Friday 20 February 2015

Top Places To Make Money in London

Yes, as the title suggests Southwark is a top target for shrewd investors who are leaving over-saturated markets for pastures new. Southwark is home to universally recognised and iconic landmarks such as the Globe and the Shard and this property finds itself tucked away within this catchment area. 

To find a two double bedroom property that oozes class in the form of a new heating system and radiators, touch-screen thermostats that control the under floor heating in the bathroom as well as the kitchen and it has been completely rewired throughout too; with wooden floors, (that’s oak flooring not just the tacky beech effect some people gravitate towards like a bull does to a matador)! The lease has a whopping 115 years left, service charge is a puny £750, with just a symbolic £10 annual ground rent. Does one need more convincing? 

Regeneration has already started here, with a gorgeous modern building (along with all the prestigious cars that grace it’s entrance) positioned adjacent to Aylesbury House, but of course it has; with the anticipated growth it is surely primed to capitalise on in the medium to long term. This property should rent in the region of £330-350 per week that gives a potential investor nearly 6% yield if bought for the full asking price.

On top of all this, it belongs to a borough that is recognised as the place to be right now largely due to the 21.5% growth that the area is expecting to witness as reported in the Telegraph in February 20015. We do not anticipate for this property to stay on the market for particularly long as the last one we marketed nearby sold in 2 weeks.

Brook W
Sales Negotiator

Monday 16 February 2015

Deal of the week, and it's only Monday!

Buy-to-let investors looking for a great yield should look no further than this great 3 bedroom purpose built flat in Streatham Hill. With an expected rental income of £425 per week equalling £22,100 per year, even at the asking price of £275,000 this gives any prospective buyer a yield of just over 8%. With long term fixed rate mortgages of up to 10 years with rates around 2% becoming available on the market this would look like a very sensible purchase.

With the Streatham Hill property market currently booming and benefitting from buyers looking further afield to find somewhere affordable, any potential investor would also be buying into a market which is likely to provide them with an excellent level of capital appreciation in the medium term, on top of an attractive yield. The property itself, with a total internal area of 836 sq ft, is the size of a small house. Over two levels with a large eat-in kitchen, spacious separate reception downstairs leading to a private balcony, three bedrooms upstairs along with the bathroom and a second WC. The location is excellent too, being just a short walk Tulse Hill station, as well as all of the shops and amenities of Tulse Hill – this represents fantastic value for money.

If you have any questions about a buy-to-let purchase you’ve got your eye on by all means drop me a line on email or call the office on 020 3397 2099; I’d be happy to help.

Richard Thompson
Sales Manager


Friday 13 February 2015

Capital Appreciation vs Rental Yield

It’s an age-old debate: do I buy something “nice” and hope for long-term capital appreciation, or do I buy something a bit less easy on the eye and get a brilliant rental yield?

Take this property as an example:

At first glance it appears to be a spacious three bedroom property with private garden.  On a second look we realise it’s a usually avoided high-rise tower block.  But wait, we have 3 double bedrooms in zone 2 with excellent transport links to the City, and just a stone’s throw from Battersea Park.

So what makes this such a wise investment?  Surely investing in a Victorian property is a more attractive proposition?  Let’s look at this in more depth, comparing with a 3 bedroom Victorian mansion block flat on Prince of Wales drive, just around the corner. 

Bought for £470,000 in 2001 and sold for £790,000 in 2010 the Victorian flat has seen price growth of 5.7% a year.  Average rents at the time of purchase would give a yield of 5% a year.  How does that compare with our ex-local flat?  Bought in 2001 for £82,500 and sold in 2011 for £144,000 it’s seen 5.7% a year price growth as well.  And the rental yield?  At the time of purchase you’d be enjoying a 15% return on your investment.

With identical price growth and a far superior rental yield, it’s easy to see why investing in ex-local authority properties is the thing to do.  Once you factor in the running costs associated with period properties (endless repairs, high service charges – for mansion blocks that is - , costly lease extensions etc.) investing in ex-local authority flats becomes an even more attractive proposition.

For ultimate peace of mind and a truly hassle-free investment I’d suggest asking your lettings agent to look after your property for you.  Naturally XanderMatthew offers a full management service.  To find out what we can do to make your life easier, just give us a call on 020 3397 2099.

If you have any investments you’d like to run by me to see what they’d yield long term, do get in touch.

All-time low rates, so repay, right? No, borrow more!

