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In 1979, more than 4 in 10 British people lived in a council house, yet today that figure is only 1 in 12, whilst according to Shelter 65% of families on the Council House waiting lists had been on those lists for more than a year and 27% had been waiting for more than five years.

 One solution to the housing crisis has always been for the local authority to build more homes, yet should the state provide people with secure and dependable places to live – or is that an out-dated point of view? To look at this objectively, let’s take a step back.

After WW2, both Tory and Labour governments were building council houses in massive numbers, yet it might surprise you to know that more Council houses were built per year under Tory Governments than Labour ones between the years 1945 and 1970.  

Everything changed in 1979, when Margaret Thatcher delivered the right for Council tenants to buy their Council House (called the Right To Buy Scheme). Interestingly, Right To Buy was a Labour Party idea from one of Labour Manifestoes of the late 1950’s (although they lost to the Tory’s). Mrs Thatcher’s idea was based on massive discounts and 100% mortgages for those buying … but this was the real issue that has come back to bite us all these years later! Half the proceeds of the property sales went back to Westminster and the other half went back to the local authority – but the Councils half could only be spent on reducing their debt – not to be spent on building more Council houses.. hence why we have a shortage of council houses.

In 2011, Central Government gave local authorities the power to limit people’s entitlement for social housing (aka Council Housing), hence removing those people that did not have an association or link to the locality.

Today, in Maidstone, the Council House Waiting List has dropped by 82.0% since 2011, meaning

 

618 families are waiting for a Council House in Maidstone

 

Interestingly though, if our local Council House Waiting List had changed by the same amount as the national one, the waiting list figure would be 2,102 instead, because nationally Council House waiting lists are only 38.6% lower than 2011.

 

So where are these Maidstone families all living and what does this mean for Maidstone homeowners and Maidstone Landlords?

 

Quite simply, private landlords have taken up the slack and housed all those people that were on the waiting list. This is important as more and more tenants are stopping longer in the Private Rented Sector - the average length of time of a tenant stays in the same property is now 4 years. Renting is becoming a choice for many, as the years of this Millennium roll on. So much so, would it surprise you to know that renting a house can be more expensive than buying it as we have these ultra-low mortgage rates and 95% mortgages freely available?

 

Rents in the Rental Sector in Maidstone will increase steadily during the next five to ten years. Even though the Council House Waiting List has decreased, the number of new council and housing association properties being built is at a 75-year low. The government campaign against buy to let landlords together with the increased taxation and the banning of tenant fees to agents will restrict supply of private rental property, which in turn using simple supply and demand economics, will mean private rents will rise – making buy to let investment a good choice of investment vehicle again (irrespective of the increased fees and taxation laid at the door of landlords). 

 

..and for home owners (and landlords) Maidstone property values will remain strong and stable in the medium term, as the number of people moving to a new house (and selling their old property) will continue to remain limited, meaning that due to lack of choice and supply Maidstone buyers will have to pay decent money for any property they wish to buy (especially ones in good locations and presented well).

 

Interesting times ahead for the Maidstone Property Market!

 

The End of S 21 notices
 
The S21 notice allows a landlord to evict a tenant without any reason. It is known as “ no fault evictions” .
There are certain rules that a landlord or agent needs to follow, such as giving 2 months- notice and the tenant not having reported faults which have not been dealt with. There also has to be an up to date gas safety certificate and energy performance Certificate. The tenant must also have been given the latest version of the Governments “ How to Rent” guide.
The government wants to give tenants more security and enabling longer tenancies.
 
Did you know :
 
Tenancies of 6-12 months make up 81 % of the rental market.
41 % 0f tenants never expect to buy and 38 % of tenants are families with children.
2017/18 - 67% 0f tenancy evictions were because of rent arrears.
90% of tenancies were ended by the tenant and only 10 % by the landlord.
 
So does it matter that S21 notices will come to an end?
 
70 % of landlords would be happy with longer tenancies if there were improvements to Section 8 notices.
The government want to encourage minimum three year tenancies with a six month break course.
Landlords would be able to recover their property where they had “ reasonable grounds” i.e unpaid rent or anti social behaviour.
Rents could still rise on an annual basis.
 
