An Expert ‘Buy-To-Let’ Checklist when looking for Property in Canterbury

 

Buying to Let - popularly hailed as an alternative to badly performing pension funds - was slowed down by a recession that squeezed mortgage deals and discouraged housing investment. But a reviving market is now generating more attractive mortgages, stimulating property prices and generally raising rent levels again.

We have found that advice for new Buy-To-Let investors can still be contradictory and confusing, like most things if you’re Buying-To-Let, you need to do it right and when a considerable amount of your own money is involved it becomes absolutely critical.

We thought, to try and make the process of buying to let simpler and more successful for you, we would prepare a definitive checklist. So here we go...

• Research your market – the area, the people you want to rent to, the available property, the benefits and the risks – and keep up with letting industry news.

   
• Choose your preferred tenant type. Students? Young professionals? Families?

   
• Find the right property that will appeal to them – houses, flats, older properties, newer builds? Students may not need anything particularly stylish but a young professional might.

   
• Then pick the right area where they want to live – parents may want to be close to schools and shops; wage earners need to commute to work; students have to be near to their college or university. Look outside your own area if necessary.

   
• If local crime statistics are available, take a look and bear them in mind.

   
• Study the condition of any property you are interested in – from roof, guttering and windows on the outside to condensation, leaks and electrical wiring on the inside. Be conscious of fire risks. Check whether extensions or conversions have met planning permission or building regulations.

   
• Don’t accept the first mortgage offer you get. Shop around. Gather information. Compare.

   
• Get the maths right – your investment might give a better return in some other way. How much is the right property going to cost? Is the rent you expect to get enough to cover the mortgage and give a profitable return? Does the potential capital growth add up to a good investment?

   
• Talk to an independent lettings agent before you buy. Most mistakes involve either wrong location or wrong price paid for a property.

   
• Don't be greedy – Buying-To-Let should be approached as a long-term investment, not a quick fix.

   
• Be prepared for costs that can upset your calculations – on-going maintenance, small and major repairs, advertising, future rate rises, mortgage costs, agents fees, tax, falling house values, periods when you can’t find tenants and the property is empty.

   
• Get the right insurance cover – and that can include insuring yourself against tenants who fail to pay rent.

   
• f you’re going to manage the let yourself, be prepared to sacrifice your evenings and weekends! If this is likely to be more of a drain than you are prepared for, seek out a professional, fully accredited lettings agent who, for a fee, will look after your property, your interests and your tenants on your behalf.

This checklist offers a selection of do’s and don’ts, but, it is only for guidance purposes, we prefer to sit down, face-to-face, with a new potential investor and offer more solid professional advice, since everyone’s circumstances and expectations are very different. Why not come in and see us in our office on Watling Street.

What has the Help to Buy scheme done to the Canterbury property market?

 

The Conservative’s and Liberal Democrats launched Help to Buy eighteen months ago to give a boost to the housing market. The Help to Buy scheme involves the Government guaranteeing up to 15 per cent of a mortgage, acting as an indemnity for the banks and building societies who sign up (so far only three banks have done so). This means lenders can provide mortgages more confidently to borrowers with a 5 per cent deposit. It will apply to all types of properties, first-time buyers, home movers and re-mortgagers.

 

Quite interestingly, first timer buyers have had access to 95% mortgages since 2010 so I am not sure what it will do to the market, except highlight that property can be bought with a 5% deposit. Scheme or no scheme, Canterbury continues to have a buoyant property market. Prices are rising, but not at the double digit level that was experienced in the early to mid 2000’s. If the scheme enables those who want to buy, to buy, then that can only be good for everyone in the town.

 

Over the last 2 or 3 years, it has mostly been landlords that have been buying property in Canterbury to let out. Carrying out a quick search on one of the price comparison websites, I was able to find in seconds that landlords can get fixed rate buy to let mortgages from as low as 3.65% until the end of 2017. With rental yields in Canterbury of around 4% to 7% per year and the property values increased by 4.3% in Canterbury in the last 12 months, the overall yearly return is the region of early 8%’s to 11% per year.

 

However, buying a buy to let property is full of pitfalls. If you have a good tenant, in a good property and a good relationship between tenant and agent, then not much can go wrong, as long as the relationship between the landlord and agent is exceptional. I pride myself on exceptional relationships with my landlords and their continued business speaks for itself.

