Thursday, 29 December 2016
We are about to embark on a busy year of investing in Clapham, Brixton and perhaps slightly further afield. Hopefully you have your finance ready and are waiting for the right deal to land in your inbox. But did you know that you could also invest your pension into property? This has the added bonus of many tax benefits.
Together with my esteemed co-host Trevor Cutmore I will be delighted to present the Clapham Property Meet on Tuesday, 31st January at the Bread & Roses, 68 Clapham Manor Street, SW4 6DZ. This month's guest speaker is Mike Holt, active investor for over a decade. Having negotiated over 350 purchases, and continuing to do so, he now specialises in unlocking pensions and allowing investors to access previously locked away funds. Pensions allow access to commercial property but a whole lot more. Mike will run through the options of this very tax-efficient way of investing.
Whether you are an experienced property investor, just starting out, or perhaps have cash sitting on the side lines, I am here to help members to network effectively and find win-win solutions by helping individuals to pursue fresh property investment opportunities.
Do join us if you are interested in property investments, be it local or further afield.
Registration and early networking is between 6-7pm with a top quality speaker as well as the latest on current issues from your hosts between 7-8:30pm. Drinks and further socialising/networking to follow the main event.
Please book your tickets here: https://www.meetup.com/Clapham-property-meet/events/235084445/
I look forward to seeing you there. Do get in touch via email me: email@example.com if you have any questions beforehand. Hope to help you soon to boost your Clapham property investment returns!
Friday, 23 December 2016
Rent growth in London has slowed with annual growth of just 1.6% compared to 3.1% year on year in the rest of the UK, the latest index data shows. This comes to me as somewhat a surprise as London has always bucked the trends when it comes to housing - recovering quicker from crashes and outperforming other parts of the country. Latest data however shows otherwise. Let's look at some factors that could be causing this.
Are landlords selling up to feed the first time buyer market?
It may appear so. After various tax changes (stamp duty and the reduction of mortgage interest relief on rental income it may be a sign that "generation rent" is now slowly becoming "generation FTB" and taking advantage of various incentives to get on the ladder, slowing rental demand. Slowly and steadily though, while buy-to-let transactions have slowed in recent months, there is no evidence of a widespread sell-off by investors associated with the softening of the market. The National Landlords Agency (NLA) had predicted a major sell-off of 500,000 homes by landlords earlier this year due to imminent unfavourable tax changes. More signs that the attack on landlords is nothing more than a tax as it's not quite the "opening of the floodgates" that the media portrayed.
It could very well be that we are experiencing a lower ebb than usual, this simply because there wasn't the usual peak of rental prices in the summer time this year. Reason for that was the significant oversupply caused by the stamp duty increase on 1st April, so many investors moved rather quickly to beat this deadline and save a significant amount of money on stamp duty.
There is continuous talk of "rents can't go any higher" and "when will it stop" but the truth is that there are still plenty of people that are NOT spending a lot of money on rents. There are plenty of tenants that pay under the market rate because their landlord isn't treating their rental property as a business and set a lower than market rent because "they are good tenants." As landlords are facing increased tax bills, increased regulatory compliance costs, and now with the banning of agency fees for tenants on the horizon there will certainly be no other option but to put rents up. I feel that there is still a very long way to go before "rents are unaffordable."
All in all it would appear that London has taken the brunt of the tax changes, especially stamp duty, causing a little bit of disruption in the market. Although concerning as a London investor would expect rents to outperform the rest of the country I feel it's not a cause for concern.
How can I ensure I get the best rents?
A question I get asked rather frequently as you can imagine. Below a few pointers to make sure that you are able to make your letting as profitable as you can - and this doesn't always mean spending the most money on the best property in the best location.
- Make sure you are on top of repairs. It would amaze you to be a fly on the wall, but often tenants do think you are psychic. You should instantly feel it in your bones when something goes wrong in the property. Alas this isn't the case so the best thing to do is to draw out the repair requests. This will benefit you because the tenants will spend less time moaning among themselves that the places is crumbling around them and you will appear to be a responsive landlord.
- Winter - condensation issues. I have lost count the number of times I've been in a property and the tenants don't draw the curtains to let in some light or open the doors to improve ventilation. A condensation/mould no-no for sure. Sunlight kills mould, don't you know! You will have to explain that it's in the tenants' best interest to make sure that air is moving in the property to ensure their lungs stay healthy (and of course you don't want to have to redecorate every year). Heating is another key issue. I always recommend they change utility supplier to a more cost effective one once they come off the "standard rate." so they pay less for their utilities and can afford to heat the property effectively, again to reduce/eliminate damp/mould/smell.
- Ensure that you are firm but fair. Rent late? ask for standing order payments a specified number of days before the rent due date to allow for bank holidays, weekends and so forth. The contract should stipulate it's paid on the rent due date (i.e. it reaches you, the landlord, on the rent due date) so it's not unreasonable for them to make arrangements to get it to you on time, if this means it leaving their account a little earlier.
- Damages midway through the tenancy - it can happen that something gets broken during the tenancy. Remember that the tenants are your customers and pay you handsomely for the privilege of living in your property. If something happens accidentally it's important not to allow emotions to take hold. You can't, after all, expect the tenants to treat the property as well as you would yourself, you have to take some rough with the smooth. A football through the window will however require you to explain that although you'll organise the replacement the cost will be down to them.
- Refinance the property - if you have not remortgaged for some years it's likely that you will have reverted on to a "standard variable" <ahem ripoff> rate. To ensure you are paying the lowest monthly repayments for the amount borrowed you would be wise to see your broker. You may, as I found, be able to release money for reinvestment and STILL be paying less monthly!
- Make sure you have funds for repairs. Agents that manage residential properties are bound by their code of practice to keep a kitty for emergency repairs. Although there is no requirement for you as a landlord to do this, it does make sense. Of course the properties you let are a commercial enterprise, but don't forget to keep some money aside in order to pay for an emergency repair. Especially in the winter those expensive emergency <ahem boiler> repairs will rear their ugly heads!
