22,732 People Live in Rented Accommodation in Ashford

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That number surprised you didn’t it? With the General Election done, I thought it time to reflect on renting’s prominence in the party manifestos and political broadcasts and ask why?

Often the best way to predict the future is to look to the past, so looking at the number of people who rented a century ago (1920’s), surprisingly 76% of people rented their home in the UK (as renting then was considered the norm). Yet in the latter part of the 1920’s, builders of the suburban housing estates with their bay fronted semis started to sell the dream of home ownership to smart renters.

Up until the mid 1920’s, the mortgage had been seen as a millstone around your neck. Now, with some clever marketing by those same builders, it started to be seen as a shrewd long-term investment to buy your own home with a mortgage. It fuelled the ambitions and goals of the up and coming well-to-do working class who re-styled themselves as lower-middle class. Meanwhile, the Government (through tax breaks) encouraged people to save in Building Societies whom in turn lent the money to these up and coming new homeowners through mortgages.

Roll the clock forward to the decade of the young Elvis, Chuck Berry, and Bill Haley (1950’s) and still 72% of Brits rented their home. Homeownership had boomed in the preceding 30 years, yet so had council house building. Then, as we entered the 1960’s and 1970’s homeownership started to grow at a higher rate than council housing.

The rate of homeownership started to drop substantially after the mid 1990’s, and now we roll the clock forward to today, there is no stigma at all to renting… everyone is doing it. In fact…

Of the 67,053 residents of Ashford, 22,732 rent their home… 

from either the council, housing association or a private landlord – meaning 33.9% of Ashford people are tenants. Yet read the Daily Mail, and you would think the idea of homeownership is deeply embedded in the British soul?

42,868 Ashford people live in an owner-occupied property (63.9%)

So, a nation of  homeowners – or renters? I noticed on the run up to the Election that housing was used as a way to get votes. This is nothing new, all parties have always used housing to get votes, although previously it was about which party would build more council houses in the 1950’s through to council Right to Buy with Thatcher (and everyone since) – running election campaigns promising everybody their own home in one way or another.

Yet, did you notice at this election something changed? The parties weren’t talking so much about increasing homeownership but about protecting the tenant. It seems the link between homeownership as the main goal of British life is starting to change as we are slowly turning to a more European way of living. Make no mistake – renting is here to stay in Ashford and growing year on year. You see, in Britain there is no property tax based on ownership, which many other western countries have. Instead Council Tax is paid by the occupier of the home (meaning the tenant pays – not the owner).

Both parties wanted to end no-fault evictions (which is a good thing), yet Labour went further and mentioned rent controls in their manifesto. As I have mentioned before in other articles on the Ashford property market, rents since 2008 (even in central London) have not kept up with inflation – so again was that another headline to grab votes/election bribe? The fact is the majority of new British households formed since the Millennium can now expect to rent from a private landlord for life – therefore the parties’ focus on this important demographic.

Yet even with the new mortgage relief tax rules for landlords and the 200+ pieces of legislation that govern the private rental sector, buy to let remains a viable investment option for most investors in Ashford. There has never been a better time to purchase buy to let property in Ashford … but buy wisely. Gone are the days when you would make a profit on anything with four walls and a roof – Most importantly do your homework, take advice and consider your options.

Labour’s U-turn on the £303,990,507 Cash-Grab on Ashford Landlords’ Wallets

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Well, with the General Election just over the horizon and having been asked by a number of Ashford homeowners and Ashford buy to let landlords what the different main parties’ policies would do to the local property market, in this week’s article we focus on Labour’s contentious Right to Buy proposal for private tenants. Launched in September, the plan was designed to force landlords to sell their buy to let investments to their tenants who wished to buy them…. at a substantial discount.

Shadow Chancellor John McDonnell told the FT in September that, under a new Labour government, tenants would be given the Right to Buy their tenanted home with a hefty discount – just like the Tory Right to Buy policy for Council house renters that came into force after the 1979 General Election.

Yet it was not certain who would have been expected to pay for discounts on buy to let homes sold to tenants. Four years ago, Jeremy Corbyn advocated using the £14bn of tax allowances that UK landlords had at the time to pay for these discounts, allowing tenants to buy their tenanted home at the same discount as they would a local authority home without leaving the landlord out of pocket.

However, these tax allowances have been substantially reduced with the changes in the way mortgage interest relief on landlords’ mortgages is calculated, meaning that this method of funding would no longer be feasible. In fact, bankrolling a project at a modest 20% discount for the whole of the UK would cost £177.84bn; a lot more than the £14billion quoted by Mr Corbyn. So, what would that policy cost Ashford landlords?

