Only 4,044 Council Houses in Medway left – opportunity or problem?
The Right to Buy (RTB) scheme was a policy introduced by Maggie Thatcher in 1980 and 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 1980’s and 90’s, when 1,719,368 homes in the country were sold using the RTB scheme between October 1980 and April 1998.
|Margaret Thatcher but what has her RTB policy resulted in?|
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 Medway homeowners and landlords? Well quite a lot in fact!
Looking at the figures for our local authority, the number of RTB’s have dwindled over the last few years to an average of only 12 per year. Looking at the overall figures, 64,922 Council properties were bought by council tenants in the Kent County Council area between 1980 and 1998 (when Medway formed part of Kent as the unitary authority was formed in 1998 when the City of Rochester-upon-Medway amalgamated with Gillingham Borough Council and part of Kent County Council to form Medway Council). Big numbers by any measure and even more important to the whole Medway property market
Medway first time buyers and landlords can now buy these ex-council properties second hand 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 originally received. The council discount was repayable if the first owner sold within a stipulated time period - usually 5 years.
|Numbers of council homes sold nationwide.|
Now, let us all be honest. 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 Medway buy-to-let property, but in a challenging market, some Medway investors are finding a more no-nonsense down to earth approach brings the largest returns.
Yes, the modern stuff being built in Medway 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 in the property yourself. What an ex-council property may lack in terms of KSA, they more than make up for in other ways. Tenants are more worried about how close the property is to a particular school or to family members for child-care. These will 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 Medway property values are so expensive and,a lot of people still can’t get mortgages to buy. Also, the very fact the council were forced to sell these Medway 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 Medway landlords I say this … don’t dismiss ex-council houses and apartments – but remember the 1st rule of buy to let (see above). However, those very same Medway 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. One source of advice is this very blog. Now, that just leaves the 4,044 council houses still owned by the local authority to be sold to their tenants in the coming years...
Any questions, please email me HERE