Friday, 16 June 2017

Should the 19,963 home owning OAP’s of Thanet be forced to downsize?



This was a question posed to me on social media a few weeks ago, after my article about our mature members of Margate society and the fact many retirees feel trapped in their homes. After working hard for many years and buying a home for themselves and their family, the children have subsequently flown the nest and now they are left to rattle round in a big house. Many feel trapped in their big homes (hence I dubbed these Thanet home owning mature members of our society, ‘Generation Trapped’).

So, should we force OAP Thanet homeowners to downsize?

Well in the original article, I suggested that we as a society should encourage, through building, tax breaks and social acceptance that it’s a good thing to downsize. But should the Government force OAP’s?

Well, one of the biggest reasons OAP’s move home is health (or lack of it).

Looking at the statistics for Thanet, of the 19,963 homeowners who are 65 years and older, whilst 10,065 of them described themselves in good or very good health, a sizeable 7,127 home owning OAPs described themselves as in fair health and 2,771 in bad or very bad health.

13.88% of Thanet home owning OAP’s are in poor health

But if you look at the figures for the whole of Thanet District Council, there are only 972 specialist retirement homes that one could buy (if they were in fact for sale) and 717 homes available to rent from the Council and other specialist providers (again- you would be waiting for dead man’s shoes to get your foot in the door) and many older homeowners wouldn’t feel comfortable with the idea of renting a retirement property after enjoying the security of owning their own home for most of their adult lives.

My intuition tells me the majority ‘would be’ Thanet downsizers could certainly afford to move but are staying put in bigger family homes because they can't find a suitable smaller property. The fact is there simply aren’t enough bungalows for the healthy older members of the Thanet population and specialist retirement properties for the ones who aren’t in such good health ... we need to build more appropriate houses in Thanet.

The Government's Housing White Paper, published a few weeks ago, could have solved so many problems with the UK housing market, including the issue of homing our aging population. Instead, it ended up feeling annoyingly ambiguous. Forcing our older generation to move with such measures as a punitive taxation (say a tax on wasted bedrooms for people who are retired) would be the wrong thing to do. Instead of the stick – maybe the Government could use the carrot tactics and offered tax breaks for downsizers. Who knows – but something has to happen?

.. and come to think about it, isn’t the word ‘downsize’ such an awful word?  I prefer to use the word ‘decent-size’ instead of ‘down-size’- as the other phrase feels like they are lowering themselves, as though they are having to downgrade themselves in their retirement (and let’s be frank – no one likes to be downgraded).

The simple fact is we are living longer as a population and constantly growing with increased birth rates and immigration. So, what I would say to all the homeowners and property owning public of Thanet is ... more houses and apartments need to be built in the Thanet area, especially more specialist retirement properties and bungalows. The Government had a golden opportunity with the White Paper – and were sadly found lacking.

And a message to my Thanet property investor readers whilst this issue gets sorted in the coming decade(s)  – maybe seriously consider doing up older bungalows – people will pay handsomely for them – be they for sale or even rent? Just a thought!

END

Wednesday, 14 June 2017

1,203,074 People use Ramsgate Train Station a year - How does that affect the Ramsgate Property Market?


It might surprise you that it isn’t always the poshest villages around Ramsgate or the swankiest Ramsgate streets where properties sell and let the quickest. Quite often, it’s the ones that have the best transport links. I mean, there is a reason why one of the most popular property programmes on television is called Location, Location, Location!

As an agent in Ramsgate, I am frequently confronted with queries about the Ramsgate property market, and most days I am asked, “What is the best part of Ramsgate and its villages to live in these days?”, chiefly from new-comers.  Now the answer is different for each person – a lot depends on the demographics of their family, their age, schooling requirements and interests etc. Nonetheless, one of the principal necessities for most tenants and buyers is ease of access to transport links, including public transport – of which the railways are very important.

Official figures recently released state that, in total, 1,653 people jump on a train each and every day from Ramsgate Train station. Of those, 986 are season ticket holders. That’s a lot of money being spent when a season ticket, standard class, to London is £5,324 a year.

