Friday, 29 January 2016

Will the young people of Thanet ever own their own home?

I had the most interesting chat with a mature couple (in their early/mid 50’s) from Kingsgate the other day, whilst viewing one of our rental properties. The property wasn’t for them, but their son, who wanted a second viewing with his parents to get the parental blessing. Now I know that isn’t the norm, but in this case the parents were going to act as guarantor. We got chatting about the Thanet property market and how they had bought their first property in the area just after they got married in the late 1980’s when they were in their early/mid 20’s. Anyway, we got chatting about how the youngsters of the UK seem to rent more than buy nowadays and from that the conversation covered a number of similar topics. I want to share the highlights of that conversation with you today.
Their son, like many 20 to 30 year olds in Thanet, desperately wants to own his own property and the parents said he had read in the Telegraph recently, when you compare house prices to earnings, the current 20 to 30 something’s generation have to spend more of their salary in mortgage payments than any previous generation. The demand for private rental sector accommodation in Thanet is huge. There are in fact 13,661 private rental properties in Thanet at the last count, impressive when you consider there are 2,935 council houses in the area. However, let us not forget 33,986 properties are owner occupied (15,659 with a mortgage).
Let us all be honest, private renting doesn’t have the stigma it had a few decades ago and it might surprise people that even though us Brit’s class ourselves as a nation of homeowners, roll the clock back 100 years and over 75% of people rented their own home (and it was all from private landlords as council housing only started to come in with the ‘homes for hero’s’ after the first World War). It might also surprise you to learn that at the time of the 1971 census, still more people rented than owned their own home.
Looking at the affordability issue, I have proved time and time again, it is in fact cheaper to buy a property than rent, when one looks at starter homes for first time buyers. 95% mortgages have been available to first time buyers for over four years and whilst you could certainly find better properties in better condition in better areas, terraced houses can be bought for as little as the early £110,000’s in Ramsgate (meaning a modest deposit of £5,500 would be required).
When it came to affordability, I was able to tell them that when they bought their first house in Thanet in 1988, the ratio of house prices to salary was 7.54 to 1 in Thanet ... and here was the surprise for both of us, today’s ratio is only 6.53 to 1!
I said I believed there had been a cultural attitude change towards renting property in Britain and that this quiet revolution was likely to be permanent. In the 60’s, 70’s and 80’s, saving for the deposit was everything and buying a house was everything. Youngsters today have far much more disposal income today than people had in the Callaghan and Thatcher years, but choose to spend it upgrading their mobile phones every 12 months, the newest tablet or PC, a newest 50” plasma LCD TV and two sun drenched holidays a year, than go without and save for a deposit.
Yes, there are horror stories of tenants living in rat infested properties with landlords who charge massive rents and don’t repair their properties. But that is very much the exception as most tenants rent homes of a quality they couldn’t ever to afford to buy. Twenty years ago, if you said you rented a property, you were considered the lowest of the low ... but now it’s the norm.
So with mortgage affordability being well within the bounds of most first time buyers, the level of deposit required for a 95% being surprisingly modest (starting off at c.£5,500 in Thanet as mentioned above) until we change our attitudes, the UK housing market is slowly but surely turning into a more European model, where people rent for long periods of their life, then eventually inherit their parents properties and subsequently become homeowners themselves, albeit later in life.
Hence, I cannot see the demand for decent, high quality rental properties ever dropping in the next 10 to 20 years, but only ever increasing as the population continues to soar. Just make sure you by the right property, at the price, in the right location. One source of information on such matters would be the Thanet Property Blog .

Friday, 22 January 2016

Thanet Landlords could be fined £276,000 per year

“Who would want to move to Thanet in weather like this?”, was what one landlord said to me as we shook hands outside his property, the other afternoon. It was windy, cold, it had been raining most of the day and it was the last appointment of the day at 4.45pm. I will admit, as I had been out of the office all day, I was looking forward to getting home, putting the fire on, and watching telly with a big mug of tea.. but this landlord lived in neighbouring Dover and this was the earliest he could do. 
It turned out he had been self-managing the property himself over the last few years, but was worried with all the new legislation that had been introduced recently. He was particularly concerned about the up and coming ‘Right to Rent’ legislation, so as his tenant had handed in their notice recently, on this new tenancy he called us for our opinion.
For those Thanet landlords that don’t know, landlords will need to check the immigration status of any new tenants moving into properties from February 2016 or face a £3,000 fine. It is called the 'Right to Rent' rules. However, tenants should also be aware that as well as traditional landlords, tenants who sub let rooms and homeowners who take in lodgers, must also check the right of prospective tenants to reside in the UK.
Our landlord from Dover wanted to know how much of a real issue was ‘Right to Rent’ in Thanet. I was able to tell him, the last available figures (from a couple of years ago) show that 92 people (whom were registered as Non-UK Born Short-term Residents) moved into private rented accommodation in the Thanet District Council area in one year alone. If all of those people weren’t supposed to be in the UK, that would be a fine of £276,000 to the landlords of the area.
It doesn’t sound a lot when you think there are 61,223 residents in Margate, and of those, 55,036 people (or 89.89%) were born in the UK. In Ramsgate there are 40,515 residents of which 37,321 people (or 92.12%) were born in the UK and in Broadstairs there are 23,632 residents of which 21,895 people were born in the UK (or 92.65%). But Thanet is a cosmopolitan area as the country of birth of the residents in the Thanet District Council area can be split down as follows:
·         UK                                                                          92.65%
·         Ireland                                                    0.64%
·         Europe                                                   2.82%
·         Africa                                                                      1.18%
·         Middle East and Asia                                        1.82%
·         Americas and Caribbean                                 0.63%
·         Australia and Pacific region                            0.21% 


