Thursday, 24 September 2015

Thanet Property Values 8.6% higher than year ago

Thanet property values rose by 0.3% last month, meaning they are 8.6% higher than 12 months ago. Overall, I expect future property price growth to remain firm, built on the foundations of an improving labour market, strengthening economy and very low mortgage rates. In fact, talking to a number of other agents in the city, mortgage arrangers and solicitors (all of whom have their direct finger on the pulse of the Thanet property market), the steady long term growth in Thanet property prices tied in by strong demand conditions so far this summer, alongside an underlying lack of supply and the continued low mortgage rate environment, means the slow but steady upward momentum of the Thanet property market is likely to continue in the second half of 2015.
However, there are a couple points I wish to highlight as all my blog readers will know, I like to give a balanced and honest opinion of what is happening in the Thanet property market.  The two main points being low interest rates and a lack of supply of property.
Interest rates first - Mark   Don’t say I didn’t warn you!

Carney (Chief of the Bank of England) said in a speech a few weeks ago at Lincoln Cathedral, the Bank will be seriously considering raising interest rates around Christmas time. An upward movement in interest rates will temper demand and result in a marked slowdown in house price growth. Mr Carney said that only six out of ten people that had a mortgage (57% to exact) had a variable rate mortgage, compared with more than seven in ten people (73% to be exact) in the Summer of 2012. Now I am not a mortgage arranger and cannot give advice, but rates are only going on one direction, so whether you are a landlord or homeowner, this might be a time to consider fixing your mortgage rate?
Tie this in with the stricter mortgage lending rules which were introduced in 2014, which affected people’s ability to have larger mortgages, this means homeowners will need to be realistic in their pricing if they want to sell. Reading other recent reports though, property owners have continued to pay off mortgages at a faster rate while mortgage rates have been low. Therefore, when mortgage rates rise, the affect on home movers sentiment which, given the shortage of supply, would result in a marked slowdown in the rate of house price growth.

Shortage of Supply As I have mentioned in previous articles, the number of houses on the market in Thanet is at an all time low. One reason is the large number of buy to let landlords who have bought Thanet property over the past fifteen years. Unlike first time buyers who tend to move on after a few years, landlords tend to keep their properties long term, meaning there are less properties coming onto the market ... thus restricting supply and sales. In fact over the last four months, only 7,197 properties in the Kent County Council area have changed hands and sold, compared to 8,030 in the same time frame in 2014, a not so insignificant drop of 10.37%. 
If you are planning on investing in the Thanet property market, or just want to know more, things to consider for a successful buy to let investment, one source of information is the Thanet Property Blog

Thursday, 17 September 2015

Thanet Landlord’s mortgages top £766 million!

The Brits can’t stop talking about property. The hot topic of discussion at the posh dinner parties of Kingsgate, Westgate on Sea and North Foreland’s movers and shakers is the subject of the Thanet Property market, but in particular, buy to let. These people are buying up buy to let properties quicker than an ace Monopoly player .. or so it would seem if you read the Sunday papers. So is the buy to let market a sure fire way to make money?  Is it something everyone should be jumping into? Is it a sure fire way to make money? The answer is Yes and No to all those questions!
Firstly, the government gives tax breaks to landlords, as it allows the mortgage interest payments on a buy to let property to be tax deductible. Also, a landlord only has to flick through Rightmove or Zoopla, pick any property at random and agree a price. Then, find a modest deposit of 25% (often by remortgaging their own home) which for an average Thanet terraced house, would mean finding £45,481 for the deposit (as the average Thanet terraced house is currently worth £181,924) and borrow the rest with a low interest rate buy to let mortgage.  Finally, the landlord would rent out the property in a matter of hours for top dollar and live happily ever after, with the rent then covering the mortgage payments, with loads of money to spare and come retirement have a portfolio of property that would have quadrupled in value in fifteen years. Sounds wonderful – doesn’t it? Or does it???
Let us not forgot that the half of one per cent Bank of England base rate is artificially low. The international money markets can be fickle and if interest rates do rise quicker and higher than expected because of some unforeseen global economic situation, that monthly profit will soon turn into a loss as the mortgage will be more than the rent. Even though tenants are staying longer in their rental property, tenants still come and go and my guidance to landlords is they should allow for void periods, plus the maintenance costs of a rental property and of course, agents fees. .. all things that eat into that profit.
Interestingly, by my calculations, there are approximately 4,090 Thanet landlords owing in excess of £766 million in mortgages on those Thanet buy to let properties.  An impressive amount when you consider Thanet only has 0.383% of all the rental properties in the Country. It really does come down to a number of important factors going forward to ensure you are water tight for the future. A lot of my existing landlords are fixing their mortgage rates. One told me that the Metro Bank are currently offering a 5 year fixed BTL remortgage rate at 3.79% for 5 years (based on a 75% loan). I don’t give financial advice, so you must speak with a qualified mortgage advisor.. but that sounds very fair!
However, one thing I do know is that buy to let is a long term investment, it’s a ten, fifteen, twenty year plan and property prices will go down as well as up. You wouldn’t dream of investing in the stock market without advice, so why invest in the Thanet Property Market without advice? We give bespoke detailed advice to our landlords to enable them to spot trends in the Thanet Property Market before others, enabling them to buy better properties at better prices. For example, did you know that flats are selling for around 30% lower than 12 months ago in Thanet yet terraced properties are selling for 9% more (with every other type in between). This means we can advise on which properties will go up in value better (or lose less if property prices drop), we can also advise which have lower voids and which properties have higher maintenance issues.  
Information on the local property market and ability to process it is the strongest asset we can give you. As Lois Horowitz, the famous author says, ”Not having the information you need when you need it leaves you wanting. Not knowing where to look for that information leaves you powerless. In a society where information is king, none of us can afford that”. One place to find information on the Thanet Property Market is the Thanet Property Blog, where you will find many articles just like this.

