Are Attitudes to Home Ownership changing in Canterbury?

 

 

Speaking to a Bank Manager the other day in Canterbury, we got talking about the state of the Canterbury property market and whether we, as a Country, are turning more and more to the European style of property ownership, where it is the norm to rent as a opposed to automatically buying once you have a good job etc.

Even though a recent report by the Halifax stated homeownership remains a goal for 85% of twenty to forty five year olds, there is information emerging that attitudes in the UK towards renting your own home as opposed to owning it have softened, showing more and more, that renting is being seen as a life style choice.  In fact it is recognised in learned circles that the cycle of renting is also repeated by the fact that people who grow up primarily in rented accommodation are themselves more likely to rent than buy.

The biggest barrier often mentioned to buying a house is the claim that they are not buying property at the moment because of a lack of sufficient wages and by the high level of deposits, but like we said a few weeks ago, in Canterbury, if a couple, one on say three quarters of the average Canterbury salary of £33,130 pa (so that would be around £25,000 pa) and the other on the Minimum Wage, assuming they had a reasonable credit history they would be showered with lenders offering them a 95% mortgage (a reasonable credit history means they haven’t defaulted on loans, paid all their bills on time nor got any County Court Judgements. Just because you missed just one credit card payment won’t mean you have messed up your credit score and your ability to get a mortgage) and they would only need to find £7,500 as a deposit to buy a decent apartment in an up market area of Canterbury or a good honest 2 bed terraced house in average part of the City (e.g. East Canterbury). ..it comes down to the perceived capability of the youngsters in Canterbury to buy nowadays.

Interestingly, when I looked at the Canterbury figures, the average Canterbury tenant has a younger profile (especially the sub 24 year olds) than the English and Welsh average, as can be seen from the graph below. However, some of this can be explained by the high Student population. What interested me as well was the relatively large number of people renting over the age of 50! I know we have a large number of mature tenants at our agency, but I always thought that was the exception to the rule. Obviously not!  (And that is good news for landlords as they make excellent tenants.)

So what does all this mean for Canterbury landlords and future Canterbury landlords? I honestly believe there is a difference between the hope and perceived capability of the younger generation to buy a home. Although homeownership is seen as advantageous by a majority, many tenants admitted in the Halifax report they are not taking the steps they need to purchase their own home.

As the local authority aren’t building any properties in Canterbury, people still need a roof over the head, and that is why, as I mentioned a few weeks ago in the Canterbury Property Blog, the demand for rental properties will only continue to steadily rise in the coming decade. If want to know where the Canterbury Property market is heading and where you should (and shouldn’t buy), maybe the one place you should visit is the Canterbury Property Blog www.canterburypropertyblog.com or send me an email to canterbury@martinco.com

Rents Paid By Tenants In Canterbury On The Rise

 

 

With May nearly gone and considering we are nearly halfway through 2015, I was talking to landlord from Tyler Hill the other day about what is happening to the level of rents that are being achieved in the Canterbury property market.

In terms of rents in Canterbury, it appears that rents being achieved for new rentals (i.e. when the tenant moves out and new tenant moves in) have risen in the order of 3.8% in the last 12 months on top of the range modern properties, yet remained static for older Victorian terraced houses and converted apartments. However, landlords with existing sitting tenants, irrespective of age are not increasing their rents, as most landlords prefer to keep their existing tenant paying the same rent and have the peace of mind that their tenant remains, paying the rent (thus reducing the risk of a void period).

It must be remembered rents dropped by 2.0% over 2008/9, (due to oversupply in the rental market in 2009.) A lot of the people who couldn’t sell their property in Canterbury in 2008/9 when the ‘Credit Crunch’ hit in 2008, decided to let their house out instead of selling at a loss. In fact, the number of houses on the market in Canterbury dropped by 58% between June 2008 and January 2010, a lot of which came on to the rental market in Canterbury. However, looking at the longer term though, tenants have had it good because since the turn of the Millennium, average wages have grown by 46%, but rents outside London have only grown by 36% rental growth over this period.

I told the landlord that there is a lack of new rental properties in Canterbury coming on the market, in fact according to the Office of National Statistics, there are only 43 new rental properties are coming to the market each month in Canterbury but the population of Canterbury is rising by 132 people a month – something will have to give soon! This is compounded by the fact a number of landlords are looking to sell their rental properties in the coming months, as the property market in Canterbury has improved. This further compounded as tenants in existing rental properties appear to be staying in properties for longer periods of time.

Looking at the rents charged in Canterbury, historic evidence in the UK suggests private market rents have moved in line with general inflation. Government figures only go back as far as the year 2000, but looking at other countries with similar housing markets (America, Australia, Ireland and Holland) the fact is rents paid by tenants tend to rise in line or just ahead of inflation.

As short term wage growth in Canterbury has eased off recently, rising by only 1.3% in the last 12 months, taking average salaries in Canterbury to £33,130pa, with the tax breaks announced by The Chancellor in the Budget, I believe, even though rents have kept pace with inflation in the past, renting as an option has become more affordable, and is increasingly seen as a lifestyle choice. With returning economic growth and expected increases in the rate of growth of wages, above inflation rental growth could rise.