·         UK                                                                          89.89%
·         Ireland                                                    0.78%
·         Europe                                                   5.63%
·         Africa                                                                      1.09%
·         Middle East and Asia                                        1.87%
·         Americas and Caribbean                                 0.50%
·         Australia and Pacific region                            0.20% 

·         UK                                                                          92.12%
·         Ireland                                                    0.56%
·         Europe                                                   3.87%
·         Africa                                                                      0.87%
·         Middle East and Asia                                        1.79%
·         Americas and Caribbean                                 0.57%
·         Australia and Pacific region                            0.19% 

However, it must also be recognised that landlords, by checking up on tenants, could potentially be accused of discrimination under the Equality Act. This is a real minefield for landlords, especially when you consider that not all of the 5,681 Europeans in the area necessarily have the right to live in the UK either.
In a nutshell, Thanet landlords will need to check and retain copies of certain documents that show a potential tenant has the right to live in the UK. These include ....
·         UK Passport
·         EEA Passport/Identity card
·         Travel document or Permanent Residence Card showing indefinite leave to remain
·         Paperwork from Home Office stating their Immigration status
·         Certificate of registration or naturalisation as a British citizen.

I hope the new law will target dishonest landlords who repeatedly fail to carry out Right to Rent checks by making it a criminal offence. This means they could face imprisonment for failing to check on their tenants. That is why more and more landlords are asking agents to manage their properties, so they can stay the right side of the law.
So what did our landlord do?
Well after our chat, he asked us to find a tenant and manage the property for him - he had been reading the Thanet Property Blog for a while and because of the knowledge we impart to the landlords of Thanet, we obviously know what we are talking about.  Even better news for him, even though this would cost him agency fees, I was able to get him an additional £75 per month for his property (when we found him a tenant one week later). Now, together with the peace of mind we will keep him the right side of the law and put a stop to midnight phone calls complaining about dripping taps, it was a win-win situation for everyone. For more thoughts, opinions and views on the Thanet property market .visit the Thanet Property Blog.

Friday, 15 January 2016

Ramsgate Landlords count the cost of a Tory Election win

Can you remember 10.05pm on Thursday, 7th May 2015 ... with the shock news that BBC Exit Polls suggested the Conservatives would be returned with majority? The middle classes in London Road and Sandwich Road exhaled a huge sigh of relief, as Ramsgate landlords, faced with rent controls from Red Ed and the Labour Party, now had something to cheer about as the Tory’s were always considered to be a political party that accepted the importance of the rental market, supported its development while properly targeting the lawbreaker landlords renting out below standard rental accommodation.
Since May though, George Osborne announced future rises in stamp duty for buy to let landlords and a change in the interest relief on buy to let mortgages, some people have started to question that loyalty. However, things could have been a lot worse for Ramsgate landlords as previous ideas of making landlord’s pay more tax was the idea (which was seriously considered) of increasing Capital Gains Tax rates to the landlord’s own income tax levels. If Landlords would have had to pay capital gains tax of 40% to 45% on any uplift in value, I can tell you here and now, that would have made investing in property a non starter for almost everyone.
However, I will admit the loss of mortgage higher rate tax relief will make a number of properties not stack up financially. The new rules are likely to slow demand in the Ramsgate housing market, which is in fact good news for the other landlords, as there is less competition from 'amateur' landlords offering too much.
Just a thought, but making Ramsgate landlords think twice and
run their numbers more cautiously is not such a bad thing.

So looking at the numbers, the November figures have just been released and they show a growth of property values in Ramsgate of 0.5% over the month of November. That figure doesn’t surprise me due to the time of year. It’s quite dangerous to look at one month in isolation, so looking at a more medium term view, over the last 12 months, property values in Ramsgate have risen by 7.7%, not bad when you consider inflation is running at -0.1%.
However, regular readers of the Thanet Property Blog know my passion for looking deeper into the stats. The really interesting information is the value growth, but what types of property are actually selling in Ramsgate?  Looking at all the properties sold, as recorded by the Land Registry, within 2 miles of the centre of Ramsgate in September 2015 (this data always runs a couple of months behind the house price data) compared to September 2007 (a couple of months before the credit crunch started to bite and the subsequent property crash).

Sept 2007
Sept 2015
Detached in Ramsgate
Semis in Ramsgate
Terraced Houses in Ramsgate
Apartments / Flats in Ramsgate

Now I have mentioned in previous articles that the numbers of properties selling in the town has certainly dropped post 2008, but what amazed me were the drop in the number of detached, terraces and apartments selling in Ramsgate compared to the sales of semi-detached properties, which rose slightly.
Less properties are selling than last decade in Ramsgate
and the types of properties selling have changed ...
interesting times ahead for the Ramsgate Property market!

Therefore, all I can say to the landlords of Ramsgate is do your homework, make sure the numbers do stack up, take advice and opinion from professionals and above all, for those of you planning to add to your portfolio, buy the right property at the right price. One place for such advice and opinion on the Ramsgate Property market is the Thanet Property Blog