Friday, 16 November 2018

How Would a Hard Brexit Affect Thanet House Prices?


I have been asked a number of times recently what a hard Brexit would mean to the Thanet property market. To be frank, I have been holding off giving my thoughts, as I did not want to add fuel to the stories being banded around in the national press. However, it’s obviously a topic that you as Thanet buy to let landlords and Thanet homeowners are interested in ... so I am going to try and give you what I consider a fair and unbiased piece on what would happen if a hard Brexit takes place in March 2019.

After the weather and football, the British obsession on the UK property market is without comparison to any other country in the world. I swear The Daily Mail has the state of the country’s property market on its standard weekly rotation of front-page stories! Like I have said before on my blog, there are better economic indexes and statistics to judge the economy (and more importantly) the property market. If you recall, I said the number of transactions was just as important, if not more, as a bellwether of the state of the property market.

Worries that the Brexit referendum would lead to a fast crash in Thanet (and national) property values were unfounded, although the growth of property values in Thanet has reduced since the referendum in the summer of 2016. 

Now, it’s true the Thanet property market is seeing less people sell and move and the property values are rising at a slower rate in 2018 compared to the heady days of the first half of this decade (2010 to 2015), but before we all start panicking, let’s ask ourselves, what exactly has happened in the last couple of years since the Brexit vote? 

Thanet house prices have risen by 18.2% since the
 EU Referendum...

...and yes, in 2018 we are on track (and again this is projected) to finish on 2,790 property transactions (i.e. the number of people selling their home) ... which is less than 2017 ... but still higher than the long term 12 year average of 2,603 transactions in the local council area.


So, it appears the EU vote hasn’t caused many major issues so far, however, if there was a large economic jolt, that could be a different game, yet how likely is that? 

The property market is mostly influenced by interest rates and salaries.

A hard Brexit would subdue wage growth to some degree, yet the level of the change will depend on the undetermined type of Brexit deal (or no deal). If trade barriers are imposed on a hard Brexit, imports will become more expensive, inflation will rise and growth will fall, although at least we are not in the Euro, meaning this could be tempered by the exchange rate of the Pound against the Euro. In plain language, a hard Brexit will be worse for house prices than a deal.

So why did the Governor of the Bank of England suggest a disorderly hard Brexit would affect house prices by up to 35%?

I mean it was only nine years ago we went through the global financial crisis with the credit crunch. Nationally, in most locations including Thanet, property values dropped in value by 16% to 19% over an 18-month period. Look at the graph and if we had a similar percentage drop, it would only take us back to the property value levels we were achieving in 2015.

And let’s not forget that the Bank of England introduced some measures to ensure we didn’t have another bubble in any future property market. One of the biggest factors of the 2009 property crash was the level of irresponsible lending by the banks. The Bank of England Mortgage Market Review of 2014 forced Banks to lend on how much borrowers had left after regular expenditure, rather than on their income. Income multipliers that were 8 or 9 times income pre-credit crunch were significantly curtailed (meaning a Bank could only offer a small number of residential mortgages above 4.5 times income), and that Banks had to assess whether the borrower could afford the mortgage if interest rates at the time of lending rose by three percentage points over the first five years of the loan ... meaning all the major possible stumbling blocks have been mostly weeded out of the system. 

So, what next?

A lot of Thanet homeowners might wait until 2019 to move, meaning less choice for buyers, especially in the desirable areas of Thanet. For Thanet landlords, Thanet tenants are also likely to hang off moving until next year, although I suspect (as we had this on the run up to the 2015 General Election when it was thought Labour might get into Government), during the lull, there could be some Thanet buy to let bargains to be had from people having to move (Brexit or No Brexit) or the usual panic selling at times of uncertainty. 

Brexit, No Brexit, Hard Brexit … in the whole scheme of things, it will be another footnote to history in a decade. We have survived the Oil Crisis, 20%+ Hyperinflation in the 1970’s, Mass Unemployment in the 1980s, Interest Rates of 15% in 1990’s, the Global Financial Crash in 2009 ... whatever happens, happens. People still need houses and a roof over their head. If property values drop, it is only a paper drop in value ... because you lose when you actually sell. Long term, we aren’t building enough homes, and so, as I always say, property is a long game no matter what happens - the property market will always come good.

Growth in UK property values as well as in Thanet seems fated to slow over the next five to ten years, whatever sort of Brexit takes place.

Monday, 15 October 2018

49 Days to Sell a Property in Ramsgate


Whether you are a Ramsgate landlord looking to liquidate your buy to let investment or a homeowner looking to sell your home, finding a buyer and selling your property can take an annoyingly long time. It is a step-by-step process that can take months and months. In fact, one of the worst parts of the house selling process is the not knowing how long you might be stuck at each step. At the moment, looking at every estate agent in Ramsgate, independent research shows it is taking on average 49 days from the property coming on the market for it to be sold subject to contract.

But trust me ... that is just the start of a long journey on the house selling/buying process. The journey is a long one and therefore, in this article, I want to take you through the standard itinerary for each step of the house selling procedure in Ramsgate.

Step 1 – Find a Buyer

You need to instruct an estate agent (of course we can help you with that) who will talk through a marketing strategy and pricing strategy to enable you to find a buyer that fits your circumstances. 49 days might be the average in Ramsgate, yet as I have said many times, the Ramsgate property market is like a fly’s eye, split up into lots of little micro markets.

Looking at that independent research, (which only focused on Ramsgate), it was interesting to see how the different price bands (i.e. different micro markets) are currently performing, when it comes down to the average number of days it takes to find a buyer for a property in Ramsgate.


