest relief on buy to let mortgages, some people have started to question that loyalty. However, things could have been a lot worse for Canterbury landlords as previous ideas of making landlord’s pay more tax was the idea (which was seriously considered) of increasing Capital Gains Tax rates to the landlord’s own income tax levels. If Landlords would have had to pay capital gains tax of 40% to 45% on any uplift in value, I can tell you here and now, that would have made investing in property a non-starter for almost everyone.

However, I will admit the loss of mortgage higher rate tax relief will make a number of properties not stack up financially. The new rules are likely to slow demand in the Canterbury housing market, which is in fact good news for the other landlords, as there is less competition from 'amateur' landlords offering too much.

Just a thought, but making Canterbury landlords think twice and

run their numbers more cautiously is not such a bad thing.

 

So looking at the numbers, the December figures have just been released and they show a growth of property values in Canterbury of 0.5% over the month of November. That figure doesn’t surprise me due to the time of year. It’s quite dangerous to look at one month in isolation, so looking at a more medium term view, over the last 12 months, property values in Canterbury have risen by 7.7%, not bad when you consider inflation is running at -0.1%.

However, regular readers of the Canterbury Property Blog know my passion for looking deeper into the stats. The really interesting information is the value growth, but what types of property are actually selling in Canterbury?  Looking at all the properties sold, as recorded by the Land Registry, within 2 miles of the centre of Canterbury in September 2015 (this data always runs a couple of months behind the house price data) compared to September 2007 (a couple of months before the credit crunch started to bite and the subsequent property crash).

	Sept 2007	Sept 2015	Difference
Detached in Canterbury	3	12	+300%
Semis in Canterbury	18	20	+11%
Terraced Houses in Canterbury	26	24	-8%
Apartments / Flats in Canterbury	52	17	-67%

 

Now I have mentioned in previous articles that the numbers of properties selling in the city has certainly dropped post 2008, but what amazed me were the drop in the number of terraces and apartments selling in Canterbury compared to the sales of detached and semi’s properties, which have increased considerably.

Less properties are selling than last decade in Canterbury

and the types of properties selling have changed ...

interesting times ahead for the Canterbury Property market!

 

Therefore, all I can say to the landlords of Canterbury is do your homework, make sure the numbers do stack up, take advice and opinion from professionals and above all, for those of you planning to add to your portfolio, buy the right property at the right price. One place for such advice and opinion on the Canterbury Property market is the Canterbury Property Blog www.canterburypropertyblog.com

Where will Canterbury Property Prices be by 2021?

I was having lunch the other day at Café Rouge on Long Market in Canterbury, with a local Canterbury solicitor friend of mine, when the subject of property came up. He asked me my thoughts on the Canterbury property market for the next five years.  Property prices are both a British national obsession and a key driver of the British consumer economy.  So what will happen next in the property market? So here is what I told him, and now wish, my blog reading friends, to share with you.

Before I can predict what will happen over the next five years to Canterbury house prices, firstly I need to look at what has happen over the last five years.  One of the key drivers of the housing market and property values is unemployment (or lack of it), as that drives confidence and wage growth – key factors to whether people buy their first house, existing homeowners move up the property ladder and even buy to let landlords have an appetite to continue purchasing buy to let property.

When the Tory’s came to power in May 2010, the total number of people who were unemployed in City stood at 1,507 (or 3.1% of the working age population in Canterbury parliamentary constituency). Last month, this had dropped to 676 people (or 1.3% of the working age population).

As the Canterbury job market has improved with better job prospects, salaries are rising too, growing at their highest level since 2009, at 3.4% per year in the private sector (as recently reported by the ONS).  That is why, even with the turbulence of the last few years, property values in the Canterbury area are 18.0% higher today than they were five years ago.

Many home occupiers have held back moving house over the past seven to eight years following the Credit Crunch but with the outlook more optimistic, I expect at least some to seize the opportunity to move home, releasing pent up demand as well as putting more stock onto the market. With a more stable economy in the City, this will, I believe, drive a slow but clearly defined five year wave of activity in home sales and continued house price growth in Canterbury.

