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!)
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