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Wednesday, 11 October 2017

Maidstone House Prices Outstrip Wage Growth by 25.12% since 2007


I recently read a report by the Yorkshire Building Society that 54% of the country has seen wages (salaries) rise faster than property prices in the last 10 years. The report said that in the Midlands and North, salaries had outperformed property prices since 2007, whilst in other parts of the UK, especially in the South, the opposite has happened and property prices have outperformed salaries quite noticeably.


As regular readers of my blog know, I always like to find out what has actually happened locally in Maidstone. To talk of North and South is not specific enough for me. Therefore, to start, I looked at what has happened to salaries locally since 2007. Looking at the Office of National Statistics (ONS) data for Maidstone Borough Council, some interesting figures came out... 



Maidstone
South East
Nationally
2007
 £27,019
 £26,120
 £23,920
2008
 £26,452
 £27,290
 £24,960
2009
 £27,123
 £27,903
 £25,506
2010
 £29,037
 £28,486
 £26,088
2011
 £27,992
 £28,839
 £26,010
2012
 £28,231
 £28,902
 £26,432
2013
 £26,047
 £28,995
 £26,931
2014
 £26,962
 £29,494
 £27,097
2015
 £29,026
 £29,895
 £27,508
2016
 £28,179
 £30,264
 £28,132


Salaries in Maidstone have risen by 4.29% since 2007 (although it’s been a bit of a rollercoaster ride to get there!) - interesting when you compare that with what has happened to salaries regionally (an increase of 15.87%) and nationally, an increase of 17.61%.

Next, I needed to find what had happened to property prices locally over the same time frame of 2007 and today. Net property values in Maidstone are 29.41% higher than they were in late 2007 (not forgetting they did dip in 2008 and 2009). Therefore...

Property values in the Maidstone area have increased at a higher rate than wages to the tune of 25.12% ... meaning, Maidstone is in line with the regional trend..

All this is important, as the relationship between salaries and property values is the basis on how affordable property is to first (and second, third etc.) time buyers. It is also vitally relevant for Maidstone landlords as they need to be aware of this when making their buy-to-let plans for the future. If more Maidstone people are buying, then demand for Maidstone rental properties will drop (and vice versa).

As I have discussed in a few articles in my blog recently, this issue of ‘property-affordability’ is a great bellwether to the future direction of the Maidstone property market. Now of course, it isn’t as simple as comparing salaries and property prices, as that measurement disregards issues such as low mortgage rates and the diminishing proportion of disposable income that is spent on mortgage repayments.

On the face of it, the change between 2007 and 2017 in terms of the ‘property-affordability’ hasn’t been that great. However, look back another 10 years to 1997, and that tells a completely different story. Nationally, the affordability of property more than halved between 1997 and today. In 1997, house prices were on average 3.5 times workers’ annual wages, whereas in 2016 workers could typically expect to spend around 7.7 times annual wages on purchasing a home.

The issue of a lack of homeownership has its roots in the 1980’s and 1990’s. It’s quite hard as a tenant to pay your rent and save money for a deposit simultaneously, meaning for many Maidstone people, home ownership isn't a realistic goal. Earlier in the year, the Tories released proposals to combat the country’s 'broken' housing market, setting out plans to make renting more affordable, while increasing the security of rental deals and threatening to bring tougher legal action to cases involving bad landlords.

This is all great news for Maidstone tenants and decent law-abiding Maidstone landlords (and indirectly owner occupier homeowners). Whatever has happened to salaries or property prices in Maidstone in the last 10 (or 20) years ... the demand for decent high-quality rental property keeps growing. If you want a chat about where the Maidstone property market is going

Monday, 9 October 2017

THE PAST, CURRENT & FUTURE OF THE MAIDSTONE PROPERTY MARKET.

Buy To Let Seminar: Monday 20th November 2017


Speaker: UK Property Market Journalist- Christopher Watkin.


This seminar is of interest to Maidstone Buy to Let landlords and property investors,

Christopher Watkins, a leading UK Property Market Journalist and commentator will discuss what has historically happened in the Maidstone Property Market over the last 30 years, comparing it with other towns in the Kent & Medway areas.


