You need to know this if you're letting a property in Clapham (or elsewhere)

Here we go, another regulatory update. You will, as a savvy investor and landlord, know about the various bits of paper that you need to give your new tenants upon move-in. Alas this list is an ever-changing one! This month the government has launched an updated version of the "How To Rent" booklet.

In the know

(Before move-in/signing tenancy agreement you must give the tenant(s) a copy of: (and make sure they are either a pdf via email or hard copy, NOT a link)

1. EPC

2. Gas safety certificate (in date of course and it must be valid for 1 month after the date of move-in)

3. How To Rent Booklet which you can download here

4. Tenancy Agreement

Post Move-in

5. Inventory and check-in report

6. Deposit registration information (within 30 days)

Here are a few important notes:

• Take special care that you give them an updated version of the HTR booklet (link above)
• They must have seen the EPC (and if you are letting after 1st April 2018 your property must be rating E or above) before signing the tenancy agreement (so that they will have time to ascertain their outgoings based on the energy efficiency of the property)
• Not giving the tenant(s) any of the above documents prejudices your position when seeking possession of the property, so make sure that your paperwork is in order!

So there you have it, a brief list of the documents that you need to give your new tenant(s) before they take possession. Make sure that you are complying in order to prevent problems further down the line. If you'd like to read more articles head over to www.claphampropertyblog.com. If you'd like to join me and other local investors for a nice social evening of property come along to the Clapham Property Meet! Hope to see you soon.

With Clapham Annual Property Values 1.2% Higher, This is My 2018 Forecast

Looking at the newspapers between Christmas and New Year, it seemed that this year’s sport in the column inches was to predict the future of the British housing market. So to go along with that these are my thoughts on the Clapham property market.

With the average 5-year fixed rate mortgage at 1.98% (down from 3.47% in 2014) and 2-year fixed rate at 1.47% (down from 2.37% in 2014), mortgage interest rates offered by lenders are at an all-time low (even with the slight increase on the Bank of England base rate a few months ago). Added to this, there has been a low unemployment rate of 5% in Clapham, which has contributed to maintain a decent level demand for property in Clapham in 2017 (interestingly – an impressive 741 Clapham properties were sold in last 12 months), whilst finally, the number of properties for sale in the town has remained limited, thus providing support for Clapham house prices, meaning …

Clapham Property Values are 1.2% lower than a year ago

However, moving into 2018, there will be greater pressures on people’s incomes as inflation starts to eat into real wage packet growth, which will wield a snowballing strain on consumer confidence. Interestingly though, information from the website Rightmove suggested over a third of property it had on its books in October and November had their asking prices reduced, the highest percentage of asking price reductions in the same time frame, over five years. Still, a lot of that could have been house-sellers being overly optimistic with their initial pricing.

In terms of what will happen to Clapham property values in the next 12 months, a lot will be contingent on the type of Brexit we have and the impact on the whole of the UK economy. A lot of people will talk about the Central London property market in the coming year, and if the banking and finance sectors are negatively affected with a poor Brexit deal, then the London market is likely to see more of an impact.

Nevertheless, the bottom line is Clapham homeowners and Clapham landlords should be aware of what happens in the rollercoaster housing market of Central London, but not panic if prices do drop suddenly in 2018. Over the last 8 years, the Central London house prices have grown by 89.6%, whilst in Clapham, they have risen by similar figure of 82.7%. So if we do see a correction in the Capital, of say 5% to 10%, it will only take us back to Clapham house prices that were being achieved only 12 to 18 months ago ... and nobody was complaining or worrying then!

Hindsight is always better than foresight and predicting anything economic is all well and good when you know what is around the corner. At least we have the Brexit divorce settlement sorted and, as the UK economy and the UK housing market are intertwined, it all depends on how we deal as a Country with the Brexit issue. However, we have been through the global financial crisis reasonably intact ... I am sure we can get through this together as well?

Oh, and house prices in Clapham over the next 12 months? I believe they will end up between 0.5% lower and 1% higher, although it will probably be a bumpy ride to get to those sorts of figures.

If you would like to read more articles on my thoughts on the Clapham property Market – please visit the Clapham Property Blog

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.

My thoughts on the future of the Clapham Buy-To-Let Market

I was recently reading a report by the Home website which suggested that hordes of landlords are selling their buy-to-let investments due to increasing burdens on them in the buy-to-let market. Their findings suggest the number of new properties that came onto the market nationally (for sale) jumped by 11% across the UK as a result.

Those increasing burdens include new tax rules coming in over the next 3 to 4 years and the announcement that all self-managing landlords (i.e. landlords that don’t use a letting agent to look after their buy-to-let property) will soon need to register with a compulsory redress scheme to resolve tenant arguments and disputes; as Westminster wants to heighten standards in the Private Rented Sector.

