Friday, 26 January 2018

With Thanet Annual Property Values 9.3% Higher, This is My 2018 Forecast

Looking at the newspapers between Christmas and New Year, it seemed that this year's sport in the column inches was to predict the future of the British housing market. So to go along with that these are my thoughts on the Thanet property market.
With the average 5-year fixed rate mortgage at 1.98% (down from 3.47% in 2014) and 2-year fixed rate at 1.47% (down from 2.37% in 2014), mortgage interest rates offered by lenders are at an all-time low (even with the slight increase on the Bank of England base rate a few months ago). Added to this, there has been a low unemployment rate of 4.8% in Thanet, which has contributed to maintain a decent level demand for property in Thanet in 2017 (interestingly - an impressive 769 properties were sold in Ramsgate alone in the last 12 months), whilst finally, the number of properties for sale in the town has remained limited, thus providing support for Thanet house prices, meaning ...
Thanet Property Values are 9/3% higher than a year ago
However, moving into 2018, there will be greater pressures on people's incomes as inflation starts to eat into real wage packet growth, which will wield a snowballing strain on consumer confidence. Interestingly though, information from the website Rightmove suggested over a third of property it had on its books in october and november had their asking prices reduced, the highest percentage of asking price reductions in the same time frame, over 5 years. Still, a lot of that could have been house-sellers being overly optimistic with their initial pricing.
In terms of what will happen to Thanet property values in the next 12 months, a lot will be contingent on the type of Brexit we have and the impact on the whole of the UK economy. A lot of people will talk about the Central London property market in the coming year, and if the banking and finance sectors are negatively affected with a poor brexit deal, then the london market is likely to see more of an impact.
Nevertheless, the bottom line is Thanet homeowners and Thanet landlords should be aware of what happens in the rollercoaster housing market of Central London, but not panic if prices do drop suddenly there in 2018. Over the last 8 ears, the Central London property market has been in a world of its own (Central London house prices have grown 89.6% in this last 8 years, whilst in Thanet, they have only risen 55.3%). So we might see a heavy correction in the Capital, whilst more locally, something a little more subdued.
Hindsight is always better than foresight and predicting anything economic is all well and good when you know what is around the corner. At least we have the Brexit divorce settlement sorted and, as the UK economy and the UK housing market is intertwined, it all depends on how we deal as a Country with the Brexit issue. However, we have been through the global financial crisis reasonably intact... I am sure we can get through this together as well?
Oh, and house prices in the Thanet over the next 12 months? I believe they will end up between 1.2% higher and 2.6% higher, although it will probably be a bumpy ride to get to those sorts of figures.
If you would like to read more articles on my thoughts on the Thanet property market - please visit the Thanet Property Market Blog.

Friday, 19 January 2018

Youngsters unable to buy their first home in Thanet – Are the Baby Boomers and Landlords to Blame?

Talk to many Thanet 20 something’s, where home ownership has looked but a vague dream, many of them have been vexatious towards the Baby Boomer generation and their pushover ‘easy go lucky’ walk through life; jealous of their free university education with grants, their eye watering property windfalls, their golden final salary pensions and their free bus passes.

If you had bought a property in Thanet for say £12,000 in first quarter of 1977, today it would be worth £263,726, a windfall increase of 2097.7%.

But to blame the 60 and 70 year olds of Thanet for that sort of rise seems a little unfair, with the value of the homes rising like rocket, I don't believe they can be censured or made liable for that. A few weeks ago, I discussed in my blog the number of people in the Thanet area who have two or more spare bedrooms (meaning they are under-occupying the house). I see many mature members of Thanet society, rattling around in large 4/5 bed houses where the kids have flown the nest years ago ... but should they be blamed?

We are all just human, and the mature members of UK society have just reacted to the inducements of our property and tax system. The mature generations who joined the property market party in the 1970’s and 1980’s were able to take out huge mortgages, protected in the knowledge that inflation would corrode the real value of the mortgage, while wage gains would boost their ability to repay.

Neither do I directly blame the multitude of Thanet buy to let landlords, buying up their 10th or 11th property to add to their buy to let empire. They too, are humbly reacting to the peculiar historic inducements of the UK property market.

So, who is to blame?

