Friday, 24 June 2016

63.8% of Thanet Voters voted to leave the EU – What now for the 35054 Thanet Landlords and Homeowners?










It’s 5.50am as I start to type this article and David Dimbleby has just announced the UK will be leaving the EU as the final votes are counted. As most of the polls suggested a Remain Vote, it came as a surprise to most people, including the City. The Pound has dropped 6% this morning after the City Whiz kids got their predictions wrong and MP’s from the Remain camp are using words like “challenging times ahead”.

.. and now the vote has been made .. what next for the 19903 Thanet homeowners especially the 17004 of those Thanet homeowners with a mortgage?

The Chancellor in the campaign suggested property prices would drop by 18%. Using Treasury estimates, their method of calculating this was tenuous at best, but focused around the abrupt and hasty increase in UK interest rates, which in turn would raise the cost of mortgages, and therefore lower demand for property, causing a drop in property prices.… and I would say, yes .. that will probably happen.

Thanet  Property Values

Thanetproperty values will probably drop in the coming 12 to 18 months – but by 18% - I am sorry I find that a little pessimistic and believe that figure was rhetoric to get homeowners and landlords to vote in a particular way. But the UK property market is quite a monster.

Since the last In/Out EU Referendum in June 1975,
property values in Thanet have risen by 2087.2%

(That isn’t a typo) and whilst property prices did drop nationally by 18.7% between the peak of 2007 and bottom of the market in 2009, when one compares property values today in the country, compared to that all-time high of 2007, (the period before the financial crisis of the Credit Crunch of 2008/9) .. they are still up 10.14% higher.

Another Credit Crunch?

And so, notwithstanding the Credit Crunch, the worst global economic outlook since the 1930s and the recession it brought us, a matter of a few years later, the Government were panicking in 2012/3/4 that the housing market was a runaway train.

Now the same Credit Crunch doom-mongers and Sooth-Sayers that predicted soup kitchens in 2008/9 are predicting Brexit meltdown. Bad news sells newspapers. Stock markets may rise, stock markets may fall, yet the British public continued to buy property in 2009/10 and beyond. Aspiring first time buyers and buy to let landlords dusted themselves down, took a deep breath and carried on buying… because us Brit’s love our Bricks and Mortar .. we need a roof over our head.

However, as mentioned previously, if the value of the pound drops, in the past UK Interest Rates have risen to reverse that drop. However, whilst a cheaper pound will make your pint of Sangria a little more expensive on your Spanish holiday this year and make your brand new BMW pricer .. it will make British export cheaper! Which is great for the economy.

Interest rates

… and what of interest rates? Since 2009, interest rates have been at 0.5% and lots of people have become accustomed to those sorts of levels. So what if interest rates rise .. end of the world? Interest rates in the 1986/88 property boom were on average 9.25%, the 1990’s they were on average around 6.5% and uber-boom years (when UK property values were rising by 20% a year for three or four straight years across the UK) .. 4.5%. Many of you reading this who are in their 50’s and older will remember interest rates at 15%.

But I suspect interest rates won’t rise that much anyway, as Mark Carney (Chief of the Bank Of England) knows, raising interest rates causes deflation – which is the last thing the British economy needs at the moment. In fact they have been printing money (aka Quantitative Easing) for the last few years (which causes inflation) to the tune of £375bn a month. A bit of inflation because the pound has slipped on the money markets (not too much mind you) might be a good thing?

.. because whilst property values might drop in the country, they will bounce back. It’s only a paper loss.. because it only becomes real if you sell. And if you have to sell, again as most people move up market when they sell, whilst your property might have dropped by 5% or 10%, the one you want to buy would have dropped by the same 5% to 10% .. and here is the best part – (and work your sums out) you would actually be better off because the more expensive property you would be purchasing would have come down in value (in actual pound notes) than the one you are selling.

