Thursday, 31 December 2015

The Thanet Property Market and £1,300,000,000,000,000,000 in loose change


The 5th of March 2009 was the date Mervyn King, the then Bank of England Governor, slashed UK interest rates to the unparalleled figure of 0.5%. In just under five months, starting on 8th October 2008, the rate had come down from 4.5% to that low figure, all in an attempt to ensure the British economy survived the worldwide credit crunch. Now as we deck the halls with bows of holly nobody expected that, over six years later, rates would still be at that low level.
In the summer, people were predicting a rise in the New Year, yet now, some forecast it may remain the same for years to come the due to the issues in China. Now, I am not some City Whiz kid with a hotline to Mr Carney at Threadneedle Street, but merely a humble letting agent from Thanet, so I can not profess to know what will happen to interest rates. However, what I do know, speaking to my Thanet friends and Thanet landlords is that these low interest rates have hit savers really hard.
If you added up everyone’s bank and building society savings in the UK, they would add up to £1,300,000,000,000,000,000 (that’s £1.3 trillion), most of which is earning a pittance in interest.  That is why more and more 40 and 50 year old Thanet landlords have been investing some of that cash into Thanet bricks and mortar, as they search for a low risk investment opportunity.
Buying a Thanet buy to let property isn’t risk free, but there are certainly things you can do to mitigate and lower one’s exposure to risk. You see by buying a rental property, it potentially offers an enigmatically decent proposition in terms of being able to obtain attractive returns that beat inflation and savings accounts, yet without taking the levels of risk associated with stock markets.
The UK residential property market has long been the safest form of collateral for lenders of all varieties. Against a backdrop of a greatly changing economic environment, Thanet house prices have been extraordinarily robust, increasing by over 2148% between 1974 and today. Some will say there have been significant property price falls, namely in 1975, 1988 and 2008, yet each time after this has been followed by an upturn in property values. For the record, the stock markets in the same time frame only rose by 432.5%!
.. and that is the best thing about buy to let property. Unlike the stock market, with its unfathomable equities, shares and bonds, that nobody really understands (as they are controlled by some faceless whizzkid in Canary Wharf!) with a buy to let property, landlords can take control and understand their investment .. in fact you can touch and feel the bricks and mortar investment.
..  but before you go out and buy any old Thanet property, plenty of landlords still get it wrong. You have to be aware of your legal responsibilities when it comes to tenant safety, tenants deposits, energy certificates and in the new year, landlords will have the added responsibility of checking the immigration status of prospective tenants. Get it wrong and big fines and even prison is an option – but that’s why many agents use a letting agent to manage their property for them.
Next, you have to buy the right property at the right price. Recently I have seen some really heart breaking situations in Thanet and the immediate area, of people paying way too much for a property, only to lose out when they came to sell. One example that comes to mind is that of a property owner in an apartment in Temeraire Court on Fort Crescent, with fantastic uninterrupted sea views and located just 0.3 miles from Margate’s bustling Old town with its ever growing hub of shops, cafes, galleries and eateries .. a decent one bed top floor apartment, 47 sq metres inside (505 sq ft in old money) sold in February 2008 for £130,000. In the summer, it only obtained £155,000, a drop of 11.54% or 1.63% a year - a very disappointing result.
I cannot stress enough the importance of doing your homework. One source of information and advice is the Thanet Property Blog where I have similar articles to this about the Thanet property market and what I consider to be the best buy to let deals around at any one time in the area, irrespective of which agent it is on the market with. If you haven’t visited and you are interested in the local property market in Thanet .. you are missing out!

Sunday, 20 December 2015

Thanet House Price Monopoly: How do Prices vary?