I forecast that the value of the average home

in Canterbury will increase by 22.4% by 2021

 

22.4% might sound optimistic to some, but according to Land Registry, values are currently rising in Canterbury at 8.2% year on year, I believe my forecast to be fair, reasonable and a reflection of both positive (and negative) aspects of the local property market and wider UK economy as whole.

However, it wouldn’t be correct not to mention those potential negative issues as I do have some slight concerns about the future of Canterbury housing market.  The number of properties for sale in Canterbury is lower than it was five years ago, restricting choice for buyers (yet the other side of the coin is that that keeps prices higher). Interest rates were being predicted to rise around Easter 2016, but now I think it will be nearer Christmas 2016 and finally the new buy to let taxation rules which are being introduced between 2017 and 2021 (although choosing the right sort of property / portfolio mix in Canterbury will, I believe, mitigate those issues with the next taxation rules).

I am telling the landlords I speak to, that with interest rates at their current level 0.5%, the cash in your Building Society Passbook is going to grow so slowly that it might as well be kept under their bed. Property prices, by contrast, have rocketed over the years, even after the property crashes, far outstripping bank accounts and inflation.

So my final thought ...  property is a long term investment, it has its ‘up and downs’ but it has always outperformed, in the long term, most investments. Those in their 40’s and 50’s in Canterbury would be mad not to include property in their long term financial calculations. 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

What does 2016 have in store for the Canterbury Property Market?

Canterbury house prices up or Canterbury house prices down? ... and if so, by how much? Those of you who read the Canterbury Property Blog will know I am not the sort of person who pulls punches nor someone who ever fails to give a forthright and straight talking opinion – so here are my thoughts for the 9,236 Canterbury homeowners and landlords.

The average Canterbury property is 8.2% higher today than it was a year ago, which doesn’t sound a lot, but when you consider inflation is currently running at -0.1% (i.e. consumer/retail prices are dropping) and average salary growth is only around 2.5% pa, this is bad news for first time buyers as property affordability continues to decrease (although I was reading in The Times the other day that wage inflation (i.e. salary growth) is showing signs of weakening).

Some commentators have said the higher stamp duty taxes announced a few months ago in the Autumn Statement for buy to let landlords, concerns over first time buyer affordability and the outlook of UK interest rate rises in 2016 will really dampen the property market. I hope you all read my previous article about what the new stamp duty rule changes would REALLY mean for Canterbury landlords in my blog, but I believe the real issue in the Canterbury property market is the shortage of property to buy, as people either worry there will be no suitable house to move to, or cannot afford to upgrade. However, on the supply side, Mr Osborne said in his Autumn Statement that he will change the planning laws to ensure the government meets the pledge made at the General Election (back in May) of 200,000 new homes a year.  All I can say is .. good luck George hitting those numbers!

Why? Because houses take years to build .. not months .. so George and his fabled house building aside .... where does that leave us in Canterbury in 2016?

Well, talking of supply ... whilst Mr Osborne builds his properties (and let’s be honest - a week doesn’t go by without him being filmed on a building site with a high viz jacket and hard hat building a house here and there!), let us look at the shortage of properties for sale. Back in February 2011, 443 properties were for sale in Canterbury .. today that figure is 273. On the face of it, this means there is less choice for Canterbury buyers – but it also means with a restricted supply of properties for sale .. it keeps property prices high for Canterbury house sellers.

Everything isn’t all doom and gloom though ... again back in February 2011, the average property in Canterbury took 115 days to find a buyer .. latest figures state this has dropped to 89 days .. a drop of 23% in how long it takes to find a buyer. However, when you delve even deeper, the best performing type of property today in Canterbury is the 4 bed, which only takes 70 days to find a buyer (on average) compared to the 2 bed, which takes 104 days. It just goes to show, even though the average has dropped since 2011, how varied that change has been!

So, back to the question everyone is asking .... What will happen to property values in Canterbury in 2016?  I am going to suggest they will rise between 7% and 8% ... nothing out of the ordinary, but unless something cataclysmic happens in the world, 2016 will be like 2015! For more thoughts, opinions and views on the Canterbury property market, visit the Canterbury Property Blog – www.canterburypropertyblog.com

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!