Monday, 15 August 2016

164% increase in Property Values in Thanet since the Millennium









Thanet house prices since the Millennium have risen by 164.75%, whilst average salaries in Thanet have only grown by 51.27% over the same time frame. This has served to push homeownership further out of reach for many Thanet people as they have to battle against raising considerable deposits and meet sterner lending criteria, as a result of new mortgage regulations introduced in 2014/5.  The private rental market in Thanet has grown throughout the last twenty years with buy-to-let investors purchasing a high proportion of newly built residential properties that were built and designed for the owner occupier sales markets.  For example, in the North Thanet Constituency, roll the clock back 20 years and there were 40,189 properties in the Constituency, whilst the most recent set of figures show there are 40,720 properties - a growth of 531 properties.
However, anecdotal evidence suggests that a large majority of those 531 were bought by Thanet buy-to-let landlords, as over the same 20-year time frame, the number of rental properties has grown from 3,647 to 7,967 in the Constituency - a rise of 4,320 properties.
Nevertheless, some say this historic growth of the Thanet rental market might start to change with the new tax rules for landlords introduced by Mr. Osborne over the last seven or eight months. Yet the numbers tell another story. Across the board, mortgage borrowing climbed to a 9 year zenith in March this year as the British property markets traditional Easter rush corresponded with landlords hurrying to beat George Osborne’s new stamp duty changes – buy-to-let landlords borrowed £7.1bn in March 2016 (the latest set of figures released) which was 163% up on the £2.7bn borrowed in the previous March.

You see, from my point of view, I don’t think things will get worse in the buy-to-let market in Thanet and these are the reasons why I believe that:

Firstly, what else are Thanet landlords going to invest in if it isn’t property - the stock market? Since the Millennium, the stock market has risen by an unimpressive total of 5.54%, quite different to the 164.75% rise in Thanet property prices?

Secondly, its true the 3% stamp duty is the first blow on top of a number of other tax changes to be phased in between 2017 and 2021, such as landlords facing a constraint in their ability to offset mortgage interest and, if sizeable numbers of landlords do take the decision to sell their portfolios, this will lead to a substantial amount of second hand properties being put up for sale. Yet that might not be a bad thing, as I have mentioned in previous articles there is a serous shortage of properties to buy at the moment in Thanet: the stock of property for sale being at a six year all time low.

.. Thirdly, if there are fewer rental properties in Thanet, as supply drops and demand remains the same (although ask any letting agent in Thanet and they will say demand is constantly rising) this will create a squeeze in the Thanet rental market and as a result rents will rise. In fact, I predict even if landlords don’t sell up, Thanet rents will rise as Thanet landlords seek to compensate for increased costs, which means more landlords will be attracted back.

For more thoughts on the Thanet Property market to read articles like this, you might find the Thanet Property Market blog of interest www.thanetproeprtyblog.com

Friday, 22 July 2016

8.21% drop in Kent and Thanet Property Transactions




 



In this post credit crunch world of sub terrain low interest and annuity rates so low a limbo dancer would smart, the growth of buy to let since 2009 has been phenomenal. So much so, there has been an evolution in purchase of property in the UK from that of just buying the roof over one’s head to that of a buy to let investment where it is seen as a standalone financial asset to fund current and future (ie pensions) investment. So recently, a few days before the release of latest Land Registry data of property transactions, quite a few market commenters were anticipating a huge increase in the number of properties sold in January as the 1st of April 2016 stamp duty deadline got closer.   

Looking at the most recent set of data from The Land Registry, it seems there has been a drop in the number of completed property sales in the Kent County Council area. Year on year, completed property sales in January (the latest set of data released) fell by 8.21% to 1,676 compared with 1,826 in January 2015. Nationally, the number is similar, as the number of completed house sales fell by 5% in January 2016 compared with January 2015. Some might say this counters the reports that there was a rush by landlords to buy ‘buy to let’ property ahead of the 1st April 2016 deadline but where was the stampede that many expected?

Looking even closer to home, in the CT11 postcode in January 2016, 30 properties changed hands, whilst 40 properties did so in January 2015. It’s even more interesting when you look at the average price paid, in January 2016, it was £188,934 yet in January 2015, the average price paid was £178,977.

Is the buy to let dream over for Thanet landlords?

.. but as ever my Thanet Property Blog readers, the devil is in the detail. The 3% stamp duty surcharge for buy to let landlords was announced in the Autumn Statement on the 25th November 2015. Anyone who has bought a property knows from their offer being accepted to receiving the keys and monies paid is a long drawn out affair, taking on average 8 to 12 weeks, as the Land Registry only get notified upon completion of the sale. We also need to factor in that Solicitors seem to have the last two weeks of December off anyway.

So if there was a rush in the last few days of November/early December in the Thanet property market, we would only see the results of that in the February figures (released in June) and more probably March’s (released in July).

So why all the doom and gloom? Simple .. bad news sells newspapers and gets the headlines. Let’s be honest, the headline to this article is designed to be eye catching. However, when we look at both the bigger and smaller picture; nationally, property values dropped (month on month) by 0.5%; in the South East region they dropped 0.4%, whilst in Kent they rose by 0.8%. The year on year figures tell a completely different story to that.



It just goes to show you should look deeper into something before making a judgment! For more thought provoking commentary on the Thanet property market – please visit the Thanet Property Blog. www.thanetpropertyblog.com