Well as the nights draw in, if there is nothing on the telly, the significant other and myself like to play the board game Monopoly. The buying and renting of property, it’s like a busman’s holiday for me! Interestingly, the game was originally invented at the turn of the 20th Century (in 1903) and the game was initially called ‘The Landlord’s Game’!  Anyway, after a few years in the wilderness, the current owners of the game renamed it in 1935 and so began Monopoly as we know it today.
So whether you are a homeowner or landlord in Thanet, what would a Monopoly board look like today in the area? Property prices over the last 80 years have certainly increased beyond all recognition, so looking at the original board, I have substituted some of the original streets with the most expensive and least expensive locations in Thanet today.
Initially, I have focused on the CT10 postcode only, looking at the Brown Squares on the board, the ‘new’ Old Kent Road in Thanet today would be Church Court Grove, with an average value £120,500 (per property) and Whitechapel Road would be Linley Road, which would be worth £132,400. What about the posh dark blue squares of Park Lane and Mayfair? Again, looking at CT10, Park Lane would be South Cliff Parade at £732,800 and Mayfair would be Cliff Road at £929,800, all of which being in Broadstairs. Also, I can’t forget the train stations (my favourite squares), and over the last 12 months, the median average price that property within a quarter mile of Broadstairs station sold for was £250,000.
So that got me thinking what you would have had to have paid for a property in Thanet back in 1935, when the game originally came out?
·         The average Thanet detached house today is worth £326,740 would have set you back 591 Pounds 3 shillings and 5 old pence.
·         The average Thanet semi detached house today is worth £225,680 would have set you back 408 Pounds 6 shillings and 5 old pence.
·         The average Thanet terraced / town house today is worth £187,960 would have set you back 340 Pounds 1 shillings and 6 old pence.
·         The average Thanet apartment today is worth £143,440 would have set you back 259 Pounds 10 shillings and 6 old pence.
Anyway, I hope you enjoyed this bit of fun, but underlying all this is one important fact. Property investing is a long game, which has seen impressive rises over the last 80 years. In my previous articles I have talked about what is happening on a month by month or year by year basis and if you are going to invest in the Thanet property market, you should consider the Thanet property you buy a medium to long term investment, because Buy to let is pretty much what it sounds like – you buy a property in order to rent it out to tenants.
As I reminded a soon to be first time landlord from St Lawrence the other week, Buy to let in Thanet (as in other parts of the Country) is very different from owning your own home. When you become a Thanet landlord, you are in essence running a small business – one with important legal responsibilities. I write the Thanet Property Blog, where it has an extensive library of articles like this one, where I talk about what is happening in the Thanet property market, what to buy (and sometimes not) in Thanet and everything else that is important to know as a Thanet landlord. Please visit the Thanet Property Blog

Friday, 11 December 2015

A great 3 Bed project in Ramsgate

Just saw this 3 Bed advertised this morning and I couldn't not put this on the blog, Its up  for £135,000!

It needs some work, this will add more value. With a quality renovation this will add at least £25,000 to the property value. A great little property in nice part of Ramsgate properties like this will rent between £750 - £800 per month.Grab it before the stamp duty hike!

Has Osborne killed buy to let in Thanet?

Well George Osborne, in his Autumn statement last week, caused Thanet landlords to ask whether buy to let is a viable investment option, when he announced that landlords, when buying another buy to let property from April 2016 will have to pay an additional 3% stamp duty on top of the standard rate. So for example,  it means that the stamp duty bill for a £285,000 buy to let home will rise from the current £4,250 to £12,800 from April next year. 
Some say property in Thanet will be worth less because potential landlords will not be willing to pay as much for them, and if house builders or existing homeowners don't feel they are going to get as much for them , then there is less motivation to build / sell them?... and the person we can blame for this is George himself. Back in 2012, he choose to utilise the British housing market to kick start the UK economy, with  subsidies, Funding for Lending and Help to Buy. However, whilst that helped the Tory’s get back into power in 2015, some say this impressive growth in the UK property market has been at the expense of pricing out youngsters wanting to buy their first home.
Others say this is the straw that breaks the camel’s back as over the next four years Landlords will slowly lose the ability to offset all their mortgage interest against tax on rental income, after changes announced in the Summer Budget. At the moment, landlords can claim tax relief on buy to let mortgage monthly interest repayments at the top level of tax they pay (ie 40% or 45%). However, over the next four years this will be reduced slowly to the basic rate of tax – currently 20%.
Surely this is the end of Buy to Let in Thanet? Probably.. but before we all run to hills panicking .. let me give you another thought.
Stamp Duty rules were changed in December 2014. Before then, landlords were eagerly buying up properties under the ‘old slab style Stamp Duty’ system. For example, the stamp duty bill on that £285,000 property was lower on the old slab style duty (pre Dec 2014), at £8,550, yet it isn’t a million miles away from new £12,800 stamp duty bill. Interestingly though, George has left a legal loophole in the new rules, because when it comes to selling up, they can offset purchase costs against any eventual capital gains tax, including stamp duty.
I believe that total returns from buy to let will continue to outpace other investments, such as the stock market, gilts, bonds and even pensions. Also, the best part about investing in property is that it is bricks and mortar. You can touch it, you can feel it, and it isn’t controlled by some City whiz kid in Canary Wharf .. the British understand property and that goes a long way!
Buy to let has enough impetus behind it that prospective landlords will continue to buy even with a larger stamp duty bill. Thanet landlords will need to be savvy with what property they buy to ensure the extra stamp duty costs are mitigated.   Buying buy to let property is a long term venture. In the past, it didn’t matter what property you bought in Thanet or at what price – you would always make money. Now with these extra taxes, the adage of ‘any old Thanet house will make money’ has gone out the window.   You wouldn’t dream of investing in the stock market without at least looking in the newspapers or taking advice and opinion from others, so why would you take the same advice and opinion about buying a buy to let property in Thanet?