If you want a chat about the local Canterbury property market, pop in for a coffee or email me on canterbury@martinco.com .

Faversham - £175K - Yield just under 5%

Good afternoon readers. Bit of a rainy day out there today, but here's a bit of sunshine on the market. Our predictions re post election are bearing fruit, with properties coming on to the market thick and fast …………….it’s another bargain in Faversham.

It’s just come on the market this afternoon and yet again, it’s ticking all the right boxes with regard to the rental market. It’s the right place, right price and also good condition. Just waiting for a tenant to move in!

As ever, these properties are in great demand with two similar properties being rented by us in the past week in Faversham. With a conservative estimate on the rental figure, I would reckon that this property should rent out at a minimum of £725 per month, which at the asking price of £175,000 will give you a yield of just under 5%.

Check this one out at the following link and give the agent a call http://www.rightmove.co.uk/property-for-sale/property-34660800.html

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

What does the General Election result mean for the Canterbury Property Market?

 

After the shock of the Conservatives returning to power with a majority at Westminster, all the potential issues and possible uncertainties of a hung parliament has lifted the cloud from the Canterbury property market.  Talking to other Canterbury agents, surveyors and solicitors in the area over the last few days, there are signs that this has started a new impetus for the Canterbury property market after a subdued six months, when an amalgamation of tougher lending conditions, a natural correction after the strong recovery in Canterbury property prices in 2014, and political uncertainty ahead of the General Election slowed demand.

Against the back drop of Labour’s election promises of rent controls and three year tenancies, some Canterbury buy to let landlords were waiting to see how these new policies would be implemented before they committed themselves to buying more property for their buy to let portfolio. Now that uncertainty has been removed, the long term picture is very positive.

So, with all that uncertainty now removed, where next for the Canterbury property market?  Well with inflation at zero and with the money markets happy David Cameron is still at No.10, the Bank of England have no reason to raise interest rates until 2016 at the earliest. As mortgage rates are at their lowest levels since 2010, landlords with large deposits will now be wooed by the mortgage companies in the coming months with low rates.

You see over the past couple of years, Canterbury landlords have benefitted from a booming Canterbury job market. Unemployment in the city has dropped to 1.6%, as a year ago 1,229 people were claiming unemployment benefit compared to today’s 806. With more jobs and better pay, as the level of rents is directly linked to tenant’s wages, there has been an increase in the rental prices tenants are willing to pay for good quality Canterbury properties.

Some landlords might be nervous about Tory’s plans for the housing market in the next five years in terms of tenant demand for their rental properties. One plan is for Housing Association tenants to have the right to buy their property. These kind of tenants were never in the private rented sector and will actually increase the supply of properties in the housing stock in decades to come. The Government ‘Help to Buy Scheme’ has only helped to buy 31 Canterbury properties since April 2013. Considering 693 properties have changed hands in the last year alone in Canterbury, I don’t think it has made a huge difference to our local property market.

The biggest matter, when it comes to tenant demand of rental property going forward, comes from the shift in the mindset and attitudes towards renting itself. Twenty years ago you were seen as a second class citizen if you rented a property. In Canterbury, as in the rest of the UK (apart from Central London), renting continues to offer good value for money for tenants.  If you are an existing landlord in Canterbury or thinking of becoming one (or as we like to call you .. a FTL .. a ‘first time landlord’), then I must suggest you seek out specialist advice and opinion. Like many agents in Canterbury, we will happily give you our opinion on the current state of the market and the advantages/disadvantages to investing in the Canterbury property market if you pop into our offices. However, if time is at a premium, another source of information on the Canterbury Property Market is the Canterbury Property Blog at www.canterburypropertyblog.com

Canterbury Property Market – What is really happening?

I had an interesting conversation with a local Canterbury accountant the other day. He is quite an observant chap (I know this because I have known him for a few years .. but I suppose you have to be, to be an accountant!). Anyway, he mentioned a few things he had noticed recently in Canterbury, one that Canterbury property prices had gone up in the last few years but nowhere near the growth levels that were being achieved in central London, and secondly, that he thought the number of for sale boards in Canterbury (and more importantly ones with sold slips on them) had increased over the last couple of years.

 

The rate of house price inflation in Canterbury continues to slow with growth of 10.4% in the 12 months to February compared to 11% just under six months ago, according to the latest Land Registry data. However, there is considerable local variation with house price growth ranging from 7.7% in East Sussex to 12% in Medway over the last 12 months.

 

Whilst Canterbury hasn’t seen the +20% per year in house price growth of London over the last couple of years,  Canterbury has seen  a sharp uplift in the number of properties sold throughout  2014 as base line demand for housing grows, which suggests there is substance to the recent pick-up in house price growth in the City. Since the Second World War in the UK, when the number of properties sold has grown, property values grew soon after. The 16.9% uplift in property transactions in Canterbury in 2014, compared to 2013, indicates the most significant recovery in house market activity in Canterbury (outside London) since 2007.