The Thanet landlords of the 14,151 Thanet buy to let landlords have nothing to fear neither, nor do the 31,864 tenants living in their properties.

Buy to let is a long term investment. I think there might even be some buy to let bargains in the coming months as some people, irrespective of evidence, panic.  Even if we pull up the drawbridge at Dover and immigration stopped today, the British population will still increase at a rate that will exceed the current property building level. Britain is building 139,600 properties a year, but needs according to the eminent ‘Barker Review of Housing Supply Report’, the country needs to build about 250,000 properties a year to even stand still, and as the the birth rate is increasing, the population is living longer and just under a quarter of all UK households now are occupied by a single person demand is only going up whilst supply is stifled. Greater demand than supply equals higher prices. That is definitely a fact.

So, what will happen next?

Well, there are many challenges ahead. The country has spoken and we are now in unchartered territory – but we have been through a couple of World Wars, an Oil Crisis, Black Monday, Black Wednesday, 15% interest rates and a Credit Crunch … and we survived!

And the value of your Thanet property? It might have a short term wobble… but in the long term -it’s safe as houses regardless.



Friday, 17 June 2016

2,420 Thanet Properties lie empty– An injustice for the 1,443 people on the Thanet Council House Waiting List?







Easy problems should have easy solutions  - shouldn’t they?

Problems like Thanet’s housing crisis, where we have a rudimentary numerical problem of too few homes for too many people ... the answer is clearly to build more property in Thanet - but that, unfortunately for those desperately seeking to purchase or let a property, takes a lot of time and huge amounts of money. So what of other solutions?

Whilst at a dinner with friends recently, the subject of property was mentioned (as I am sure it does at most dinner parties up and down the country). Normally someone always mentions empty properties as the solution to the problem. On the face of it, it seems so obvious. Now quite interestingly, I had recently done some research on this topic, which I want to share with you (as I did with those at the dinner table).

The most recent set of figures from 2015 state there are 2,420 empty homes in the Thanet District Council area. So it begs the question ... why not put them back onto the system and help ease the Thanet housing crisis? Whilst they stand empty, 1,443 Thanet households (not people – households) are on the Council House Waiting List for council houses. Surely, we can undoubtedly all agree that property left empty for years and years isn’t morally right with the burgeoning Council House Waiting List, not to also mention the issue of homelessness.

But a different story emerges when you look deeper into the numbers. Of those 2,420 homes lying empty, only 731 properties were empty for more than six months. The local authority has to report a property being empty, even if it’s for a week. So many of the Thanet properties are either awaiting new homeowners or, in the case of rental properties, new tenants. Also most certainly, some properties are being refurbished and renovated, while others properties have homeowners who are anxious to sell but cannot find a buyer.

And this is where its gets even more interesting. Of the 731 long-term vacant properties (those empty more than six months), 44 belong to the council. However, before we all go Council-bashing, anecdotal evidence suggests these empty council houses are habitually in need of so much restoration that it’s not worth the Council’s while to do and are in the roughest parts of the council estates, they are properties that even the Council find difficult to fill.

The fact is that the number of genuinely long term empty properties is only a tiny drop in the ocean of the 59,513 properties in the area covered by Thanet District Council and, even if every one of those empty homes were filled with happy cheerful tenants tomorrow, it would only meet a small fraction of Thanet housing needs.

So what does this mean for all the homeowners and landlords of Thanet? Well it means with demand being so high, especially for rental properties, the certainty of the rental market growing is an inevitability because young people cannot buy and councils don’t have the money to build new council houses. This in turn bolsters property prices as landlords continue to buy at the lower end of the market (starter homes, etc), which in turn sustains the rest of the market as those sellers move up the property ladder, releasing others in turn to buy on again.

These are interesting times in the Thanet property market!


