Only 7,950 Council Houses in Crawley left – Opportunity or problem?

The ‘Right to Buy’ scheme was a policy introduced by Maggie Thatcher in 1980 which gave secure council tenants the legal right to buy the Council home they were living in with huge discounts. The heyday of Council ‘Right To Buys’ was in the 80’s and 90’s, when 1,719,368 homes in the country were sold in this manner between October 1980 and April 1998. However, in 1997, Tony Blair reduced the discount available to tenants of council houses and the numbers of properties being bought under the Right to Buy declined.

So what does this mean for Crawley homeowners and landlords? Well quite a lot in fact!

Looking at the figures for our local authority, whilst the number of ‘Right to Buys’ have dwindled over the last few years to an average of only 47 ‘Right to Buy’ sales per year, one must look further back in time. Looking at the overall figures, 9,015 Council properties were bought by council tenants in the Crawley Borough Council area between 1980 and 1998. Big numbers by any measure and even more important to the whole Crawley property market (i.e. every Crawley homeowner, Crawley landlord and even Crawley aspiring first time buyers) when you consider these 9,015 properties make up a colossal 35.6% of all the privately owned properties in our area (because in local authority area, there are only 25,303 privately owned properties).

Crawley first time buyers and landlords can now buy these ex-council properties second hand (or the PC brigade like to call them ‘pre-loved ex–local authority dwellings’) as those original 80’s and 90’s tenants (now homeowners) have more than passed the time of any claw back of the discount they received (council discount was repayable if the first owner sold within a stipulated time period - usually 5 years).

Now let us all be honest, some (not all), but some ex-council properties lack the vital KSA that some landlords crave. The new homes builders know all about KSA (or Kerb-Side-Appeal) as they dress up the exteriors of their new homes to make them more appealing to buyers ... and if you don’t believe me ... why do Show homes exist? Going on the exterior looks of a modern property might be a theoretically good way of choosing a Crawley buy-to-let property, but in a challenging market, some Crawley investors are finding a more no-nonsense down to earth approach brings the largest returns.

Yes, the modern stuff being built in Crawley is lovely, but too many landlords purchase buy to let property solely based on where they would choose to live themselves, instead of choosing with a business head and choosing where a tenant would want to live ... because remember the first rule of buy to let property … you aren’t going to live the property yourself. What an ex-council property lack in terms of KSA, they more than make up for in other ways.  Tenants more worried about how close the property is to a particular school or family members for child care matter to them far more than the look of a property.

Whilst ex-council properties tend to increase in value at a slower rate than more modern properties, that is more than made up in the much higher yields – and those built between the wars or just after are really well built. Tenant demand for such properties is good since Crawley property values are so expensive, a lot of people can’t get mortgages to buy, so they will reconcile themselves to renting, meaning there is a good demand for that sort of property to rent. Also, the very fact the council were forced to sell these Crawley properties in the 80’s and 90’s, means that today’s younger generation who would have normally got a council house to live in themselves, now can’t as many were sold ten or twenty years ago.

So to Crawley landlords I say this … don’t dismiss ex-council houses and apartments – but remember the 1^st rule of buy to let (see above). However, those very same Crawley landlords should go in with their eyes open and take lots of advice. Not all ex-council properties are the same and even though they have good demand and high yields, they can also give you other headaches and issues when it comes to the running of the rental property. That just leaves the 7,950 council houses still owned by the local authority to be sold to their tenants in the coming years!

Looking for an investment in Ifield

The highest yields are always to be found on the smaller properties and I’ve seen this little one bedroom maisonette that is true to form.  The photo’s probably do not it justice but with a yield of 5.5% it does have true potential.

http://www.rightmove.co.uk/property-for-sale/property-58958273.html

These maisonettes in Ifield West have a great shape to the living space that allows for distinct areas for lounge & dining – which is unusual in the smaller properties.  They also have enclosed kitchens rather than the current craze of having cookers and washing machines open plan to the main living area.  Because of the detached private garden the conservative rental value would be £750 per month but with some updating and modernisation it could achieve the higher guide of £800.  Ifield West is not best served by public transport but car owners would enjoy the allocated parking space. 

If purchased at the marketing price of £164,950 the yield would be a respectable 5.4% if rented at the lower end of the guide price.

One Bed Maisonette For Sale in Ifield

Has owning a home become an unattainable dream for the 1,528 Crawley 28 year olds

My parents bought their first house in the 1960’s, they were in their early 20’s. Interestingly, looking at some research by the Post Office from a few years ago, in the 1960’s the average age people bought their first house was 23. By the early 1970s, it had reached 27, rising to 28 in the early 1980’s.

This year alone, 1,528 people in Crawley will turn 28 and 1,403 in 2017 .. and dare I say 1,167 in 2018 .. year in year out the conveyor belt carries on .. where are the Crawley youngsters going to live?

Ask a Crawley ‘twenty something’ and they will say they do not expect to buy until they are in their mid thirties - seven years later than the 1980’s. Some people even say they will never be able to buy a property and the newspapers have labelled them ‘Generation Rent’ as they are people born in the 1980s who have no hope of getting on the property ladder. One of the major problems facing young Crawley people is the large deposit needed to get a mortgage .. or is it?

The average price paid for an apartment in Crawley over the last 12 months has been £176,600 meaning our first time buyer would need to save £8,980 as a deposit (as 95% mortgages have been available to first time buyers since 2010) plus a couple of thousand for solicitors and survey costs. A lot of money, but people don’t think anything today of spending a couple of thousand pounds to go on holiday; the latest iPhone upgrade or the latest 4K HD television. That amount could soon be saved if these ‘luxuries’ were withheld over a couple of years but attitudes have changed.

One Bedroom House for sale with Martin & Co with guide price of £175,000 to £190,000

Official figures, from the Office for National Statistics, show the average male in Crawley with a full-time job earns £593.20 per week whilst the average female salary is £498.30 a week, meaning, even if one of them worked part time, they would still comfortably be able to get a mortgage for an apartment.

I was reading a report/survey commissioned by Paragon Mortgages from the autumn of last year. The thing that struck me was that when tenants were asked about their long term housing plans, some 35% of participating tenants intend to remain within the rental sector and 24% intended to buy a house in the future, with the proportion of respondents citing the “unaffordability” of housing as the reason for renting privately increasing from 69% to 74%.

However, time and time again, in the starter home category of property (ie apartments), nine times out of ten the mortgage payments to buy a Crawley property are cheaper than having to rent in Crawley. It is the tenant’s perception that they believe they can’t buy, so choose not to. Renting is now a choice. Tenants can upgrade to bigger and better properties and move up the property ladder quicker than their parents or grand parents (albeit they don’t own the property). Over the last decade, culturally in the UK, there has been a change in the attitude to renting so, unless that attitude changes, I expect that the private rental sector in Crawley (and the UK as a whole) is likely to remain a popular choice for the next twenty plus years. With demand for Crawley rental property unlikely to slow and newly formed households continuing to choose the rental market instead of purchasing a property. I also forecast that renting will continue to offer good value for money for tenants and recommend landlords pursue professional advice and adopt a realistic approach to rental increases to ensure that they are in line with inflation and any void periods are curtailed.