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Canterbury Rents Set to Rise to £1,471pm in Next 5 Years

Canterbury Rents Set to Rise to £1,471pm in Next 5 Years

It’s now been a good 12/18 months since annual rental price inflation in Canterbury peaked at 3.4%. Since then we have seen increasingly more humble rent increases. In fact, in certain parts of the Canterbury rental market over the autumn, the rental market saw some slight falls in rents. So, could this be the earliest indication that the trend of high rent increases seen over the last few years, may now be starting to buck that trend?


Well, possibly in the short term, but in the coming few years, it is my opinion Canterbury rents will regain their upward trend and continue to increase as demand for Canterbury rental property will outstrip supply, and this is why.


The only counterbalance to that improved rental growth would be to meaningfully increase rental stock (i.e. the number of rental properties in Canterbury). However, because of the Government’s new taxes on landlords being introduced between 2017 and 2021, that means buy-to-let has (and will) be less attractive in the short term for certain types of landlords (meaning less new properties will be bought to let out).


Interestingly, countless market experts assumed at the start of 2017, that the number of mayan riviera villa rental properties would in fact drop throughout the year. The assumption being as the new tax rules for landlords started to kick in, landlords looked to kick their tenants out, sell up and invest their capital elsewhere. (Although ironically that would lower supply of rental properties, decreasing the supply, meaning rents would increase again!).


Anecdotal evidence suggests, confirmed by my discussions with fellow property, accountancy and banking professionals in Canterbury, that Canterbury landlords are (instead of selling up on masse), actually either (1) re-mortgaging their Canterbury buy-to-let properties instead or (2) converting their rental portfolios into limited companies to side step the new taxation rules.

The housing market is influenced by the state of the economy, interest rates, real income and changes in the size of the population. As well as these demand-side factors, house prices will be determined by available supply. With periods of rising demand and limited supply, we will see rising house prices, rising rents and increased risk of homelessness.

Main factors that affect the housing market

  • Economic growth. Demand for housing is dependent upon income. With higher economic growth and rising incomes, people will be able to spend more on houses; this will increase demand and push up prices. In fact, demand for housing is often noted to be income elastic (luxury good); rising incomes leading to a bigger % of income being spent on houses. Similarly, in a recession, falling incomes will mean people can’t afford to buy and those who lose their job may fall behind on their mortgage payments and end up with their home repossessed.
  • Unemployment. Related to economic growth is unemployment. When unemployment is rising, fewer people will be able to afford a house. But, even the fear of unemployment may discourage people from entering the property market.
  • Interest rates. Interest rates affect the cost of monthly mortgage payments. A period of high-interest rates will increase cost of mortgage payments and will cause lower demand for buying a house. High-interest rates make renting relatively more attractive compared to buying. Interest rates have a bigger effect if homeowners have large variable mortgages. For example, in 1990-92, the sharp rise in interest rates caused a very steep fall in UK house prices because many homeowners couldn’t afford the rise in interest rates.
  • Consumer confidence. Confidence is important for determining whether people want to take the risk of taking out a mortgage. In particular expectations towards the housing market is important; if people fear house prices could fall, people will defer buying.
  • Mortgage availability. In the boom years of 1996-2006, many banks were very keen to lend mortgages. They allowed people to borrow large income multiples (e.g. five times income). Also, banks required very low deposits (e.g. 100% mortgages). This ease of getting a mortgage meant that demand for housing increased as more people were now able to buy. However, since the credit crunch of 2007, banks and building societies struggled to raise funds for lending on the money markets. Therefore, they have tightened their lending criteria requiring a bigger deposit to buy a house. This has reduced the availability of mortgages and demand fell.
  • Supply. A shortage of supply pushes up prices. Excess supply will cause prices to fall. For example, in the Irish property boom of 1996-2006, an estimated 700,000 new houses were built. When the property market collapsed, the market was left with a fundamental oversupply. Vacancy rates reached 15%, and with supply greater than demand, prices fell.

By contrast, in the UK, housing supply fell behind demand. With a shortage, UK house prices didn’t fall as much as in Ireland and soon recovered – despite the ongoing credit crunch.

The supply of housing depends on existing stock and new house builds. Supply of housing tends to be quite inelastic because to get planning permission and build houses is a time-consuming process. Periods of rising house prices may not cause an equivalent rise in supply, especially in countries like the UK, with limited land for home-building.

  • Affordability/house prices to earnings. The ratio of house prices to earnings influences the demand. As house prices rise relative to income, you would expect fewer people to be able to afford. For example, in the 2007 boom, the ratio of house prices to income rose to 5. At this level, house prices were relatively expensive, and we saw a correction with house prices falling.Another way of looking at the affordability of housing is to look at the percentage of take-home pay that is spent on mortgages. This takes into account both house prices, but mainly interest rates and the cost of monthly mortgage payments. In late 1989, we see housing become very unaffordable because of rising interest rates. This caused a sharp fall in prices in 1990-92.
  • Geographical factors. Many housing markets are highly geographical. For example, national house prices may be falling, but some areas (e.g. London, Oxford) may still see rising prices. Desirable areas can buck market trends as demand is high, and supply limited. For example, houses near good schools or a good rail link may have a significant premium to other areas.

The sentiment of many Canterbury landlords is that property has always weathered the many stock market crashes and runs in the last 50 years. There is something inheritably understandable about bricks and mortar – compared to the voodoo magic of the stock market and other exotic investment vehicles like debentures and crypto-currency as Bitcoin that is really popular now a days and exist many sites online that are solely dedicated to this kind of trading, and if you invest enough you may even get some free bitcoins online. You can also use Bitcoin Trader Test the latest and hottest new software to hit the market. It is a lightning fast, laser accurate method of pinpointing the right times to buy and sell Bitcoin, the hottest market in financial trading today. Buy some clay chiminea today and get back on your home investment today.


Remarkably, there is some good news for tenants, as Tory’s recently published the draft Tenants’ Fee Bill, which is designed to prohibit the charging of tenants lettings fees on set up of the tenancy. However, looking at evidence in Scotland, I expect rents to rise to compensate landlords, thus hammering faithful tenants looking for long-term tenancy agreements the hardest. This growth will be on top of any usual organic rent growth. It really is swings and roundabouts!


So, what does this all mean for landlords and tenants in Canterbury? In my considered opinion,


Rents in Canterbury over the next 5 years will rise by 9.2%, taking the average rent for a Canterbury property from £1,347 per month to £1,471 per month.


To put all that into perspective though, rents in Canterbury over the last 12 years have risen by 21.5%. In fact, that rise won’t be a straight-line growth either, because I have to take into account the national and local Canterbury economy, demand and supply of rental property, interest rates, Brexit and other external factors.



In the past, making money from Canterbury buy-to-let property was as easy as falling off a log. But with these new tax rules, new rental regulations and the overall changing dynamics of the Canterbury property market, as a Canterbury landlord, you are going to need work smarter and have every piece of information, advice and opinion to hand on the Canterbury, Regional and National property market’s, to enable you to continue to make money.

One place for that information is the Canterbury Property Market blog -


Robert Brady

Sales and Lettings Director

01227 812864


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