New Horizons For The Property Portal Marketplace

As our lives become increasingly entangled within the digital sphere, it's becoming even harder for various market sectors to exist exclusively in a physical space.

Whilst online transactions, and web-based trade are now commonplace, the companies that immediately adapted to this shift remain at the helm of their respective industries. This is a particularly accurate statement in reference to the property market as Zoopla and Rightmove have consistently lead property portal usership with the backing of agents country wide. However, the dominance of the previously discussed businesses has triggered accusations of a stagnant market, some critics even claimed that Rightmove and Zoopla Property Group had become a ‘duopoly’.

Expanding OnTheMarket

These sentiments fueled the launch of a competing portal owned by agents called OnTheMarket. Although, the site was established as the weaker party, OnTheMarket have now acquired a substantial share of the market within an equally brief period of time. Founded by a real estate trust consisting of agents such as Chestertons, Knight Frank and Savills, the relatively new portal has gained the support of agents who influence this fiercely competitive market. OnTheMarket currently has the backing of over 4000 agencies located throughout the United Kingdom.

The property association planned on acquiring finance from specialist investors to enable them to accelerate expansion plans for their website, utilising the funds to increase site traffic, widen their usership and maintain interest. The proprietors of OnTheMarket have since fulfilled that mission statement, and although still a distance away from the amount of listings placed on competing portals, OnTheMarket are now able to claim a one-third share of the digital property portal market with 6,000 individual estate agents and letting agents subscribed to the service and an expanding user base.

The Dispute

The high-street consortium shared a heated exchange with the 'duopoly'. Ian Springett, OnTheMarket 's CEO alleged Zoopla and Rightmove's respective founders "generate super profits for their shareholders at the expense of their agent customers”. However, a spokesperson for ZPG replied that OnTheMarket's 'One Other Portal' clause was unfair and uncompetitive.

The back-and-forth came after associates from Knight Frank and Savills were motivated to request a tribunal case after an agency named Gascoigne Halman, made efforts to break OnTheMarket’s terms of service by listing properties on multiple competitor sites.

Embroiled in a larger debate regarding an alleged agent boycott of Zoopla, this summer also saw the tribunal develop considerably as a judgment declared OnTheMarket's 'one other portal rule' for estate agents using the site was lawful.

This ruling prevented users of the site from listing on multiple competitor sites, effectively blocking duplicate listings from featuring on Zoopla and Rightmove at the same time.

Although this result was welcomed by the owners of OnTheMarket, the judgment has triggered a fallout with Zoopla due to the rumoured boycott previously mentioned. A rep for ZPG said “We welcome competition based on innovation and performance but firmly believe that OnTheMarket ‘one other portal’ rule is not in the interests of either agents or consumers.” Later stating that it was Zoopla's belief that OnTheMarket had “… failed to gain traction precisely because they don’t allow agents a free choice in their own marketing decisions and limit consumer choice and exposure.”

The Future Is Bright

OnTheMarket's CEO, Ian Springett said that that moving forward the portal's directors intend on furthering the expansion of the site and continuing to confront the ‘duopoly’, stating “in the immediate term, we will be ramping up our marketing activity to restore the strong growth in consumer traffic and leads OnTheMarket was delivering over its first two years of operations".

Considering the future implications of this decision, it's reasonable to assume that this is likely the beginning of the end for the property portal stronghold. If this is the case it will almost certainly make it easier for agents and consumers to discover a service that's right for their needs. Since the conclusion of the tribunal we have witnessed the roll-out of several new portals that specialise in everything from ex-council properties to housing LGBT renters. And while Zoopla and Rightmove still lead the industry, it's safe to say that their shared reign is nearing it's end.

Today's guest blog was written by Charlie Saunders of Assist Inventories, a property inventory services agency in London. Charlie arranges check-ins, inventories and visual inspections for my whole portfolio - mention the Clapham Property Blog if you enquire and be assured of a great service.