Then after chatting about Maidstone property values, rents & yields, he will speak about the future of the Maidstone Property Market.


Finally, where he considers the next up and coming areas of Maidstone and surrounding area to be.


Venue  : Village Hotel- Forstal Road, Maidstone ( Junction 6 M20 -Running Horse roundabout)

5.30 for 6pm. Complimentary light refreshments will be served.

Exclusive Invite only- so please call Seekers to book your place or email  : nigel@seekersmaidstone.co.uk


Invest a small amount of time in exchange for invaluable advice that will benefit your investment.

Friday, 29 September 2017

Maidstone Buy-to-Let Return / Yields – 2.3% to 7.2% a year

The mind-set and tactics you employ to buy your first Maidstone buy to let property needs to be different to the tactics and methodology of buying a home for yourself to live in. The main difference is when purchasing your own property, you may well pay a little more to get the home you (and your family) want, and are less likely to compromise. When buying for your own use, it is only human nature you will want the best, so that quite often it is at the top end of your budget (because as my parents always used to tell me – you get what you pay for in this world!).
Yet with a buy to let property, if your goal is a higher rental return – a higher price doesn’t always equate to higher monthly returns – in fact quite the opposite. Inexpensive Maidstone properties can bring in bigger monthly returns. Most landlords use the phrase ‘yield’ instead of monthly return. To calculate the yield on a buy to let property one basically takes the monthly rent, multiplies it by 12 to get the annual rent and then divides it by the value of the property.
This means, if one increases the value of the property using this calculation, the subsequent yield drops. Or to put it another way, if a Maidstone buy to let landlord has the decision of two properties that create the same amount of monthly rent, the landlord can increase their rental yield by selecting the lower priced property.

 Now of course these are averages and there will always be properties outside the lower and upper ranges in yields: they are a fair representation of the gross yields you can expect in the Maidstone area.

As we move forward, with the total amount of buy to let mortgages amounting to £199,310,614,000 in the country, landlords need to be aware of the investment performance of their property, especially in the era of tax increases and tax relief reductions. Landlords are looking to maximise their yield - and are doing so by buying cheaper properties.

However, before everyone in Maidstone starts selling their upmarket properties and buying cheap ones, yield isn’t the only factor when deciding on what Maidstone buy to let property to buy.  Void periods (i.e. the time when there isn’t a tenant in the property between tenancies) are an important factor and those properties at the cheaper end of the rental spectrum can suffer higher void periods too. Apartments can also have service charges and ground rents that aren’t accounted for in these gross yields. Landlords can also make money if the value of the property goes up and for those Maidstone landlords who are looking for capital growth, an altered investment strategy may be required.

In Maidstone, for example, over the last 20 years, this is how the average price paid for the four different types of Maidstone property have changed…

· Maidstone Detached Properties have increased in value by 251.1% 

· Maidstone Semi-Detached Properties have increased in value by 274.5%

· Maidstone Terraced Properties have increased in value by 285.4%

· Maidstone Apartments have increased in value by 279.6%

It is very much a balancing act of yield, capital growth and void periods when buying in 
Maidstone. Every landlord’s investment strategy is unique to them. If you would like a fresh pair of eyes to look at your portfolio, be you a private landlord that doesn’t use a letting agent or a landlord that uses one of my competitors – then feel free to drop in and let’s have a chat. What have you got to lose? 30 minutes and my tea making skills are legendary!




 *For a online rental or sales valuation please visit our website  www.seekershomes.co.uk*




Thursday, 7 September 2017

Slowing Maidstone Property Market? Yes and No!

My thoughts to the landlords and homeowners of Maidstone…

The tightrope of being a Maidstone buy-to-let landlord is a balancing act many do well at. Talking to several Maidstone landlords, they are very conscious of their tenants’ capacity and ability to pay the rent and their own need to raise rents on their rental properties (as Government figure shows ‘real pay’ has dropped 1% in the last six months). Evidence does suggest many landlords feel more assured than they were in the spring about pursuing higher rents on their properties.