Interestingly I was chatting with a self-managed landlord from the north side of the Common, when I was out socially over the festive period, who didn’t realise the other recent legislations that have hit the Private Rented sector, including the ‘Right to Rent’ regulations which came in to operation last year. Landlords have to certify their tenants have the legal right to live in the UK. This includes checking and taking copies of their tenant’s passport or visa before the tenancy is signed. Of course, if you use a letting agent to manage your property, they will usually sort this for you (as they will with the redress scheme when that is implemented).

If you are a self-managed landlord though, the consequences are severe because if you let a property to a tenant who is living in the UK illegally, you will be fined up to £3,000. That same landlord popped into my offices in the New Year, and I checked all his paperwork and ensured he was on the right side of the law going forward – and I offer the same to any landlord in the Clapham area if you want me to cast my eye over your buy to let matters (and at no cost – ok just bring in some chocolates for the girls in the office!)

But what of all these extra properties being dumped onto the market in Clapham? When I looked at the records the number of properties on the market in Clapham now, as opposed to a year ago, the numbers tell an interesting story …

Overall, Clapham does match the national trend, with the number of properties on the market rising by 7% in the last year. It was particularly interesting to see the number of terraced properties increase by 23%, yet the number of detached on the market dropped by 76%.

However, speaking with my team and other property professionals in the district, the majority of that movement in the number of properties and the types of properties on the market isn’t down to landlords dumping their properties on the market. The whole property market has changed in the last 12 months, with the majority of the change in the number and type of properties for sale due to the owner-occupier market, not landlords (a subject I will write about soon in my Clapham Property Market blog later this Spring?). You see, for the last ten years, each month there has always been a small number of Clapham landlords who have been releasing their monies from their Clapham buy to let properties - as is the nature of all investments!

Nationally, the number of rental properties coming on to the market to rent fell by 16% in Q4 2017 compared to Q4 2016 .. but that isn’t because there are 16% less rental properties to rent – it’s because tenants are staying in their rental properties longer meaning less are coming on the market to be RE-LET.

Nevertheless, some Clapham landlords will want to release the equity held in their Clapham buy to let properties in 2018. All I suggest is that you speak with your letting agent first, as putting a rental property on the open market often spooks the tenants to hand in their notice days after you put it on the market (because they don’t like the uncertainty and also believe they will become homeless!). This means you have an empty property, costing you money with no rent coming in. However, some letting agents who specialise in portfolio management have select lists of landlords that will buy with sitting tenants in. If you have a portfolio in the Clapham area and are considering selling some or all of them – drop me a line as I might have a portfolio landlord for you (with the peace of mind that you won’t have any rental voids).

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.

Youngsters unable to buy their first home in Clapham – Are the Baby Boomers and Landlords to Blame?

Talk to many Clapham 20 something’s, where home ownership has looked but a vague dream, many of them have been vexatious towards the Baby Boomer generation and their pushover ‘easy go lucky’ walk through life; jealous of their free university education with grants, their eye watering property windfalls, their golden final salary pensions and their free bus passes.

If you had bought a property in Clapham for say £30,000 in first quarter of 1977, today it would be worth £907,667, a windfall increase of 2925.56%.

But to blame the 60 and 70 year olds of Clapham for that sort of rise seems a little unfair, with the value of the homes rising like rocket, I don't believe they can be censured or made liable for that. A few weeks ago, I discussed in my blog the number of people in the Clapham area who have two or more spare bedrooms (meaning they are under-occupying the house). I see many mature members of Clapham society, rattling around in large 4/5 bed houses where the kids have flown the nest years ago ... but should they be blamed?

We are all just human, and the mature members of UK society have just reacted to the inducements of our property and tax system. The mature generations who joined the property market party in the 1970’s and 1980’s were able to take out huge mortgages, protected in the knowledge that inflation would corrode the real value of the mortgage, while wage gains would boost their ability to repay.

Neither do I directly blame the multitude of Clapham buy to let landlords, buying up their 10th or 11th property to add to their buy to let empire. They too, are humbly reacting to the peculiar historic inducements of the UK property market.

So, who is to blame?

Well, hyperinflation in the 1970’s meant the real value of people’s mortgages was whipped out (as mentioned above). Margaret Thatcher and Nigel Lawson are also good people to blame with Maggie selling off millions of council houses and Nigel Lawson’s delayed ending of the MIRAS tax relief in 1987; meaning he too can get his share of indignation. The Blair/Brown combo doubled stamp duty in 1997 and again in 2000, which, as a tax on property transactions, precludes a more efficient distribution of the current housing stock. The Government has had plenty of opportunity to change the draconian stamp duty rules to incentivise those mature Clapham house movers to downsize.

However, I have started to see over the last few years a change in Government policy towards housing. The new breed of Clapham buy to let landlords that have come about since the Millennium, have had their wings clipped over the last couple of years, with the introduction of new tax rules (meaning it is slightly more difficult to make money out of property unless you have all the national information and Clapham property trends to hand).