- Make sure it suits. If your tenants are moving out you may be wise to offer them a slightly discounted rent in order to do some improvements around them (if possible). It's a good time of year to have a planned void, so if it's something like a kitchen or a bathroom that you want to replace it's probably best to leave the property empty. Winter is always the worst time of the year to be letting a property (demand is the lowest, see my previous article about seasonal rents here) so when you bring the property back to market the demand will be picking up, especially thanks to your improvements. Remember not to go cheap, go good value. White gloss kitchens, neutral tiles in the bathroom, etc etc.
In summary - offer the best product you can to command the best price. Repairs are costly. You can't eliminate them but you can reduce their cost by communicating with your tenants. This will reduce the number of hours and pound notes you spend on repairs and in turn increase their length of stay. Changeovers and repairs are costs. Reduce them in numbers for increased returns!
I hope of course that was useful, so I'll leave you with that to mull over. I have helped many investor landlords build profitable investments, so if you are interested in learning more about growing your investments wisely then do get in touch via email me: firstname.lastname@example.org or come down to the Clapham Property Meet and learn more about getting the best returns in the London property market.
Tuesday, 6 December 2016
First time buyers are still buying! What does this mean for the Clapham Property Market in the long run?
Excellent news - the first time buyer market is staying strong, and growing ever more. The National Association of Estate Agents has reported that first time buyers accounted for nearly a third (32%) of all purchases in October - the highest since they started logging this data back in the year 2000.
But what does that mean?
In a nutshell, it's great news! The continued demand from first time buyers will mean that properties at the lower end of the spectrum (starter homes - one and two bedroom flats, anything up to £500k) - will continue to rise in value sharply. A good proportion of these will be former starter homes belonging to now "accidental landlords" (those that couldn't sell at the time so reluctantly held) or couples who perhaps were able to trade up using the old "let to buy" system (letting out their flat whilst remortgaging to release equity for a deposit for the next property). A lot of these non-professional landlords will be selling up due to tax changes, increased regulation and increasing costs in the PRS, making the money made every month (probably not more than a few hundred pounds, dwindling to nothing after a few repairs and a void) not worth their time.
So what happens next?
There are, in my opinion three or four stages to a London purchaser's life. Naturally this is wildly generalised of course, but here is my take:
1. First time buyer, purchases small one or two bedroom flat (50-60sqm)
2. Trades up to bigger flat or even house, perhaps due to growing family (95-110sqm)
2a. Extends existing home
3. Trades up again or
4. Downsizes or leaves London for better value
We now find ourselves in a market where any property £950k plus is disproportionately more expensive due to the increase in stamp duty - a £million purchase would now set you back 73k in SDLT, prior 1/4/2016 this was 30k cheaper. As a result we've seen sales in this segment of the market dwindle some 10-15% depending on which tracker you look at. More people in that segment are therefore staying put; they are finding it difficult to sell. So the top end staying stagnant means that buyers that would have been (3) above now revert to either 2a or 4, skipping a trade up to a nice house in Old Town (but let's face it £1,000,000) can be paid quite easily outside of Old Town too these days).
Let's go back to the bottom of the market. The lion's share of the stock that first time buyers are purchasing right now is stock being offloaded by aforementioned small-time investors, for whatever reason. An equilibrium of supply and demand? Perhaps not because prices are still rising, and pretty sharpish too! A year ago you could find a decent 1bed apartment in Clapham North/Brixton for £400-450k, now you're talking £450-500k for the same thing. For a "woe is Britain, the market is rubbish" market, that's a pretty sharp increase! So not so rubbish after all, FTBs galore chasing limited stock, prices going up. Simple Keynesian economics. I predict that, over time, small-time landlords that haven't sold up yet may do so when they realise their tax bill will increase substantially, further feeding the demand at the bottom of the ladder. However the problem is this: people at the (3) stage, so looking to buy a bigger property than they have, don't move as often, or as quickly. They take a lot more time to deliberate a move. There may be children involved, commutes to important jobs - they are older and therefore have more specific requirements. What they want may not be readily available on the market. So they wait. Patiently. After all they are not in a hurry to move, they are comfortable where they are, they are homeowners, their property is going up in value whilst they wait. Unlike the FTB they are not "wasting" money by paying a landlord's mortgage. So this piece of the pie is very slow. That will cause surge in demand a few years down the line ones all these new first time buyers want to trade up! I predict second properties will be in short supply, leading to a surge in prices. I would like to say the same for the bottom of the market, but I think the slow and phased taxation change will mean that landlords selling off will be gradual over time, drip feeding the supply to the pit of hungry first time buyers. There is no material change on the horizon that would incentivise the middle of the market to move. Instead the stamp duty higher up the ladder means that it is much better value to extend and stay put.
What can we learn from this?
I predict there will be a sudden surge in demand for these (middle of the market) homes in 2018-2020 when this surge of first time buyers decides they have outgrown their properties and want to trade up. If the stamp duty costs in the upper end of the market have not come down by then, we may well see a mass exodus of young families out of Clapham (and this theory can be applied to the rest of zone 2 also of course). Either those that have extended and want a change of scenery, or more truthful you may even get the first time buyers of today moving out because by 2020 I'd be surprised if you could buy a three bedroom terraced house in SW4 for under £1,000,000! The upper end of the market may well stay stagnant for a few years yet until earning power and deposits have caught up. Stamp duty cannot be financed, it needs to be paid like the deposit, it must be money in the bank.
So what does that mean for investment in Clapham?
I feel that there is reasoned argument to deduce that the demand for bigger properties will surge in the next few years. You may be wise now to look at bigger as opposed to smaller units, both for yield (higher rental income per £ spent on purchase) and in the long run, for capital appreciation. I can say from personal and professional experience that 3 bedroom apartments and houses have done well. Whether you buy for yield or capital appreciation both Victorian and old Local Authority units do remarkably well. There is however, more incentive than ever for first time buyers to get on the housing ladder, and with the government's continued attack on the property investor you are sure to see good capital appreciation from a desirable 1 bedroom apartment too, especially Victorian ones. As aforementioned you'd be pressed to find a good one now for under £450k on a desirable road near a tube - just be aware that due to lending tightening up (because of the tax changes) you will find that it will be nigh on impossible to leverage a period property over 70%LTV, normally you'll find you can't get beyond 60-65% due to these stress tests (the lender will simulate the interest rate at 5% and then insist the rent is 1.45 times the rental income).