Well, hyperinflation in the 1970’s meant the real value of people’s mortgages was whipped out (as mentioned above). Margaret Thatcher and Nigel Lawson are also good people to blame with Maggie selling off millions of council houses and Nigel Lawson’s delayed ending of the MIRAS tax relief in 1987; meaning he too can get his share of indignation. The Blair/Brown combo doubled stamp duty in 1997 and again in 2000, which, as a tax on property transactions, precludes a more efficient distribution of the current housing stock. The Government has had plenty of opportunity to change the draconian stamp duty rules to incentivise those mature Thanet house movers to downsize.

However, I have started to see over the last few years a change in Government policy towards housing. The new breed of Thanet buy to let landlords that have come about since the Millennium, have had their wings clipped over the last couple of years, with the introduction of new tax rules (meaning it is slightly more difficult to make money out of property unless you have all the national information and Thanet property trends to hand).

It’s easy to think the only reason that hundreds of first time buyers have been priced out of the Thanet housing market is because of these landlords. Yet, I believe landlords have been undervalued with the Thanet homes they provide for Thanet people. With first time buyers struggling to save for a deposit, if it weren’t for those landlords buying up those homes over the last 10/15 years, we would have a bigger housing crisis than we have today. Since the global financial crisis of 2008/9, local councils have had to cut services, so certainly didn’t have enough money to build new homes ... homes that were provided to Thanet by these buy to let landlords.

One side of the argument is that 688 homes are being bought up by buy to let landlords each year in the Thanet District Council area when otherwise they might have become available to other buyers, the other side of the argument is the current national average deposit is £51,800, which is, by far, the greatest barrier to those wanting to buy their first home. Those homes bought by local buy to let landlords are not left idle, as they equate to 4,815 of new homes for local people, most of whom who see renting as a better option because of the choice, the simplicity and the flexibility which renting brings.

In the 60’s/70’/80’s, the traditional thoughts that you were a failure unless you owned your own home have now all but disappeared, because if you ask many young people, they would probably say renting was the perfect option for them at certain times of their life.

Friday, 12 January 2018

My thoughts on the future of the Ramsgate Buy-To-Let Market

I was recently reading a report by the Home website which suggested that hordes of landlords are selling their buy-to-let investments due ti increasing burdens on them in the buy-to-let market. Their findings suggest the number of new properties that came onto the market nationally (for sale) jumped by 11% across the UK as a result.

Those increasing burdens include new tax rules coming in over the next 3 to 4 years and the announcement that all self-managing landlords (i.e. landlords that don't use a letting agent to look after their buy-to-let property) will soon need to register with compulsory redress scheme to resolve tenant arguments and disputes; as Westminster wants to heighten standards in the Private Rented sector.

Interestingly I was chatting with a self-managed landlord from Manston, when I was out socially over the festive period, who didnt reliase the recent legislations that have hit the Private Rented sector, including the 'Right to Rent' regulations which came in to operation last year. Landlords have to certify their tenants have the legal rights to live in the UK. This includes checking and taking copies of their tenant's

Overall, Ramsgate does match the national trend, with the number of properties on the market actually rising by 20% in the last year.  It was particularly interesting to see the number of semis increase by 38%, yet the number of terraced on the market drop by 5%.

However, speaking with my team and other property professionals in the town, the majority of that movement in the number of properties and the types of properties on the market isn’t down to landlords dumping their properties on the market. The whole property market has changed in the last 12 months, with the majority of the change in the number and type of properties for sale due to the owner-occupier market, not landlords (a subject I will write about soon in my Thanet Property Market blog later this Spring?). You see, for the last ten years, each month there has always been a small number of Ramsgate landlords who have been releasing their monies from their Ramsgate buy to let properties - as is the nature of all investments!

Nationally, the number of rental properties coming on to the market to rent fell by 16% in Q4 2017 compared to Q4 2016 .. but that isn’t because there are 16% less rental properties to rent – it’s because tenants are staying in their rental properties longer meaning less are coming on the market to be RE-LET.

Nevertheless, some Ramsgate landlords will want to release the equity held in their Ramsgate buy to let properties in 2018. All I suggest is that you speak with your letting agent first, as putting a rental property on the open market often spooks the tenants to hand in their notice days after you put it on the market (because they don’t like the uncertainty and also believe they will become homeless!). This means you have an empty property, costing you money with no rent coming in.  However, some letting agents who specialise in portfolio management have select lists of landlords that will buy with sitting tenants in. If you have a portfolio in the Ramsgate area and are considering selling some or all of them – drop me a line as I might have a portfolio landlord for you (with the peace of mind that you won’t have any rental voids).