 

When you compare Canterbury with London, you could be looking at two different countries. In London, its mid / late teens house price to earnings ratios are impacting demand (i.e. the average property value is often 15 or 17 times the average wage in London .. in fact in Knightsbridge the ratio can be 30 to 1).  However, the number of people wanting to sell has dropped considerably, meaning that falling sales volumes combined with a general slowdown in activity in the run up to the General Election are resulting in lower mortgage approvals for home purchase.

 

Transactions are a great indicator for house prices. The acceleration in house price growth in London in the last two years was preceded by three years of rising transactions. A similar pattern is being registered in the Canterbury area, as pent up demand returns to the market supported by low mortgage rates and an improving economic outlook.

 

But before you get the champagne out, while the uplift in activity is welcome news, the number of Canterbury property sales in 2014 are still 23.1% lower than the level seen in 2007 and property values are 3.2% above the 2007 levels. The ongoing housing recovery is far from broad based and remains focused on middle to higher value areas within Canterbury where households have equity and find it easier to access mortgage finance. If you want to know more about the Canterbury Property Market, please visit the Canterbury Property Blog www.canterburypropertyblog.com or send me an email to canterbury@martinco.com.

2 bed terraced house - Faversham - Yield 5.14%

1st day back to work after the Bank Holiday and a great start to the week! The mornings browse through Rightmove has uncovered another possible gem in Faversham. It's on the market at £175K in Luton Road, Faversham, with Ward & Partners. Therefore, great property in great location, which will be a great rental = RESULT!

These properties are in good demand by tenants and we have a number of similar properties in Faversham which rent out for between £725 and £750 per month, which at £750 will give you a yield of 5.14%. Not only will this one make a good property for your portfolio, but the capital growth will certainly be one to watch in this great market town.

This property will not be on the market long, so give the agent a call.

Check out the details at: http://www.rightmove.co.uk/property-for-sale/property-49827274.html

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

Two Speed Canterbury Property Market?

 

Even with the pending General Election, property values in Canterbury are still 1.27% higher than they were 3 months ago, the diversion and ambiguity of an election typically makes house sellers who need to sell, price their property more realistically (although this only lasts a couple of months). Looking specifically at it from a Canterbury landlord’s point of view, the Canterbury properties favoured by investors are in short supply in many parts of the city because of a number of factors. One of the factors has been that we have seen the number of first time buyers coming to buy their first home increase over the last 12 months in Canterbury.  Another factor has been the fact that the banks have been pushing ‘let to buy’ (yes ‘let to buy’ is different to ’buy to let’) to homeowners (more of ‘let to buy’ in an up and coming article). Next, because of the banks, who are chasing low risk landlords with high deposits with very low mortgage rates - and the low risk landlords with high deposits tend to be attracted to the safer modern two and three bed town houses and semis in Canterbury.

 

As I mentioned a few weeks back, the pension rules are changing which means buy to let landlords can use some, or all, of their pension pot to buy a property.  It shouldn’t be forgotten that there are tax implications taking more than a quarter of your pension pot out (see the article from a couple of weeks ago), so whilst many pension pots may not be able fund a suitably big enough tax free lump sum to buy the property outright, for most it will provide enough for the 25% deposit (required by most BTL mortgage providers). It shouldn’t be forgotten landlords that the interest paid on the mortgage is tax deductible against the rent, thus lowering your income tax paid.

 

In the last 12 months, I have noticed a particular uplift in interest from ‘50 something’ Canterbury people wanting to become landlords for the first time. In Canterbury, the highest returns for the lowest investment are at the lower end of the market e.g. the classic apartment . Unfortunately apartments , with one  bedroom are coming to the market in smaller numbers than the larger four bed’s  in  top end sectors of the Canterbury property market. When looking at the actual numbers, in the latter part of the Summer of 2014 in Canterbury, in one month alone 64 one bed properties were on the market in Canterbury. However, in January this year, a notoriously excellent bumper month for properties coming on to the market, there were only 52 one bed properties on the market in Canterbury to choose from. Today, that figure stands at only 43 ..whilst the number of four and five beds has increased significantly ...  interesting don’t you think?

 

At that lower end of the property market in Canterbury, (i.e. where first time buyers and landlord investors compete with each other to buy those smaller properties), I believe throughout 2015, there will be a slow and steady tipping of the scales between supply and demand. In fact, from what I am seeing and hearing, early anecdotal evidence has suggested over the last few months (although we will need to look at figures later in the Summer, once we have the data from The Land Registry), we are beginning to see a polarised Canterbury property market, where we have high demand but low supply at the bottom end of the property market, yet high supply but lower demand at the top of market .. and that can only mean one thing ... prices will go up quicker on the smaller properties than the larger ones in Canterbury, thus narrowing the gap for people looking to move up market!

“The way it works in Canterbury is this, you have to rent where you want to live, or buy where you don’t want to live,”

I had this really interesting chat with one on my tenants the other day, on renewal of their tenancy agreement. They are a lovely couple, early thirties and I know they have decent jobs in Canterbury. They have been tenants of ours for quite a while, so I know them quite well.  We got talking and I enquired if they ever thought of buying a property for themselves, to which they replied back with the title of this article. It made me think and so I did some more research into the subject which I want to share with you.