 

If you are considering becoming a new buy to let landlord, feel free to pop your head through the door of our agency on Watling Street in Canterbury for some advice and opinion on what (or not) to buy. It is true the property market is showing signs of good improvement, but, if you know where to look, and more importantly, what to look for, there are still bargains in Canterbury to be had.

Student Investment - 6.16% yield

Talking to an investment landlord from London yesterday, we discussed a property that he had just purchased close to Station Road West. During the conversation he asked my opinion with regard to investing in the student market, here in Canterbury. With a sharp intake of breath, I said ‘tread with caution’, due to the current over supply of student properties and ensure that it’s the right property and in the right place.

The above being said, the following property has just come onto the market and it looks OK. It’s on the market with Miles & Barr for £250K and based upon a 12 month Tenancy, with half rent in July / Aug, i.e. 11 months’ rent, it should give a yield of circa 6.16%. This was based upon a room rate of £350 per student.

From the photos and description, the property appears to be in good shape and should let fairly swiftly. There is a timing issue with this property, which is not insurmountable and just needs to be taken into consideration.

My advice it phone the agent and take a look, and see what you think. Further details can be found at the following link: http://www.rightmove.co.uk/property-for-sale/property-33434937.html

 

 

Should you wish to discuss any other specific properties or just a general chat re the current market, please feel free to contact me on 01227 455717 / canterbury@martinco.com or call in and see me at 23 Watling Street in Canterbury.

Canterbury Property Market – should you be buying?

A number of landlords, first time buyers and investors have approached me recently, asking about the Canterbury property market. With all these headlines about property values in the UK, should we be worried we are about to have a price crash or price explosion? We are at the early stages but the economy is now actually looking a lot healthier and there are signs we are seeing an actual recovery after several false starts. 

I am of the opinion that over the last few years, whilst mortgages have been a little more difficult to obtain than the last decade of the 2000’s, this lack of mortgages has produced some pent up demand for property. Now we appear to be on the other side of the financial crisis , and the banks are more willing to lend, this is why sales, prices and first-time buyer numbers have improved so rapidly. It has been like opening a shaken can of fizzy pop. You get the initial fizz of activity, and then it flattens. What we're seeing is a relatively normal market correction, not a quick transition from a recession to a boom or even boom to recession.

Property values in Canterbury have risen, on average by only 4.3 % in the last 12 months. When I look at Kent as a whole, prices have risen by 10.7% and nationally by around 8.7%. Compared to the boom years of 2000 to 2004, when property values increased by 20% in 2000, 10% in 2001 and 16.2% in 2002, 23.5% in 2003 and finally 11.6% in 2004 in Canterbury, I cannot see why some are concerned about an unsustainable price boom.

On the other hand, speaking to others in Canterbury, the issue isn’t potential massive drops in property values, but a lack realistically priced properties coming onto the market for sale, a lack of supply. In the first half of 2014 on average 156 properties came onto  the market for sale in Canterbury each month, whilst in the last three months of 2014 on the run up to Christmas, even though you would expect a slight drop, only 109 properties on average came on to the market each month. This lack of supply will keep Canterbury property prices relatively stable.

So, now is a good time to buy, provided you accept prices may fall again in a few years. It depends on how long you plan to own the property (whether as a home or investment), whether it personally suits you and most importantly whether you can afford it. Canterbury first time buyers preparing to take the plunge should bear these factors in mind. The biggest issue must be that buyers ensure they can take the hit of future interest rate rises and therefore, I ask the first time buyers of Canterbury to make sure you'd be happy in your new home, because you could be stuck there in five years' time.

Landlords tend to buy for the long term, so these short term movements don’t tend to affect them as much. The lack of supply in Canterbury of new properties coming onto the market indicates people wanting to buy have to move quickly, and don’t have the luxury of a few weeks to decide to view the property. However, my findings show that first time buyers and landlords in Canterbury aren’t prepared to pay over the odds for a property to secure it. Maybe, just maybe, the memory of the 2008 price crash has given a dose of realism to the optimistic Canterbury property market?

 

Why don’t people buy instead of renting in Canterbury?