Asking Price (Ramsgate)
Average Time to Find a Buyer in Ramsgate (days)
Under £100,000
50
£100,000 to £200,000
50
£200,000 to £300,000
46
£300,000 to £400,000
70
£400,000 to £500,000
62
£500,000 to £1,000,000
63
Over £1,000,000
-



Interestingly, I thought I would see which price band had the highest proportion of properties sold (stc)... again – fascinating!


So, now you have a buyer ... what next?

There are a variety of distinctive issues at play when selling your property in Ramsgate, together with the involvement of a wide and varied range of professionals who get involved in that process. That means there is are enormous differences in how long it takes from one property to another. Moving forward to the next steps, these are the average lengths of time it takes for each step to give you some idea of what to expect. 

Step 2  - Sort Solicitors (and Mortgage)

Again, something we can point you in the right direction to, but it will take a good few weeks for your buyer to apply and sort their mortgage and for your solicitors to prepare the legal paper work to send to the buyer.

Step 3 – Legal Work and Survey

Once you buyer’s solicitor receives the paperwork from your solicitor, then your buyer’s solicitor applies for local searches from the local authority (to ensure no motorways etc., are going to be built in the back garden!).  These Searches can take a number of weeks to be returned to the buyer solicitors from the council, from which questions will be raised by the buyer’s solicitor to your solicitor (trust me – you don’t see a tenth of the work that goes on behind closed doors to get the sale through to completion). Meanwhile, the surveyor will check the property to ensure it is worth the money and structurally sound. Overall, this step can take between 3 and 6 weeks (sometimes more!).

Step 4 – Exchange of Contracts

Assuming all the mortgage, survey and legal work comes back ok, both the buyer and solicitor sign contracts, the solicitors then perform “Exchange of Contracts”. When contracts are exchanged, this is the first time both buyer and seller are tied in. Before then, they can walk away ... and you are probably 4 or 5 months down the line from having put up the for sale board – this isn’t a quick process! BUT hold on ... we aren’t there yet!

Step 5 – Completion

Between a week and up to six weeks after exchange of contracts, the buyer solicitor sends the purchase money to the seller’s solicitor, and once that arrives, the keys will be given to the buyer … phew!

To conclude, all in all, you are looking at a good four, five even six months from putting the for-sale board up to moving out. 

If you are thinking of selling your Ramsgate home or if you are a Ramsgate landlord, hoping to sell your buy to let property (with tenants in), either way, if you want a chat to ensure you get a decent price with minimal fuss ... drop me a message or pick up the phone.

Monday, 8 October 2018

3.5% Drop in the Thanet Property Market



The number of residential property transactions in Thanet will be 3.5 per cent lower in 2018, compared to 2017.

According to my research, the seasonally adjusted statistics for our local authority area suggest with the number of properties already sold in 2018, and the number of properties currently under offer or sold subject to contract (allowing for property sales to fall through before exchange of contracts) we, as an area, will end the year 3.48 per cent lower compared to 2017.

So why are transaction numbers so important to Thanet homeowners, Thanet landlords and potential first-time buyers?

Many economists and property market commentators believe transaction numbers give a more precise and truthful indicator of the health of the property market than just house values. In the six years before the Credit Crunch in 2007/8, the average number of completed property transactions in the local area (the local authority covered by Thanet) stood at 3,630 per year .. yet in the three years following the Credit Crunch, on average, only 1,875 homes were changing hands per year in the area.
Roll the clock forward to more recent times and last year, in 2017, 3,004 homes changed hands (i.e. transacted and sold) in the area, higher than the local authority’s 23 year overall average of 2,855 homes per year.


In the past, a reduction in the number of properties selling has often been believed to be the first signal of a down turn in the housing market as a whole. Although, the down turn of the credit crunch years (2007/2008) was more a free-fall than a subtle down turn. Look at the graph and the ‘so-called’ halcyon days of the 2000 to 2006 property market were a roller coaster when it came to the number of transactions. House prices were rising in the six/seven years before the credit crunch (2000 to 2006), albeit, the rate of growth of Thanet house prices did slow in late 2005 and 2006 (which does fit in nicely with the graph).
In other articles, I have mentioned the change in the number of houses for sale today compared to last year and further back. Although, the market has seen in recent months (i.e. the short term) an increase in the number of properties for sale, fundamentally, in the medium term, there has been an underlying trend in the reduction of properties coming onto the market for sale in Thanet (and nationally) and this has been one of the main drives behind the lack of properties selling .. Thanet people aren’t moving as much as they were 30 years ago meaning fewer houses are selling each year.

However, this short-term increase in properties for sale hasn’t been even across the board. In certain sectors of the Thanet property market, there is a glut of properties on the market at the moment and so prices and values are dropping on those types as sellers compete for the limited amount of buyers… yet, there are other sectors of the Thanet property market where there is a dearth, a shortage of property, and buyers are fighting tooth and nail with silly offers to try and secure the sale. This means, there are some bargains for you Thanet buy to let landlords. If you look hard enough, you could spot the same trends I have seen in Thanet and find the individual property micro markets that fall into that first sector (with its glut). 

So, if you want the inside track on the Thanet property market, whether you are a landlord of ours or another agent, I am more than happy to guide you in the right direction if you drop me a line or an email (contacts details are easily found on this page – and I don’t bite or do hard sell – promise!).

