The ‘Right to Buy’ scheme was a policy
introduced by Maggie Thatcher in 1980 which gave secure council tenants the
legal right to buy the Council home they were living in with huge discounts.
The heyday of Council ‘Right to Buy’ was in the 80’s and 90’s, when 1,719,368
homes in the country were sold in this manner between October 1980 and April 1998.
However, in 1997, Tony Blair reduced the discount available to tenants of
council houses and the numbers of properties being bought under the Right to Buy
declined.So what does this mean for Canterbury
homeowners and landlords? Well quite a lot in fact!
Looking at the figures for our local
authority, whilst the number of ‘Right to Buys’ have dwindled over the last few
years to an average of only 14 ‘Right to Buy’ sales per year, one must look
further back in time. Looking at the overall figures, 3,004 Council properties
were bought by council tenants in the Canterbury City Council area between 1980
and 1998. Big numbers by any measure and even more important to the whole Canterbury
property market (i.e. every Canterbury homeowner, Canterbury landlord and even Canterbury
aspiring first time buyers) when you consider these 3,004 properties make up a
colossal 32.5% of all the privately owned properties in our area (because in
local authority area, there are only 9,236 privately owned properties).
Canterbury first time buyers and landlords
can now buy these ex-council properties second hand (or the PC brigade like to
call them ‘pre-loved ex–local authority dwellings’) as those original 80’s and
90’s tenants (now homeowners) have more than passed the time of any claw back
of the discount they received (council discount was repayable if the first
owner sold within a stipulated time period - usually 5 years).
Now let us all be honest, some (not all),
but some ex-council properties lack the vital KSA that some landlords crave. The
new homes builders know all about KSA (or Kerb-Side-Appeal) as they dress up
the exteriors of their new homes to make them more appealing to buyers ... and
if you don’t believe me ... why do Show homes exist? Going on the exterior
looks of a modern property might be a theoretically good way of choosing a Canterbury
buy-to-let property, but in a challenging market, some Canterbury investors are
finding a more no-nonsense down to earth approach brings the largest returns.
Yes, the modern stuff being built in Canterbury
is lovely, but too many landlords purchase buy to let property solely based on where
they would choose to live themselves, instead of choosing with a business head
and choosing where a tenant would want to live ... because remember the first
rule of buy to let property … you aren’t going to live the property yourself. What
an ex-council property lack in terms of KSA, they more than make up for in
other ways. Tenants are more worried
about how close the property is to a particular school or family members for
child care matter to them far more than the look of a property.
Whilst ex-council properties tend to
increase in value at a slower rate than more modern properties, that is more
than made up in the much higher yields – and those built between the wars or
just after are really well built. Tenant demand for such properties is good
since Canterbury property values are so expensive, a lot of people can’t get
mortgages to buy, so they will reconcile themselves to renting, meaning there
is a good demand for that sort of property to rent. Also, the very fact the
council were forced to sell these Canterbury properties in the 80’s and 90’s,
means that today’s younger generation who would have normally got a council
house to live in themselves, now can’t as many were sold ten or twenty years
ago.
So to Canterbury landlords I say this … don’t
dismiss ex-council houses and apartments – but remember the 1st rule of buy to
let (see above). However, those very same Canterbury landlords should go in
with their eyes open and take lots of advice. Not all ex-council properties are
the same and even though they have good demand and high yields, they can also
give you other headaches and issues when it comes to the running of the rental
property. One source of advice is the Canterbury Property Blog www.canterburypropertyblog.com
… that just leaves the 2,661 council houses still owned by the local authority
to be sold to their tenants in the coming years!
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