So, if up to £5.25m is being spent on rail season tickets each year from Ramsgate, those commuters must have some impressive jobs and incomes to allow them to afford that season ticket in the first place. That means demand for middle to upper market properties remains strong in Ramsgate and the surrounding area and so, in turn, these are the type of people whom are happy to invest in the Ramsgate buy to let market – providing homes for the tenants of Ramsgate…

The bottom line is that property values in Ramsgate would be much lower, by at least 3% to 4%, if it wasn’t for the proximity of the railway station and the people it serves in the town

And this isn’t a flash in the pan. Rail is becoming increasingly important as the costs associated with car travel continue to rise and roads are becoming more and more congested. This has resulted in a huge surge in rail travel.

Overall usage of the station at Ramsgate has increased over the last 20 years. In 1997, a total of 580,470 people went through the barriers or connected with another train at the station in that 12-month period. However, in 2016, that figure had risen to 1,203,074 people using the station (that’s 3,305 people a day).



The juxtaposition of the property and the train station has an important effect on the value and saleability of a Ramsgate property. It is also significant for tenants - so if you are a Ramsgate buy to let investor looking for a property - the distance to and from the railway station can be extremely significant.
One of the first things house buyers and tenants do when surfing the web for somewhere to live is find out the proximity of a property to the train station. That is why Rightmove displays the distance to the railway station alongside each and every property on their website.

For more thoughts on the Ramsgate Property market – please visit the www.ThanetPropertyBlog.com

End

Friday, 2 June 2017

Hard Brexit could cause 2,000 properties to be dumped onto the Thanet Property market



So all cards up in the air! A general election on the books, but one thing is for sure ... whoever gets the job to deal with Brexit has a hard job on their hands (I'm just glad its not me!) As it currently stands, by not assuring the rights of EU citizens in the UK, Theresa May has squandered an opportunity to give peace of mind to our EU co-workers working and living in Thanet (and the rest of the UK). No.10 Downing Street’s point of view is that in promising the rights of EU citizens in the UK, it will postpone the same guarantee to the 1.5 million UK citizens living in the other nations of the EU.

Putting aside the politics for one second, the simple fact is now Article 50 has been triggered, we have two years to make a deal with the EU; otherwise it will be a ‘hard Brexit’. Now you might not think a hard Brexit will affect you in your home in Thanet ... but nothing could be further from the truth.

Of the 131,755 people who are resident in the Thanet District Council area, 120,568 were born in the UK, 2,515 were born in EU countries from West Europe and 3,017 were born in EU countries from the former Soviet States in East Europe (the rest coming from other countries around the world).

The rights of these EU citizens living in the Thanet area are not guaranteed and will now be part of the negotiation with Europe. It is true a lot of our EU next door neighbours in Thanet will have acquired rights relating to the right to live, to work, to own a business, to possess a property, the right to access health and education services and the right to remain in a UK after retirement… yet those acquired rights are up for negotiation in the next two years.

So, what would a hard Brexit do to the Thanet property market?

Well a hard Brexit could mean the nuclear option when it came to the Thanet housing market. It could mean that every EU citizen would have to leave the UK.

In the Thanet District area, 1,532 of the 2,515 Western European EU citizens own their own home and (so they would all need to be sold) and 2,484 of the 3,017 Eastern European EU citizens rent a property, so again all those rental properties would all come on the market at the same time.

Hard Brexit and mass EU Migration would mean c. 2,000 properties being dumped onto the housing market in a short period of time, meaning there would be a massive drop in Thanet property values and rents, causing negative equity for thousands of Thanet homeowners and many buy-to-let landlords would be out of pocket.

While there is no certainty as to what the future will hold, both UK expats in the EU and EU citizens in the UK rights will no longer be guaranteed and will be subject to bilateral renegotiation.

All I ask is that the politicians are sensible with each other in the negotiations. A lot of the success of the Thanet (and UK) property market has been built on high levels of homeownership and more recently in the last 10/15 years, a growth of the rental sector with lots of demand from Eastern Europeans coming to Thanet (and the surrounding area) to get work and provide for their families. Many Thanet people have invested their life savings into buying a buy to let property.