So, to conclude, I believe we will finish on 2,899 housing transactions by the end of the year in the area .. not too far off last year’s figure but higher than the long-term 23-year average. Looking at the short term future, now it’s true some (not all) but some potential purchasers of property in Thanet may be exhibiting more caution because of concerns that the Bank of England will continue to put up interest rates– to which I reply – yes of course they will when they are only ultra-low at 0.75%. Anyway, that is the reason why 90%+ of new mortgages over the last nine months have been on a fixed rate. Also, if they do go up a few percentage points – they are nothing compared to the 12%, 14%, even 15% mortgage rates many of my landlords saw in the early 1990’s. 

We can all speculate (and I appreciate the irony of that as I write this article) but all I say to any Thanet landlords, Thanet homeowners or Thanet first time buyers is act according to your own life cycle, budget on a modest increase in interest rates in the coming few years (yet protect yourself by fixing it), consider your own circumstances and finally, what you can afford.

Friday, 28 September 2018

Margate Property Market – How Does It Compare Historically to the South East and National Property Market’s?

Living in our own homes or owning buy to let property in Margate and the surrounding areas, it’s often easy to ignore the regional and national picture when it comes to property. As a homeowner or landlord in Margate, consideration must be given to these markets, as directly and indirectly, they do have a bearing on us in Margate.
Locally, the value of property in Margate and the number of people moving remain largely steady overall, although looking across at the different regions, there are certainly regional variations. Talking to fellow property professionals in the posh upmarket central London areas of Mayfair and Kensington, the number of people looking to buy and registering interest with agents is continuing to climb after 18 months in the doldrums, whilst in other parts of the UK, there is restraint amongst both buyers and sellers in some locations. The things that affect the national property market are the big economic numbers. Nationally, over the last few months, thankfully, the economic forecast and predictions have improved, notwithstanding the Brexit uncertainties. Inflation has mercifully throttled back its high growth seen in 2016 to the current level of 2.1% (from 2.7% average last year), coupled with marginally stronger wage growth at 2.5%. Unemployment is at a 42-year low at 4.2% and UK consumer spending power rose to an all-time high last month to £331.04bn – all positives for consumer sentiment. Look further afield, a resilient property market depends on the UK's economic health with the outside world, so if Sterling weakens, that makes imports more expensive, meaning inflation increases, and this matter I talked about a few weeks ago in my blog article ... interest rates could be raised to bring inflation under control, which in turn could seriously affect the property market. On the assumption Brexit negotiations are successful, economic growth should continue to be upward and positive, meaning confidence would be increased ... which is the vital element to a good housing market. Looking closer to home now, Margate landlords and Margate homeowners might be interested in the how the regional and Margate markets have performed over the last 20 years (compared to the National picture). Let’s look at the regional picture first,
That means a Margate homeowner has profited by an additional £89,512 over the last 20 years compared to the average homeowners across the country.
Thanet has outperformed the South East housing market by 18.65% and nationally, Thanet has actually outperformed the country by 39.26%

I found it interesting to see the ups and downs of the Margate, South East and National markets in this graph. How the lines of graphs roughly go in the same direction, with Margate following the regional trend more closely than the national trend (as one would expect), how the 2007/08 property crash timings and effects were slightly different between the three lines and finally how the property markets performed in the post-crash years of 2011 to 2014 ... fascinating!


So, what does this all mean for Margate homeowners and Margate landlords?

Well, house prices going up or down are only an issue when you sell or buy. In the last 12 months, only 1,076,288 (let’s call it’s a straight million between friends!) properties changed hands out of 27.2 million households in the UK in 2017, meaning only 3.7% would have been affected if property values had dropped in the last year. 

Property values in Margate are 377.08% higher than the summer of 1998

Yet this has been a long-term gain. The number one lesson in property is that it is a long-term game.  The biggest issue in property isn’t house values or prices ... it’s the number of homes built, because the number of households nationally has only increased by 6% since 2007, whilst the population has grown by 7.6%. That doesn’t sound a lot, until you express it another way…

If the UK population had had only grown by the same percentage as the percentage growth in UK households in the last decade, there would be 1,000,000 less people living in the UK today

The final thought for this article is this, apart from central London, over the last 20 years it hasn’t mattered what part of the UK you were in with regards to the property market. Be you a landlord or homeowner, property is a long game, so look long term and you will win because until they start to build more homes, from the current levels of 180,000 new homes built per year to at least 250,000 households built per year, demand will, over the long term, outstrip supply for owning and renting!




Wednesday, 19 September 2018

Value of Ramsgate Property Market falls £83.3m


The combined value of Ramsgate’s housing market has fallen by £83,338,200 in the last 6 months, meaning the average value of a Ramsgate property has decreased in value by an average of £6,325.  

This is great news for Ramsgate first time buyers and Ramsgate buy to let landlords, as there is a slight hesitation in the market because of the uncertainty over Brexit. As I have always said, investing in Ramsgate property, be it for you to live in or as a buy to let investment, is a long-term game. In the grand scheme of things, this minor change over the last 5 or 10 years is nothing.

The RICS’s latest survey of its Chartered Surveyor members showed that nationally the number of properties actually selling has dropped for the 16th month in a row. Locally in Ramsgate, certain sectors of the market are matching that trend, yet others aren’t. It really depends which price band and type of property you are looking for, as to whether it’s a buyers or sellers market. 