 

After the end of the Second World War, just over a quarter of the UK population owned their own home, the rest rented from private landlords or the local Council. If someone told you in the 1970’s and 1980’s that they rented, they were considered a second class citizen. Everyone wanted to own their own home .. it was the done thing.   We think that home ownership will inevitably happen, but it won't.

 

It all changed in the 1970’s, when two things happened. Firstly, the number of people who owned their own home broke through the 50% barrier in 1971 and by 1981 it was at 57%. Tied in with that, the average house prices in Canterbury were doubling at one point every four years in the 1970’s so property and profit started to feed off each other.

 

To put that growth in context, if we were to look at the last 85 years in Canterbury, in 1930, the average Canterbury property was worth £609. It took 16 years for Canterbury property values to double, rising £1,505 by 1946. Another 15 years and the average Canterbury property doubled again to £2,858 in 1961. The next doubling only took 10 years, as by 1971 the average Canterbury property had reached £5,811 in value.

 

It was (as mentioned above) the 1970’s when things really took off, as by 1975 (i.e. only four years) they had doubled to £12,162 and they doubled again to £24,347 by 1980. It took another eight years for values to double again, as an average Canterbury property reached £50,926 in 1988. Twelve years had to pass until the doubled again in 2000 (£104,782 and just six years to double again by 2006, when they reached £211,331.  Where are we today? The average property value in Canterbury currently stands at £285,400.

 

We could blame Maggie Thatcher for making home ownership the ultimate goal, but what we now need to consider is that the country is turning on its head and we need to, as a Country, love renting again. Some blame the banks, but obtaining a 95% mortgage is hard work, but nowhere near impossible. A typical Canterbury first time buyer would only need to save £8,000 for a deposit and fees and they could buy a very decent property. For example, you could buy a property on the Thanington Estate in Canterbury, and it would be cheaper each month in mortgage payments than renting.

 

People might say on the surveys they want to buy, but when it comes down to it, if you have been living in a top of the range large property in South Canterbury  , but the bank will only lend you enough to buy a smaller property on the Thanington Estate, what would you do? Don’t get me wrong, the Thanington Estate has really pulled its socks up over the last ten years, but it isn’t South Canterbury, is it? Again, if you were a twenty something, what would you do? Look again at the title of the post ... “The way it works is, you have to rent where you want to live, or buy where you don’t want to live,”

 

With tenant demand only going in one direction, that is probably why more and more people are getting into buy to let in Canterbury. With the new rules on pensions and the ability to use them to buy residential rental properties from April onwards, this could be the time for you to buy a rental property. You must take advice on your pension from an Independent Financial Advisor (there are plenty in Canterbury) and you must take advice from people who know what to buy (and not to buy) in Canterbury to ensure you get the best from your investment.

Are Canterbury landlords worse than Politician’s and double glazing salesmen?

 

 

I was having an interesting chat the other day with a couple of solicitors at a Canterbury business networking event, when the subject of a lack of property for first time buyers came into the conversation.  I followed the chat up with an email with my findings, findings which I would like to share with you today.

 

At the time of the last census in 2011, there are 3,401,675 properties in England that were privately rented, of which it is estimated, were owned by over 1.25 million private landlords. The rapid growth of buy-to-let is hugely controversial, especially as only ten years before that, there were only 1,798,864 properties under private renting in England. Buy to let landlords have been held responsible for forcing up property prices and preventing our younger generations from being able to buy. There is also growing resentment toward the billions of pounds in tax relief (estimated to be nearly £10 billion) landlords claim on their mortgage interest -tax relief not available to homeowners.

 

They may be asset rich thanks to recently rising property values, but let us not make the landlords the ‘bogiemen’ they could easily be called. Despite all these benefits enjoyed by private landlords, let us not forget the good they have done, especially in Canterbury.

 

Property values today in Canterbury are still 3.2% above the 2007 property boom levels (2007 being the peak of last property boom before everything dropped in 2008/9), yet inflation has risen by 26% in the same time frame, so in real terms, properties today are 22.8% CHEAPER than they were in 2007. Just think how low they would be without landlords buying all those rental properties in the city. Interest rates are at an all time low and first time buyers only need to save a £8,000 deposit to secure a lovely 3 bed town house in Thanington with a 95% mortgage. Forget what the papers say, first time buyers can borrow money relatively easily on a 95% mortgage and nine times out of ten, it’s cheaper to buy than rent. So why aren’t people buying?

 

The number of people choosing to rent, either for lifestyle or economic reasons, has grown over the last 15 years. I also believe they will continue to grow for some time to come (as does every report on the subject). In fact I would go as far to predict the number of rental properties in Canterbury will have risen from the 10,665 properties recorded in 2011 to 13,900 by 2021. Sound fanciful? Well in 2001, there were only 6,124 privately rented properties in Canterbury.