During the summer months, historic evidence suggests that the rents new tenants have had to pay on move in have increased. June/July/August is a time when renters like to move, demand surges and the normal supply and demand seesaw mean tenants are normally prepared to pay more to secure the property they want to live in, in the place they want to be. This is particularly good news for Maidstone landlords as average Maidstone rents have been on a downward trend recently. So look at the figures here...

Rents in Maidstone on average for new tenants moving in have risen 0.9% for the month, taking overall annual Maidstone rents 0.9% lower for the year

However, several Maidstone landlords have expressed their apprehensions about a slowing of the housing market in Maidstone. I think this negativity may be exaggerated.

Before we get the Champagne out, the other side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Maidstone as well as the Maidstone buy-to-let landlords).  I believe the Maidstone property market has been trying to find some level of equilibrium since the New Year.  According to the Land Registry…

Property Values in Maidstone are 5.64% higher than they were 12 months ago, rising by 2.3% last month alone!


Yet, I would take those figures with a pinch of salt as they reflect the sales of Maidstone properties that took place in early Spring 2017 and now are only exchanging and completing during the summer months.

The reality is the number of properties that are on the market in Maidstone today has risen by 14.1% since the New Year and that will have a dampening effect on property values. As tenants have had less choice, buyers now have more choice ... and that will temper Maidstone property prices as we head towards 2018.

Be you a homeowner or landlord, if you are planning to sell your Maidstone property in the short term, it is crucial, especially with the rise in the number of properties on the market, that you realistically price your property when you bring it to the market ... with the increase in choice of properties, the balance of power during negotiation generally sways towards the buyer. Given that everyone now has access to property details, including historic stats for how much property have sold for, they will be more astute during the offer and negotiation stages of a purchase.
 
However, even with this uplift in the number of properties for sale in Maidstone, property prices will remain stable and strong in the medium to long term. This is because the number of properties on the market today is still way below the peak of summer of 2008, when there were 1,812 properties for sale compared to the current level of 790 (if you recall, prices dropped by nearly 20% in Credit Crunch years of ‘08 and ‘09).

Compared to 2008, today’s lower supply of Maidstone properties for sale will keep prices relatively high...and they will continue to stay at these levels for the medium to long term.

Less people are moving than a few years ago, meaning less property is for sale. Fewer properties for sale mean property prices remain relatively high and this is because of a number of underlying reasons. Firstly, buy-to-let landlords tend not sell their properties as often than owner-occupiers, consequently removing the property out of the housing market selling cycle. Secondly, Stamp Duty is much higher compared to 10 years ago (meaning it costs more to move). Next, there is a dearth of local authority rental housing so demand for private rented housing will remain high. Then we have the UK’s maturing owner occupier population, meaning these older people are less likely to move (compared to when they were younger). Another reason is the lack of new homes being built in the country (we need 240k houses a year to be built in the UK and we are currently only building 145k a year!) and finally, the new mortgage rules introduced in 2014 about how much a person can borrow on a mortgage has curtailed demand.

Some final thought’s before I go – to all the Maidstone homeowners that aren’t planning to sell – this talk of price changes is only on paper profit or loss. To those that are moving ... most people that sell, are buyers as well, so as you might not get as much for yours, the one you will want to buy won’t be as much, (swings and roundabouts as Mum used to say!)

To all the Maidstone landlords – keep your eyes peeled – I have a feeling there may be some decent buy-to-let deals to be had in the coming months. One place for such deals, irrespective of which agent is selling it, is my Maidstone Property Blog ...

Wednesday, 30 August 2017

Supply and Demand Issues mean Maidstone Property Values Rise by 4.4% in the Last 12 Months

The most recent set of data from the Land Registry has stated that property values in Maidstone and the surrounding area were 4.4% higher than 12 months ago and 17.91% higher than January 2015.

Despite the uncertainty over Brexit as Maidstone (and most of the UK’s) property values continue their medium and long-term upward trajectory. As economics is about supply and demand, the story behind the Maidstone property market can also be seen from those two sides of the story.

Looking at the supply issues of the Maidstone property market, putting aside the short-term dearth of property on the market, one of the main reasons of this sustained house price growth has been down to of the lack of building new homes.