The RICS also said its member’s lettings data showed a lower number of rental properties coming on to the market. Anecdotal evidence suggests that (and this is born out in the recent English Housing Survey figures) Ramsgate tenants over the last few years are stopping in their rental properties longer, meaning less are coming onto the market for rent. I have noticed locally, that where the landlord has gone the extra mile in terms of decoration and standard of finish, this has certainly helped push rents up (although those properties where the landlord has been remiss with improvements and standard of finish are in fact seeing rents drop). Ramsgate tenants are getting pickier – but will pay top dollar for quality. So much so, I believe there will be a cumulative rise of around fourteen to sixteen per cent over the course of the next five years in private rents for the best properties on the market.

Back to the Ramsgate Property Values though … 

This drop in Ramsgate property values doesn’t particularly concern me. The fact is that over the last 6 months 253 properties have sold for a combined value of £61,383,872. You see, that drop must be seen in perspective in that 6 months ago, the total value of Ramsgate property stood at £3,195,588,456 (£3.20bn), and today it stands at £3,112,250,256 (£3.11bn) .. this change is a drop in the ocean.

In the short term, say over the next six months and assuming nothing silly happens in Korea, the Middle East or Brexit negotiations, it will be more of the same until the end of the year. In the meantime, the on-going challenges ensuring we as a Country build more homes (although the Office of National Statistics figures released in July showed nationally the number of new homes started to be built over the second Quarter of 2018 had dropped dramatically) makes me think that Ramsgate (and Nationally) property value is likely to recommence an upward trajectory as we go into 2019.

One final thought for all the buy to let landlords in Ramsgate (and indirectly this does affect all you Ramsgate homeowners too). I do hope the recent tax changes towards buy to let landlords don’t bite as deep as it is possibly starting to with certain landlords I know.  We talked about this in an article a few weeks ago and I know why the Government wanted to change the balance by taxing landlords and providing a lift for first time buyers .. however, this may well come at the expense of higher rents for those Ramsgate tenants that don’t become first time buyers, as the appeal of buy to let potentially weakens.

Monday, 20 August 2018

‘Taxing’ Time for the 2,655 Ramsgate Buy To Let Landlords

Over the last twenty years, there has been a shift in the way the Ramsgate (and the UK’s) property market works. In the 1960’s, 70’s, 80’s and 90’s, a large majority of twenty somethings saved up their 5% deposit, went without life’s luxuries of going out and holidays etc., for a couple of years and then bought their first home with their hard earned savings.

By 2000, 40.8% of Ramsgate 25 to 29 years owned their own home (compared to 46% Nationally (and 57% of Ramsgate 30 to 34 year olds in 2000 owned their own home – again compared to 64.2% nationally) whilst the remaining youngsters mostly rented from the Council and in some rare cases, privately rented.

Now it’s 2018, and those levels of homeownership have slipped dramatically and now only 21.8% of Ramsgate 25 to 29 year olds own their own home and 38.4% of Ramsgate 30 to 34 year olds own their own home (interestingly mirroring the National picture of 24.5% for the younger age cohort and 64.2% for the older 30 to 34 year cohort).


There was concern in Government since the late Noughties that this shift from homeownership to private renting wasn’t good for the well-being of the Country and things needed to change, to make it a more level playing field for first time buyers. House prices needed to be more realistic and there needed to be a carrot and stick for both landlords and first time buyers.

In the 1980’s and 1990’s, interest rates were the weapon of choice of Government to cool or heat up the UK housing market – and it did work – up to a point. It’s just interest rates also affected so many other sectors of the UK economy (and not always a in good way). The policy of interest rates to control the economy is called ‘Monetary Policy’. Monetary policy is primarily concerned with the management of interest rates (and the supply of money) and is carried out by the Bank of England (under direction from the Government).

It’s just in this post Credit Crunch, Brexit environment, the use of higher interest rates wouldn’t directly affect landlords (as around two thirds of buy to let properties are bought without a mortgage). Therefore, an increase in interest rates would have hardly any effect on landlords and hit the first time buyers - the people the Government would be trying to help!

Also, given muted growth of real income (i.e. real income being the growth salaries after inflation) in the past few years, an uplift in interest rates (from their ultra-low 0.5% current levels) would have a massive effect on Brit’s household disposable income. Yet, over 90% of new mortgages in 2018 being taken are fixed rate and with such low rates, it has made buying a property comparatively attractive.

Instead, over the last 8 years, the Government has encouraged first time buyers and clipped the wings of landlords with another type of economic policy – Fiscal Policy (Fiscal Policy is the collective term for the taxing (and spending) actions of the Government).  First time buyers have had the Help to Buy Scheme, Stamp Duty Exemption and contributions to their deposit by HMRC. On the other side the coin, landlords have had the way they are able to offset the tax relief of their mortgage payments against income change (for the worse), an increase in Stamp Duty (for the worse) and they will be hit with additional costs as the Government will be phasing out fees to tenants in the next 12 to 18 months.

So, what does this all mean for the 2,655 Ramsgate landlords?

The days of making money in Ramsgate buy to let with your eyes closed are long gone. There are going to be testing times for Ramsgate landlords, yet there is still a defined opportunity for those Ramsgate landlords who are willing to do their homework and take guidance from specialists and experts.

It’s all about looking at your Ramsgate portfolio (or getting a property professional to do so) and ascertaining if your current portfolio, mortgage and gearing are designed to hit what you want from the investment (because that is what it is – an investment) in terms of income now and income in the future, capital growth and when you plan to dispose of your assets.

I have seen many Ramsgate landlords (both who use me and my competitors) to manage their rental property or find them tenants – and on many occasions recently, I have told them to SELL – yes sell some of their portfolio to either reduce mortgage debt or buy other types of property that match what they want in the short and long-term from their investments. I know that sounds strange – but my role isn’t just to collect the rent  .. it’s also to give strategic advice and opinion on the landlord’s portfolio to help them meet their current and future investment goals.