I hope you enjoyed reading. If you are keen to take things further, be it to start from scratch, or do something a bit more interesting with your current portfolio... Start the conversation on email. I'd love to meet you in person of course at this month's Clapham Property Meet, so do come along. Click here for tickets and more info.

Increase in Interest Rates to cost Clapham Home Owners £983.80 a year

Clapham homeowners will be among those affected by the latest rise in the Bank of England interest rates. The first increase in 10 years; they have just been raised from 0.25 percent to 0.5 per cent. This uplift comes as inflation hits a 51-month high of 2.9 per cent whilst the national unemployment rate is at an all-time low of 4.3 per cent.

Interestingly, the Governor of the Bank of England has indicated that the interest rate is likely to increase again over the next couple of years, but Mr Carney said mortgages and savings would not be affected in the short term. However, look at all the big banks and just about all of them have increased their standard variable mortgage rate..

The average Clapham mortgage is £393,521

I have to ask by how much Clapham homeowners (on variable rate or tracker mortgages) will see their repayments increase?

In the SW4, SW8, SW9, SW11 and SW12 postcodes there are 21,080 homeowners with a mortgage, of which 9.056 have a variable rate mortgage (the remaining have fixed rate mortgages). The total amount owed by those SW4, SW8, SW9, SW11 and SW12 homeowners with those variable rate mortgages is £3,563,717,643, meaning the average monthly mortgage payment for those home owners on variable rate mortgages before the interest rate rise was £3,068.37 per month and now its £3,150.36 per month … meaning

The interest rate rise will cost Clapham homeowners on average an extra £983.80 per year

Whilst this is the first raise in interest rates in over 10 years, it must be noted it is at a significantly low level compared to figures in the 1970s and early 1990s. Many of my readers talk of interest rates at 17 per cent when Sir Geoffrey Howe increased them to try and combat the hyperinflation (from the fallout of the financial crisis that hit Britain in the 1970’s) and Norman Lamont in September 1992 with the infamous Black Wednesday crisis, when interest rates were raised from 10% to 15% in just one day.

So, what will this interest rate actually do to the Clapham housing market?

Well, if I’m being frank – not a great deal. The proportion of Clapham homeowners with variable rate mortgages (and thus directly affected by a Bank of England rate rise) will be smaller than in the past, in part because the vast majority of new mortgages in recent years were taken on fixed interest rates. The proportion of outstanding mortgages on variable rates has fallen to a record low of 42.3 per cent, down from a peak of 72.9 per cent in the autumn of 2011.

If more Clapham people are protected from interest rate rises, because they are on a fixed rate mortgage, then there is less chance of those Clapham people having to sell their Clapham properties because they can’t afford the monthly repayments or even worse case scenario, have them repossessed.

However, and this will be of interest to both Clapham homeowners and Clapham buy to let landlords …

.. for every 1% increase in the Bank of England interest rate, it will cost the average Clapham homeowner on a variable rate mortgage £327.93 per month

So, what next? Because UK inflation levels are at 2.9 per cent (the country’s highest rate since April 2012) and the Bank of England is tasked by HM Government to keep inflation at 2 per cent using various monetary tools (one of which is interest rates) – you can see why interest rate rises might be on the cards in the future as increasing interest rates tends to dampen inflation.

Now of course there is a certain amount of uncertainty with regard to Brexit and the negotiations thereof, but fundamentally the British economy is in decent shape. People will always need housing and as we aren’t building enough houses (as I have mentioned many times in the Clapham Property Blog), we might see a slight dip in prices in the short term, but in the medium to long term, the Clapham property market will always remain strong for both Clapham homeowners and Clapham landlords alike.

I hope you enjoyed reading. If you are keen to take things further, be it to start from scratch, or do something a bit more interesting with your current portfolio... Start the conversation on email. I'd love to meet you in person of course at this month's Clapham Property Meet, so do come along. Click here for tickets and more info.