 

It is a fact that we as a Country are more and more turning into a European model when it comes to homeownership, where the norm is renting for the first ten years, as opposed to the norm from the 1960’s to 1990’s, where first time buyers were encouraged to buy as soon as they left school and got a job.

 

Tenants, in particular, will also feel the benefit from potential changes in the market. The likelihood of interest rate increases in late 2015, existing economic conditions, combined with the uncertainty of new Government manifestos following the General Election in May will result in low demand for people to buy, yet also put a dampening effect on increases in rent. As long as landlords buy the right sort of property, that allows for a reasonable yield, decent capital growth, everyone will be a winner. If you want a chat about what would make the best sort a property that would offer that in Canterbury, then please email me at canterbury@martinco.com or visit my Canterbury Property Blog www.canterburypropertyblog.com

Canterbury Landlords invest £1.29 billion in the Canterbury Property market

South East property asking prices jumped by more than £6,400 to £363,992 in February according to Rightmove, an increase of 1.8% from January and 8.1% higher than a year ago. After the traditionally quiet months of January and February, the property market has started to warm up, but talking to some Canterbury Estate Agents, they are reporting their lowest ever stocks of quality property for sale. However, asking prices have no relation to what property sells for (i.e. their REAL value), is the issue a lack of supply?

Putting aside Canterbury’s continual housing supply shortage, (we only built 5,187 properties in the last decade but the population of Canterbury grew by 15,867), this is now, according to some people, being exaggerated by an increase in homes being owned by buy to let investors, who tend to be buying a property as part of a long term pension plan and are more likely to keep it for longer than an owner/ occupier would. I have also seen unwillingness among homeowners looking to move, to put their own property on the market as they can find few suitable properties to make it worth their while going through the whole moving process.

Talking to some Canterbury landlords only last week, I said that I believe this is the new norm in the Canterbury property market, and is the consequence of over 35 years of not enough homes being built to meet the escalating growth in household numbers, resulting in a lack of quality homes for sale in many popular areas of Canterbury.

When one looks at the historic data, in June 2008, there were 603 properties on the market in Canterbury compared to today’s 271. Should we be worried?  Well in January 2010, there were only 253 properties for sale in Canterbury, but seven months later in August 2010, this had jumped to 583 properties, for it to drop to 273 properties in January 2014. The number of properties on the market is a cyclical thing in Canterbury, it always has been and always will be. As we go into the Spring of 2015, the number of new properties coming onto the market will increase ... just as the daffodils will flower.

So are landlords to blame? Well, on one side of the coin, yes they are. If they buy a property to rent out, that means someone can’t buy it to live in. However, it doesn’t matter if someone wants to live in a property if they can’t afford the deposit and upkeep .. and the youngsters of Canterbury still need a roof over their head. So on the other side of the coin, if the Council aren’t building any properties and people can’t afford the large deposit for the mortgage, then Canterbury landlords have stepped in and bought property to rent out to them. Canterbury landlords have bought 4,541 properties over the last decade (investing approximately £1.296billion buying those Canterbury rental properties), meaning there were at the last count, 27,278 Canterbury properties being privately rented out to tenants. Canterbury tenants are in fact getting a good deal as well, as average rents in Canterbury are 5.9% above where they were seven years ago. That sounds like a win-win situation for everyone to me. Stop blaming landlords and start building more properties in Canterbury .. that is the only answer.

In the meantime, the demand from Canterbury tenants for Canterbury property is only set to rise over the coming years. If you want some advice and opinion on where (or not) to buy, please visit the Canterbury Property Blog where we discuss such matters in greater depth www.canterburypropertyblog.com .

Canterbury - 5.56% yield - new build

Good morning. So who said ‘lightning doesn’t strike twice in the same place’?? After a drought of properties over the past few weeks, we not only get another property in Canterbury, but it’s another one on the London Road estate!

Today, we are looking at a type of property that doesn’t come onto the market that often and it’s an affordable, one bedroom flat. Not only is it a good price, it’s also brand new, which should make it an attractive proposition to the rental market.

It’s come on the market at £135K with Regal and looks very good. This type of property is in constant demand and should rent out for circa £625 per month, which in turn will deliver a yield of 5.56%. Check it out at http://www.rightmove.co.uk/property-for-sale/property-51440783.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 or call in and see me at 23 Watling Street in Canterbury.

London Road Estate - 4.74% yield, with good capital growth

Good afternoon folks! Well after a fairly quiet couple of weeks on the investment front, we are now starting to see a few ‘spring shoots’, which certainly confirms that Spring is here and the investment properties are starting to flourish!

Our first property of the week is in Canterbury and it’s a three bedroom property on the London Road estate. Whilst it would appear to be ideal territory for a student let and those ‘tasty’ student yields, for the purpose of this exercise I will look at it on the basis of a standard family let. ‘Shock’ ‘horror’ I hear you shout, ‘not a student property?????’. Well, yes and no, it could be a student property, but with the current ‘over supply’ of student properties and again, a large number of such properties will not be let due to the lack of student supply, I would rather be honest and say take great care!

