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 Harlow 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 39 ‘Right to Buy’ sales per year, one must look further back in time.
Looking at the overall figures, 9,723 Council properties were bought by council
tenants in the Harlow Council area between 1980 and 1998. Big numbers by any
measure and even more important to the whole Harlow property market (i.e. every
Harlow homeowner, Harlow landlord and even Harlow aspiring first time buyers)
when you consider these 9,723 properties make up a colossal 49.9% of all the
privately owned properties in our area (because in local authority area, there
are only 19,466 privately owned properties).
Harlow 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 Harlow buy-to-let
property, but in a challenging market, some Harlow investors are finding a more
no-nonsense down to earth approach brings the largest returns.
Yes, the modern stuff being built in Harlow 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 Harlow 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 Harlow
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 Harlow 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 Harlow 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 the Harlow Property Blog …. that just leaves the 9,327 council houses
still owned by the local authority to be sold to their tenants in the coming
years!