A client asked me for my advice on a buy-to-let investment not so long ago. He said he had £200,000 saved up for an investment property and wanted my advice on what to buy. He was looking to get a small mortgage of £50,000 and hence get a good difference between the monthly rent and the interest payments on the loan. Very sensible.

We had worked out that over the years his property would go up in value and stand the test of time, and also give him a kitty for when things went wrong. Plenty of money in that kitty; from experience more than is strictly necessary. I posed the question “what if I could show you how to buy two properties with the same money and you can DOUBLE your gains?” He was interested.

You see here is “le grand truc…” By taking the remaining £150,000 in our example and investing it in further properties you could quadruple your capital gains over time. You wouldn’t quadruple your cash flow as your interest payments would gobble some of that up, but nonetheless the crude example below illustrates my point: by investing borrowed money into further property you will be better off than choosing to borrow less money - you will increase your capital gains over time.

Example: (based on tax rate of 40% earnings between £31,866 and £150,000)
Purchase Price
 £    250,000
 £    250,000
Annual Rental Income:
 £      15,600
 £      15,600
 £    200,000
 £      50,000
 £      50,000
 £    200,000
Interest Rate
Annual Interest
 £        1,250
 £        5,000
Yield before other costs
 £      14,350
 £      10,600
Net after tax:
 £        8,610
 £        6,360

If we estimate an average price rise of 8% on a property value of £250,000 it would be worth £539,731.25 in 10 years’ time. If you had one property you would gain £289,731.25 (excluding costs of course). Imagine if you had 3 or 4…

If you have any questions or would like to get in touch to talk property, drop me a line on email or call 020 3397 2099.

Thursday 12 February 2015

Hot Property in Cold Weather

What has the lettings market of 2015 told us thus far?

We have found in the past that January was an extremely busy month. Up until 2013 we would say it was the busiest month of the first two quarters. This was driven by relationships made and broken over Christmas and New Year’s resolutions to find a new home. We found that one and two bedroom properties were most popular in the early part of the year leading up to Spring.

2014 and 2015 have been different. A different trend is emerging.

This year and last we have noticed that there is a much higher demand for three and four bedroom homes. These offer a lower rent per person and are being snapped up quicker than they would have been a couple of years ago. I feel the main contributing factor is that tenants are now looking for bargains to minimise their spend on rent every month. This has also led to more and more tenants pairing up through on room share sites and through flat-mating events (equivalent of speed dating for a flat mate, could lead to romance - who knows?). in summary the cheaper one and two bedroom flats will still let relatively quickly but any landlords looking to achieve a large rent increase will have to be a little more realistic or may end up being left disappointed with an unexpected void period!

And so we conclude… 2015 so far has left us hunting for bigger properties!

Tuesday 10 February 2015

£1000pw with nearly 7% gross yield - Clapham SW4

£1000pw with nearly 7% gross yield

Branch Manager at XanderMatthew

Currently for sale is this 6 bedroom house on Aristotle Road SW4. An ideal buy-to-let if you are able to go the extra mile and comply with HMO regulations. I classify this property a good find for professional sharers, offering excellent living accommodation (1500sqft) with mostly large double bedrooms. The property includes the necessities such as garden, garage and a nice open-plan kitchen/living, features that professional people will be considering upon their search. You won’t secure a better location to invest in, with this particular property situated right next to the underground tube (Clapham North) station and within close proximity of Clapham High Street which offers an array of fine restaurants, bars and the vibrant nightlife one seeks within this location. This is an exceptional opportunity for investment purposes, resulting in a high yield and attracting the finest tenants. I estimate £1000pw, yielding nearly 7% at asking price. Properties of this size are rare and will be snapped up very quickly by a group so low voids are nearly guaranteed. Definitely one for the shortlist. Give us a call on 020 3397 2099 for a price update on your current rental property if you think your tenancy is expiring in the next few months or drop me a line on email.

Friday 6 February 2015

Excellent 3bed ex-local authority maisonette with garden - Clapham North SW9

Another stunner! I came across this one this morning and it is even more attractive than the one from earlier in the week. A three bedroom, split-level, maisonette in Clapham North, right next to the tube station. We have had similar properties in the past, which have achieved offers in excess of the asking price simply due to high yield. With an asking price of £365,000 and a location adjacent to Clapham North Tube and an estimated rental of £475pw it works out to 6.8% gross yield at asking price.

Interested yet?

Remember if you are looking at this investment, or others, feel free to drop me a line either here on the blog or privately via email or give me a ring on 020 3397 2099.

EPC - is your property going to fail?