The opportunities will appear in the Ramsgate property market for Ramsgate landlords from gentler growth in property values linked with a restrained Ramsgate property market, meaning if you put in the time, there will be deals and great bargains to have. Many landlords in Ramsgate (both clients and non-clients) send me Rightmove links each week, asking my opinion on the suitability of the investment. Some are exceptional – whilst others are duds. The bottom line is, private renting will continue to outgrow first time buyers in the next 5 to 10 years and as we aren’t building enough homes in the UK, which means rents can only go in one direction – upwards!

Friday, 3 August 2018

What Will Happen to Margate Property Values Now That Interest Rates Have Risen?

The current average value of a property in Margate currently stands at £228,000 and the base rates are now at 0.75%. In many of my articles, I talk about what is happening to property values over the short term (i.e. the last 12 months or the last 5 years), but to answer this question we need to go back over 40 years, to 1975. 

The average value of a Margate property in 1975 was £11,038

However, since 1975, we have experienced in the UK, inflation of 807.5%.

Back in 1975, the average salary was £2,291 and average car was £1,840. A loaf of bread was 16p, milk was 28p a pint and a 2lb bag of sugar was 30p. Inflation has increased prices, so comparing like for like, we need to change these prices into today’s money. In real spending power terms, an average value of a Margate house in 1975, expressed in terms of today’s prices is £100,181. 

That means in real terms, property costs a lot more today, than in the mid 1970’s, but has it always been that way? Looking at the important dates of the UK property market, you can see from this table, the last two property boom years of 1989 and 2007, show that there was a significant uplift in the cost/value of property (when calculated in today’s prices).


Before we move on, hold onto the thought that you can quite clearly see from the table, in real terms, properties are cheaper today in Margate than they were in 2007!
So, it made me wonder if there was a link between house prices, inflation and other external economic factors, such as interest rates? Interest rates have a strong influence on inflation and property values, principally because changes in the interest rate affect the cost of mortgage payments for homeowners and they affect the flow of foreign currency in (or out) of an economy, thus changing the exchange rate and prices we can sell our goods and services abroad and prices we pay on imports.
So how exactly do interest rates affect property values?
When interest rates rise, it has a substantial effect on increasing the monthly cost of mortgages. Higher mortgage payments will discourage prospective homebuyers or people looking to move up market (meaning their mortgage payments go up) – thus making it comparatively cheaper to rent.
Furthermore, the high cost of mortgage payments sometimes also pushes some existing home owners to sell, meaning there is an increase in house sellers and a decline in house purchasers, and as the law of economics state, when supply is increased and demand falls, (house) prices fall. Another fallout of a rise in mortgage payments is a rise in repossessions. Interestingly, repossessions in the UK rose from 15,000 per annum in the late 1980’s to over 75,000 per annum in the early 1990’s, meaning even more properties came onto the market, exasperating the issue of over supply – pushing property values even lower. 


High interest rates caused property values to fall in mid 1970’s, early 1980’s and most recently, the early 1990’s (who can remember the 15% mortgage rate!) Conversely though, the drop in property values in 2008/2009 – was not due to interest rates, but due to the credit crunch and global recession.
So, what will happen if when interest rates rise?


It is vital to remember that interest rates are not the only factor affecting property values. Now that interest rates have increased (which they have from 0.5% to 0.75%), property values can also continue to rise (it happened throughout the mid to late 1980’s and again between the boom years of 2002 and 2007). When confidence in the economy is good, and we as a Country experience a period of rising real incomes (i.e. after inflation), then the British in the past have continued to buy bricks and mortar, notwithstanding the rise in interest rates.
Another important factor on property values is the supply of housing. A big reason in the current level of Margate house prices is due to the shortage of supply, which has kept property values higher than I would have expected. An additional factor is whether homeowners have a variable or fixed rate mortgage. 90.6% of new mortgages taken in the last Quarter were at a fixed rate, and 66.2% of all mortgaged homeowners are on fixed-rate mortgages, therefore, they will not notice the effects of higher interest rate payments until they re-mortgage in a few year’s time, meaning there is frequently a time-lag between higher interest rates and the effect on property values. Another factor on mortgages is the ability to get one in the first place. Back in 2014, mortgage providers were told to be stricter on their lending criteria when arranging mortgages following the footloose days of 125% loan to value mortgages with the Northern Rock. These new rules are a lot more rigorous on borrowers' ability to repay the payments (although it makes me laugh, when with starter homes it nearer is always cheaper to buy then rent!).
I think the final point is this … affordability is the key. Look at the graph (the red bars) and you will see in REAL HOUSE PRICE terms – it’s cheaper to buy a home today than it was in 2007, yet why aren’t we seeing people buying property at the levels we were seeing in the 2000’s before the credit crunch? Again, looking at the reasons why, I will talk about in future articles.
In conclusion, interest rates are important – but nowhere near as important on the Margate (and British) property market than they were 15 or 20 years ago.


So, before I go, one final thought - how do we measure the success of the Margate property market? Well I believe one measure that is a good bellwether is the number of property transactions, as that could show a more truthful picture of the health of the property market than property values. Maybe I should talk about that in an up and coming article?


Friday, 27 July 2018

The Thanet Bank of Mum and Dad Lent £2.72m Last Year


My analysis has shown that up to the end of the last quarter, Thanet first time buyers purchased 226 Thanet properties.  With wages rising at 2.8%, unemployment at a low rate of 4.2% (down from 4.6% from a year earlier and the joint lowest since 1975), national GDP rising at 1.87% and inflation at 2.3%, tied in with indifferent house price growth (compared to a few years ago), this has given first time buyers a chance to get a foot hold on the Thanet property market.