Labours policy of 20% Right to Buy discount could cost Ashford landlords £303,990,507! 

… and if Ashford tenants got the maximum discount of 35% that Council tenants receive with the Right to Buy scheme that would cost Ashford landlords £531,983,387.

However, it appears Mr McDonnell has re-considered the original suggestion and done a (slight) U-turn, stating it should apply only to the richest landlords and not those who only own a couple of rental properties. He was quoted in The Times as saying, “There’s a large number of individuals or families who have bought another property as an asset for the future and we wouldn’t want to endanger that”.

Yet, even this somewhat watered-down account still creates threats to the private rental sector and Ashford’s overall stock of private rented homes. John McDonnell seems to have altered his initial thought to permit all private tenants the right to buy from their landlords to apply only to those with more than a couple of buy to let properties. The shift appears to be aimed at pacifying middle England’s small time landlords who are probably swing voters with smaller property investments and instead, Labour’s focus is on the larger scale buy to let investors. Looking at the stats, and being generous that we are only looking at landlords with 6 or more (not the couple that Mr McConnell suggested) …… 

Of the 4,545 rental properties in Ashford, 1,241 are owned by Ashford landlords with 6 or more properties in their portfolio

If targeted, these larger scale landlords would unquestionably leave the property market in their hordes if their buy to let investments could be so easily destabilised. There would be mass sell offs before the legislation even became law, thus making tenants homeless (and who would then house them?) ..and even if that didn’t happen, it would be very damaging and someone (probably landlords) would have to stump up the £48.54bn national bill (£83,003,789 in Ashford alone).

If Labour really want to fix the property market, it needs long term certainty and confidence, yet their policies would instantly challenge this.

And don’t think I am just Labour bashing here – the Tory 2014 Help to Buy scheme hasn’t really helped either as their scheme, which gave first time buyers (FTB) a 20% interest free loan, if they put down a 5% deposit, has been a cash-cow for home builders.

The Tories announced recently another £10bn of taxpayer’s money will be pumped into a scheme which, quite frankly, wasn’t needed to boost an already decent property market. The banks were already giving 95% first time buyer (FTB) mortgages from 2010 and the Help to Buy scheme was only allowed on new homes purchases, meaning it didn’t help the larger second-hand market.

That £10bn could have been far better spent building Council houses, not helping the large PLC builders line their pockets with Public cash.

Are the Tories Selling Off the Last of the Family Silver? 677 Ashford Housing Association Households & the Right to Buy Their Homes

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In 1979, Margaret Thatcher was voted in on a Tory landslide with the ‘right to buy your own council house’ being a mainstay of Conservative policy. She encouraged people to buy their council flats and houses, although it might interest you to know the council tenant right to buy idea was first proposed in the late 1950s as part of a Labour manifesto.

Maggie’s version was based on massive discounts for tenants and 100% mortgages (no deposit required). However, the real bugbear was that half the monies raised from the council house sales went to central Government coffers with the other half having to be used to reduce local authorities’ debt rather than building new houses – so houses were rapidly being sold but not replaced!

4,752 council homes in the Ashford area have been bought in the last 40 years (an average 119 per year)

Interestingly, in 2012 the Tories relaxed the rules for right to buy and raised the highest discount on a property to £75,000 (it has subsequently been increased further, to £100,000, in some parts of the UK) with 166 council houses sold locally since the rule change, raising £20,946,538 since 2012 alone.

The issue, noted by many existing council house tenants, is that those tenants turned homeowners subsequently sell on their ex-council homes at a huge profit, meaning the demographics of those areas has become ever more transient – more specifically, properties that were once council homes are now owned by buy-to-let landlords renting them out on a short-term basis.

Yet up to this point in time, nothing has been said about the ‘other’ type of social housing – housing association properties. Whilst council houses are properties owned by the local authority providing low cost social housing, housing associations also provide lower-cost social housing for people in need of a home, yet they are private, non-profit making organisations.

The Tories state one of the biggest divides in our British society is between those who can and those who cannot afford their own home, so plan to establish a new national model for shared ownership which allows people in new housing association properties to buy a proportion of their home while paying a lower/subsidised rent on the remaining part – helping thousands of lower income earners get a step onto the housing ladder.

So, what for the tenants of the existing 677 housing association households in Ashford? The Conservatives have said they will work with housing associations on a voluntary basis to determine what right to buy offer could be made to those Ashford tenants, although there are already existing rules which give most housing association tenants the right to buy their home, although with only modest discounts of £9,000 to £16,000 depending on where you live. So, what does all this mean for the current homeowners and landlords of Ashford properties?