I have helped many investor landlords build profitable portfolios. If you are interested in learning more about growing your investments wisely then do get in touch. I offer a range of investment options to help you invest - either by helping you purchase property or by helping you fund sustainably profitable property developments. It can be as hands-off or hands-on as you like. Get in touch by emailing me: email@example.com or come down to a meet in Clapham (Clapham Property Meet) and learn more about getting the best returns in the London property market.
Monday, 28 November 2016
Are you interested in learning more about property, investment and otherwise?
Do you want to be inspired by experienced investors that can help you get better results from the outset?
You would like to avoid expensive mistakes, you say?
Great! Come on down to the Clapham Property Meet on Wednesday evening and join my colleagues and me. We'll be discussing the ins and outs of property letting and how to maximise your returns.
The evening will be as follows:
6-7pm Arrival and Networking
7-715pm Trevor and Jeroen welcome fellow investors and provide market update
7:15-7:45pm Jenny Fenton
7:45-8:15pm Trevor & Jeroen's individual slots
8:15-8:30pm Question Time!
8:30-8:40 Introduce yourself to your fellow investors
8:45pm Close and Networking
• Legislation Updates
• Topical discussions such as tax changes and investment strategies
• Monthly Market review; what's in demand right now?
• Unbiased investment advice
• Relaxed social environment
• Professional investors speaking. Not talkers, but DOERS!
Event: The Clapham Property Meet, (Monthly Networking Event)
When: Wed 30th Nov, 6 pm til late
Where: The Jam Tree, 13-19 Old Town, Clapham, London, SW4 0JT
What: Maximising your (HMO) rental investments and planning alternative exits
With: Professional investors Jenny Fenton, Trevor Cutmore and Jeroen Hoppe
If you are looking to enhance your property investment returns then come along on Wednesday the 30th at 6pm til late to the Jam Tree in Clapham for an inspiring talk by Jenny Fenton who is an investor, developer and HMO expert. She will be talking us through maximising the returns on your (HMO) rental properties (but naturally these things can be applied to Rent to Rent, Serviced accommodation, and of course straight forward buy to let.
To book your ticket(s) CLICK HERE!
Wednesday, 23 November 2016
Well here we are, another bold move by the government for "Generation Rent." It seems you can't go a day without a picture of some poor tenant on the news saying "I paid thousands to move in to a property." To everyone who doesn't understand the concept, let me put the record straight. It is perfectly normal to have to pay a deposit (normally 6 weeks' rent), a month's rent in advance and then a fee to the agent to sort out all the paperwork. So in London where the average rent is £1500ish this would break down as £2100 deposit, £1500 and then say £350 for the agent. Yes, it's thousands of pounds, but this wasn't all for the agent was it? No... only about the equivalent of week's rent was for the agent. As people are renting for 2 years on average nowadays I don't think that's a big cost.
Why this draconian measure then? <sarcasm> Well the government was clearly so pleased with the results achieved in Scotland. All the tenants are now praising the government for banning these fees, which have now been passed on the landlords, and on to the tenants through higher rent. They really enjoy paying more rent. </sarcasm>
Well done, own goal! The group they are trying to help has just been sold an expensive finance deal to pay the agency fees monthly. Plus interest of course. Clap. Clap. Clap. Sadly Generation Rent genuinely thinks this is a victory. Any attack on evil landlords and their agent counterparts is, of course, a move they support. In fact Shelter commissioned a study, which was quoted in a newspaper (I use this term loosely) claiming that rents didn't go up much, if at all. The validity of this statement is on par with the credibility of the paper that published it, namely the Mirror, article here. Interestingly they quote that the fee ban in Scotland has made no difference to rents, yet fail to reference where the data is on which they base this statement. The research was commissioned by Shelter, so by default I would say the data is biased. Campbell Robb, Shelter's chief executive, said banning fees was a welcome move: "Millions of renters in England have felt the financial strain of unfair letting agent fees for far too long, so we are delighted with the government's decision to ban them. We have long been campaigning on this issue and it is great to see that the government has taken note," It's a move I wholeheartedly disagree with. We live in a Western, capitalist society and nothing is free. Simple. If you don't want to pay an agency fee then don't move house. Agency fees are subject to the supply and demand in the market. If they are too expensive customers will go elsewhere, we don't need the government intervening with this.
I am not alone in thinking this is a terrible move for renters. David Cox, MD of the Association of Residential Letting Agents (ARLA) has already warned that “…a ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market." I think we can agree on the fact that the tenant will end up paying for this. You will see the BBC writes a more balanced article but one can't help but see the bigger picture here. It's simply a move to get sympathy from the "generation rent" and win some votes. Sadly this group largely consists of those that don't understand the bigger picture and the implication of such a move.
Actual figures from the Homelet Rental Index claim that the Scots are suffering the biggest rent increases outside of the M25!! Article here. In a nutshell, rent increases within Greater London about 7.9%, rest of UK 4.9% and Scotland 7.7%! So there you have it. I believe this will be a great way for landlords to increase their rents and then some. Along with the Tenant Tax, which will come into effect tax year 2017-2018, this is certain to make rents rise by double digit figures in London come summer of 2019 compared to the year prior. I predict that once landlords start paying those Self-Assessment tax demands due by Jan 31st 2019 they will realise in cold hard cash what these taxes are costing and implement knee-jerk rent rises. The thing is it will be done en masse, so tenants will be hard up to find value for money in the summer of 2019 the busiest time of the year in terms of demand.