National Landlord Licensing to roll out to Clapham Landlords

20% of landlords are registered with Rent Smart Wales, the mandatory licensing scheme for landlords in Wales. They are looking to roll this scheme out nationally under the “National Landlord Licensing” scheme. RSM has proven rather ineffective with only 3 prosecutions to date, so here it is - I’ve said it before and I’ll say it again: “enforcing existing legislation is more (cost) effective than further legislation.”

The PRS has a lot going for it, low rents and long tenancies galore, providing the tenant behaves. Automatic rights for tenants to stay a long time are nonsensical, simply because landlords will not risk being stuck with a terrible tenant for a long period of time without the safety net of the ability to evict.

So what next? Compliant landlords are frustrated at increased taxation and legislation when “rogues” next door get away with beds in sheds and the like. With the prosecution rate low it’s a risk rogues continue to take, with the burden of tax and legislation falling on those that will fully comply.... but this doesn’t even self-fund the schemes, leaving a further financial hole to chase down the bad landlords that the schemes were set up to tackle in the first place!

Source: https://news.rla.org.uk/future-for-private-renting-in-wales/
 

I hope you enjoyed reading. If you are keen to take things further, be it to start from scratch, or do something a bit more interesting with your current portfolio... Start the conversation on email. I'd love to meet you in person of course at this month's Clapham Property Meet, so do come along. Click here for tickets and more info.

The Clapham House Price Index: 200.26

I had the most interesting conversation the other day with a local Clapham accountant, who asked me about my articles on the Clapham property market. It was quite humbling to be given praise by such a professional, when he commented enthusiastically on the articles I write. He was particularly interested with the graphs, facts and figures contained within them – so much so he recommended his clients read them, as most of them were either Clapham homeowners, Clapham landlords and a lot of the time - both. However, one question that kept me on my toes was, “With so many House-Price-Indices, how do you know which one to use and how can you calculate what is exactly happening in Clapham?”

To start with, there are indeed a great number of these Indices, including the Land Registry, Office of National Stats, Halifax, Nationwide and LSL to name but a few. The issue occurs when these different house price indices give diverse pictures of the state of the UK housing market. Whilst some indices measure the average value of every property in the UK (sold or unsold), others measure the average ‘price-paid’ of houses that happen to be sold over a fixed time scale… confusing isn’t it!

A lot of the variance between house price indices occurs because of the distinctive ways in which the numerous indices endeavour to beat these issues. You see, the biggest problem in creating a house-price-index when comparing and contrasting with most other indexes (e.g. inflation where the price a ubiquitous tin of Beans can easily be measured over the months and years), is every home is unique and as Clapham people are only moving every 11 years, it appears the only thing that can be measured is the price of property sold in a given month.

By their very nature, all of the indices are only able to paint a picture of the whole of the UK or, at best, the regional housing market. As I have said many times in my articles on the Clapham property market, it is important to look to the medium term when considering house price inflation/deflation. Looking at the month-to-month jumps, many indices look like one of those jumpy lie-detector needles you see in the cold war movies!

I can guarantee you in the coming few months, on a month-by-month basis, one or more of the indices will say property prices will have dropped. Let me tell you, no property market indices are representative of the housing market in the short term. Many indices have shown a drop around the Christmas and New Year months, even the boom years of 2001 to 2007 and 2013 to 2015.

So, back to the question, how do we work out what is happening in the Clapham Property Market and can there be a Clapham House Price Index?

To calculate what I consider is a fair and proper House Price Index for Clapham, I initially needed to decide on a starting place for the index. I have chosen 2008 as far enough away, but still gives us a medium/long term view. Next, I split all the house sales into their types (Detached/Semi/House /Apartment) to give us an indication of what is actually selling by postcode district. So, for example, below is a table for the SW4 postcode district (the sample shows 2008, 2016 and 2017).

	2008	2016	Proj 2017
Detached	1.0%	0.7%	1.0%
Semi Det	4.8%	3.9%	4.3%
Terraced	19.3%	19.4%	19.1%
Apartment	74.9%	76.1%	75.7%

Then I look at the actual numbers of properties sold in the SW4 postcode district. Below is the graph with the numbers for the years already mentioned.