Over the last year, the average purchase price of a Thanet first time buyer property has been £170,200 and the average deposit was £27,572. Furthermore, my calculations show the average Thanet parents contributed £12,063 of that £27,572 figure.

You see “The Bank of Mum and Dad (Thanet Branch)” is for countless Thanet twenty something’s, perceived to be the only way they will ever be able to afford their first home. In fact, Thanet parents put up a substantial £2.72m in the last 12 months to help their nearest and dearest progeny onto the property ladder. This assistance towards the deposit makes a huge difference, enabling Thanet youngsters who thought they couldn’t get on the housing ladder more able to do so.

With mortgage rates at all-time lows, few Thanet twenty something’s would struggle to make mortgage repayments, but it is the requirement of the deposit which is the issue, although as parents (and grandparents) are helping out where they can, it does little to address the real problems of the housing market, whether for people renting or buying their first home.

If you think about it, as a Country we have been fortunate that the older generation who control the biggest share of the nation’s wealth are so plentiful to those following after. We need to remember, though, that this generosity is
 a sign of the issues of the British housing shortage, not its solution. 

But before I leave this article … note I used the word PERCEIVED in a previous paragraph. Yes, the average first time buyer deposit is 16.1%, but that is an average. Did you know 95% mortgages returned to first time buyers in late 2009 and have been available ever since? Also, lenders like Barclays and many local Building Society’s now offer 100% mortgages (i.e. no deposit) at 2.75% fixed for three years.

The perception is you need 15%, 20% even a 25% deposit to be a first-time buyer – you don’t! You don’t need any deposit, but (there is always a but!)...

Over the last decade, many renters have upgraded themselves into homes that they (or any generation before them) could never have ever afforded as a first time buyer in the past. You see the British housing market started to change with the dawn of the new Millennium and I am seeing a slow but steady attitude change when it comes to renting. Those tenants have found the price difference of upgrading from the typical 1970’s TV show Rigsby “Rising Damp” style rental property to plush terraced house or even semi-detached home, with all the mod cons, comparatively inexpensive (when compared to the increase in mortgage payments if they had to make the move as buyers).

Renting isn’t seen as the poor man’s choice, as many young (and increasing older) people are becoming more at ease and comfortable with the flexibility offered by private renting a property rather than jumping ‘lemming like’ into home ownership. Thanet landlords will continue to see growth in sector, and like Germany, todays renters will become homeowners in 20 years’ time – when they will inherit the wealth of their parent’s home.

Monday, 16 July 2018

Extra Funding Is Required for Affordable Homes in Thanet



In my blog about the Thanet Property Market I mostly only talk about two of the three main sectors of the local property market, the ‘private rented sector’ and the ‘owner occupier sector’. However, as I often stress when talking to my clients, one cannot forget the third sector, that being the ‘social housing sector’ (or council housing as some people call it). 
In previous articles, I have spoken at length about the crisis in supply of property in Thanet (i.e. not enough property is being built), but in this article I want to talk about the other crisis – that of affordability. It is not just about the pure number of houses being built but also the equilibrium of tenure (ownership vs rented) and therein, the affordability of housing, which needs to be considered carefully for an efficient and effectual housing market.
An efficient and effectual housing market is in everyone’s interests, including Thanet homeowners and Thanet landlords, so let me explain ..

An average of only 86 Affordable Homes per year have been built Thanet District Council since 2009

The requirement for the provision of subsidised housing has been recognised since Victorian times. Even though private rents have not kept up with inflation since 2005 (meaning tenants are better off) it’s still a fact there are substantial numbers of low-income households in Thanet devoid of the money to allow them a decent standard of housing.
Usually, property in the social housing sector has had rents set at around half the going market rate and affordable shared home ownership has been the main source of new affordable housing yet, irrespective of the tenure, the local authority is simply not coming up with the numbers required. If the local authority isn’t building or finding these affordable homes, these Thanet tenants still need housing, and some tenants at the lower end of the market are falling foul of rogue landlords. Not good news for tenants and the vast majority of law abiding and decent Thanet landlords who are tarnished by the actions of those few rogue landlords, especially as I believe everyone has the right to a safe and decent home.

Be it Tory’s, Labour, SNP, Lib Dems, Greens etc, everyone needs to put party politics aside and start building enough homes and ensure that housing is affordable. Even though 2017 was one of the best years for new home building in the last decade (217,000 home built in 2017) overall new home building has been in decline for many years from the heady days of the early 1970s, when an average of 350,000 new homes were being built a year.  As you can see from the graph, we simply aren’t building enough ‘affordable’ homes in the area.



The blame cannot all be placed at the feet of the local authority as Council budgets nationally, according to Full-Fact, are 26% lower than they have been since 2010.  
So, what does this mean for Thanet homeowners? Well, an undersupply of affordable homes will artificially keep rents and property prices high. That might sound good in the short term, but a large proportion of my Thanet landlords find their children are also priced out of the housing market. Also, whilst your Thanet home might be slightly higher in value, due to this lack of supply of homes at the bottom end of the market, as most people move up the market when they do move, the one you want to buy will be priced even higher.
Problems at the lower end of the property market will affect the middle and upper parts. There is no getting away from the fact that the Thanet housing market is all interlinked .. it’s not called the Property ‘Ladder’ for nothing!