So what do I do now? Well sit tight and see how the bigger London agencies react to this news, I trust the rest of the country will follow. Will letting a property through an agency cost the landlord more? According to Shelter's report 10% of Scottish agents have found some kind of work-around, but as they are in the minority I doubt this is a "reputable" way to go. I will sit and watch to see the market does with great interest. What I do know is that the tenant will ending paying for it in the end...! Hopefully investors will see a ban on arrangement fees from mortgage companies and solicitor fees for conveyancing... Ah no, we are sensible and understand capitalism and that you can't get something for nothing (!)
I am a career property professional, helping landlord investors build profitable portfolios. If you are interested in learning more about growing your investments wisely then do get in touch. I offer a range of investment options to help you grow your portfolio. It can be as hands-off or hands-on as you like. Get in touch on firstname.lastname@example.org or come down to the Clapham Property Meet and learn more about getting the best returns in the London property market.
Monday, 21 November 2016
I trust you've felt the cold already, November has been a chilly one! Cold does bring some problems when it comes to maintenance, so be sure to cover yourself for the cold eventualities.
- Do you know your property? Always a bonus of course if you have lived in the property prior to renting it out; do you know how the heating controls work? Do you know what to do if a radiator doesn't work? Tenants often times don't especially if they are used to a different type of heating system (electric radiators don't need bleeding of course). Be sure that when you do get the call that they've tried all the obvious things, and speaking from experience YouTube is a saviour! What's that expression, a picture says 1000 words but a video...)??
- Condensation. A big bug bear of course. If the property is not properly heated and ventilated then condensation will build up and eventually lead to mould. Over the years I have found that tenants don't want to spend money on heating when they aren't home etc, and yes I can see the point in that, but a property simply does need to be heated to a certain extent to get rid of the condensation and dry out the air. Hot, dry air needs to be circulating. So be sure to advise them to open the curtains, letting in light (and heat), keep the internal doors open and get the heating nice and hot on a regular basis to dry out the moisture in the air. Not properly airing and heating the property can take its toll on paint work, wooden windows and in the bathroom can lead to that awful black mould on the silicone filler around the bath. All this will cost a lot more to redo than simply flicking the heating on. Point your tenants in the right direction to make a cost-effective switch of their utility tariffs through one of the energy price comparison sites (gocompare, confused, moneysupermarket, uswitch).
- Fire! With all the Christmas decorations and candles up and around it would be wise to test the smoke alarms, and whilst your at it your carbon monoxide detector. Don't be alarmed if you don't have one, the legal obligation for a CO detector is only there in rooms with a solid fuel burner (not gaseous fuel, because...it's a gas). Still not a bad idea to have one though!
- Don't get locked out. One of the most obvious problems I've ever come across in my property career is keys. When I don't have them I simply cannot get in. The same goes for many a landlord I've met - they don't keep a spare key. Think! Emergency repairs for instance; you'll need to get in, won't you? Viewings? Yep you'll need to get in too. Inspections? Access is also required. Make sure that you have a key in order to get you or your agent (or your tenant if they've locked themselves out) back in!
- Do simple repairs before they get worse. That leaky tap? Water will find its way down and dissolve the cupboard below. Slow leak? Will leave a patch on the ceiling of the room below. Make sure that you are on top of these things and above all else remind your tenants to tell you if things go wrong, no matter how small they may be. Small niggly things add up to bigger things, which ultimately may be the reason that the tenants move out, causing you voids and a big repair job as well as annoyed tenants (when they move in and the place is falling down around them). Having tenants that report repairs is worth gold, but make sure you prompt them. Remind them this isn't the 80s and you are a good landlord, you aren't going to evict them for telling you something needs doing!
I hope everyone has a trouble free winter! If you are interested in learning more about managing your investments wisely then do get in touch. I even offer a range of investment options such as portfolio building for high yield and maximum capital appreciation with hands-off management if that route interests you. Get in touch on email@example.com or come down to the Clapham Property Meet and learn more about getting the best returns in the London property market.
Wednesday, 9 November 2016
Wow what a year it's been. We've had so many changes on the playing field (property market), stamp duty, increased taxation, more regulations, Brexit, and now.... TRUMP! But what will the last change mean for homeowners and investors in South London?
Let's go over a few factors which will influence the housing market, be it purchasing or rental demand:
Immigration - Trump has been rather outspoken on his immigration views; practically wanting to stop Muslim immigrants at the border and deport Mexicans en masse. Result, lower demand in the lower end of the market, but increasing domestic wages.
Inflation - This will go up if imports are reduced and Americans are forced to spend more on goods produced locally rather than manufactured for less in the Far East.
Taxes - Trump promises to cut taxes in general, especially for corporations, thus increasing rewards for entrepreneurs domestically.
Markets always react to change. Normally investors head for cover, which is no different today. Gold prices are up, and the Dollar price is down today vs the Pound, but Wall street is reported to be surprisingly calm. No knee jerks really. This is probably also due to the fact that Trump won't take office for another two months.
In a recent interview with City A.M. some big investors warned that "knee-jerk reactions won't get us anywhere." Sounds like Brexit all over again! But what does this have to do with the UK? Well, the housing market is only a small part of the country's macro economy. Ultimately the housing market is linked with investor confidence. When the public is confident and we are in an environment of political stability, prices continue to rise (however inflation going up will be a good thing for homeowners, their house prices will be linked to inflation to an extent).
I am confident that despite there being change in recent times, the USA and the UK are still in a politically stable environment. Civil unrest isn't on the cards, is it? Yes there will be changes, but if there's one thing that Trump does have, it's business acumen. My statement will be debateable I'm sure, but as mentioned I don't think that "unrest" is a way to describe the US/UK climate, be it political or economical.
I am a career property property professional and I have built portfolios for many clients. If you are interested in investing your money in the London property market then I can help you get the best returns so that you needn't worry about risking your capital. I offer a range of investment options such as portfolio building for high yield and maximum capital appreciation with hands-off management (armchair investing) or opportunities to invest your money into refurbishment projects for relatively quick returns on your capital. If you are interested in working with me do get in touch on firstname.lastname@example.org or come down to the Clapham Property Meet and learn more about investing in the London property market.