When will this change happen- Probably in around 2 years.- Watch this space !

 

This research, which polled more than 500 UK property investors, takes a look at just how Brexit is impacting their long-term investment strategies.  It found that since the EU referendum in June 2016, 64% of investors have not let Brexit impact their property investment decisions.  45% of investors have expanded their property portfolio since the EU referendum and only 7% have sold one or more homes as a direct result of Brexit.

According to the findings, 57% do not envisage their property investment strategy changing following the Brexit deadline (29th March 2019).  There might be a spike in property investment in new properties immediately following the Brexit deadline.

The 2016 EU referendum signified the beginning of a new era in UK politics.  It also triggered many predictions of the demise of the country’s property market.

However, despite the uncertainty caused by the on-going Brexit talks, the majority of property investors have carried on with their financial strategies unperturbed, new research from Market Finance Solutions revealed.

The bridging lender commissioned an independent survey, among more than 500 UK property investors, all of whom own two or more investment properties.  It found that when reflecting on the period since the EU referendum, almost two-thirds (64%) stated the Brexit has not impacted their property investment decisions.

In fact, 45% said they had bought at least one more property since 23rd January 2016, with only 7% stating they had sold one or more real estate assets as a direct result of Brexit.  The research also revealed that the majority of investors do not see Brexit affecting their long-term strategies.  More than half (57%) of respondents say they will not change their property investment strategies following the Brexit deadline.

Although, there could be a surge in activity with the real estate market after Brexit formally takes place, with three in ten (29%) property investors lining up new purchases for once the deadline has passed.  The potential delay to the Brexit deadline could see this activity stalled.

 

www.seekershomes.co.uk

Nationally, the number of new homes created in 2018 was 222,194, the highest since 1989. Yet since 2002, the average number of properties built in the UK has only been 146,700 per year. You would think, seeing all the new homes sites around, you could ask are we building too many houses, especially off the back of those impressive 2018 build figures? However, to keep up with the ever-growing population, lifestyles and people living longer, official reports state the Country actually needs 240,000 new homes built every year to just stand still.

 

It is estimated, by the Chartered Institute of Housing, that the current national backlog of new homes required is in the order of 4.7 million (i.e. because of the bottled-up household formation by younger adults living with parents, shared housing and unaffordability). As a Country, we cannot meet all these needs immediately and it will take time to build up an effectual plan to address these issues.

 

Looking closer to home, you will also see from the graph below the long-term trend of new homes building (the yellow dotted line) has been going in an upward direction. In fact, the 2018 new homes build stats for Maidstone are 68.6% above the post Millennium average.

   

 

In 2018, 1,286 new dwellings were created in the Maidstone Council area and of those 1,286; interestingly 302 were Council and Housing Association homes

 

So, if our local authority had a more ambitious annual target of say an additional 500 homes on top of those figures, where could they be built and how would they be paid for? Of course, there are the normal apprehensions about infrastructure issues such as roads, schools, hospital capacity and doctors’ surgeries but our local authority has a Local Plan and that has the locations of where they envisage the new housing will be built (and the infrastructure that goes with it).

 

The Tories lifted the cap on what local authorities could borrow to build Council houses in late 2018 meaning Councils could borrow more money to build more Council     houses. Let’s say we built those 500 homes a year for the next 5 years in Maidstone, that would cost the local authority £375 million to build, which would produce in total £17.4 million in rent. At current interest rates, the interest would be £9.5m per year leaving a surplus of £7.9m for property maintenance and management – meaning the Council houses pay for themselves!

 

Therefore, what does all this mean for Maidstone homeowners and Maidstone buy-to-let landlords?

 

Well, the chances of our local authority getting the full funding for an extra 500 homes a year is slim as there is only so much money to borrow. If every UK local authority got funding for 500 additional homes a year for the next 5 years, an impressive 867,500 homes would be built in those 5 years but that would require the councils to borrow £130.1bn – and Central Government doesn’t have that kind of money for Councils to borrow (more like £10bn to £15bn).