Friday, 6 July 2018

1,175 Margate Landlords Plan to Expand Their Buy To Let Portfolios


A noteworthy number of buy to let landlords in Britain plan to buy more properties over the next year notwithstanding the frustrations, challenges and seismic changes in the private rented sector. According to Aldermore, the specialist Buy To Let lender, their research shows around 41% of portfolio buy to let landlord’s objective is to grow their buy to let portfolio (Portfolio landlords are landlords that own more than one property). So, I thought, “Are Thanet landlords feeling the same?” If so, if these numbers were applied to the Thanet private rental market, what sort effect would it have on the Thanet property market as whole? Talking to the landlords I deal with, most are feeling quite optimistic about the future of the Thanet rental market and the prospect it presents notwithstanding the doom and gloom prophecies that the property market will shrink. Many of those landlords who are looking to enlarge their portfolio are doing so because they still see the Thanet rental market as a decent investment opportunity. With top of the range Bank and Building Society Savings Accounts only reaching 1.5% a year, the rollercoaster ride of Crypto currency and the yo-yoing of the Stock Market, the simple fact is, with rental yields in Thanet far outstripping current savings rates, the short term prospect of a minor drop in property prices isn’t putting off Thanet landlords. The art to buying a Thanet buy to let investment is to buy the profit on the purchase price, not the anticipation of the future sale price. No matter what the historical economy has thrown at us, with the global meltdown in 2008/9, dotcom crash of 2000, ERM in 1992, the three day week, oil crisis and hyperinflation in the 1970’s (the list goes on) ... the housing market has always bounced back stronger in the long term. That’s the point ... long term. Investing in buy to let is a long-term strategy. The simple fact is, over the long term with the increasing demand for rental properties, predominantly among Millennials as many cannot afford to get on the property ladder, and with councils not building enough properties of any kind, many youngsters are having to resort the private rental market for their accommodation needs. So, what of the numbers involved in Thanet? Lets look at the numbers for Margate for example. There are 1,316 landlords that own just one buy to let (BTL) property in Margate and 2,866 Margate landlords, who are portfolio landlords. Between those 2,866 Margate portfolio BTL landlords, they own a total of 6,015 Margate BTL properties and they can be split down into the size of landlord portfolio in the graph below….


If I apply the Aldermore figures that means 1,175 Margate landlords have plans to expand their BTL portfolio in the coming year or so. However, the Aldermore Research also showed that 8% of private landlords intended to reduce the number of properties they own. They put this down to continuing Government intervention in the housing market (as many landlords mentioned too many limitations and higher taxation) while some believed that tenants are excessively protected to the disadvantage of the landlord. I would say there is no repudiating that the buy to let market has taken a bit of a beating, thanks to a plethora of Government regulation, new mortgage underwriting rules in 2014 and George Osborne’s tax changes. Yet there still remains an overall consciousness of optimism among the vast majority of Thanet buy to let landlords. Despite these latest changes, many landlords still view buy to let as a good investment, as long as you buy right and expand your portfolio taking into account the second rule of buy to let … assess your position on the ‘buy to let seesaw’ of capital growth and yield. If you want to buy right and assess your own portfolio on the yield/capital growth seesaw ... drop me a note. I don’t bite and the opinion I give, whether you are landlord of mine or not as the case may be, is given freely, without obligation or cost. The choice is yours. Thank you for reading this article. To read others, please visit my Thanet Property Blog.

Friday, 25 May 2018

£685 pcm – The Average Thanet Rent


The rents paid by Thanet tenants are now standing at £685 per calendar month (PCM), a rise of 0.59% year on year and 0.71% higher month on month.

However, this attention-grabbing monthly rent figure masks stark differences in the various different parts of the Thanet rental market.  Demand in Thanet for high quality family homes with two or three bedrooms in good catchment areas for schools remains really robust due to tenants wanting access to the schools.  Other influencing factors that make certain areas popular are the proximity to transport links. However, I have noticed a drop in demand (and thus rents achieved) for property where the landlord hasn’t kept the property fresh; in terms of decoration, carpets, replacement windows and poor heating.

So, what does all this mean for Thanet landlords and tenants?
With the new tax rules for landlords, many believed that the number of rental properties would narrow throughout 2017, as landlords sold up their Buy to let properties and looked to invest their money elsewhere, but evidently this hasn’t happened (yet).  Feasibly Thanet landlords are re-mortgaging their Thanet buy to let properties instead, as they still believe it’s a safer investment than looking, say at the stock market?
However, demand remained strong in 2017 for Thanet private rental properties, meaning the rents being achieved were at a decent level for landlords. Keeping your outgoings low is also an important consideration and so I looked on a well-known financial services comparison site this morning and found a High Street bank offering a 5-year fixed rate for Buy to let landlords with a 40% deposit/equity for 2.17% … I can remember (as I am sure many of my readers of this blog can) when mortgage rates were at 15% - this is cheap money!
Looking at property values in Thanet, over the last 12 months and specifically at the lower of the market where buy to let landlords tend to buy their rental properties.  Flats/apartments have risen in value by 1.22% whilst terraced properties have risen by 4.53%.

Some Thanet landlords have seen the yields they are achieving remain squeezed.

However, most landlords can start to feel assured that as capital growth in Thanet remains at a more realistic figure (good for long term stability in the property market) and long-term rents are on the rise, the overall corresponding annual return on investment (Annual ROI being annual capital + annual yield) has stabilised in all areas and is now starting to grow.

With additional people seeing renting as a long-term option, even with the challenges of the new tax regime, Thanet landlords, with the support of a good advice and opinion, should continue to see renting as a good investment vehicle.

