There is no escaping the fact that, over the last couple of decades, the rise in the number buy to let properties in Ashford has been nothing short of extraordinary.
The“left-leaning” press tell of a broken nation, citing many youngsters are unable to buy their first home with the rise of the so-called ‘Generation Rent’, whilst greedy landlords hoover up all available properties for their buy to let property empires.
Government has also been blamed for giving landlords an unfair advantage within the tax system. It is also true many in the property industry have done little to bathe themselves in glory with some suspect if not – on occasions – downright dubious practices.
Yet has the denigration and criticism of Ashford landlords gone too far?
Only a few weeks ago, I read an online newspaper article of one landlord who had decided to sell their relatively modest buy to let portfolio for a combination of reasons, one of which being the new tax rules on buy to let that were introduced last year. The comments section of the newspaper and the associated social media posts were of pure hate and venom and were most certainly not deserved.
As with all aspects in life, there are good and bad landlords as well as good and bad letting agents … and so, it should be said, both good and bad tenants in similar measure. Bad letting agents and bad landlords should be routed out … but not at the expense of the good and decent vast majority.
But are the 1,777 Ashford portfolio buy to let landlords at fault?
The Tories enticed people to buy their own Council house in the 1980’s, thus taking those homes out of the collective pot of social rented housing for future generations to rent.
Landlords have been vilified by many, as it has been suggested by some they have the unhealthy and ravenous avarice to make cash and profit at the expense of poor renters, unable to buy their first home. Yet, looking beyond the headline grabbing press, this is in fact ‘fake news’.
There are seven reasons that have created the perfect storm for private renting to explode in the 2000’s:
To start with, the Housing Acts of 1988 and 1996 gave buy to let landlords the right to remove tenants after six months, without the need for fault. The 1996 Act, and its changes, meant banks and building societies could start to lend on buy to let properties, knowing if the mortgage payments weren’t kept up to date, the property could be repossessed without the issue of sitting tenants being in the property for many years (even decades!) … meaning in 1997, buy to let mortgages were born… and this, my blog reading friends, is where the problem got started.
Secondly, in the early 2000’s, those same building societies and banks were hugely relaxing their lending criteria, with self-certification (i.e. you did not need to prove your income), mortgages of 8 times annual salary and, most helpfully, interest-only mortgage deals that helped to keep the monthly repayments inexpensive – in most cases, much less than the monthly rental yielded by the mortgaged property concerned.
Thirdly, the totally inadequate rate at which Council Houses (aka Local Authority Housing) have been built in the last two decades and (so I’m not accused of Tory bashing) – can you believe Labour built only 6,510 Council Houses in the WHOLE OF THE UK between 1997 and 2010?
To give the Conservatives their due, they have built 20,840 Council Houses since they came to power in 2010 (although this is still inadequate when compared to the 142,000 Council Houses built nationally per year in the 1960’s and 1970’s). Thus people who would ordinarily have rented from the Local Authority, had no Council House to rent (because they had been sold), so they rented privately.
And then 3rd, 4th, 5th, 6th and 7th.…
• Less private home building (again look at the graph) over the last two decades.
• A loss of conviction in personal pensions meant people were looking for a better place to invest their retirement savings.
• Ultra-low interest rates for the last nine years since the Credit Crunch meaning borrowing was unprecedentedly cheap.
• A massive increase in EU migration from 2004 – Eight new Eastern European members joining the EU brought 1.4m people coming to the UK from those countries – and they all needed somewhere to live.
Thus, we got the perfect storm conditions for an eruption in the Ashford Private Rented Sector
Commercially speaking, purchasing an Ashford property has been undoubtedly the best thing anyone could have done with their hard-earned savings since 1998, where property values in Ashford have risen by 271.15%…
…and based on the average rental in Ashford, earned £239,112 in rent!
Yet, the younger generation have lost out, as they are now generally perceived as being incapable of getting on the property ladder (especially in Central London).
The Government have over the last few years started to redress the imbalance, increasing taxes for landlords, together with the Banks being tighter on their lending criteria meaning the heady days of the Noughties are long gone for Ashford landlords. In the past 20 years, anything but everything made money in property and it was easy as falling off a log to make money in buy to let in Ashford – but not anymore.
Being a letting agent has evolved from simply being a glorified rent collector to a trusted advisor giving specific portfolio strategy planning on a landlord’s buy to let portfolio. I have had a few instances recently, particularly a couple of portfolio landlords, one from Sellindge who wanted stable retirement income from his Buy to Lets and the other from Aldington, wanting to generate a decent chunk of cash for his grandchildren to enable them to buy their own home in 10-15 years’ time.
Both of these landlords’ portfolios were going to woefully miss their respective targets and expectations, so over the last six-nine months, they have refinanced their properties, also selling a few of their properties, and purchased other types of Ashford property to enable them to hit their future goals (some properties in Ashford are better for income and some are better for capital growth) … and that my blog reading friends is what ‘portfolio strategy planning’ is!
If you think you might need some ‘portfolio strategy planning’, whether you are a landlord of ours or not (because back then the Aldington landlord wasn’t)… drop me line or give the office a call. Thank you for reading.