Tuesday, 15 September 2015

Fancy a Project, over 6% yield

I saw this nice little  project on Rightmove this morning. I love a nice little project like this. It needs a renovating but you can leave your stamp on it. Houses in this road rent for at least £750.00. Its located close to Dreamland, so it could let as a holiday home as well.

Friday, 11 September 2015

The ‘Liquorice Allsorts’ Thanet Property market

Despite the UK economy heading in the right direction with record low mortgage rates and unemployment  figures dropping,  the rate of property prices rising in Thanet have tempered since the start of the year. This slow but sure downward trend in the rate of growth has been in evidence since mid-2014.  Property value increases continue to outpace the growth in salaries, however the gap is closing, helped by a lift in salaries over the last 6 months.  Property values in the South East region as a whole are 9.1 higher than a year ago.  Compare this to the neighbouring regions of the London at 9.1% higher and the East at  8.8%, the majority of the country continue to see annual house price gains - the exception being Wales which recorded a slight  decline of -0.6%.
Even with the tempering in house price inflation, it does not necessarily change my outlook that property prices are likely to be firmer over the second half of 2015 amid heightening activity in the Thanet property market.  As stated in a previous article, there is a current shortage of properties on the market, restricting supply, which in turn will provide stability and support to Thanet property prices. Therefore, my overall opinion is that Thanet property prices will rise by 6% over 2015 and roughly the same in 2016.
Property investment is a long term business.  Buying the right sort of property is vital. I have recently been speaking with a number of Thanet landlords about the importance of a balanced portfolio, when buying and renting out property. The balance between buying properties that offer good monthly returns (high yields) but quite often offer poor capital growth (i.e. they don't increase in value that much over the years compared with the average) verses properties that do go up in value quicker but often offer a lower yield.  So, what type of properties have performed best over the last few years in Thanet, especially in terms of their capital growth?
When comparing  what the average price of detached, semi detached, terraced and flats were selling for back at the start of the Millennium to the present.  The results are quite remarkably different, almost like a bag of Liquorice Allsorts, as the different types of property have performed poles apart over the last 15 years:. So in Margate ...
·         Detached Houses in 2000 were selling on average for £124,552 and so far in 2015, they have been selling on average in Margate for £301,363, a rise of 142%
·         Semi -Detached Houses in 2000 were selling on average for £77,505 and so far in 2015, they have been selling on average in Margate for £195,950 a rise of 153%
·         Terraced Houses in 2000 were selling on average for £61,060 and so far in 2015, they have been selling on average in Margate for £159,312 a rise of 161%
·         Flats and Apartments in 2000 were selling on average for £37,629 and so far in 2015, they have been selling on average in Margate for £95,672 a rise of 154%
 Moving forward, what should new and existing buy to let landlords do with this information?  Well, the questions I seem to be asked on an almost daily basis by landlords are:

·         “Should I sell my property in Thanet?”
·         “Is the time right to buy another buy to let property in Thanet and if not Thanet, where?”
·         “Are there any property bargains out there in Thanet to be had?”

Many other Thanet landlords, who are with both us and other  Thanet letting agents, like to pop in for a coffee,  pick up the phone or email us to  discuss the Thanet property market, how Thanet compares with its closest rivals (Royal Tunbridge Wells, Southend-on-Sea and Ashford), and hopefully answer the three questions above.  I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion and look forward to hearing from you.