The draconian planning laws, that over the last 70 years (starting with The Town and Country Planning Act 1947) has meant the amount of land built on in the UK today, only stands at 1.8% (no, that’s not a typo – its one point eight percent) and that is made up of 1.1% with residential property and 0.7% for commercial property. Now I am not advocating building modern ugly carbuncles and high-rise flats in the Cotswolds, nor blot the landscape with the building of massive out of place ugly 1,000 home housing estates around the beautiful countryside of such villages as Hunton, Hollingbourne and East Farleigh.

The facts are, with the restrictions on building homes for people to live in, because of these 70-year-old restrictive planning regulations, homes that the youngsters of Maidstone badly need, aren’t being built. Adding fuel to that fire, there has been a large dose of nimby-ism and landowners deliberately sitting on land, which has kept land values high and from that keeps house prices high.

Looking at the demand side of the equation, one might have thought property values would drop because of Brexit and buyers uncertainty. However, certain commenters now believe property values might rise because of Brexit. Many people are risk adverse, especially with their hard-earned savings. The stock market is at an all-time high (ready to pop again?) and many people don’t trust the money markets. The thing about property is its tangible, bricks and mortar, you can touch it and you can easily understand it.  

The Brits have historically put their faith in bricks and mortar, which they expect to rise in value, in numerical terms, at least. Nationally, the value of property has risen by 635.4% since 1984 whilst the stock market has risen by a very similar 593.1%. However, the stock market has had a roller coaster of a ride to get to those figures. For example, in the dot com bubble of the early 2000’s, the FTSE100 dropped 126.3% in two years and it dropped again by 44.6% in 9 months in 2007… the worst drop Maidstone saw in property values was just 20.05% in the 2008/9 credit crunch.


Despite the slowdown in the rate of annual property value growth in Maidstone to the current 4.4%, from the heady days of 13.39% annual increases seen in mid 2010, it can be argued the headline rate of Maidstone property price inflation is holding up well, especially with the squeeze on real incomes, new taxation rules for landlords and the slight ambiguity around Brexit. With mortgage rates at an all-time low and tumbling unemployment, all these factors are largely continuing to help support property values in Maidstone (and the UK).

Monday, 7 August 2017

The Maidstone Property Market, The Beatles, Sweden and 50 year mortgages


50 years ago, in 1967, the first human heart transplant was performed by Dr Christian Barnard in South Africa. In the same year Sweden switched from driving on the left-hand side to the right-hand side of the road. 

The average value of a Maidstone property was £4,512, interest rates were at 5.5% and The Beatles released one of my favourite albums – their Sgt Peppers album ... but what the hell has that to do with the Maidstone property market today?? Quite a lot actually ... so with my CD Player turned up loud - let me explain my friends!

I have been doing some research on the current attitude of Maidstone first-time buyers. 

First-time buyers are so important for both landlords and homeowners. If first-time buyers aren’t buying, they still need a roof over their heads, so they rent (good news for landlords). 

The average value of a Maidstone property is currently standing at £340,223 and UK interest rates at 0.25%. 

As each year goes by, it appears the age of the everlasting mortgage has started to emerge, prompted by these first-time buyers, eager to get a foot on the housing ladder. 

I was reading a report a few days ago where some mortgage companies con-fessed that the battle to gain big returns from the property market has led to mortgages that will take considerably longer than the customary 25 years to pay off.

Over the last few years, it has been commonplace for first-time buyer mortgages to be 30 and 35 years in length as the ‘Bank of Mum and Dad’ have been helping with the deposit (Beatles Sgt Pepper song - “With a Little Help from My Friends”). Now, some high street banks are offering mortgage terms of 40 years. 

This means first-time buyers could be paying until their mid 60’s - I can hear that other great track from the same album "When I'm Sixty-Four" ring-ing in my ears! So, a 50-year mortgage does not seem as far-fetched now as it would have been back in the 1970’s. After all life expectancy for a male then was exactly 69 years and today its 79 years and 5 months!