Wednesday, 2 November 2016
For those of you who managed to make it down to the Clapham Property Meet and heard my eviction talk you will know that there is plenty of regulation to comply with when renting out your property. Get caught out and it could spell disaster. Literally! If you do spell things wrong on a notice then it could mean the invalidity of an important move-out date that you sought, and/or whether a judge will throw out your request for possession, if it does get that far.
But what does all this regulation really mean for renters and landlords in Clapham? Well for starters it will increase barriers to entry. More regulation (or red tape as some people refer to this as) means that it is more difficult for the average man to just start letting out their property. They are made to comply with a myriad of safety checks, and should they not comply the penalties are severe.
This is a good thing! The private rental sector has improved vastly over the last 50 years, what with the Protection From Eviction Act, Housing Act, and so on and so forth. There isn't a day that goes by without a newspaper reporting on yet another "beds in sheds" case where a landlord lets a property in an overcrowded state or doesn't comply with the various safety protocols that are in place for both single lets and houses in multiple occupation.
There is less and less room for bad landlords these days; one will have to comply and rent their property in a professional manner in order to get the best returns and rent to respectable tenants. Tenants that cut corners are a risk for the landlord I'm sure that you will agree.
Legislation may not be completely obvious. It is very easy to find a tenant due to the vast demand of rental properties in London, but it is more difficult to comply with legislation and at the same time maximising your investment. Regulation costs money after all - the vast majority of professional tenants don't mind paying that little bit extra to a professional agent or landlord in order to "buy this safety" as it were. There are, of course, still landlords that cut corners, knowingly or unknowingly. For example from 2018 landlords will not be allowed to let out properties that have a Rating of E or better as I mentioned in a post some time ago: https://goo.gl/1FXHpk.
More legislation that is not immediately obvious is the serving of the government "How to Rent" booklet. A lot of landlords are being caught out with this, because any tenancy that started after October 2015 will be subject to this legislation: if the booklet was not given to the tenant then the service of a Section 21 notice (notice for a landlord to end the tenancy) will not be valid. Can this be done retrospectively? Yes it can, but you can't serve a S21 notice until 6 months down the line.
Some say that "what you don't know won't hurt you" but I think ignorance is not bliss when it comes to renting out a property worth hundreds of thousands of pounds. It is a big risk not to be able to get possession just by not serving a pdf from the internet. Aforementioned are only some of the hidden rules of renting. I am a career property property professional and I have built portfolios for many clients. If you are interested in investing your money in the London property market then I can help you get the best returns whilst complying with all the relevant legislation so that you needn't worry about risking your capital. I offer a range of investment options such as portfolio building for high yield and maximum capital appreciation with hands-off management (armchair investing) or opportunities to invest your money into refurbishment projects for relatively quick returns on your capital. If you are interested in working with me do get in touch on email@example.com or come down to the Clapham Property Meet and learn more about investing in the London property market.
Tuesday, 25 October 2016
24 HOURS TO GO!!!
Content on the night as follows:
1. London Developments
Anna and Stefan will be taking us through how they work. Their company Landmark Projects has gone (literally) through the roof in the past year and they will be talking us through how they source funding for their purchases, meet their investors' needs and overcome problems in property. Are you looking to add value to property? Are you looking to learn from those who are actively investing and making money by developing properties in London? Don't miss this.
2. Make you eviction count!
Jeroen Hoppe will be talking us through the pitfalls of London Lettings (and beyond). What you can do to make your eviction happen sooner rather than later, and if you do need to go down the court order route how you can prepare for this; saving you time and money.
3. Problem solving
Trevor Cutmore will be running through a real life case study and how he helped the investor overcome these problems. Mortgage problems in the current market and how to avoid these. He also discusses fines for landlords! Be aware!
4. Good things are saved until the end!
As usual we will also be doing deal analysis and inviting your questions! Bring along your property questions. Short lease - how to extend? How to get the most out of your floor space? How to structure a deal? Lettings legal issue? Let's open the room and get your problem heard and answered. If you want to be assured your question will be discussed on the night please do email us at in advance on: questions@claphampropertym
Most importantly though IF YOU HAVE NOT BOOKED YOUR TICKET YET PLEASE DO SO NOW!
Tuesday, 11 October 2016
I was speaking to a client the other day and he said he had as many properties as he wanted to own. A bold statement. To the layman it's the equivalent of a child at Toys 'r' us saying "I've got everything I want."
He had amassed a portfolio of a substantial size and over the years he had used the equity to purchase more. A lovely idea of course, getting a return on equity - imagine that! More about that momentarily. He said he didn't really want to to own any more properties to hold and rent out, so was focussing his efforts on bigger property transactions where he could add substantial value using his expertise and experience.
He had structured his portfolio to ensure that his assets paid for all his liabilities. Repairs, service charges, ground rents, voids, tax bill and at the very end a nice monthly allowance. He had now moved on to the next thing on his list: developing properties. He was telling me about a lovely deal that he had found locally: a pair of flats, one of which with a short lease and the other with loft conversion potential. He had cleverly bought both at auction, made the freeholder an offer to buy the freehold (he agreed to sell) and has now written himself nice long leases and included the loft space in the lease for the top flat and extended the downstairs flat to make a nice 2bedroom flat. Talk about maximising your return! He had financed the transaction through a private financier or two that were just looking for somewhere to park their money and get a fixed return and have him use his expertise to maximise the profit on his deal. All parties happy. This particular deal is still ongoing, but once it completes the profit margin will be substantial, well into 6 figures.
How did he have the confidence to do all this? Well, quite simply he had enough passive income to pay for the finance charges on a monthly basis, and enough capital to fund the deal, partly his own, partly through co-investors who had given him a loan.
It sounds like he had everything he wanted. Very interesting. Let's go back to the point I made earlier about passive income. You may be reading this and thinking "I'll never be able to build up enough income to leave my job (which you may love, or hate!) or pay for the finance costs on a large development" or "I don't want to be a property developer." One of those statements may be false, but certainly not the former.