 

 

Quite often, when talking about the rental market, we talk about property and seem to forget the other party in the equation, the tenant. Without tenants, there is no demand for the rental property. The profile of the Canterbury tenant has changed and continues to change. Although this is in part due to the credit crunch, job mobility and the raising of deposits, an increased number of people in their twenties are choosing to rent rather than buy and have done so, even when they were in a position when they could have bought a property.

Since the credit crunch, rents have been good value for money for most tenants outside London. Few rents (outside London) have kept pace with inflation as they tend to track wage inflation. In 2008, the average median gross wage according to Office of National Statistics in Canterbury was £32,977. Latest figures for Canterbury in 2014 show average salaries in the City had risen to £37,297, an increase of 13.1%. I was reading some research from the Bank of England which suggests with regards to inflation, goods and services that cost £100 in 2008 would cost £119 in 2014, making inflation 19% over those seven years.

Canterbury tenants are paying less than both wage and goods inflation. Canterbury rents are in fact still around 5.4% above the level being achieved in 2008 but the tenants are being paid 13.1% more. That is why we have seen a greater demand for Canterbury rental properties with more and more people becoming tenants. So renting has since the credit crunch, on average, delivered good value for money for tenants and hence the healthy demand and lack of void periods for most property.

Overall, even considering the recent rises in property prices over the last 12 months, we are only 0.4% above the 2007 boom prices in Canterbury. With reasonable rents, many would-be first time buyers in Canterbury have been wise to remain in the private rental sector. Rents tend to move in line with wages as opposed  to inflation and if something goes wrong with the property, inevitably landlords pick up the bill, so tenants aren’t hit with awful expenditure surprises as a normal homeowner would be. In addition, renting offers better mobility both from a location perspective, but also from a trading up or down perspective in terms of rent commitment which, in this tough job market, could be considered a wise move.

From the landlords point of view, the consequence of this steady / solid market throughout the Canterbury area, with good tenant demand, decent long term capital growth (as mentioned in last week's article) and average yields between 4 and 6%, with home owners it used to be buy, sell, buy, sell as one rose up the property ladder.. Now its buy, hold, buy, hold.

If you would like to discuss my thoughts on the rental markets in Canterbury, feel free to pop into our offices on Watling Street, or email me on david.anthony@martinco.com

 

Canterbury - 2 bedroom apartment - yielding circa 6%

Just checking through my files this morning and I have just noticed another interesting property which only came onto the property market a few days ago. At first, it didn't quite catch my eye (not too sure why), but after a few quick calculations it appears to add up.

The property is an apartment in Oxford Road and has come onto the market for £160K with Your Move in Canterbury. As ever, two bedroom apartments are in constant demand, especially within the rental Canterbury market.

So, what do the numbers look like? For starters, let's look at the first scenario, i.e. purchase and let. If the property was let for say £800 per month, this would deliver a yield of 6%. On the other hand, you may wish to make some modifications, i.e. complete re-decoration, new carpets, bathroom and kitchen for say £10K, this would still give you a yield of 5.65% which is a) excellent and b) you now have a fully re-furbished property, which will make it very attractive to quality tenants.

Check this one out at http://www.rightmove.co.uk/property-for-sale/property-49870307.html and give them a call!

Should you wish to discuss any other specific properties or just a general chat re the current market, please feel free to contact me on 01227 455717 / canterbury@martinco.com or call in and see me at 23 Watling Street in Canterbury.

Is it summer? - Faversham 5.49% yield!

Is it me or has summer arrived early? Driving into work this morning, in the dark and the howling winds, I glanced down at the outside temperature gauge and it was registering 10 deg. After a slow registration to my head, I concluded that this wasn’t usual for this time of the year and realised how lucky we are in this little micro climate in the South East of England. Global warming, bring it on!

Anyway, back to business and this morning we are scooting back up the A2 towards Faversham for this morning’s little gem. As ever, regular readers will know of my view regarding two bedroom properties and these being the ‘bread & butter’ of the lettings industry. If there was ever a type of property which is in demand and will remain in high demand for the foreseeable future, then it’s the two bed property.

The one that caught my eye is on the market for £175K with Geering & Colyer. From the photos and description, it all appears to be in good order and would be able to be rented with little changes. Such properties should rent out at circa £800 per month, which in turn delivers a healthy yield of 5.49%.