Tuesday, 14 June 2016

Westbrook Buy to Let





While sipping my gin and juice this evening I came across a little gem of a property that just screams 'Buy to let', which is something that is becoming harder to find in the Thanet area. This is due to large numbers of first time house hunters moving into the area and living in the them!!
10 years ago Thanet didn't have this problem! Every property was a 'Buy to Let' investment and you couldn't pay people to live here! How times have changed. With Thanets stunning beaches, the thriving art community, music scene and not to mention Dreamland Amusement Park, Thanet is now THE place to be, which is why it is becoming more and more difficult to source reasonable investment properties.

Which is why this first floor flat in Westbrook is such a good find! In a ideal location for commuters and locals alike, this split level two bedroom flat which is in the process of being refurbished is perfect for the rental market. Just a minutes walk from Margate train station and Westbrook beach you can expect a monthly rental of between £550 and £600 which provides a yield of between 6% and 6.5% on this £110,000 property.









Friday, 10 June 2016

35% of Thanet People Rent - Is this healthy?



Image result for healthy home



Renting used to be a dirty word in the 60’s and 70’s. You either lived in a ‘Rigsby Rising Damp’ style bedsit with wood chip on the wall and a coin operated electric meter (that buzzed in the night) or you lived in a council house. In the latter part of the 20th Century, the British were persuaded that rent payments were ‘wasted money’. However, owning often makes less financial sense than renting and as the rate of homeownership is starting to drop substantially, as we roll the clock forward to today, there is no stigma at all to renting .. everyone is doing it. In fact, of the 123,026 residents of Thanet, 45,894 of you rent your house from either the local authority/social provider (ie council house or housing association) or private landlords – meaning 35.02% of Thanet people are tenants.

The idea of homeownership is deeply embedded in the British soul, in fact 75,695 Thanet people live in an owner occupied property (or 63.78%). Housing is at the heart of Government policy, as George Osborne has promised 200,000 new properties a year so first time buyers can buy their first home whilst recently changing the tax laws for buy to let landlords. To get votes, Thatcher (and everyone since) ran election campaigns promising everybody their own home, and as a country, we seem to equate homeownership the goal of British life.

So as more and more people are renting nowadays, are we turning to a more European way of living? Well, I believe, as a country, we are. In fact, homeownership could be affecting your health! The UK, according to Bloomberg, is only the 21st most healthy country in the world. Germany is at No.10 and Switzerland at No.4 and homeownership is at 52.5% and 44% respectively in those countries (in the UK it is 64.8%).


                                          

In the Thanet District Council area, 63.7% of homeowners who own their house outright said they were in ‘very good’ or ‘good’ health whilst, at the other end of the scale, 9.86% said their health was ‘bad’ or ‘very bad’. Looking at renting, the census splits tenants into two types - 64% of Thanet local authority/social tenants said they were in ‘very good’ or ‘good’ health and 15% were in ‘bad’ or ‘very bad’ health …

… whilst ‘private rented tenants’ in Thanet, were the healthiest, as 80.28% of them described themselves in ‘very good’ or ‘good’ health and only 6.39% were in ‘bad’ or ‘very bad’ health

I am not suggesting that low homeownership rates in Switzerland and Germany are directly linked to health, nor, do I expect Brits to all go to Berlin, Interlaken or Düsseldorf and realise how happy people are when they don't need to worry about all the stresses which accompany home-ownership. The numbers for Thanet do go some way to back up the argument (and they are the same across the whole of the UK). Nonetheless I do think that substantially all of the upside to homeownership in recent years has been a function of monumental rising house prices. Now that's come to an end, it's hard to see why anybody would want to buy?


Renting is here to stay in Thanet and it’s growing incrementally each year. Even with the new tax rules for landlords, buy to let is still a viable investment option for most people in the area. There has never been a better time to buy buy to let property in Thanet, but buy wisely. Gone are the days that you would make profit on anything with four walls and a roof. Take advice, take opinion, do your homework. One place to do more homework, to read more articles on the Thanet Property market like this, is the Thanet Property Blog