Friday, 5 January 2018

Ramsgate Apartments are 12.1% more affordable than 10 years ago

My research shows that certain types of Ramsgate property are more affordable today than before the 2007 credit crunch.

Roll the clock back to 2007 just before the credit crunch hit which saw Ramsgate property values plummet like a lead balloon and the Ramsgate property market had reached a peak with the prices for Ramsgate property hitting the highest level they had ever reached.  Between 2008 and 2010, Ramsgate property values lay in the doldrums and only started to rise in 2011, albeit quite slowly to begin with.

Nevertheless, even though property values have now passed those 2007 peaks, my research indicates that Ramsgate property, especially flats/apartments, are now more affordable than they were before the 2008 credit crunch.

Back in 2007, the average value of a Ramsgate flat/apartment stood at £131,204 and today, it stands at £149,409, a rise of £18,205 or 13.9%.

However, between 2007 and today, we have experienced inflation (as measured by the Government’s Consumer Price Index) of 25.97% meaning that in real spending power terms Ramsgate apartments are 12.1% more affordable than in 2007. Looking at it another way, if the average Ramsgate apartment (valued at £131,204 in 2007) had risen by 25.97% inflation over those 10 years, today it would be worth £165,278 (instead of the current £149,409).

The point I’m trying to get across is that Ramsgate property is more affordable than many people think.  Ramsgate first time buyers can get on the ladder as 95% mortgages have been readily available to first-time buyers since 2010.

It really comes down to a choice and if Ramsgate first-time buyers can get over the hurdle of saving the 5% deposit for the mortgage on the property – they will be on to a winner, especially with these ultralow mortgage interest rates, a mortgage can be between 10% and 30% cheaper per month than the rental payments on the same house.

So why aren’t Ramsgate 20 somethings buying their own home?

Back in the 1960’s and 1970’s, renting was considered the poor man’s choice in Ramsgate (and the rest of the Country) a huge stigma was attached to renting. However, over the last 10 years as a country, we have done a complete U-turn in our attitude towards renting - meaning that many people find renting a better option and a lifestyle choice.

Saving the 5% deposit means going without many luxuries in life (such as holidays, every satellite movie and sports channel, socialising or the latest mobile phone – even if only in the short term) therefore instead of saving every last pound to put towards a mortgage deposit Ramsgate 20 somethings choose to rent.

There is no denying the simple fact that over the next 10 to 15 years, the people who choose to rent instead of buy in Ramsgate will continue to rise.

Therefore, everyone in Ramsgate has a responsibility to ensure that an adequate number of quality Ramsgate rental properties are safeguarded to meet those future demands. Interestingly, what I have noticed though over the last few years are the expectations of Ramsgate tenants on the finish and specification of their Ramsgate rental property.

I have perceived that in the past, what a tenant wanted from their Ramsgate rental property was moderately unassuming because renting a property was only a short-term choice to fill the gap before jumping on the property ladder. Before the millennium, wood chip wall paper and twenty-year-old kitchen and bathroom suites were considered the norm.

However, Ramsgate tenants’ expectations are becoming more discerning as each year goes by.  I have also noticed the length of time a tenant remains in their Ramsgate property is becoming longer (and this was backed up recently by stats from a Government Report), although I have noticed a tendency for many Ramsgate landlords not to keep the rental payments at the going market rates  - maybe a topic for a future article for my blog?

The bottom line is this … Ramsgate landlords will need to be more conscious of tenants needs and wants and consider their financial planning for future enhancements to their Ramsgate rental properties over the next five, ten and twenty years -  e.g. decorating, kitchen and bathroom suites etc etc ..

The present-day and future situation of the Ramsgate private rental property market is important, and I frequently liaise with Ramsgate buy-to-let investors looking to spread their Ramsgate rental-portfolios. I also enjoy meeting and working alongside Ramsgate first time landlords, to ensure they can navigate through the minefield of rental voids, the important balance of capital growth and yield and ensuring the property is returned back to you in the future in the best possible condition.