One source of information, opinion and advice is the Thanet Property Blog

Friday, 4 December 2015

Ramsgate vs Hastings – Clash of the Property Market Titans

Many landlords have been asking me my thoughts on the Ramsgate property market recently, and in particular, what is happening to property values. My calculations show property values in Ramsgate quite interestingly grew in the month of September by 0.7%. When one looks at the annual growth, Ramsgate values are 8.5% higher (when comparing Sept 14 to Sept 15).  However, there are signs that the fundamental growth of property values in Ramsgate has now peaked, despite those average property values being below levels recorded in 2007 (just before the 2008 crash).
Even though prices are higher this month, this impressive rise of Ramsgate property values masks the underlying truth in what is really happening to local property values in the Town. Throughout 2015, property values have been yo-yo like on a month by month basis, being quite volatile in nature.  For example,
·         September 2015               0.7% rise
·         August 2015                       1.0% rise
·         July 2015                              1.9% rise
·         June 2015                            0.8% rise
·         May 2015                             0.7% rise
·         April 2015                            0.9% rise
·         March 2015                         0.2% rise
This is in part due to seasonal factors, as well as mortgage approvals increasing over June and July and then falling by over 15% in August, according to the Council of Mortgage Lenders (CML).

The outlook for the Ramsgate property market remains positive against the foundations of low mortgage rates and growing consumer confidence. However, I do have to question the recent CML mortgage data and whether that raises issues over whether the rate of growth since the Tory’s were re-elected in the early summer can continue? However, on a positive note, Ramsgate property values are still running ahead of salaries and average property values are 9.2% below the levels recorded in 2007.
Talking to fellow property professionals in the town, demand for property has been showing signs of moderating in the final few months of 2015, which in turn will lead to a slight slowdown in the pace of house price growth in the run up to the festive season. You see, it is really important not to read too much into one month’s (September’s) headline figures.
Readers might be interested to note that before the 2008 property crash, all the UK region’s housing markets tended to move up and down in tandem like the Ramsgate Synchronised Swimming team at the Ramsgate Leisure Centre Swimming Pool!  Since then though, the Greater London property market took off like a rocket in 2009/10, whilst the rest of the UK only really started to grow in 2012/13, and even then that growth was a lot more modest than the Capital’s.  Looking closer to home, it can even be different in neighbouring towns, areas and cities, so whilst Ramsgate property values are 8.5% higher than a year ago (as mentioned above), Hastings property values are 6.9% higher than a year ago.
I cannot stress enough the importance of doing your homework.  One source of information and advice is the Ramsgate Property Blog where I have similar articles to this about the Ramsgate property market and what I consider to be the best buy to let deals around at any one time in the town, irrespective of which agent it is on the market with.  If you haven’t visited and you are interested in the local property market in Ramsgate….. you are missing out!