Friday, 24 April 2015

Are Thanet 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 Thanet 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 Thanet.
Property values today in Thanet 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 £6,000 deposit to secure a lovely 3 bed terraced in the Marlborough Road area of Margate 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 Thanet will have risen from the 13,072 properties recorded in 2011 to 18,900 by 2021. Sound fanciful? Well in 2001, there were only 7,272 privately rented properties in Thanet.
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 want a  chat about what would make the best sort  a property that would offer that in Thanet, then please email me on a.munns@redstones.co.uk 

Research from ‘Denton House Property Market Researching’

Thursday, 23 April 2015

Are auction properties worth the effort in Margate

I was contacted by a landlord the other day who asked me some advice on a property he had seen that was due to go under the hammer.

Its a 4 bed semi detached property with a guide price of £187,000. Picture below.



Everyone expects an auction property to be a bargain. With the infamous 'Homes under the Hammer' TV program  suggesting that we can all make money by going to the auctions.

Well, I did some further investigation on behalf the landlord. This property is an ex HMO (House of Mulitple Occupancy) used by doctors and nurses at the nearby hospital.its in reasonable order needed new carpets and some light redecoration.


However looking at the legals that came with the property there was an interesting development. Part of the land that the property is sited is in the process of being sold. Which would suggest for further development. If you bought this property there would no doubt be some disturbance for several months while building work is being undertaken.

So it a bit of a downer in my view.

The property last sold in 2013 for £144,000. Part of the land is in the process of being sold for £45,000.

Buying at auction you need to complete within a month, which can be a bit stressful as you are at risk of losing 10% deposit if  your unable to finance the rest of the monies in that time. So generally its cash buyers only and therefore you would expect to get the property at a discounted price.

The guide price seems a bit  on the high side when you can compare other 4 bed properties in the area. So my advice to the landlord was to look at other properties in the area around the same price range as there were better buys than this investment in my view.


The property reached a bit of £192,500 at auction, but was unsold, the buyer is looking for  £200,000.

This is the property in question.

http://www.as-r.co.uk/property-auctions/auction-property/property-for-sale/ramsgate-road-margate-kent-ct9/6505

Examples of the similar properties in the area.

http://www.rightmove.co.uk/property-for-sale/property-31874796.html

http://www.rightmove.co.uk/property-for-sale/property-32380062.html

If you want some advice and opinion on where (or not) to buy, please email at a.munns@redstones.co.uk

Friday, 10 April 2015

“The way it works in Broadstairs 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 Broadstairs. 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 wich 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 Broadstairs 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 Broadstairs, in 1930, the average Broadstairs property was worth £534 It took 16 years for Broadstairs property values to double, rising to £13,019 by 1946. Another 15 years and the average Broadstairs property doubled again to £25,005 in 1961. The next doubling only took 10 years, as by 1971 the average Broadstairs property had reached £50,094 in value.
It was (as mentioned above) the 1970’s when things really took off, as by 1975 (ie only four years) they had doubled to £10,660 and they doubled again to £21,340 by 1980. It took another eight years for values to double again, as an average Broadstairs property reached £44,637 in 1988. Twelve years had to pass until the doubled again in 2000 (£91,842) and just six years to double again by 2006, when they reached £185,233  Where are we today? The average property value in Broadstairs currently stands at £261,500.
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 Broadstairs first time buyer would only need to save £7,500 for a deposit and fees and they could buy a very decent property. For example, you could a prpoerty in the Prince Charles area in Broadstairs, and it would be cheaper each month in mortgage payments than renting.
People might say on the surveys they want to buy, when it comes down to it. If you have been living in a top of the range large property in the Foreland Heights area  , but the bank will only lend you enough to buy a smaller property in the Prince Charles Road area, what would you do? Don’t get me wrong, the Prince Charles area has really pulled its socks up over the last ten years, but it isn’t the Fareland Heights area, 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 Broadstairs. 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 a Independent Financial Advisor (there are plenty in Broadstairs) and you must take advice from people who know what to buy (and not to buy) in Broadstairs to ensure you get the best from your investment.

Friday, 3 April 2015

Thanet Landlords invest £1.04billion in the Thanet 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 Thanet 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 (ie their REAL value), is the issue a lack of supply?
Putting aside Thanet’s continual housing supply shortage, (we only built 4,285 properties in the last decade but the population of Thanet grew by 7,484) 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 Thanet landlords only last week, I said that I believe this is the new norm in the Thanet 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 Thanet.
When one looks at the historic data, in July 2008, there were 1,647 properties on the market in Ramsgate compared to today’s 659. Should we be worried?  Well in January 2010 there were only 812 properties for sale in Ramsgate but ten months later in November 2010 this had jumped to 1,314 properties, for it to drop to 614 properties in December 2013. The number of properties on the market is a cyclical thing in Ramsgate 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 Thanet 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 Thanet landlords have stepped in and bought property to rent out to them. Thanet landlords have bought 5,800 properties over the last decade (investing approximately £1.044billion buying those Thanet rental properties), meaning there were at the last count, 29,540 Thanet properties being privately rented out to tenants. Thanet tenants are in fact getting a good deal as well, as average rents in Thanet 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 Thanet .. that is the only answer.
In the meantime, the demand from Thanet tenants for Thanet property is only set to rise over the coming years. If you want some advice and opinion on where (or not) to buy, please email at a.munns@redstones.co.uk