 

The 4.7million long term housing shortage means house prices will remain strong in the long term (despite blips like Brexit etc). Demand for private rental properties will continue to grow and if you read my recent article on Maidstone rents, this can only be good news for Maidstone landlords. This attention on the housing crisis by the Government is good news for all Maidstone homeowners and Maidstone buy to let landlords, as it will encourage more fluidity in the market in the longer term, sharing the wealth and benefits of homeownership for all. However, in the short term, demand still outstrips supply for homes and that will mean continued upward pressures on rents for tenants and stability on house prices.

 

The proportion of 25 to 34-year olds who own their home in Maidstone has nearly halved in the last 20 years, so what does this mean for all the existing Maidstone landlords and homeowners together with all those youngsters considering buying their first home?

 

Well, looking at the numbers in greater detail, in Maidstone there has been a 43.5% proportional drop in the number of 25 to 34-year olds owning their own home between 1999 and 2019 .. and a corresponding, yet smaller drop of 21.2% of 35 to 44-year olds owning their own home over the same time frame.

So, if you were born in the late 1980’s or early 1990’s, the dream of owning a home in Maidstone has reduced dramatically over the past 20 years as young adults’ wages and salaries are now much lower in relation to Maidstone house prices. Nationally, average property values have grown by 186.9%, whilst average incomes have only risen by 44.8%, yet that doesn’t allow for inflation. However, whilst not over the same 20 years (it’s close enough though), the Institute of Fiscal Studies said recently the average British home was just over 2.5 times higher in 2015/6 than in 1995/6 after allowing for inflation; yet the average household income (after tax) of 25 to 34-year olds grew by only 22% in ‘real-terms’ over those 20 years.

Yet, even though property prices are at record highs, on the other side of the coin, the monthly cost of mortgage payments has actually fallen because interest rates have remained low. In 1999, the average mortgage rate paid by UK homeowners was 6.54% whilst today it’s more than halved to 2.64% - a drop of 59.4%. Many of you reading this will remember the 15% mortgage rates of 1992!

 

The fact is, mortgage repayments take up a considerably smaller proportion of take home pay, on average, than they did before the Credit Crunch or in the late 1980’s. Although the risk that mortgage rates will increase if the Bank of England put up interest rates might leave some homeowners in a difficult position – hence I might suggest (if you haven’t already) you seriously consider fixing your mortgage rate (remember to take advice from a professional before you do).

 

Yet look at the data in even greater detail and you will see, going back to the 1960’s, we weren’t always the huge homeowning nation we always thought we were.

 

Today, 4.5% less 35 to 44-year olds and 33.5% more 45 to 54-year olds own their own home compared to 1969. So as the younger generation in Maidstone has seen homeownership drop in the medium term, they will in fact end up inheriting the homes of their parents. We are turning into a more European (especially German) model of homeownership, where people buy their first home in their 50’s instead of their 20’s.

 

My message to first time buyers of Maidstone is go and get some mortgage advice!  The cost of renting smaller starter homes is between 20% and 25% more than the mortgage payments would be. 95% mortgages (meaning a 5% deposit is required) have been available since late 2009 and some banks even do 100% mortgages (i.e. no deposit) .. I suggest that you don’t assume you can’t get a mortgage – for the sake of a 45 minute chat with a mortgage adviser – you get a straight answer and all the information you need.

 

Therefore, what does this mean for homeowners and landlords of Maidstone? Well, for many tenants, renting is a positive choice and as we aren’t building enough homes to meet current demand, let alone eating into the lack of building over the last 35 years, demand will outstrip supply, home values will, over the medium to long term, rise above inflation – meaning it will be a good overall investment as demand for rental properties increases. Good news for Maidstone landlords and Maidstone homeowners alike.

 

The single biggest issue in the Country (and Maidstone) today is that we aren’t building enough homes. I know it seems the local area is covered with building sites – yet looking at the actual numbers – we still aren’t building enough homes to live in. Residential property only takes up 1.2% of all the land in the Country – and whilst I’m not suggesting we build housing estates on National Trust land or cut down forests, until we realize that we aren’t building enough .. this issue will only continue to get worse.

 

 

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