Check this one out at http://www.rightmove.co.uk/property-for-sale/property-49257134.html?premiumA=true and give them a call.

Should you wish to discuss any other specific properties or just a general chat re the current market, please feel free to contact me on 01227 455717 / canterbury@martinco.com or call in and see me at 23 Watling Street in Canterbury.

6% yield in Faversham for £150K - get in there!

Morning Prop Pickers. Calling all ‘Homes Under The Hammer’ enthusiasts, this is just the one for you!

This interesting property has just come onto the market in Whitstable Road, Faversham with Miles & Barr for £150K. From the outset, they are being totally upfront and saying that a) it requires modernisation and b) cash buyers only. Therefore starting from a base of £150K, plus a refurbishment of say £30K (max), this takes us to a figure of £180K. Now it gets interesting!

These properties, should rent out for circa £900 per month, which would give you a cracking yield of 6%! Try getting that from the bank! Of interest, I spoke with a Landlord last week who told me his bank offered him a savings rate of 1.9% on £250K………what a laugh!

Check this one out further at http://www.rightmove.co.uk/property-for-sale/property-47832334.html  and give them a call. I don’t believe that this one will be around for long!

Should you wish to discuss any other specific properties or just a general chat re the current market, please feel free to contact me on 01227 455717 / canterbury@martinco.com or call in and see me at 23 Watling Street in Canterbury.

Is the Canterbury Property market a runaway train?

 

 

Some of my landlords invest for yield, some invest for capital growth (however, it’s very difficult to get both in this market). Everyone is different; if you are a landlord in Canterbury, who invests for capital growth as opposed to yield, it is crucial to look to build in capital growth in a property by getting a property at a discount or by finding a way to add value.

So, how can you get a discount in this property market, with Canterbury property values alight and property being snapped up over night? Achieving capital growth in Canterbury is going to be tough over the coming few years isn’t it? Well yes and no. Looking at the headline figures, of the 517 properties available for sale today in Canterbury, 254 of them are sold subject to contract, an impressive 49.1% which is obviously a sign of a runaway Canterbury property market? Well, no it isn’t. Don’t get me wrong it is a lot better than it was a few years ago, but there are still good property deals to be had.

We asked Rightmove for all of the properties that had come on to the market in the last 28 days (122 to be precise), after one month, how many of those 122 had found buyers .. just over one in five (28 to be precise or 22.9%). Look at the last 56 days (2 months) and of the 229 properties that have come on to the market in Canterbury, only 75 have a sale agreed on them (or 32.7%) .. the property market is good but it’s not a runaway train, is it?

The main thing is that landlords must take as much advice as possible. They will need to take a long and serious look at any existing properties or new ones to make sure they can achieve capital growth and that this increases in line with inflation.  I have a great technique for finding properties that have been on the market for sale over three months or more. You don’t need any special software. All you need to do is ask Rightmove to list your search results (when searching), with the most recent first. The ones on the last few pages are by definition, the ones that have been on the market longest and potentially ready to do a deal .. simple but effective.

We are able to look at the whole of the Canterbury property market.  In all three towns, there are good agents and bad ones, but one thing is always the same,  they are all paid by a vendor to sell you a property, not paid by you to help you buy. Therefore, when they show you that bargain, don’t get pressured into buying a property until you have a good feel for the market. We have many landlords who send me a web link of any Canterbury properties they are interested in and I always give my honest opinion. (It might not be what you want to hear, but it will always be what you need to hear!).

So why do we do that? Well, we are a Lettings Agency. Once you’ve bought the property, we would very much like to manage it for you or help with just finding you a tenant. If we give our opinion, at no cost or obligation, then we start to build a relationship, you may just start to trust us and as we will be giving you great customer service, which at the end of the day, is what landlords want from their letting agent and you might end up asking us to be your agent in the future (but of course there is no obligation to do so). With that considered, it’s very much in our interests that you buy something that’s sensible and lettable – we don’t want you buying a dud, or something where the figures don’t stack up! 

If you would like to discuss my thoughts on the rental markets Canterbury, feel free to pop into our offices on Watling Street, or email me on david.anthony@martinco.com

 

Herne Bay - £130K - Rental yield 6.92%

 

Today, we are back to Herne Bay where I have just noticed a great property that was put on the market just before the New Year. Not too sure why I missed this one, must have been due to the frivolities during the holiday period....

