Friday, 26 June 2015

Thanet Buy To Let – Demand and Supply




Following on from my recent article about the state of the Thanet property market and in particular what had happened to the rents Thanet tenants have had to pay since the Credit Crunch, if you recall, I said rents in Thanet are 7.4% higher than they were in 2008. A Thanet landlord has since rung me after reading the Thanet Property Blog, wanting to know more of the story of what was happening to current rents in the area. The reason he asked was that his current agent hadn’t increased his rent for a number of years and was concerned if he was getting the best return from his buy to let investment.
The Thanet rental market is all about supply and demand (isn’t it so in all parts of the economy?). On the supply side, 238 rental properties have come up for let in the last 31 days in Thanet. It sounds a lot until you consider there are 13,661 rental properties in Thanet, that means only 1.74% of the rental stock of properties in Thanet are coming onto the market each month (it is normally around 5%).  One reason for this lack of new rental properties coming on the market is the fact that tenants seem to be staying in properties longer.
With this lack of supply, newer tenants have to pay more to secure the property they want. And this is the crux of the matter ...properties they want. Older properties in Thanet, that haven’t been maintained, still retain their wood chip wallpaper from the 1970’s and thread bare carpets have seen their rents drop. Tenants want either modern properties with all the mod cons or older style properties that have been presented to an exceptional standard – and they are prepared to pay for the privilege. Rents for top quality properties in Thanet have risen by 0.5% in the last month.  Any properties, old or modern, put on the market in good or excellent condition will rent in a matter of days.   
Interestingly, looking at Thanet property values, the Land Registry have just released their latest set of data on property values. Throughout April 2015 (the latest set of data), property values rose in Thanet, with 0.4% growth, meaning they are now 8.9% higher than they were a year ago.  When one looks at the regional picture, the South East average property values rose by 0.8% in the last month. The difference doesn’t concern me, as the regional and local property values always even themselves out over the months. 
Looking forward, after considering all the statistics and talking to other property professionals, I expect property values in Thanet to rise by 3% to 5% over the coming 12 months, following the Conservative victory.  In a forthcoming article, I will discuss how the number of properties changing hands each month has dropped considerably in the last 10 to 15 years in the area. 

...And so back to our landlord. Each property is unique and so as his tenancy agreement allows him to inspect the property with notice to the tenant, we will be visiting the property next week.  For more in depth thoughts and opinions like this on the Thanet Property market ...visit the Thanet Property Blog http://redstonesthanet.blogspot.co.uk/ for advice, intelligent commentary and analysis of the Thanet Property market.


Friday, 19 June 2015

Thanet Buy To Let – Should you look further afield?





I was at a recent business networking event in Thanet, when a landlord (who it transpired had a couple of Buy to let properties) bent my ear on where the next hot spot town or city is to invest his money in and where the best rental yields are. Now it can be tempting to just look at Thanet when growing a buy to let property portfolio, but there can be big differences in the amount of rental income you receive and how much your property will appreciate by considering other locations in the country.
Now regular readers of my articles of the Thanet Property Blog know of my love of the ‘buy to let seesaw’. On one side of the seesaw is yield and the other capital growth. Landlords should be looking for a high rental yield so that they can comfortably cover any mortgage payments and make some profit from the income return, but you also want the property to rise in value over time so you can get some capital growth when you come to sell. However, high yielding property in say such areas as Newington Estate, (so the seesaw arm with yield on it goes up on one side), will suffer from low capital growth (so the other arm with capital growth on the seesaw goes down).  The relationship works in reverse as well, so in such upmarket areas as Broadstairs, properties offer good capital growth, but at the expense of a decent yield.  
The North East and North West of the UK are landlord magnets for great yields. The average yield in Thanet today is 4.53%, which when you compare with say Hartlepool in the North East, which achieves 7.73% or  9.43% in the Anfield area of Liverpool, doesn’t look too healthy. Now of course, these are only averages and some of my Thanet landlords are achieving 6% to 7% on some of their Thanet properties, but at the expense of capital growth. Anyway, after wasting a tank full of petrol up the A1 to Teeside or the M1 to Home of the ‘The Reds’,  that Liverpool property, would have dropped in value by 2.2% in the last 12 months and the Hartlepool property would have dropped by 1.4%.
When you compare the long term house price growth, it gets even worse. Since 1995, property values in Thanet have risen by 219.37%,compared with Hartlepool at 21.02% and Liverpool  at 90.11% – it just shows you shouldn’t always chase the yield because of the poor increases in property values in those two places. As I always like to explain to landlords, a decent yield is important, but when you come to sell your buy to let property it would also be nice to make a decent profit.
At the end of the day, as a Thanet landlord, you want to be making gains from both your rent and house price growth, particularly when you want to sell, because when combined, the rental yield and capital growth, that gives you the real return on your investment. Finally though, do you know Hartlepool and Liverpool as well you know Thanet? Do you know where the good and bad areas are in both those places? Are you happy that it would require you to take a day out of work if there was an issue with your property in the North?  If you can’ t answer yes to all three questions, then maybe you should be considering a closer to home? If you want a chat about the local Thanet property market, pop in for a coffee or email me a.munns@redstones.co.uk.

