I was reading a report the other day produced by the
Halifax, about the UK property market and why more and more of the younger
generation seem to be renting rather than buying. I find it fascinating that
over the last ten years, the British obsession of buying a house almost as soon
as you left school, and the fact that if you rented you were seen as a second
class citizen, has turned on its head to a point where the hopes and dreams to
own a nice home will be replaced by the ambition simply to live in one.
In the latter half of the 20th Century, you left school, got
a job, bought a small house and kept buying and selling property, constantly
upgrading until eventually they carried you out in a box. However, the perceived
shame and stigma of renting is no longer the case, as it seems that the British
are now beginning to accept a lifetime of renting. This is a very important
consideration for both Canterbury homeowners and Canterbury landlords as it will
transform the way the Canterbury property ladder looks in the future and I
might ask whether or not it will exist at all for some people? The make up of
households is one important factor, especially in the Canterbury property
market. The normal stereotypical married couple, two kids and dog of the 1970’s
and 80’s has changed. More and more we have the need for larger houses where
two families come together after divorces (+ kids) and need a property to house
everyone through to an increase in the number of one person households.
Looking at the data for Canterbury, of the 10,665 private
rental properties in the Canterbury City Council area, 27.62% of those rented
properties are one person households (2,946 properties). However, when we
compare the number of one person Canterbury households who have bought their
own property with a mortgage (i.e. therefore they are still in work), of the 40,107
owner occupied households in the area, only 3,025 of those properties are a one
person household (i.e. 7.54%). Compared to a decade ago, this explosion in
demand for decent high quality rental properties that one person households require
has not been met with an increase in supply of such properties. More and more I believe Canterbury landlords
need to consider this change in the make up of Canterbury households, as I
believe this could be an opportunity. As an aside, another interesting stat
that raised an eyebrow was that 12.91% of those 10,665 rental properties (1,377
properties) are lone parents households as well. Again, another possible
opportunity that Canterbury landlords might want to consider in their future
investment plans.
It is true that the Governments introduction in 2013 of the
Help to Buy scheme, where first time buyers only needed a 5% deposit, changed
the perception of peoples’ ability to buy without having to save ten’s of
thousands of pounds for a deposit. However, it might surprise you, 95%
mortgages were re-introduced within six months of the Credit Crunch in late
2009, so again it comes down to people’s own perception. Many youngsters think
they won’t get a mortgage, so don’t even bother trying.
Coming back to the deposit, it’s still a fact that once you
start renting it becomes that much harder to save for a deposit, regardless of
the size. Interestingly, 7 out of 8 renters polled by the Halifax (86% to be
exact) refuse to sacrifice the quality of accommodation they currently live in
to reduce the amount of rent they pay in order to save for a deposit. This is the crux and the real reason why people
aren’t buying but renting... and why demand for renting will continue to grow
in the future (i.e. good news for landlords). Canterbury tenants can upgrade
the quality and size of the property they live in for a minimal rent increase.
The average rent of a two bed property in Canterbury is £1,059pm, but a three
bed is only £98pm more at £1,157pm, whilst the average four bed rent is £1,383pm.
If you had to make that jump when buying, the monthly mortgage payments would be
stratospherically more than that! Without any social pressure and better quality
rental properties compared to a decade ago, we will become a nation of renters
within the next generation, as the UK is becoming more like Europe, where
renting is ‘the norm’. Who is going to supply all these properties to rent?
Landlords! Whether you are an existing landlord looking to grow your portfolio
or looking to become a ‘first time landlord’, my thoughts are take advice from
as many people as possible. However, as the majority of landlords buy their buy
to let properties in the same town they live, you will need specific advice
about Canterbury itself. One place for such advice and opinion is the Canterbury
Property Blog www.canterburypropertyblog.com
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