Thursday, 24 March 2016

8.6% rise in Thanet Property Values adds weight to the town’s Housing Crisis



Thanet’s continuing housing shortage is putting the town’s (and the Country’s) repute as a nation of homeowners ‘under threat’, as the number of houses being built continues to be woefully inadequate in meeting the ever demanding needs of the growing population in the town.   In fact, I was talking to my parents the other day at a family get together; the subject of the Thanet Property market came up in the conversation (as I am sure it does at many family parties in Thanet) after the weather and politics. My parents said It used to be that if you went out to work and did the right thing, you would expect that relatively quickly over the course of your career you would be buying a house, you would go on holiday every year, you would save for a pension.   But now things seem to have changed?

Back in the Autumn, George Osborne, used the Autumn Statement to double the housing budget to £2bn a year from April 2018 in an attempt to increase supply and deliver 100,000 new homes each year until 2020.  The Chancellor also introduced a series of initiatives to help get first time buyers on the housing ladder, including the contentious Help to Buy Scheme and extending Right to Buy from not just Council tenants, but to Housing Association tenants as well.

Now that does all sound rather good, but the Country is only building 137,490 properties a year (split down 114,250 built by private builders, 21,560 built by Housing Associations and and a paltry 1,680 council houses).    If you look at the graph (courtesy of ONS), you will see nationally, the last time the country was building 230,000 houses a year was in the 1960’s.




How George is going to almost double house building overnight, I don’t know, because using the analogy of a greengrocers; if people want to buy more apples (i.e. houses) in a greengrocers’ shop, giving them more money (i.e. with the Help to Buy scheme) when there's not enough apples in the first place doesn't really help.

Looking at the Thanet house building figures, in the local authority area as a whole, only 300 properties were built in the last 12 months, split down into 270 privately built properties and 30 housing association with not one council house being built.   This is simply not enough and the shortage of supply has meant Thanet property values have continued to rise, meaning they are 8.6% higher than 12 months ago, rising 0.9% in the last month alone.

I was taught at school (all those years ago!), that’s it’s all about supply and demand, this economics game.   The demand for Thanet property has been particularly strong for properties in the good areas of the town and it is my considered opinion that it is likely to continue this year, driven by growing demand among buyers (both Thanet homebuyers and Thanet landlords alike). You see Thanet’s economy is quite varied, meaning activity is expected to remain relatively strong into the early Summer of 2016, especially as some Thanet buy to let landlords try to complete purchases ahead of the introduction of new stamp duty rules in April.

.. and of supply, well we have spoken about the lack of new building in the town holding things back, but there is another issue relating to supply.   Of the existing properties already built, the concern is the number of properties on the market and for sale.   The number of properties for sale last month in Thanet was 442, whilst 12 months ago, that figure was 524, whilst four years ago it stood at 616… a massive drop!

With demand for Thanet property rising, minimal new homes being built and less properties coming onto the market, that can only mean one thing ... now is a good time to be a homeowner or landlord in Thanet.   For more articles like this, please visit the Thanet Property Market Blog INSERT www.thanetpropertyblog.com





Info from Office of National Stats for Building Numbers and House price growth from Land Registry and number of properties marketed from THE HOME WEBSITE

Sunday, 13 March 2016

8,021 Thanet Homes bought by private landlords in the last 20 years – Is this the end for first time buyers?






 




There I was, out with the family at the Royal Harbour and Marina last weekend, when a smart gentleman approached me. ‘Hello’, he said, ‘You are the person writes that Property Blog aren’t you? We have met before at that Business Networking event in Ramsgate a few months ago’. I did then recognise him and, whilst I wont mention his name, he runs a small but perfectly formed well known independent retailers in the district ... It’s amazing who you see when out walking! Anyway, I was at a loose end for five or ten minutes as the other half was sorting things with the family, so we had a chat.

He wanted to know my thoughts on the future of the Thanet property market, and I would now like to share with you that conversation, my Thanet property Blog reading friends. People are always going to need a roof over their heads and somewhere to live will never go out of fashion – it’s a necessity for every single person. The 22 to 30 year olds of the area have a choice to what type of roof they have ... they rent from the Council, they can rent from a private landlord or finally they can get a mortgage and buy one. In the 1970’s/80’s and 90’s, the expected thing was to save like mad for two years for the deposit (going without luxuries) whilst living at home or renting a cheap two up two down, then buy your first house. However, more recently fewer Thanet youngsters have been buying, choosing to rent instead – mainly from private landlords (as Councils have been selling off council housing on the Right to Buy Schemes). The numbers are truly staggering ... and I want to share them with you.

Roll the clock back 20 years and Thanet was a different place. There were 53,989 households in Thanet and 36,988 of those were owner occupied. Move to the present, and with all the building in the district, the total number of households has increased by 3.2% to 55,719 and quite surprising (to me at least), the number of owner-occupiers has increased to 33,986 (although as a proportion, it is only 60.9% compared to 66.6% twenty years ago).

However, it’s rented sector that is truly fascinating … twenty years ago, only 5,640 properties were privately rented in Thanet ... and now its 13,661, a rise of 8,021.