Research from ‘Denton House Property Market Researching’


Friday, 12 June 2015

Thanet Property Market – Post Election Blues?



With the election now over and the stability of Downing Street secure, with David Cameron and his Blue Tories as the largest party in Westminster, in Thanet (as in the rest of the UK) average wages are beginning to grow faster than inflation. This is good news for the Thanet housing market, as some buyers may be willing or able to pay higher prices given the more certain political outlook and attractive inexpensive mortgage rates. However, sellers who think they have the upper hand due to the lack of property for sale should be aware that we should start to see an increase in the number of people putting their properties on to the market in Thanet giving buyers some extra negotiating power.
At the last election in May 2010, there were 3202 properties for sale in Thanet and by October 2010, this had risen to 4,286, an impressive rise of 25% in five months. An increase in the supply of properties coming on to the market could tip the balance in the demand and supply economics seesaw, thus potentially denting prices. However, as most sellers are buyers and confidence is high, this means there will be good levels of property and buyers, well into the summer, as demand will continue to slightly outstrip supply.
Just before we leave the run up to the election, it is important to consider what the uncertainty in April did to the Thanet property market. I mentioned a few weeks ago that property values (ie what properties were actually selling for) had dropped by 0.2% in March 2015. Now new data has been released from Rightmove about April’s asking prices of property in Thanet. It shows that pre-election nerves finally came home to roost in the final weeks of electioneering, with the average price of property coming to market only increasing by a very modest 1.1% (April is normally one of the best months of the year for house price growth).
I am sure our local MP’s, Roger Gale and Craig Mackinlay, would agree that the biggest issue is the lack of new properties being built in Thanet. The Conservative manifesto pledged to build 200,000 discounted starter homes for first-time buyers in the next five years. For Thanet to gets its share, that would mean only 108 such properties being built in Thanet each year for the next five years, not much when you consider there are 59,513 properties in Thanet.
Housing is not a big issue for Conservative voters and because London is an increasingly Labour city where the biggest housing issues are found by a country mile, so will it remain on the ‘to do list’ but won’t get recognition it deserves. Until another political party gets back into power, nothing will seismically change in the property market, thus demand for housing will continue to outstrip supply, meaning property values will increase (good news for landlords). However, as rents tend to go up and down with tenant wages, in the long term, rents are still only 7.4% higher than they were in 2008 (good news for tenants)... with renting everyone wins!
If you want a chat about the local Thanet property market, pop in for a coffee or email me a.munns@redstones.co.uk.

Friday, 5 June 2015

Property Values drop by 0.2% in Thanet






Property values in Thanet fell by 0.2% in March. This follows several months of sluggish activity in the Thanet property market in the run up to the Election, putting the average price of a property in Thanet at £246,000, 9.1% higher than in March 2014. Despite the not so insignificant fall in March, the figures showed property values in Thanet were still higher in the first quarter of 2015 than in the last quarter of 2014.
Interestingly, the Council of Mortgage Lenders and Estate Agent trade bodies over the last few months have reported seeing a fall in mortgage lending and enquiries from prospective homebuyers. This is important because it comes amid an overall fall in housing market activity in Thanet. Data from the Land Registry said completed house sales in Thanet in the three months to January 2015, (the most up-to-date figures available) fell by 6.78% compared to the same three month period up to January 2014.
However, I believe that the slowdown in property sales in Thanet is supporting Thanet property values, as there is a shortage of houses coming onto the market. Even though in the whole of the first Quarter of 2015, Thanet property value increases may seem subdued when compared to 2014, let us remember, property values are still rising well above the level of inflation. 
As I have said many times before, the population in Thanet is growing at a much higher rate than the number of properties being built. This increasing demand for a roof over people’s head, which is outpacing the supply of new houses being built in Thanet, is creating a severe imbalance in the Thanet (in fact the whole of UK’s) housing market, thus making homeownership an ever increasingly distant dream for many of Thanet’s potential first time buyers.
In fact, I still maintain the view that house prices are likely to rise by around 3 to 5% in Thanet in 2015, even after taking into account this blip at start of the year. The reason being is that the rise reflects both strong economic conditions and steady market conditions with (and this is the most important factor) very low numbers of properties on the market. 
Many Buy to Let landlords know that investing in the Thanet property market is a long-term strategy of 10, 20 even 30 years. Governments come and go, but unless Thanet District Council start to build hundreds of new properties a year to make up for the shocking lack of supply, Thanet people will always want a roof over their head, and irrespective of which party is in power, if there aren’t any council houses and they can’t (or are unable to buy), a demand for rental properties will always remain.
As my existing Thanet landlord clients will testify, whether you manage your property yourself, or another Thanet agent manages your properties, everyone is always made to feel welcome when they pop in for a coffee at our offices in Thanet to discuss anything to do with the Thanet property market, how Thanet compares with its closest rival towns. I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion. 
However, if you are too busy to pop into town, you could always visit the Thanet Property blog http://redstonesthanet.blogspot.co.uk/for advice, intelligent commentary and analysis of the Thanet Property market.