Tuesday, 15 November 2016

Private Renting set to grow by 3,100 Margate households by 2025

I was having a most interesting chat the other day with a Thanet landlord when we were looking at a property. As I am sure you are aware, I am always happy to cast my eye over any potential buy to let purchase in Thanet, be that you emailing me a Rightmove link, a brochure in the post or even treading the carpet and seeing it together. I don't charge for that, and you don't even need to be a client of mine. We got talking about the Thanet Property Market and this landlord brought up the subject of a report he had read from the Royal Institution of Chartered Surveyors (RICS) and PricewaterhouseCoopers (PwC) that stated almost 1.8m new rental homes are needed by 2025 to keep up with current demand from tenants. He wanted to know what this meant for Thanet.

Well my blog reading friends, some commentators said last Winter that buy to let was about to die, what with the new stamp duty changes and how mortgage tax relief will be calculated. Others even said 500,000 rental properties would flood the market nationally in the 12 months after the new Stamp Duty rules came into force on the 1st April 2016 as landlords left the rental market. Well, all I can say is, I wish all the landlords of those half a million properties would hurry up and put them on the market – because I have plenty of other potential landlords wanting to buy them!

Back to the matter in hand.. if the RICS and PwC are indeed correct, what does this mean for Thanet? The fact is, as a country, we are facing a precarious rental shortage and need to get Thanet building in a way that benefits a cross-section of Thanet society, not just the fortunate few. I call on the Prime Minister to drop the higher stamp duty tax on buy to let purchases to ease the pressure on the rental market.

Of the 27,300 households in Margate, currently 16,300 tenants live in 7,300 private rented properties. If we apportion those 1.8m households equally around the Country, that means in nine years’ time, the number of rental properties in Margate needs to rise by 3,100 (i.e. 42.8%) .. taking the total number of rented properties in the city to 10,400.

That means Margate landlords need to buy around 300 properties a year between now and 2025 to meet that demand – because according to my calculations, an additional 7,000 people will want to live in all those 'additional' Margate rental properties – so why is the government penalising landlords?

Thankfully the new housing minister Gavin Barwell detached Teresa May's new administration from the Cameron/Osborne laser-like focus of just home ownership to solve our housing issues, saying "we need to build more homes for every single type of person needing a home and not focus on one single tenure". The private rented sector became a stooge under David Cameron's watch and still, with increasingly unaffordable Thanet house prices, the majority of new Thanet households will be relying on the rental sector in the future to house them. I can only say Westminster must put in place the measures that will allow the rental sector to flourish. Any restrictions on the supply of rental property will push up rents (bad news for tenants), thus side-lining those members of Thanet society who are already struggling. Let's hope this new Government continues to see the contribution landlords give to the country as a whole.

Tuesday, 8 November 2016

Thanet Housing Crisis? 4.3% of Ramsgate Homes Are For Sale

The Thanet Property Market continues to disregard the end of the world prophecies of a post Brexit fallout with a return to business as usual after the summer break.

The challenge every Thanet property buyer has faced over the last few years is a lack of choice – there simply hasn't been much to choose from when buying (be it for investment or owner occupation). Levels are still well down on what would be considered healthy levels from earlier in this decade, as there is still a substantial demand/supply imbalance. Until we start to see consistent and steady increases in properties coming on to the market in Thanet, the market is likely to see upward pressure on property values continue.

However, there may be hope for first time buyers, with homeowners looking to move upmarket and buy to let landlords looking for their next investment, the Thanet property supply crisis just might be starting to ease, as the number of new properties coming onto the market in Thanet has increased.

For example, last month CT12 saw 62 new properties coming on to the market, not bad when you consider for the last year the average has generally been in the 40 to 50 range. With the average Ramsgate property value hitting a record high, reaching almost £217,100 according to my research, this shortage of properties on the market over the last two years has contributed to this ‘fuller' average property figure, but there is a glimmer of hope that the Ramsgate supply crisis may be starting to ease.