I am a very avid believer in passive income - and assets do just that, they by and large deliver you with a passive income. I remember buying my first property in 2004 when was still renting myself. This was the start of a nice passive income. At the time the mortgage on this property was £450pcm and the rent £650pcm (yes it is in London and I still own it today). Not a life changing amount of money, but fast forward 12 years and the property is now worth more than 2.5x what I had paid for it. And of course by remortgaging I am able to make use of some equity in order to reinvest.
Having used the "investing your equity" method a few times I have now honed this skill to perfection and I only look at properties that I can remortgage after doing some building works (be it redecoration, extensions, reconfiguration) in order to "take back out" a large part of investment. What I am left with is a property which pays the mortgage and then some, most of my money back, and BEST OF ALL.... an asset which will sit there and increase in value over time. Because as sure as night follows day the London market will (short term corrections aside) rise steadily over time.
An example of a recent purchase:
So after refinancing there was just over 17k left in the property and the property was £850pcm cash flow positive after fees, ground rents and service charges, and repaid £97,500 of the initial investment in order to fund another purchase.
That means that using my methods you could theoretically pay back your private investors in less than 24 months. Let's think about that for a moment, because the above assumes that you immediately refinance it. But let's say that your aim is to pay back your investors as quickly as possible - you don't, therefore, want to refinance immediately (being 6-8 months after purchase) but instead take advantage of some of that capital gain that London has to offer. Let's say the market moves another 5% - after 12 months your property is suddenly worth £445k. If you were to set aside the monthly "profit" then you would be in a good position to pay back your investors after 12 months. Once the investors are paid back then you enjoy a handsome capital appreciation (all things remaining equal of course). The capital appreciation in this case is above the national average wage, imagine what happens if you buy another property, and then another. You know that job you didn't like? You can now do whatever you like because you're making as much money with your portfolio as you are from your job. Eye-opening I'm sure. Even if you love your job, you would want to have a better plan in place for retirement than your average pension fund, no? The fees that you pay to a pension fund manager is hardly worth the return they bring, and besides - this is much more tangible and you are able to cash in early if you wanted to.
People I've spoken to have always asked me "what if prices go down?" and indeed that is a risk in any market. But when property prices go down it tends to be in a climate of instability. People then decide to put off moving or buying and rent instead. As a result rents go up. So your profits will be increased in terms of monthly revenue and slightly hampered in terms of capital gain. Sir Isaac Newton's law of equal and opposite reaction applies. It's the law. it applies in economics too.
If you want to learn how to find properties, fund properties and refinance properties in order to repeat the process and build a recession proof passive income then get in touch. Together with my esteemed colleague Trevor Cutmore I am hosting the Clapham Property Meet Training weekend at the end of November and I will be focusing on building a passive income and having other people finance it. Are you coming? Even if you have little to no cash to invest you will be able to build up a passive income using my tried and tested methods. Email me on firstname.lastname@example.org to find out how you can be investing your money or other people's money effectively to build your passive income. If you would like to meet me in person then do come along to the next Clapham Property Meet, details can be found here.
Monday, 3 October 2016
You will no doubt have seen many news outlets spouting that after 10-15 years of London the average person simply "gives up" and moves out. So what are they giving up on, exactly? In the words of Samuel Johnson: "...when a man is tired of London, he is tired of life; for there is in London all that life can afford." Not so much so today however...
As you will know the tenant population is ageing. If you have been letting long enough you will have found over the past decade that student digs that were let to 20 year olds are now being occupied by first or even second jobbers; two bedroom flats that were once let to couples looking for more space now more often occupied by a couple plus one, and so on. Renting has become more expensive, and in an everlasting pursuit of affordability thirtysomethings are now moving out to live in property with more "acceptable" square footage of floor space. After all what is acceptable in zones 1-2 is considered a broom cupboard at the end of a commuter train.
The main factor to consider in such a move is of course employment. The vast majority of people that move out factor in a lengthy commute when making their decisions. You will often see property advertised as "xx minutes from yy London Station." People ignore the transfer times between the 4 lines they cross, along with the 2 buses and 15 minute walk at the end of it. In the rain of course. Some of course find employment out of London, but for those that cannot as yet they will be forced to stay local(-ish).
Value for money
There is surely something to be said for value - tenants will certainly find this further out. After all they've been paying so much rent they hardly have enough savings to afford a London property. Value is a perception though and if people are moving out of London for this, I would argue that value can still be found in London. Read on.
Pretty much anywhere you go in South London there will be a transport hub close by. "Closeby" is of course a relative term. I have seen vast increases in capital values in areas that are the furthest away from any tube or train station. Why?? Well quite simply those are the cheapest properties. Take a map and try to find the furthest points away from stations. Generally speaking those will be the cheapest, and hence buyers will flock there as it is the most affordable. Queue big capital gains and rent rises. I've been tracking a few of these spots, namely the patch around the South Circular/Brixton Hill junction as well as some of the estate on the South Circular, even having missed out on a beautiful opportunity to acquire a 3bed to turn into a 4bed at auction over the last few months. I can tell you now that capital values are up 20-30% on last year. Investing further out pays dividends. This goes for rents too of course; the best investments are of course those where you can add value by adding a room of some sort, but as mentioned in previous posts this doesn't always have to be by adding square footage!
In summary there are still parts of Clapham (or other parts of South London where you are investing) that are untapped... Look for places further from the station. The increase in popularity of cycling is helping fuel this demand of course, as are improved bus services and so on. There is no need for mass panic among investors that everyone is fleeing London. Tenants and buyers flock to affordability. Cater for this for big returns.
If you are looking to make an investment decision then do get in touch and let's start the conversation. I have years of experience building portfolios for clients and can help you too. Having secured 4 properties this year, two of which are completed, I have a proven track record of investing other people's money as well as my own. You can phone me or why not come along and meet me in person at the Clapham Property Meet on Wednesday 26th October. Do book a ticket promptly though as places are limited. We are having another social evening of networking along with quality content from my colleague Trevor Cutmore, guest speakers Anna Harper and Stefan Canavan (specialists in London Developments) and of course me. You can book tickets at www.claphampropertymeet.co.uk.