The property is a three bedroom semi, on the market for £215K with Miles & Barr. Whilst a bit dated, it’s only cosmetic and not a huge expense to ‘freshen up’ for the rental market. Such three bed properties will rent out at circa £850 / £875 per month, which will give you a yield of circa 4.74%. Whilst not quite our target figure of +5%, it’s still solid as these properties are in good demand for young families and will rent out easily.

‘So that’s the rent’ I hear you say, ‘but what about the capital growth for the area’. Well, over the past year and five years we start to see some interesting figures. If we look at the whole of Canterbury, the past year has only seen a growth of 1.65% and the past five 12.5%, but this area has seen a one year / 5 year growth of 3.55% and 14.07% respectively!!!!!!!

That’s surprised you! Check it out at http://www.rightmove.co.uk/property-for-sale/property-34059054.html and give the agent a call.

It’s just that looking at the Canterbury property market in more depth enables me to give you the best advice and opinion to help you find the best investment property. It is in our interest that you buy a property which will rent well, and for long periods of time. If you would like any advice on choosing properties, please come and see me at our office in Watling Street in Canterbury.

Your Pension could now buy a Buy to Let property in Canterbury

 

In a recent article, I mentioned that pension rules are changing this April. It certainly created a few emails, with people asking questions about it. Therefore, this week, I want to look a little deeper into the subject of your pension and the Canterbury property market. George Osbourne, in last years’ Budget, announced pension reforms that come into effect this April, which will give people with pension’s unprecedented access to their pension pot and the freedom to look for alternatives. In a nutshell, after the 6th of April, anyone aged over 55 will be allowed to withdraw all or part of their pension pot and spend it as they wish. Until now, you were allowed to take out a quarter of it and were forced to buy an annuity policy with the rest.

 

However, my readers always know that I like to tell it ‘as it is’. There are always two sides to a story, good and bad. Let me tell you the bad news first. There are some hefty tax implications by taking money from your pension pot. As before, as per the old rules, the first 25% can still be withdrawn from the pension pot tax free but, here is the sting in the tail, if you take more than a quarter of your pot (25%), anything above that initial 25% level will be taxed as income. So if you took the whole lot out, the first 25% will be tax free but the remaining 75% will be taxed at your income tax rate of 20%, 40% (or even 45% if you earn over £150,000 a year).

 

.. and now the good news!

 

Under the old scheme, if you bought an annuity, when you died your annuity normally died as well. You would have no asset to pass on to your family. Also, the returns from pensions are awful at the moment. The best rates according to Hargreaves and Lansdown (big wigs in the City) state if you were 55 years old, the best rate you would get on your annuity pension would be 4.4% fixed for life (so it would never go up) or 2.2% but the payment would go up with inflation.  The sort of rates (also known as yields in the property investing game) being achieved in Canterbury are in the order of 3% to 6%.

 

The other aspect of property investment is how the fact property values have risen consistently over the last 50 years.  According to the Office of National Statistics, the life expectancy of a 65 year old male in Canterbury is 19 years and 3 months (its only 17 years 9 months in Thanet). If we roll the clock back 19 years 3 months to January 1996, property values in Canterbury have risen by 229.4% to today .. you wouldn’t have had that with your pension!   But this is the biggest win, even by taking a hit in income tax now,  by buying a property, you buy an asset that you can pass on to your family when you die.... (or the cats home if they aren’t nice to you!).

 

So where next? It totally depends which strategy you are going to look at, one strategy is to look to achieve relatively small rental returns (i.e. low yields) in an up market area which has decent capital growth or, alternatively, another strategy is to buy properties in not so good areas known to produce a high returns (i.e. high yields) but low capital growth (i.e. how much the value of the property goes up). Now, I am not financial advisor, so cannot offer financial advice on what the best thing for you with your pension is. However, I can share my knowledge and experience of the Canterbury property market, what to buy, what not to buy and where to buy etc etc.  My thoughts on the Canterbury Property market can always be found on the Canterbury Property Blog www.canterburypropertyblog.com .

Whitstable – the place to buy a property?

 

Information is so important when making decisions on what (or not) to buy when investing in Canterbury property. The demand for rental properties is much greater that the supply and some circumstances, we have four to five prospective tenants for each decent property. As always the demand is much greater for properties that are good areas. Also, we are noticing that tenants are staying longer in their chosen property, with some tenants signing for the third and fourth years. This is obviously causing problems from the supply side so we are relying on new investment Landlords to bring in some new properties.

 

Today, I want to look at Whitstable to the North of Canterbury. By knowing the different areas of Central and North Kent, I can weigh up potential hotspots in the rental market and show potential landlords where there could be an opportunity. The majority of properties sold in Whitstable during the last 12 months were detached properties which on average sold for £370,100. Semi-detached properties had an average sold price of £256,100 and terraced properties averaged at £266,900. The overall average property in Whitstable is worth £282,000, which as one would expect is similar than Tankerton average at £292,400 but was cheaper than next door Chestfield at £334,700.