Friday, 18 May 2018

Margate Millennials Have Spent £102,986 On Rent By The Age of 35


The Millennials were born between the mid 1980’s and late 1990’s thus making them between the age of around 22 to late 30’s. They are the imaginative, artistic youngsters who grew up with the newest tech and computers and who are huge aficionados of music festivals, gourmet pizzas, emoji’s, selfies and old school nostalgia. Also known as Generation Rent, many Millennials have discovered that renting is a good choice for their shelter and accommodation needs without the hassle that comes from buying a home. Nonetheless, that is not the only reason they don’t buy property. When they should be concentrating on their profession, putting down roots and starting a family, Millennials are still going through the pressure and strain of student loan liabilities whilst, at the same time, finding it tough to pay rent.
The hot topic at the moment is the cost of renting, as both political parties have seen mileage in wooing these Millennial Generation Renters. The average rent in Margate is currently £721 per month making this a big-ticket item on the monthly budget. I was inquisitive to find out exactly how much Margate Millennials will spend on rent by the time they reach their mid 30’s. The average age people leave home in the UK is 22; so looking at a Margate 22-year-old (or Millennial) who left home in 2005 then between 2005 and today that Margate Millennial will have shelled out £102,986 in rent.
It’s no wonder local Millennials can’t afford to buy a Margate home given their tremendous debt. This means younger Margate Millennials will probably carry on renting for the foreseeable future, simply because the prospect of buying a home is not yet achievable.. that is until you look more deeply at the numbers…


Looking at the chart above, the average rent of a Margate property in 2005 was £593 per month (pm)  … if it had risen by inflation, today, that would be £835 pm. As I have already mentioned in the article, today it only stands at £721 per month. Looking over the last 12 years, adding up all the differences between what the average actual rent was compared to what it should have been if rent had gone up by inflation, the average Margate Millennial tenant would have paid £112,162.


This means that an average 35-year-old Margate Millennial tenant, who has been renting since 2005, is better off by £9,177 when comparing the actual rent paid compared to what it would have been if it had risen by inflation. In a nutshell, tenants have done well due to the sub-inflation growth in rents.
In fact, if you recall I mentioned in an article a few weeks ago, the older Margate Millennials are starting to use those savings and are gradually shifting towards home ownership. They are finally catching up with the British homeownership dream as Bank of Mum and Dad help with the deposit. Also, the scrapping of Stamp Duty from the Government starts to kick in together with the realisation that if the 5% mortgage deposit can be scrapped together (yes, 95% first time buyer mortgages have been available since 2009), it is still a lot cheaper to buy than rent, meaning this will unquestionably drive demand for Margate homes for sale – good news for Margate homeowners.

… and what does this mean for Margate landlords?

Well the vast majority of younger Millennials are still renters and I foresee this to be the case for at least the next ten to fifteen years. Landlords will need to keep improving their properties to ensure they get the best tenants and they will see a much higher rent achieved. Millennials will pay top dollar for a top dollar property. It is important to do things correctly as making money won’t be as easy as it has been over the last twenty years.  With a greater number of properties on the market .. comes greater choice. Don’t buy the first thing you see, buy with your head as well as your heart … because as I promised a few weeks ago, the first rule of Buy To Let Investment ….. “You are not going to live in the property yourself”

Friday, 11 May 2018

Margate Property Market – Asking Prices Up 8% in the Last 12 Months



The average asking price of property in Margate increased by 8% or £21,685 compared to a year ago, with particularly good demand from landlords and home-movers in the first few months of the year. This takes the current average asking price to £294,394, compared with £272,709 this time last year.

The rise in asking prices is being aggravated by buyers jumping into action looking to benefit from potential stamp duty savings (especially first-time buyers) or beat impending mortgage interest rate rises later in 2018. Of the numerous Thanet buyers starting their property hunting in the usually active spring market this year, many face paying even more than ever for the property of their dreams, although as I mentioned a few weeks ago, there are more properties for sale in Margate compared to 12 months ago.

Looking at the different sectors of the Margate property market, splitting it down into property types, one can see what is happening to each sector of the market with regard to their average asking prices now compared to a year ago. Firstly, looking at the Pound note amounts …



Interestingly, when one looks at the percentages, the most upward average asking price pressure is in the terraced property type sectors.



Now, I must stress this growth in the asking prices of Margate property doesn’t mean the value of Margate property is going up by the same amount ... nothing could be further from the truth.  Only time will tell if the current levels of Margate asking prices is a catch-up abnormality after a couple of months of restrained asking price rises in the first few months of 2018, or is it an initial sign that we are in for a better 2018 Margate Property market than all of us were expecting at the start of the year? 

I believe these asking prices must be viewed with a pinch of salt, as it will be fascinating to see whether Margate properties actually sell at these higher asking prices. Just because house sellers (be they owner-occupiers or landlords liquidating their assets) are asking for more money it doesn’t mean buyers will be enthusiastic to part with their hard earned cash. Like my Mum and Dad used to say to me all those years ago, “You can ask ... but you might not get”.

Also, Thanet homeowners and landlords wanting to sell their property need to be aware of progressively strained buyer mortgage affordability and the more those sellers increase asking prices, the more buyers will hit their maximum on the amount they are able borrow on a mortgage.

However, those Thanet buyers who need a mortgage (be they owner-occupier or landlord), will paradoxically benefit from lower mortgage payments before interest rates rise … maybe another reason for the uplift in the number first time buyers and landlords buying? Only time will tell!