Over the last ten years, Maidstone property prices have continued to rise more than wages, therefore, first-time buyers are looking for bigger loans. If this development continues, the only way repayments can remain reasonable is by increasing the term of the loan.


However, some commenters have said there are worries the mortgage companies are lending money over such a long term, they threaten leaving some first-time buyers with a generation of debt if the house price bubble bursts. Interestingly, when I looked at what had happened to average property values in Maidstone over the last 50 years, there have been bubbles. 

First-time buyers should take heart, since as a county we have always recovered from it a few years later.

What if interest rates rise? Well looking at historic UK interest rates, the current rate of 0.25% is at a 300-year low. Mortgages will never be cheaper. I would however, seriously consider fixing the rate to cushion any future potential interest rate rises (since they can only go in one direction when they do change). If Maidstone first-time buyers see buying a home as a long-term decision, based on the last 50 years, they should be just fine!



Before I go, a final thought for property buyers in Sweden, the land of Volvo and Abba. 

As Swedish property prices are so high, Swedish Regulators announced last year limits on the length of Swedish mortgage terms. They don’t bother with 50-year mortgages (On and On and On – Abba).

No, our Volvo-loving Swedish friend’s average mortgage length is 140 years (this is not a typo). 

Although such mortgages have had their Waterloo (Abba), regulators have significantly reduced the maximum term of a Swedish mortgage to 105 years.

Either way, that’s a lot of Money, Money, Money (Abba again – Sorry!) to pay back!

Now I will leave you in peace as I listen to the 1980’s Madness song ‘Our House’. My apologies to all the Beatles and Abba fans in Maidstone - a bit of light hearted fun albeit on serious topic.



1 in 8 Maidstone Properties are Leasehold



There are 23.36 million properties in England and Wales with 64% being owner occupied and 36% being rented either from a private landlord, local authority or housing association.

Over nine out of ten of those English and Welsh owner-occupied properties are a whole house or bungalow. Now, most people would assume they would be freehold - however, of those renting nearly half of rental properties, 44% to be precise, lived in other leasehold apartments and flats.

It might be wise to quickly explain the difference between free-hold and leasehold. When someone owns the freehold of a property they own it outright, including the land it is built on, whilst with a leasehold property the leaseholder owns the property for the length of their lease agreement. Leaseholders must pay the person who owns land (the freeholder) ground rent and other fees. When the leasehold ends, ownership re-turns to the freeholder although the leaseholder can extend the lease or they can buy the freeholder out, but there are rules and regulations with regards doing that.

Therefore, it would be safe to assume that houses are freehold and flats are leasehold .. wouldn’t it? Not necessarily! Most houses are freehold but some might be leasehold - usually through shared-ownership schemes – but more and more new homes builders are selling houses on a leasehold as well. The protection of the law afforded to leaseholders who own a flat is massive, but sadly lacking to leasehold houses sold privately.

Looking specifically at the figures for Maidstone, at the last  count in ME14-ME16 there were 49,329 properties. Since 1995, 45,946 properties in ME14-ME16 have changed hands and have been sold. Looking further at those 45,946 transactions
in ME14-ME16 since 1995, using data from Land Registry and solicitors practice My Home Move,11.99% have been leasehold (lower than the national average of 15%).

However, I am concerned about a few new homes builders selling new houses (not flats - houses) as leasehold. There has been a growing (yet small) trend for new-build houses to be sold as leasehold in recent years. While not all house builders use this model, those that do maintain it helps make developments financially viable. 

The issue comes when builders sell the freehold separately to an investment company without informing the lease holder – which they are legally allowed to do without telling the leaseholder. In England and Wales, the "right of first refusal" to buy the freehold is written in law to leaseholders of flats i.e. the freeholder must offer it to the leaseholders of all the flats of the building first), but not leaseholders of houses. .. and this is the point I am trying to get across. If you are buying a new home and it’s a house (i.e. not a flat) – please check very carefully indeed whether its freehold or leasehold. 

If it is a leasehold, whilst you do have rights, they are not as strong as for those people buying a leasehold flat. I appreciate I am only talking about a very small percentage of the property market, but potentially this could end up costing ......