Thursday, 29 September 2016
Thank you so much to all of you who came to join Trevor, Mike and myself at the inaugural Clapham Property Meet!
As expected the meeting was very popular and judging from the feedback I've had the content was well-received and useful - don't forget to buy a sofa bed!
There was an enormous amount of information - Mike Frisby showed us how he made tenfold the rent on one of his vanilla buy to let properties by scaling his serviced accommodation strategy; Trevor talked about using extensions as a high yielding investment and I talked about combining serviced accommodation with a buy to sell deal I did most recently in London.
There was a very good response to the training weekend Trevor and I are hosting towards the end of November; limited spaces available - if you are interested in investing and want a good baseline knowledge then come and talk to me at the next Clapham Property meet or send me an email at: email@example.com. We will be going into the finer details of Rent2Rent, Flipping, Options, Recycling Deposits and much much more.
As you can see from the photos the room was packed nearly to capacity with investors looking to network in Clapham and learn new property investment strategies.
If you are looking to make an investment decision then do get in touch and let's start the conversation. I have years of experience building portfolios for clients and can help you too. Having secured 4 properties this year, two of which are completed, I have a proven track record of investing other people's money as well as my own. You can phone me or why not come along and meet me in person at the Clapham Property Meet on Wednesday 26th October. Do book a ticket promptly though as places are limited. We are having another social evening of networking along with quality content from my colleague Trevor Cutmore, guest speaker Anna Harper (specialist in London Developments) and of course me. You can book tickets at www.claphampropertymeet.co.uk.
Tuesday, 20 September 2016
Monday, 12 September 2016
I have always been of the opinion that the market in London is quite different to the rest of the country. More resilient, driven with an unquenchable thirst for bricks and mortar from first time buyers and naturally a place where people live for convenience of travel. It's no wonder that new developments on the outskirts of Glasgow are still advertised with "only xxx minutes to London by train." Everybody measures that distance when moving out. When you factor in the 17 changes, potential for train delays and the tube trip, bus ride, and 20 minute march to one's office those times certainly add up. Decision made, let's stay in London for a bit longer.
Location, location, location, it must be London then. This explains (partially at least) why the London property market is so strong. A vast factory always seeking worker bees - London offers a wide range of jobs for all levels. It's normal to work long hours, so cutting down the commute at the end of the day seems sensible. Bear this in mind of course when looking for your next investment.
The media seems to want to admit that the scaremongering of late is just that. The market is strong, and my thoughts are confirmed by this article from the Independent.
Their thoughts of late mirror mine when it comes to other factors as well, such as first time buyers. The article confirms that figures show a 17% rise in first time buyers completing on mortgages vs this time last year. Good news if you are developing properties for that market. I have spoken to several clients over the past month and said that the home mover market is rather slow (£750,000 - £1,500,000) which again the article confirms - the FTB completions outperformed this segment for the third month running.
Rents have been fairly stable at the moment due to a slight surge in supply - this is caused by accidental landlords selling up. Increasing regulation and taxation has pushed a few BTL properties on the sales market and a lot of these were snapped up in March to beat the April tax hike in stamp duty (a whopping 3% surcharge), but as summer is here the spike in demand is causing the usual (annual) peak in prices. Rents are up by 5.2% according to ARLA, but I predict that over the next few years (in London) we'll see much stronger increases once landlords start paying their tax bills and realising their costs have gone up by more than anticipated.
All in all the market is dependent on confidence - and this certainly exists. The Brexit vote was relatively evenly split (although of course a small majority for exit overall) so we must not forget that a lot of people that voted feel that the UK is better off outside the EU. Although there may not have been a majority who thought so in the South, you will see it's business as usual when you look at the price growth overall - over 5% this year.
Money is as cheap as it will ever be with the Bank of England base rate at 0.25% - hints have even been made that it will drop to 0.1%. All good signs really. Time to invest your time to research and your money in bricks and mortar!
If you are looking to make an investment decision then do get in touch and start a conversation. I have years of experience building portfolios for clients and can help you too. Having secured 4 properties this year, two of which are completed, I have a proven track record of investing other people's money as well as my own. You can also come along and meet me in person at the Clapham Property Meet on Wednesday 28th September. Do book a ticket promptly though as places are limited. We are having a social evening of networking along with quality content from my colleague Trevor Cutmore, guest speaker Mike Frisby (specialist in multi-lets and serviced accommodation) and of course me. You can book tickets at www.claphampropertymeet.co.uk.
Monday, 22 August 2016
Not a day goes by that I don't have my finger firmly on the pulse. Be it Clapham, Brixton or beyond I do like to get a feel of what is going on in South London. As do you, I'm sure.
Today, however, I was confronted with such contradicting headlines I couldn't help but tell you about it.
House price growth to slump 1% post-Brexit
Prime London prices cool in Q2
Limited company applications surge in June
43 million Brits 'would go over budget' for the right home
The first claim about house prices "slumping" (if you can call 1% a slump) was made by Fionnuala Earley, Countrywide’s Chief Economist. Forgive me for not immediately agreeing. Countrywide have not exactly been the best bunch of business people or estate agents for that matter, so much so that they are now investing heavily in online property sales. Anyway, rest assured, they do conclude with something sensible such as "Countrywide says they will mean prices returning to levels similar to Q1 2016". Scaremongering over.
The second article again has a misleading title. You get the jist of the article by the title you would have thought, but I quote "The rate of quarterly house price growth in Prime London cooled in the second quarter of the year, with a 0.3% decrease from the opening three months of the year". Yes, you read that right, the RATE OF HOUSE PRICE GROWTH. So there is still growth. Excellent news.
On the brighter side you will see that limited company applications are up in the mortgage sector. A very interesting development - it is clear that astute landlords have taken advice to proceed down such a route. Thanks to a growing number of lending products now available to limited companies (this has grown exponentially over the course of this year) more and more landlords are incorporating and taking advantage of this tax efficient way of holding a portfolio. A clear sign that a) opportunities are there and b) investors are not holding back.