Next, I have looked at the prices paid for those types for every year since 2008, again in this example using the sample years of 2008, 2016 and 2017 for the SW4 postcode.

Finally, I amalgamated the same data points for the other postcode districts covered by Clapham and the surrounding villages, weighted it accordingly, to produce the Clapham House Price Index ... which after all that work, currently stands at for Q4 2017 at 200.26 (Q4 2008 = 100).

I hope you found that of interest and over the coming months and seasons, I shall refer back to Clapham House Price Index in my Clapham Property Blog to give you a flavour of what is really happening in the Clapham Property Market

I hope you enjoyed reading. If you are keen to take things further, be it to start from scratch, or do something a bit more interesting with your current portfolio... Start the conversation on email. I'd love to meet you in person of course at this month's Clapham Property Meet, so do come along. Click here for tickets and more info.

One in 38 rental properties in the Clapham area will be illegal in 2018

As the winter months draw in and the temperature starts to drop, keeping one’s home warm is vital. Yet, with the price of gas and electricity rising quicker than a Saturn V rocket and gas, oil and electricity taking on average 4.4% of a typical Brit’s pay packet (and for those Brit’s with the lowest 10% of incomes, that rockets to an eye watering 9.7%), whether you are a tenant or homeowner, keeping your energy costs as low as possible is vital for the household budget and the environment as a whole.

For the last 10 years, every private rental property must have an Energy-Performance-Certificate (EPC) rating. The property is given an energy rating, very similar to those on washing machines and fridges with the rainbow coloured graph, of between A to G (A being the most efficient and G the worst). New legislation comes in to force next spring (2018) for English and Welsh private landlords making it illegal to let a property that does not meet a certain energy rating. After the 1st of April next year, any new tenant moving into a private rented property or an existing tenant renewing their tenancy must have property with an energy performance rating of E or above on the property’s EPC and the new law will apply for all prevailing tenancies in the spring of 2020. After April 2018, if a landlord lets a property in the ‘F’ and ‘G’ ratings (i.e. those properties with the worst energy ratings) Trading Standards could fine the landlord up to £4,000. 

Personally, I have grave apprehensions that many Clapham landlords may be totally unaware that their Clapham rental properties could fall below these new legal minimum requirements for energy efficiency benchmarks. Whilst some households may require substantial works to get their Clapham property from an F/G rating to an E rating or above, my experience is most properties may only need some minor work to lift them from illegal to legal. By planning and acting now, it will mitigate the need to find tradespeople in the spring when every other Clapham landlord will be panicking and paying top dollar for work to comply.

Whilst there is money and effort involved in upgrading the energy efficiency of rental property, a property that is energy efficient will have greater appeal to tenants and other buy-to-let landlords/investors and this will enable you to obtain higher rents and sale price (when you come to sell your investment).

So, how many properties are there in the area that are F and G rated .. well quite a few in fact. Looking at the whole of the Lambeth London Borough Council area, of the 38,133 privately rented properties, there are ..

792 rental properties in the F banding
224 rental properties in the G banding 

That means just under one in 38 rental properties in the Clapham and surrounding area has an Energy Performance Certificate (EPC) rating of F or G. From April next year it will be illegal to rent out those homes rated F and G homes with a new tenancy.

Talking with the Energy Assessors that carry out our EPC’s, they tell me most of a building’s heat is lost through draughty windows/doors or poor insulation in the roof and walls. So why not look at your EPC and see what the assessor suggested to improve the efficiency of your property? I can find the EPC of every rental property in Clapham, so irrespective of whether you are a client of mine or not, don’t hesitate to contact me via email (or phone) if you need some guidance on finding out the EPC rating or need a trustworthy contractor that can help you out?

I hope you enjoyed reading. If you are keen to take things further, be it to start from scratch, or do something a bit more interesting with your current portfolio... Start the conversation on email. I'd love to meet you in person of course at this month's Clapham Property Meet, so do come along. Click here for tickets and more info.