Much will depend on what is politically realistic. Unilateral knee-jerk reactions and measures caused by a hard Brexit would not only likely cause major disruption or suffering to the 3 million EU citizens living in the UK, but also everyone who owns property in the UK ... politics aside - a hard Brexit is in no one’s interests.

Thursday, 18 May 2017

What will the General Election do to 33,986 Thanet Homeowners



In Thanet, of the 55,719 households, 18,327 homes are owned without a mortgage and 15,659 homes are owned by a mortgage. Many homeowners have made contact me with asking what the General Election will do the Thanet property market?  The best way to tell the future is to look at the past.

I have looked over the last five general elections and analysed in detail what happened to the property market on the lead up to and after each general election. Some very interesting information has come to light.

Of the last five general elections (1997, 2001, 2005, 2010 and 2015), the two elections that weren’t certain were the last two (2010 with the collation and 2015 with unexpected Tory majority). Therefore, I wanted to compare what happened in 1997, 2001 and 2005 when Tony Blair was guaranteed to be elected/re-elected versus the last knife edge uncertain votes of 2010 and 2015 ... in terms of the number of houses sold and the prices achieved.

Look at the first graph below comparing the number of properties sold and the dates of the general elections


It is clear, looking at the number of monthly transactions (the blue line), there is a certain rhythm or seasonality to the housing market. That rhythm/seasonality has never changed since 1995 (seasonality meaning the periodic fluctuations that occur regularly based on a season - i.e. you can see how the number of properties sold dips around Christmas, rises in Spring and Summer and drops again at the end of the year).

To remove that seasonality, I have introduced the red line. The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers, whilst the yellow arrows denote the times of the general elections. It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (i.e. number of properties sold).

Next, I wanted to consider what happened to property prices. In the graph below, I have used that same 12-month average, housing transactions numbers (in red) and yellow arrows for the dates of the general elections but this time compared that to what happened to property values (pink line).


It is quite clear none of the general elections had any effect on the property values.  Also, the timescales between the calling of the election and the date itself also means that any property buyer’s indecisiveness and indecision before the election will have less of an impact on the market.


So finally, what does this mean for the landlords of the 13,661 private rented properties in Thanet? Well, as I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Thanet will be more subdued in the coming few years for reasons other than the general election. The growth of rents has taken a slight hit in the last few months as there has been a slight over supply of rental property in Thanet, making it imperative that Thanet landlords are realistic with their market rents. But, in the long term, as the younger generation still choose to rent rather than buy ... the prospects, even with the changes in taxation, mean investing in buy-to-let still looks a good bet. If you want to read more about the Thanet property market – then why not visit the Thanet Property Market Blog for more information? www.thanetpropertyblog.com

Monday, 24 April 2017

With 16,287 people in Private Rented Properties in Margate - Should you still be investing in Margate Buy To Let?



If I were a buy to let landlord in Margate today, I might feel a little bruised by the assault made on my wallet after being (and continuing to be) ransacked over the last 12 months by HM Treasury’s tax changes on buy to let. To add insult to injury, Brexit has caused a tempering of the Margate property market with property prices not increasing by the levels we have seen in the last few years. I think we might even see a very slight drop in property prices this year and, if Margate property prices do drop, the downside to that is that first time buyers could be attracted back into the Margate property market; meaning less demand for renting (meaning rents will go down). Yet, before we all run for the hills, all these things could be serendipitous to every Margate landlord, almost a blessing in disguise.

Margate has a population of 59,986, so when I looked at the number of people who lived in private rented accommodation, the numbers astounded me …

Margate - Accommodation Type and the Number of Occupiers
Owned outright - Margate
Owned with a mortgage - Margate
Shared ownership (part owned and part rented) - Margate
Social rented (aka Council Housing) -  Margate
Private rented - Margate
Living rent free - Margate
15,462
20,261
177
7,298
16,287
501
25.8%
33.8%
0.3%
12.2%
27.2%
0.8%

Yields will rise if Margate property prices fall, which will also make it easier to obtain a buy to let mortgage, as the income would cover more of the interest cost. If property values were to level off or come down that could help Margate landlords add to their portfolio. Rental demand in Margate is expected to stay solid and may even see an improvement if uncertainty is protracted. However, there is something even more important that Margate landlords should be aware of: the change in the anthropological nature of these 20 something potential first time buyers.