The last headline pertains somewhat to investors using a "buy-to-sell" strategy. Excellent news really. In a nutshell 75% of people would stretch the budget to get the ideal property that suits their needs. With this in mind I re-emphasise that knowing your target audience can pay dividends. A bidding war worth of dividends, mind you! A recent development of mine saw a bidding war - perhaps due to the modern bathroom with underfloor heating, perhaps because of the wine cooler in the kitchen. Maybe both. I know for a fact though that first time buyers like aspirational property, so sell that lifestyle; the key to a successful development.
In summary, read closely. Headlines conflict, but the overall message is still clear: there is a market for your product (property). If you are selling, ensure you know your audience. Same goes of course for your letting portfolio, but key is to structure wisely to minimise your tax bill. With recent changes you will see some of your tax breaks go, so make sure you adapt, or you will lose money to the Chancellor of the Exchequer.
To finish off, a lovely quote from the first article: "Annually, Prime London prices saw a 1.3% increase, rising to 2.7% in Outer Prime London. This has been driven by particularly strong growth in certain south London areas, with Clapham (9.2%) and Balham (6.5%) – forever popular with aspirant, young professionals – leading the charge. North Kensington (5.1%) also enjoyed solid price growth on a year-on-year basis." Lovely news of course, so let's keep investing locally!
Remember - if you are after investment advice, whether you are looking to grow your existing portfolio or start afresh then do get in touch by emailing me on firstname.lastname@example.org or come and meet me at the Clapham Property Meet Wednesday 28th September. There are still a few tickets remaining to the event, so do RSVP promptly here. Also, if you are looking for hands-off investing and you wish to invest upwards of £50,000 then do get in touch as I have a number of transactions that are ready for funding within the next 2-12 weeks. I help investors like you make better returns on their investment. I have done so for nearly 15 years, with proven results. If you are interested in taking the next step on your investment journey then reach out and I will expertly guide you through the process. I am actively looking for clients to invest with and for to expand the current successful portfolio.
Friday, 12 August 2016
I've been asked a number of times when speaking at Wimbledon PIN why I wasn't working a bit closer to "home." Truth is there is no regular meet on the Northern line near Clapham. Thankfully there is now.
I have decided, together with fellow property investor Trevor Cutmore (who specialises in lease options), to host the Clapham Property Meet at the Jam Tree in Clapham Old Town. We will be delivering a content-filled evening on the last Wednesday of September (28th) in a relaxed, social environment. We felt that some of the meetings can feel a bit corporate, so we're trying to steer away from that. Naturally we will be hosting some very knowledgeable speakers and we will be talking about the latest in property investment.
After listening to a number of my clients I've found there is a thirst for knowledge locally; hopefully a nice evening at the Jam Tree will somewhat quench that thirst. We can't cover everything in one night, but we will over the course of time cover various investment strategies that you can implement locally as well as further afield. We will be covering (in no particular order and not limited to) HMO, R2R, Buy to Let with cash recycling, Serviced Accommodation, and much more.
So do come along to The Jam Tree on Wednesday the 28th September. Networking (or socialising; networking can sound so business like) will start at around 6pm. Main event and speakers from 7pm and further socialising/networking from 8:30 onwards. It will be a great opportunity to see local investors in a social yet purposeful environment. If you are looking to expand your knowledge on property investment and rub shoulders with experienced investors this is certainly a meeting not to miss.
Book early to reserve a space as numbers are of course limited.
How to book
www.claphampropertymeet.co.uk for more details
you can book on the September meeting by clicking here. A quick registration process and hit the RSVP button.
6pm onwards Wednesday 28th September
The Jam Tree
13-19 Old Town
Remember if you are looking to expand your portfolio or get into property investing, be it full time to replace your income or you just have some spare money to invest and you want to do this as a worthwhile investment strategy instead of getting 1% interest in the bank then reach out to me on email@example.com and let me tell you how to make the most from your assets.
Thursday, 4 August 2016
I came across this article the other day: Huge spike in Chinese property investors' interest in the UK post-Brexit. I think without clicking on the link you can get the jist of it. In essence the drop in value of the GBP has made property in London 10% cheaper overnight. Before the Brexit results 1 GBP bought you 9.8CNY. Today that same pound is only worth 8.8CNY. A nice discount if your money is in China and you happen to be in the market for a flat in the UK/London.
As I predicted in my previous articles, the weaker pound has indeed sparked mass interest from overseas. This is great news! Normally whatever happens in (Prime) Central London will have a ripple effect on the rest of the capital, so you can see more activity in zones 2, 3 and beyond in the next few months. People keep asking me whether Brexit has been detrimental to the market and truth be told it may have been, but combine it with other factors like the summer holidays (it's normally very quiet in the sales market this time of year) and the effects have been minimal if any. Once everyone comes back from summer holidays I trust it will be business as usual, with a stronger comeback due to increased numbers of foreign buyers.
I foresee that with £millions of foreign investment we will end the financial year on some significant capital appreciation. If you are after an investment property it probably is a good time to capitalise on seller's willingness to "do a deal" in order to move on as opposed to wager with uncertainty. Sadly for UK buyers their pound doesn't necessarily stretch 10% further, but nonetheless I do feel that now is a good time to buy - there are sellers out there looking to sell, summer holidays or not.
I've had a number of clients ask me as to whether they should hold off buying, and my answer has always been a resounding "no." Now is the time to buy, whether you're looking to add value or simply hold and rent it - rents are set to go up over the next few years, so if you are able to secure a good property at a good price this will pay dividends. If you are looking to sell on, the first time buyer market is still doing very well. Cater to that market and you cannot fail.
If you are looking to expand your portfolio or get into property investing, be it full time to replace your income or you just have some spare money to invest and you want to do this as a worthwhile investment strategy instead of getting 1% interest in the bank then reach out to me on firstname.lastname@example.org and let me tell you how to make the most from your assets.
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