Thursday, 26 March 2015

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

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 Thanet property market. George Osbourne, in last years’ Budget, announced pension reforms that come into effect this April, which will give people with pensions 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 As before, as per the old rules, the first 25% can still be withdrawn from the pension pot tax free but, here is the sting in the tail, if you take more than a quarter of your pot (25%), anything above that initial 25% level will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 Thanet 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 Thanet is 17 years and  9 months (its 19 years 3 months in Canterbury)- well they are posh there aren’t they! If we roll the clock back 17 years  9 months to July 1997, property values in Thanet have risen by 204.6% 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 (ie 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 (ie high yields) but low capital growth (ie 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 Thanet property market, what to buy, what not to buy and where to buy etc etc.  

Saturday, 21 March 2015

Cliftonville property market outperforms the Kingsgate property market by 138%

Following a discussion with a local landlord who lives in the Cliff Promenade area of Broadstairs, we got chatting about his two buy to let properties in Margate and Broadstairs. His Margate property is one of those one bed apartments in the Cliftonville area and the other is in Kingsgate. We got talking about the two properties in both areas and he wanted some advice on where to buy the next one. Whilst giving that advice, just for interest, I did a comparison between the two areas (Cliftonville and Kingsgate) and was surprised to find that the property market in the Cliftonville Estate area had outperformed the Kingsgate development market by 138%!
The average price of one bed apartment in the Cliftonville area is £61,700. When you consider the rents that are achieved in the Cliftonville area are on average (for a one bed apartment) £526 pcm, this gives us a yield of 10.62% per year. So is the Cliftonville area the best investment? Well, in the Kingsgate area, where the the average value of property is £347,600 (although they can reach £500 to £600k) and the average rent for property in Kingsgate is £1,239 pcm, giving a much lower yield of 4.27% per year. This makes the yield/ return in the Cliftonville area 138% proportionality more than property in the Kingsgate area, so surely it is the best investment, isn’t it?
However, this is a great example of annual yield/return not being the only factor when choosing an investment property, as you should also consider how much the value of the property goes up in the long term. In the last 12 years, property values have risen on average by 50.2% in the Cliftonville area which is impressive considering there was the 2008 property crash. However, average property values for property in the Kingsgate area have risen on average by 142.9% in the same time frame!

So, if you are investing in Margate, Ramsgate or Broadstairs, do you want capital value or yield or a bit of both?  If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the rental market, please call me on 01843 610 611 or email me at

Friday, 13 March 2015

Thanet .. good time to buy property?

Following last week’s article, I had an interesting chat with a chap who lives in Broadstairs, who popped into our office on Marlowe Innovation Centre on Marlowe Way in Ramsgate, whilst his better half was around the corner at Tesco’s. He is thinking of buying his first buy to let property and he wanted my opinion on the state of the market and if it was a good time to invest.
He was particularly worried that with all the newspaper headlines of a booming housing market, there wouldn’t be any demand from tenants. One of the best pieces of advice I can give to those looking to invest in property is a simple trick of the trade. You can judge the affordability of an area’s property market (and thus how much demand there could be) by simply finding the ratio of the average property price to the average salary. The lower the ratio, the more affordable property is.
When we put this to the test, as we talked about a few weeks ago, we found that Margate currently has an average property value of around £182,600. The average salary of someone living in Margate estimated at £22,467. This is a ratio of 8.12 to 1. Most lenders will only lend up to 4.5 times income, so to buy an average house in Margate, a first time buyer would need to be on a salary in the early £40,000’s  and even then, would need to raise the 5% deposit, which when you take into account buying fees, will be in the order of £11,500.
Tenants’ inability to raise that sort of money for the deposit is driving demand for rental property. If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the rental market please  phone  me on 01843 610 611, or you can email me at

Thursday, 12 March 2015

Nice little 3 Bed Investment in Ramsgate 6.4% Yield

I was looking for some properties this morning for one of my clients and I came across this great little property in Ramsgate. Its a nice 3 bed well presented and would make a great buy to let. Its close to all amenities and would be no trouble at all to find tenants. I would rent for around £750.00 that s a yield of 6.4 %. Dont hang around as all the properties I have recommended have sold. If you require any advice on the buy to let market please do not hesitate to email me at

Friday, 6 March 2015

How can you find a good property deal in Margate?

The subject of a lack of Margate property bargains over the last couple of years has always been near the top of most local landlord’s thoughts. I have built up an extensive database of every property sale in Thanet since the late 1990 ’s, so are able to give an objective and unbiased opinion on what (and what does not) make a good property deal /investment. Knowing what is and what has happened to the property market in the different areas of Margate (the differences of the property markets in Westgate on Sea, Margate, Broadstairs and Ramsgate for example)  or comparing Thanet against say Canterbury, Deal or Dover, enables me to spot any trends /opportunities for buy to let landlords. 
Here are a couple of bargains that I spotted at the time and made a note of. It’s obvious other people thought the same as it has now resold a few years later. A lovely 4 bed end terrace on Grotto Hill (with one of those houses with the lovely bay windows)  sold in the Summer of 2013 for £124,500.   Admittedly it needed a some TLC and a lick of paint, but what a bargain, because it sold again in the Autumn just gone for £162,500 .... a 30.52% increase in just under nine months. (Average property values in Margate in the same three years only rose by 6.1%).  
Another property that caught my eye back in the early Summer of 2013 was a lovely 4 bedroomed semi-detached house on Arlington Gardens in Margate.  It sold for a very reasonable £136,800 and again it needed some TLC but just over 15 months later the property sold again at an impressive £165,000, an uplift of 20.59% !
Now of course most landlords don’t do properties up to sell on straightaway, but it is a good way to build in equity in case the property market changes in the future.  Buying the right property at the right price enables you to build in equity and future capital growth.  Whether you are a landlord of ours or not or someone thinking of investing in rental market for the first time, drop by our offices for any advice and opinion on where the bargains are in Thanet or email me at