 

Anyway, it's a two bed apartment with a share of the freehold and it's chain free! The asking price with Kimber Woodward in Herne Bay, is just short of £130K and from reading the description, I reckon that there is a deal to be done.

 

So with an asking price of circa £130K and I reckon the rental should be in the region of £750 per month makes a great combination, delivering a yield of 6.92%. From the photos, it looks 'good to go'.

Check it out at http://www.rightmove.co.uk/property-for-sale/property-31659852.html and give them a call.

 

Should you wish to discuss any other specific properties or just a general chat re the current market, please feel free to contact me on 01227 455717 / canterbury@martinco.com or call in and see me at 23 Watling Street in Canterbury.

Faversham - Westgate Road - 5% yield

No sooner have the party poppers and streamers been swept up from the floor, post New Years Eve celebrations, we are now starting to see properties come onto the market. Just a small point whilst I think about it. If you are going to market your property in the next few days, please ensure that the photos are NOT taken with the Christmas decorations in the piccies. It's a bit of a giveaway when your property is still on the market in May......

 

Anyway, we are off to Faversham where a good looking 2 bed has just come onto the market with Your Move for £180K. It ticks most boxes, i.e. location, condition and price, and with a rental potential of circa £750 per month, giving a respectable yield of 5%.

 

Take a look at http://www.rightmove.co.uk/property-for-sale/property-49772318.html and give the agent a call.

 

 

Should you wish to discuss any other specific properties or just a general chat re the current market, please feel free to contact me on 01227 455717 / canterbury@martinco.com or call in and see me at 23 Watling Street in Canterbury.

What will this year's property trends be in Canterbury?

I had an interesting chat with a landlord who uses another letting agent in the town, after he popped into our offices for a coffee whilst his wife was doing some last minute Christmas shopping. We got taking about the Canterbury market and thought other landlords might be interested.

You see, property values didn’t stop dropping in Canterbury until June 2012, so after a strong run over the last 30 months, the ever upward drive of house price rises has started to turn with increases now at an almost standstill for the first time since the start of 2013. Now it could be said this easing of the housing market in Canterbury can be attributed partly to the time of year (last year property values in Canterbury dropped by 0.1% in November but recovered by 1% in February 2014), it is obvious that estate agents in Canterbury are wary about the direction of the market as a result of the not as strong demand and fewer house sales.

With the uncertainty of a possible interest rate rise, new mortgage rules, a general election on the horizon and recent warnings of a house price bubble. Although the main indicators suggest that buyers will start to gain the upper hand, especially with the new stamp duty rules announced recently by George Osborne. However, there are many homeowners who don’t need to sell and won’t bother unless it’s economically beneficial to do so, but most homeowners are homebuyers, so what they lose with one they gain with another.

This is all good news for landlords looking to buy rental property with the changes in stamp duty and later in 2015, the new rules regarding pensions, where you will be able to take money out of your pension pot to invest in property. However, at the same time, I would say don’t just buy any old property in Canterbury. First time landlords need to be cautious. The doubling of house prices every seven to ten years which has taken place since WW2 doesn’t seem to have been seen since the mid 2000’s. The property market is shifting with more properties being built and restrictions put on mortgage lending, the likelihood of the property market increasing at the same levels as the past are questionable. But investing in property is also about receiving the rent.

On the one hand going for high yielding Canterbury property to rent out seems an obvious choice, but high yielding property often doesn’t go up in value that well and in some circumstances doesn’t keep up with inflation, meaning in real terms you have a depreciating asset (I spoke about this a few months ago in ‘The Canterbury Property Blog’ when comparing the Thanington Estate to South Canterbury, where property values in Thanington Estate had only risen by 41.3% in last 13 years yet the property values in the South Canterbury housing market had risen by 84.3%!).

So surely you should pick a property that has great capital growth then, because of the obvious potential to generate long term capital profit, especially with inflation eating away at our savings. However, rental yields on high capital growth properties (in areas such as Chestfield in Whitstable, the Rough Common area and the Old and New Dover Roads) tend to be low meaning if you are taking a high percentage mortgage, the rent doesn’t pay the mortgage payments.

These are the sort decisions as a Canterbury landlord investor you need to take.