Energy performance certificates have been around for a number of years now; most sellers and landlords will be aware of their existence. They are however probably not aware of their importance. Granted, up until recently they weren't very important; but that is set to change.

When Brussels imposed the EPC legislation on the UK (again the debate of UK's EU membership lights up, but that’s for another day) it was seen by the estate agency as red tape. "Buyers buy because they love the house, its local transport links, visual appeal and suitability to their requirements, not because they are spending less on their energy bill" was the argument from many an agent, me included. In London even more so, with flats being the home of choice for professional sharers and the bulk of properties in London being terraced houses, flats or perhaps even the odd semi-detached house the saving in energy consumption could have meant less than a £30 per month difference between A and F rated properties. Perhaps more so now (energy prices have risen and inflation has devalued our currency since EPC introduction in 2008), but the consensus was that there was very little attention paid to the energy bill when making a purchasing decision.

This is all set to change from 2016 with the introduction of legislation making it compulsory for landlords to make improvements at tenants' requests in order to make the home more energy efficient; and by 1 April 2018 ALL landlords must upgrade the energy efficiency of the rental properties which are rated F and lower to a minimum of E by April 2018 or they will not be allowed to let until such time improvements are made.

So with this in mind, is your portfolio ready for the government’s continued eco agenda?

Thursday 5 February 2015

Looking for a bargain at auction? Look no further.

Three bedroom apartments are always in high demand with sharers. In my experience they command the least void periods and provided they are refurbished to a high specification they always attract top-notch tenants. Gone are the days where renting a 3bed meant opening the doors to 3 rugby players that party all day and night. The gross of our 3beds are rented to respectable professionals with good jobs. Depending on the specification completely, but tenants range from graduate first-jobbers to qualified accountants, PhD students, doctors and lawyers. Naturally doctors and lawyers don't want cheap IKEA furniture though!

I saw this lot in the auction for 17th February with Savills and it represents an ideal opportunity. With over 100 years left on the lease and situated in a convenient spot between Oval and Stockwell it's ideal for those who want a serene home life and do their socialising in the City.

With Flats 4, 6, 16, 7 and 28 in the block all sold last year for 495k and over it looks like a safe bet, even if works are required. Estimated rental (depending on quality of refurbishment) between £500 and £550pw). I found another one in a neighbouring block too.
More photos on the late sales below, bear in mind most of these are listed as 2bedroom apartments so it would be interesting to compare layouts on the visit if you are indeed going for a look:

Comparable 1 - 28 Cleveland Mansions
Comparable 2 - 6 Cleveland Mansions
Comparable 3 - 4 Cleveland Mansions
Comparable 4 - 33 Aigburth Mansions

Remember, as always, if you do have your eye on an investment property and you'd like to pick my brain to see if it's worthwhile drop me a line: Via email or ring the office for an informal chat: 020 3397 2099.

Wednesday 4 February 2015

Rent controls, do we need them to stop rents from spiralling out of control?

Not a day goes by that we don't hear about the London property market, and namely that rents are astronomically high. Higher than other parts of the country of course. But so are earnings; and food; and transport; and everything for that matter. We are frequently hearing from tenant action groups calling for lowered rents and a fairer deal for tenants. But what about landlords? Nobody is campaigning for lower mortgages and better laws to stop tenants from withholding rents and so forth...

The latest comes in the leadup to the elections with Labour touting Rent Controls as the latest gimmick to sway voters. Or renters should I say. I can't imagine that many landlords would embrace the idea of the government telling them how much rent they can earn from their investment. That's like the government interfering with the stock market, limiting the rise and fall of share prices.

One argues that renters are being squeezed out due to rents being unaffordable, and research suggests* that 77% of private tenants are in favour of rent controls. This would offer them a fairer deal. In the short term. If rent controls are introduced it would no doubt restrict the number of BTL investors, thus reducing the number of homes to rent. Less choice. Which is bad for consumers, in this case the would-be tenants. And consumers/tenants love choice. I can tell you a thing about that, it takes quite a few viewings before a tenant makes a decision on where to live! 20 viewings is not uncommon.

But as the Telegraph would suggest there is no problem to fix. There is no evidence that would-be homeowners are being pushed out of the market. With various help-to-buy schemes helping to fund deposits and so forth there is plenty of assistance. Would rent controls aid this further? Arguable.

With the elections upon us in the not all too distant future we are finding ourselves under attack by promises of fairer deals, lower taxes, more job opportunities, better education and so forth. But if we read past the headlines and the bold statements, does it hold water?

* Source: The Telegraph Online

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