 

In Whitstable, there are 31,822 people living in 14,136 properties. It is the home ownership percentages that really got me interested, as it is this information, tied in with our intimate knowledge of the market, where we can match tenant demand to an under supply of rental properties. In Whitstable, of those 14,136 households, 77.2% own their property (compared to the Canterbury average of 65.9%).

 

There are only 1,660 rented properties in Whitstable are in the private rented sector (11.7% of Whitstable properties are privately rented compared with the Canterbury average of 17.52%). The reason the private rental sector is much lower is that Whitstable has a high proportion of homeowners and hardly any local authority housing. The properties do sell well, in fact 699 properties have changed hands in the last 12 months. However, with such excellent demand from homeowners and tenants, this could be the right area to purchase your next buy to let investment. 

 

Therefore, if you are considering buying a property for investment in the near future, I am always happy to give you my considered opinion on which property to buy (or not as the case may be) to give you what you want from your investment. If you are a landlord, new or old, I am certainly more than happy for you to pick up the phone or visit the CanterburyProperty Blog  www.canterburypropertyblog.com .

Canterbury - 6% yield

Morning all, on this bright and sunny morning here in Canterbury! A bit of a chill in the air, but should warm up nicely!

Today, we are back into Canterbury for today’s hot investment tip and this morning I have found a good property in an area that does not come onto the market that often.

It's been put on the market by Kent Estate Agencies and is being offered for a figure of just under £160K. I suspect that it's also quite likely that there is an offer to be made, so the purchasing price could drop a few more thousand.

From the agents photos, it looks in good condition and should be OK to rent upon completion.

As previously mentioned in other blogs, these two bed properties, in Canterbury, are in good demand and will rent out for circa £800 per month, all day long, with good quality tenants.

The above being the case, calculated on the above figures, this property should give you a yield of circa 6%, which again is above the benchmark 5%.

See further details at http://www.rightmove.co.uk/property-for-sale/property-51081824.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 or call in and see me at 23 Watling Street in Canterbury.

 

 

 

 

Massive drop in Homeownership in Canterbury

An Englishman’s home is his castle but when it comes to the UK the ‘Brit’s are still a nation of homeowners ‘(although wasn’t it Napoleon who thought we were all shop keepers!). It is interesting to note that up until the mid to late 1960’s, more people rented their home (albeit mostly from the local council) than owned their own. In fact, I was surprised to read that in 1921, over 75% of homes in England and Wales were privately rented with the remaining 25% being owner occupied. 

It was only after the Second World War, when the Beatles were rocking, that people started to buy instead of rent .. but instead of owning our property outright, we borrowed money from banks and building society’s to buy them and the roots of the growth of the private rental sector can be drawn back to the late 1970’s early 1980’s, when the council houses began to be sold off under the right to buy scheme.

In 2001, 72.4% of households were owner occupied in Canterbury, Whitstable and Herne Bay, but ten years later, that percentage dropped massively to 65.9%  But here is the interesting part, when you look at the actual numbers of households, 40,277 households in Canterbury (plus Herne Bay and Whitstable) were owner occupied in 2001. Ten years later, in 2011, that number (who owned their own home) had only dropped to 40,107 households.

So why big drop in percentages but not in actual properties? An additional 5,187 properties were built in Canterbury between 2001 and 2011, but a lot of them were bought as buy to let investments, thus more than doubling the number of private rental properties in Canterbury. In fact, the number of properties in Canterbury, which were privately rented, jumped from 6,124 in 2001 to 10,665 in 2011!

With the Canterbury City Council housing waiting lists being in the 5 to 10 year range for a decent property in a decent location. Therefore, with no more council houses being built, and an increasing number of people looking for a roof over their head, private renting is the only option

With every report stating the rental market will continue to grow throughout the rest of this decade and beyond, linked with high demand and limited supply in the Canterbury, then if you are considering buying a property for buy to let investment in Canterbury, I am always happy to give you my considered opinion on which property to buy (or not as the case may be).. If you are a landlord, new or old, I am certainly more than happy for you to pick up the phone or visit the Canterbury office, here in Watling Street.

What properties are actually selling in Canterbury?

 

Prices up, prices down, prices stable... the newspapers are full of good news, bad news and indifferent news about the Brit’s favourite subject after the weather... the property market. The thing is the UK does not have one housing market. Instead, it is a patchwork of mini property markets all performing in a different way.  At one end of scale is London, which has seen average prices grow in the last twelve months by a shade under 19% (and again that is an average because some Borough’s in London have risen by 26%) whilst in the land of Daffodils, by contrast, Wales only saw a 2% increase in property values (although in the Merthyr Valleys they dropped by over 11%).

Well we can’t ignore the rest of the UK, and we can’t forget that the Chancellor’s Stamp Duty reforms have polarised the London property markets above £1,000,000 because at the top end of the market, punitive Stamp Duty charges will dampen demand further. While the Bank of England warned of the growing London property price bubble in the Spring of 2014, even talk of a recovery in some areas was premature. In 2015, irrespective of where you are in the UK, one story will unite the patchwork quilt of markets – really slow property value growth.