The Tories sold off 3,581 council houses in Ashford whilst in power between 1979 and 1997

This really created waves in the 1980s housing market and was a contributary factor to the housing crash of 1987 when Dual-MIRAS tax relief was removed by Nigel Lawson. By selling off council housing in those depressed years they were accused of selling off the family silver cheaply, thus creating the foundations of the buy-to-let boom of the early to mid-2000s because of the major shortage of affordable housing being sold in the previous two decades.

But note this time around, the Tories state it is just for new housing association properties, not existing ones. Also, tenants will only have the right to shared ownership – NOT OUTRIGHT OWNERSHIP. This policy will therefore have hardly any effect … unlike Thatcher’s policies of 1979.

 

Ashford Property Market and Mysterious Politics of the General Election

 

As the dust starts to settle on the various unread General Election party manifestos, with their ‘bran-bucket’ made up numbers, life goes back to normal as political rhetoric on social media is replaced with pictures of cats and people’s lunch. Joking aside though, all the political parties promised so much on the housing front in their manifestos, should they be elected at the General Election. In hindsight, irrespective of party, they seldom deliver on those promises.

Housing has always been the Cinderella issue at General Elections. Policing, NHS, Education, Tax and Pensions etc., are always headline grabbing stuff and always seem to ‘go to the ball’. However, housing, which directly affects all our lives, always seems to get left behind and forgotten.  Nonetheless, the way the politicians act on housing can have a fundamental effect on the wellbeing of the UK Plc and the nation as a whole.

Right to Buy

One policy that always comes to mind is Margaret Thatcher’s Council House Right to Buy sell off in the 1980’s, when around 1.4m council houses went from public to private ownership. It was a great vote winner at the time (it helped her win three General Elections in a row) but it has meant the current generation of 20 somethings in Ashford (and across the country) don’t have that option of going into a council house. This has been a huge contributing factor in the rise of the private renting and buy to let in Ashford over the last 15 years.

Nevertheless, looking back to the start of the Millennium, Labour set the national target for new house building at 200,000 new homes a year (and at one point that target increased to 240,000 for a couple of years). In terms of what was actually built, the figures did rise in the mid Noughties from 186,000 properties built in 2004 to an impressive 224,000 in 2007 (the highest since the early 1980’s) as the economy grew.

Then the Credit Crunch hit. It is interesting, that the 2010 Cameron/Clegg government did things a little differently. The fallout of the Credit Crunch meant a lot less homes were built, so instead of tackling that head on, the coalition side-stepped the target of the number of new homes to build and offered a paltry £400m fund to help kick start the housing market (a figure that was a drop in the ocean when you consider an average UK property was worth around £230,000 in 2010). The number of new houses being completed dipped from 146,800 in 2011 to only 135,500 the subsequent year.

210,000 New Households per Year

So, one might ask exactly how many new homes do we need to build per year? It is commonly accepted that not enough new properties are being built to meet the rising need for homes to live in. Despite a report by the Government in 2016, showing that, on average, 210,000 additional new households will be formed each year up to 2039 (through increased birth rates, immigration, people living longer, lifestyle (i.e. divorce) and people living by themselves more commonly than 30 years ago), in 2016 only 140,600 homes were built … simply not enough!

Looking at the numbers locally in the Ashford Borough Council’s area it is obvious to me that Ashford, as an area, is not pulling it’s weight either when it comes to building new homes. In the 12 months up to the end of Q1 2017, only 500 properties were built in the Ashford District Council area. Go back to 2007, that figure was 840, 10 years before that in 1997, 430 new homes and further back to 1988, 730 new homes were built.

Political Will

Who knows if Teresa May’s Government will last the full five years? She will doubtless think she has bigger fish to fry with Brexit to get bogged down with housing issues. But let me leave you with one final thought.

The conceivable rewards in providing a place to live for the public on a massive house building programme can be enormous, as previous Tory PM’s have found out. In 1951 Winston Churchill asked his Minister for Housing, Harold Macmillan, if he could guarantee the construction of 300,000 new properties a year, he was notoriously told: “It is a gamble—it will make or mar your political career, but every humble home will bless your name if you succeed.”

Isn’t it interesting that the Tories then remained in power until 1964! Mrs May will have to work out if she wants to be the heiress to Harold Macmillan or David Cameron?

 

Taylors Residential Lettings Limited, Company no. 6002742, Regd Office: Suite 1, Invicta Business Centre, Monument Way, Ashford TN24 0HB