Only 8,537 Council Houses in Camberwell area left – Opportunity or problem?
Back in the 1980’s Maggie Thatcher introduced the ‘Right to Buy’ scheme which gave secure council tenants the legal right to buy their council home along with a generous discount to boot. The peak activity for these type of purchases was during the 1980’s, and 1990’s when 1.7 million homes in the country were sold in this manner (Oct 1980 to Apr 1998). Then in 1997, Tony Blair reduced the discount available to tenants of council houses and subsequently the numbers being bought through this scheme started to decline.
So what does this mean for Camberwell homeowners and landlords? Well, quite a lot in fact!
Looking at the figures for Southwark the number of ‘Right to Buys’ have dwindled over the last few years to an average of 138 ‘Right to Buy’ sales per year. If you look at the data for Southwark between 1980 and 1997, 9,527 council properties were purchased via this scheme, which in turn represents 26.9% of the entire privately owned stock in 2011 census. If we try and extrapolate this data down to the Borough of Camberwell then of the 5,989 privately owned houses in 2011 census, 1,534 of these would have been bought via the Right to Buy scheme.
These numbers are significant especially as Camberwell first time buyers and landlords can now buy these ex-council properties second hand as the original 1980’s and 1990’s tenants (now homeowners) have passed the time restriction set down to allow for any clawback of the discount they received. The council discount was repayable if the first owner sold within a stipulated period – usually five years.
If we are all honest, some but not all ex-council houses come with a slight stigma attached them and don’t have the same attractiveness of new developments many of which are dressed up to meet the aspirations of new buyers with on-site gyms and concierges. As a landlord, it’s tempting to base your decision entirely on these factors, but as the buy-to-let market becomes more challenging (with the recent tax changes in the budget), some Camberwell investors are already focusing on the ex-council stock as it means a better return in terms of yields.
I think that most of us can agree, the modern properties being built in Camberwell is lovely, but it is a common mistake of landlords (especially those just starting on their journey) to purchase buy-to-let property based on where they would choose to live themselves, rather than focusing on the key business aspects. i.e., location, who is your market, do your numbers stack up. The first key rule is you’re not going to live there yourself, so you don’t need to buy according to these tastes. With this in mind, ex-council properties are certainly attractive, some have a great location, there are often larger than new builds and as the competition for housing stock increases key things in tenants minds include.
While it can be argued that ex-council properties increase in value at a slower rate than more modern properties this is more than made up with the potential for higher yields – and the social housing built between the wars or just after tend to be really well built. Tenant demand for such properties is good since Camberwell 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 Camberwell 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.
For Camberwell landlords looking to invest make sure you consider ex-council houses and flats, do your homework, check for any large schedule of work bills and do your research into the individual estate’s and make sure you seek 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. Feel free to pop in anytime and discuss such investments with me. We’re always keen to share our knowledge and advice.