Canterbury house prices since the Millennium have risen by 164.75%,
whilst average salaries in Canterbury have only grown by 51.27% over the same
time frame. This has served to push home-ownership further out of reach for many
Canterbury people as they have to battle against raising considerable deposits
and meet sterner lending criteria, as a result of new mortgage regulations
introduced in 2014/5. The private rental
market in Canterbury has grown throughout the last twenty years with buy-to-let
investors purchasing a high proportion of newly built residential properties
that were built and designed for the owner occupier sales markets. For example, in the Canterbury Constituency,
roll the clock back 20 years and there were 38,802 properties in the Constituency,
whilst the most recent set of figures show there are 43,070 properties - a
growth of 4,268 properties.
However, anecdotal evidence suggests that a large majority
of those 4,268 were bought by Canterbury buy-to-let landlords, as over the same
20-year time frame, the number of rental properties has grown from 3,103 to 8,959
in the constituency - a rise of 5,856 properties.
Nevertheless, some say this historic growth of the Canterbury
rental market might start to change with the new tax rules for landlords
introduced by Mr. Osborne over the last seven or eight months. Yet the numbers
tell another story. Across the board, mortgage borrowing climbed to a 9 year
zenith in March this year as the British property markets traditional Easter
rush corresponded with landlords hurrying to beat George Osborne’s new stamp
duty changes – buy-to-let landlords borrowed £7.1bn in March 2016 (the latest
set of figures released) which was 163% up on the £2.7bn borrowed in the previous
March.
You see, from my point of view, I don’t think things will get
worse in the buy-to-let market in Canterbury and these are the reasons why I
believe that:
Firstly, what else are Canterbury landlords going to invest
in if it isn’t property - the stock market? Since the Millennium, the stock
market has risen by an unimpressive total of 5.54%, quite different to the 164.75%
rise in Canterbury property prices?
Secondly, its true the 3% stamp duty is the first blow on
top of a number of other tax changes to be phased in between 2017 and 2021, such
as landlords facing a constraint in their ability to offset mortgage interest
and, if sizable numbers of landlords do take the decision to sell their
portfolios, this will lead to a substantial amount of second hand properties
being put up for sale. Yet that might not be a bad thing, as I have mentioned
in previous articles there is a serous shortage of properties to buy at the moment
in Canterbury: the stock of property for sale being at a six year all time low.
.. Thirdly, if there are fewer rental properties in Canterbury,
as supply drops and demand remains the same (although ask any letting agent in Canterbury
and they will say demand is constantly rising) this will create a squeeze in
the Canterbury rental market and as a result rents will rise. In fact, I
predict even if landlords don’t sell up, Canterbury rents will rise as Canterbury
landlords seek to compensate for increased costs, which means more landlords
will be attracted back.
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