The twentysomethings of Thanet housing difficulties haven’t been helped by the local authority selling off council housing, with the number of council houses dropping from 6,130 to 2,935 over the same twenty-year period. Demand for decent rented property remains high, as Cameron’s much vaunted house building program is years away and has decades of under investment to catch up on before it starts to affect demand. Even with the Buy to Let tax rule changes over the coming few years (which will see the maximum tax relief available to landlords drop from 45% to 20%), private landlords still have an important role to play in housing the people of Thanet and those who educate themselves and treat it as a business will survive and prosper.

The best way Thanet landlords can protect their income from property (and mitigate the affects of the tax rises) is to keep the homes they let out in Grade A condition. I have found, especially over the last three or four years, Thanet tenants have ever growing demands from their rental property, but many are prepared to pay ‘top dollar‘ for houses and apartments that meet their high expectations. You must not forget, letting property in Thanet (in fact anywhere) is a business, so all private landlords should also seek the advice, opinion and commentary of property professionals.

... And just as the other half had sorted the family, he asked ‘What of the news of Stamp Duty changes for Landlords coming in April?’ My thoughts are with such low supply (i.e. numbers of property for sale), and high demand it is hard to imagine Thanet property values will see much impact – but I predict, ever so slightly, the proportion of owner occupiers should increase slightly compared to buy to let landlords in the coming decade as the the housing market should return to balance. For more in-depth thoughts on the Thanet Property Market, which have a library of similar articles like this, all on the Thanet Property Market, please visit my blog –www.thanetpropertyblog.com

Friday, 4 March 2016

Private Renting in Thanet increases by 115.65% in 20 years










You find me in a reflective mood today as I want to talk about the future of investing in property in Thanet. The truth is that we have got fat and lethargic, with many people having mistaken the ever rising Thanet (and in fact the whole of the UK) property market since the 1960’s as the eternal gift that kept giving as property prices constantly rose and doubled every five to seven years.

The days of making money from property as easy
as falling off a log, like taking candy from a baby are sadly
over my Thanet Property Blog reading friends

Whilst George Osborne has decided now is the time to milk the ‘Golden Cow’ of UK’s private landlords, with changes in taxation for buy to let property, many pundits are predicting the end of buy to let as we know it. However, it is still possible to make a reasonable, profitable and safe return on property with these changes. You see, I have always seen investing in the Thanet buy to let market (as I would anywhere in the UK), as I might see mother nature, creating some truly wonderful stunning warm weather but at the same time, she will bite, creating catastrophic situations such as snowstorms and hurricanes.  You need to study the market, take advice and opinions from many people and then decide what the proverbial property weather will be … remember, tenants will always want a roof over their head and I don’t see the HM Government building the millions of houses required to house them?

Nobody knows the future, and yes people can predict but I wouldn’t be afraid of this change .. because as a famous French proverb says, (I told you I was a reflective mood today), ‘the more things change, the more they stay the same’.  I mean, no one could have predicted how the property market has changed in Thanet over the last couple of decades? Looking specifically at the North Thnat Parliamentary Constituency, twenty years ago, 28,037 households (meaning 69.76% of property) was owned and only 3,647 households were privately rented (meaning 9.07% of property was rented out by private landlords). Roll the clocks on twenty years and the change has been seismic …. Now only 27,269 of properties in the Constituency are home-owners (a drop to only 66.96% being owner occupied) and the jump in private renting has been out of this world, as 7,967 properties are now privately rented proportionally 19.56%). (NB Neighbouring Constituencies show similar changes as well).

Who would have predicted in 1995 the private rental sector in
Thanet would have grown by 115.65% in the proceeding 20 years?

Also, if you had asked someone in 1995 to predict what would happen to property values over the proceeding 20 years (ie between 1995 and 2015), they might have predicted similar growth to the growth experienced over the previous 20 years (ie between 1975 and 1995), which was a very impressive 351.55%. Yes, property values in Thanet have increased over the last 20 years (between 1995 and 2015), but by a more modest 240.77% (and most of that can be attributed to house price growth between 2000 and 2006.)

The property market is constantly changing and buy to let for too long has been heavily dependent solely on house price growth, where yield has been almost forgotten.  I see the changes in tax and landlord and tenant law in a different perspective to the doom-mongers and see it as bringing many opportunities. You might need to change your buy to let benchmarks, your approach to financing or even consider places other than Thanet in which to invest your money, but this will shine a light on investing in properties with healthier yields and create more realistic long term buy to let opportunities, instead of short term growth bets and wagers.

The advice I give to my landlords, and you my blog reading friends is this; these changes will make some landlords panic, meaning competition for decent Thanet buy to let bargains will reduce as fear of change kicks in and amateur investors flee the market. These opportunities will provide a more stable platform for knowledgeable and wise Thanet buy to let landlords to thrive in. If you want to learn more about the Thanet Property Market, feel free to pop in for a coffee at our office for a chat with me, or failing that, visit the Thanet Property Blog, where you will find many more articles like this ..solely on the one topic of the Property Market in Thanet. www.thanetpropertyblog.com.