But what about Canterbury? Well, we haven’t had the February figures from the Land Registry yet but the last few months’ activity and prices achieved would suggest neither house price growth nor drops.  In fact, most sellers are buyers anyway, so if you need to take less for yours, you won’t have to pay as much for the one you want to buy ... and that is good news for everyone as most move up market when they move. This is even better for landlord investors, as they can bag a bargain as well.

The question you should be asking though is not only is what happening to property prices, but which price band exactly is selling? I like to keep an eye on the property market in Canterbury on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Canterbury. 

If you look at Canterbury and split the property market into four equalled sized (into terms of households) price bands. Each price band would have around 25% of the property in Canterbury, from the lowest in value (the bottom 25%) all the way through to the highest 25% (in terms of value).  Over the last two months (63 days to be precise), in the lowest quartile, (those with asking prices under £180k) 60 properties have come onto the market in Canterbury and 35% of them (21 properties have a buyer and sold stc. The next quartile, between £180k to £230k, of the 63 properties that come on to the market, 38% of them (24 properties) have a buyer. The £230k-£305k price range has seen 47 properties come on to the market, and 42.5% of the properties have a buyer (20 properties). The most expensive 25%, the £305k plus range, has seen 19 of the 58 properties that came on to the market find buyers (32.7%). Fascinating don’t you think?

The next three months’ activity will be crucial in understanding which way the market will go this year and I honestly believe we will not see any house price growth or drops this side of the election. Election or no election, people will always need a roof over their head and that is why the property market has rode the storms of Oil crisis in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the Credit Crunch together with the various house price crashes of 1973, 1987 and 2008.

And why? Because of Britain’s chronic lack of housing will prop up house prices and prevent a post spike crash. ... there is always a silver lining when it comes to the property market!

National Landords Association

What a difference a day makes……. yesterday was a beautiful day and today it’s now back to the winter blues…. This being said, let’s hope the Rugby score on Sunday is going to be a victory for England (apologies to my Landlords in the Emerald Isle!), that will certainly make the sun shine in my little world!

Anyway, back to business or should I say lack of…. It’s a bit strange for a Saturday morning without any decent investment properties coming onto the market, but then again this could be another indicator of the market slowdown that I mentioned the other day. However, another bit of news has caught my attention that I would not only like to share with you, but also recommend you should attend.

The National Landlords Association (NLA) is an excellent organisation for not only existing Landlords, but also great for anyone looking to become a Landlord. They really know their subject and offer great assistance to their members. The local representative for Kent is Marion Money, whom I have met on a number of occasions and whilst being a ‘fountain of knowledge’, is also a Landlord herself, which means that she has a great understanding of the market, plus all of its advantages and pitfalls!

On the 16th March 2015 at 17.30hrs they will be holding a Landlords Information Evening at the Darwin Conference Suite, Darwin College, University of Kent. CT2 7NY. The meeting lasts for about three hours and they normally have some great speakers with very useful advice / information / updates on regulation. It’s well worth attending.

Check them out at www.landlords.org.uk 

Faversham - 2 bed - £185K - yield of 4.86%

What a fabulous day today! The sun is shining, the birds are singing and the investment properties keep on coming! Today, we are off to Faversham where a property has just come on this morning with Miles & Barr and from a couple of calculations on my note pad, it looks a good investment.

 

It’s a two bedroom house in Cremer Place in Faversham and is on the market for £185K. From the details it looks like it’s available to rent immediately upon completion and has been completely refurbished throughout.

 

In the past few months we have seen a really good demand for such properties and we would estimate a rent of circa £750 per month. This coupled with the purchase price would deliver a respectable yield of 4.86%.

 

Out of interest, I have taken a look at the history of this property to see how it’s performed in the last few years since it was purchased by the current owner in 2007. It was purchased back in June 2007 for £142K, which if sold at the current asking price would give the owner a return of circa 23%. It would also appear that this was an investment Landlord, as our database shows that this property was rented for £700 back in 2013, therefore our predictions for the current rent is there or thereabouts. The database also shows that in the past year, it’s seen an increase of circa 7.43%, which again is positive.

Check it out further at http://www.rightmove.co.uk/property-for-sale/property-50128124.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.

Herne Bay - £95K - 7.8% yield!! (yes, you have read this correctly...........)

Good afternoon everybody. On my morning check of the market, the following property not only caught my eye, but made me look again to make sure the price was right! It’s a snip!!

 

It’s a one bed apartment in the High Street at Herne Bay and the asking price with Your Move is £95K. As ever, these properties are in constant demand and will let out all day long for circa £550 / £600 per month. What’s more impressive, is that it’s been refurbished to a good standard, which again will make it very attractive for the rental market. Therefore, it's good to go from day one!

 

Now here comes the interesting part….. if we were to calculate the yield based upon a conservative £550 per month, the yield is nearly 7%, yes 7%! At £600 per month, we now get 7.58% which is a really serious yield!

 

Check this one out further at http://www.rightmove.co.uk/new-homes-for-sale/property-50779802.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.