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!