As I write this article, 4.38% of Ramsgate properties are up for sale. In terms of actual chimney pots, that equates to 647 properties on the market in Ramsgate (within 2 miles of the centre of Ramsgate) – which, when compared to only a year ago when that figure stood at 597, is a steady increase in the number of properties available to buy. Split down into the type of property, it makes even more fascinating reading...
·         Detached Properties in Ramsgate  - 122 on the market a year ago compared to 134 on the market now – an increase of 10%
·         Semi Detached Properties in Ramsgate - 132 on the market a year ago compared to 152 on the market now - an increase of 15%
·         Terraced Properties in Ramsgate - 65 on the market a year ago compared to 131 on the market now - an increase of 102%
·         Flats / Apartments Properties in Ramsgate  - 231 on the market a year ago compared to 201 on the market now – a decrease of 13%

With realistically priced properties flying off the shelves and this increase in new properties (especially terraces), this is evidence of strength in the Thanet housing market that many didn't expect. Many believed that the Thanet property market wasn't going to be strong enough post Brexit - as what was a sellers' market before the Brexit vote and Buyers' market in the early months after it, may now be somewhere in between and the market might just be coming back into balance.

However, all this will mean property values won't continue to grow at the same extent they have been over the last 12 to 18 months, and in some months (especially on the run up to Christmas and early in the New Year), values might dip slightly. This won't be down to Brexit but a re-balancing of the Thanet Property Market – which is good news for everyone.

For more thoughts on the Thanet Property Market, please visit the Thanet Property Blog . www.thanetproeprtyblog.com

Wednesday, 2 November 2016

What will the 0.25% Interest Rate do to the Thanet Property Market?

I had an interesting chat with a North Foreland landlord who owns a few properties in the area. He popped his head in to my office as his wife was shopping in the area (and let’s be honest talking about the Thanet Property Market is a lot more interesting than clothes shopping!). We had never spoken before (because he uses another agent in the area to manage his Thanet properties) yet after reading my blog on the Thanet Property Market for awhile, the landlord wanted to know my thoughts on how the recent interest rate cut would affect the Thanet property market and I would also like to share these thoughts with you……

Well it’s been a few weeks now since interest rates were cut to 0.25% by the Bank of England as the Bank believed Brexit could lead to a materially lower path of growth for the UK, especially for the manufacturing and construction industries. You see for the country as a whole, the manufacturing and construction industries are still performing well below the pre credit crunch levels of 2008/09, so the British economy remains highly susceptible to an economic shock. This is especially important in Thanet, because even though we have had a number of local success stories in manufacturing and construction, a large number of people are employed in these sectors. In Ramsgate, of the 16,920 people who have a job, 1,384 are in the manufacturing industry and 1,561 in Construction meaning

8.2% of Ramsgate workers are employed in the Manufacturing
sector and 9.2% of Ramsgate workers are in Construction

The other sector of the economy the Bank is worried about, and an equally important one to the Ramsgate economy, is the Financial Services industry. Financial Services in Ramsgate employ 461 people, making up 2.7% of the Ramsgate working population.

Together with a cut in interest rates, the Bank also announced an increase in the quantity of money via a new programme of Quantitative Easing to buy £70bn of Government and Private bonds. Now that won’t do much to the Thanet property market directly, but another measure also included in the recent announcement was £100bn of new funding to banks. This extra £100bn will help the High St banks pass on the base rate cut to people and businesses, meaning the banks will have lots of cheap money to lend for mortgages .. which will have a huge effect on the Thanet property market (as that £100bn would be enough to buy half a million homes in the UK).

It will take until early in the New Year to find out the real direction of the Thanet property market and the effects of Brexit on the economy as a whole, the subsequent recent interest rate cuts and the availability of cheap mortgages. However, something bigger than Brexit and interest rates is the inherent undersupply of housing (something I have spoken about many times in my blog and the specific affect on Thanet). The severe undersupply means that Thanet property prices are likely to increase further in the medium to long term, even if there is a dip in the short term. This only confirms what every homeowner and landlord has known for decades .. investing in property is a long term project and as an investment vehicle, it will continue to outstrip other forms of investment due to the high demand for a roof over people’s heads and the low supply of new properties being built.
For more thoughts on the Thanet Property Market, please visit the Thanet Property blog. www.thanetpropertyblog.com