I have just come back from a visit to my partners relations after a family get together. I got chatting with my partners nephew and his partner.  Both are in their mid/late twenties, both have decent jobs in Margate and they rent. Yet, here was the bombshell, they were planning to rent for the foreseeable future with no plans to even save for a deposit, let alone buy a property. I enquired why they weren’t planning to buy? The answers surprised me as a 40 something, and it will you. Firstly, they don’t want to put cash into property, they would rather spend it on living and socialising by going on nice holidays and buying the latest tech and gadgets. They want the flexibility to live where they choose and finally, they don’t like the idea of paying for repairs. All their friends feel the same. I was quite taken aback that buying a house is just not top of the list for these youngsters.


So, as 27.2% of Margate people are in rented accommodation and as that figure is set to grow over the next decade, now might just be a good time to buy property in Margate – because what else are you going to invest in?  Give your money to the stock market run by sharp suited city whizz kids – because at least with property – it’s something you can touch - there is nothing like bricks and mortar!

For more views and opinions on the Margate Property Market – visit the Thanet Property Market Blog . www.thanetpropertyblog.com

Wednesday, 12 April 2017

Thanet Rents To Rise Quicker Than Thanet Property Prices In Next 5 Years




The next five years will see an interesting change in the Thanet property market. My recent research has concluded that the rent private tenants pay in Thanet will rise faster than Thanet property prices over the next five years, creating further issues to Thanet’s growing multitude of renters. In fact, my examination of statistics forecasts that ..

By 2022, Thanet rents will increase by 23%, whereas Thanet property values will only grow by 17%.

Let me explain why I have come to those conclusions:

Over the last five years, property values in Thanet have risen by 46.3%, whilst rents have only risen by 16.3%.

Throughout the last few years, and compounded in 2016, tenant demand for rental properties continued to go up whilst the Press predicted some landlords expect to reduce their portfolios in the next couple of years, meaning Thanet tenants will have fewer properties to choose from, which will push rents higher. In fact, talking to fellow property professionals in Thanet, there appears to be privation and shortage of new rental properties coming on to the Thanet lettings market.

Landlords have some intriguing challenges ahead of them in the coming years most notably in that the Tory’s have changed the taxation rules for landlords in the way buy to let properties are to be taxed. On top of that, there is the ban on letting agent fees which is still to come into force (probably in 2018). When that happened in Scotland in 2012, Scottish letting agents passed on those fees to their landlords, who in turn increased the rent they charged to their tenants.

All I would say to Theresa May and Philip Hammond is that they must be wary about indicating both red and green lights at the same time to the private rented sector. They can’t expect the armies of small private landlords to continue to house around a fifth of the population and then tax the hell out of them. They didn’t invest in buy to let as a charity or to satisfy any philanthropic urges. Something has to give – and that will be significant rent rises over the coming few years (and before anyone gives me any derogatory comments about landlords … if it wasn’t for landlords buying all these buy to let properties over the last 15 years, I am not sure where everyone would be living today – because most the Council houses were sold off in the 1980’s!).

With the challenges ahead, with the ‘B’ word (that’s budget if you wondered!), house price inflation will be tempered over the coming five years in Thanet. As I have discussed in previous articles, the number of properties on the market in Thanet remains close to historic lows, which is both good as it keeps houses prices relatively stable, yet not so good as it impedes choice for buyers… and hence why I believe property values in Thanet will only be 17% higher in five years’ time.

Whilst on the other side of the coin, with the challenges facing landlords and the significant shortage of new homes being built, Thanet people still need somewhere to live. If those people aren’t buying houses and the local authority aren’t building council houses in there thousands (because they have no money), with the average rent for a Thanet rental property currently standing at £789 per month …

Over the next five years, I predict the average rent
in Thanet will rise to £978 per month

These are interesting times. There is still money to be made in buy to let in Thanet – Thanet landlords will just need to be smarter and more savvy with their investments. If you are looking for such advice and opinion to help you meet those investment goals, one place you can find more information is the Thanet Property Blog. www.thanetpropertyblog.clom