It’s easy to think the only reason that hundreds of first time buyers have been priced out of the Clapham housing market is because of these landlords. Yet, I believe landlords have been undervalued with the Clapham homes they provide for Clapham people. With first time buyers struggling to save for a deposit, if it weren’t for those landlords buying up those homes over the last 10/15 years, we would have a bigger housing crisis than we have today. Since the global financial crisis of 2008/9, local councils have had to cut services, so certainly didn’t have enough money to build new homes ... homes that were provided to Clapham by these buy to let landlords.

One side of the argument is that 1,631 homes are being bought up by buy to let landlords each year in the Lambeth London Borough Council area when otherwise they might have become available to other buyers, the other side of the argument is the current national average deposit is £51,800, which is, by far, the greatest barrier to those wanting to buy their first home. Those homes bought by local buy to let landlords are not left idle, as they equate to 11,416 of new homes for local people, most of whom who see renting as a better option because of the choice, the simplicity and the flexibility which renting brings.

In the 60’s/70’/80’s, the traditional thoughts that you were a failure unless you owned your own home have now all but disappeared, because if you ask many young people, they would probably say renting was the perfect option for them at certain times of their life.

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.

Clapham Apartments are only 18.7% more expensive in REAL terms than 10 years ago

My research shows that certain types of Clapham property are a little more affordable today than what the newspapers might make you think.

Roll the clock back to 2007 just before the credit crunch hit which saw Clapham property values plummet like a lead balloon and the Clapham property market had reached a peak with the prices for Clapham property hitting the highest level they had ever reached. Between 2008 and 2010, Clapham property values lay in the doldrums and only started to rise in 2011, albeit quite slowly to begin with.

Nevertheless, even though property values have now passed those 2007 peaks, my research indicates that Clapham property, especially flats/apartments, are now more affordable than they were before the 2008 credit crunch.

Back in 2007, the average value of a Clapham flat/apartment stood at £387,385 and today, it stands at £560,530, a rise of £173,145 or 44.7%.

However, between 2007 and today, we have experienced inflation (as measured by the Government’s Consumer Price Index) of 25.97% meaning that in real spending power terms Clapham apartments are more affordable than you might initially think … because if you take off the inflation from that rise, apartments are only 18.7% more expensive than in 2007. If the average Clapham apartment (valued at £387,385 in 2007) had risen by 25.97% inflation over those 10 years, today it would be worth £487,989 .. meaning in real terms, property values haven’t gone up as much as you believe.

The point I’m trying to get across is that Clapham property is more affordable than many people think. Clapham first time buyers can get on the ladder as 95% mortgages have been readily available to first-time buyers since 2010.

It really comes down to a choice and if Clapham first-time buyers can get over the hurdle of saving the 5% deposit for the mortgage on the property – they will be on to a winner, especially with these ultralow mortgage interest rates, a mortgage can be between 10% and 30% cheaper per month than the rental payments on the same house.

So why aren’t Clapham 20 somethings buying their own home?

Back in the 1960’s and 1970’s, renting was considered the poor man’s choice in Clapham (and the rest of the Country) a huge stigma was attached to renting. However, over the last 10 years as a country, we have done a complete U-turn in our attitude towards renting - meaning that many people find renting a better option and a lifestyle choice.

Saving the 5% deposit means going without many luxuries in life (such as holidays, every satellite movie and sports channel, socialising or the latest mobile phone – even if only in the short term) therefore instead of saving every last pound to put towards a mortgage deposit Clapham 20 somethings choose to rent.

There is no denying the simple fact that over the next 10 to 15 years, the people who choose to rent instead of buy in Clapham will continue to rise.

Therefore, everyone in Clapham has a responsibility to ensure that an adequate number of quality Clapham rental properties are safeguarded to meet those future demands. Interestingly, what I have noticed though over the last few years are the expectations of Clapham tenants on the finish and specification of their Clapham rental property.

I have perceived that in the past, what a tenant wanted from their Clapham rental property was moderately unassuming because renting a property was only a short-term choice to fill the gap before jumping on the property ladder. Before the millennium, wood chip wall paper and twenty-year-old kitchen and bathroom suites were considered the norm.

However, Clapham tenants’ expectations are becoming more discerning as each year goes by. I have also noticed the length of time a tenant remains in their Clapham property is becoming longer (and this was backed up recently by stats from a Government Report), although I have noticed a tendency for many Clapham landlords not to keep the rental payments at the going market rates - maybe a topic for a future article for my blog?

The bottom line is this … Clapham landlords will need to be more conscious of tenants needs and wants and consider their financial planning for future enhancements to their Clapham rental properties over the next five, ten and twenty years - e.g. decorating, kitchen and bathroom suites etc etc ..

The present-day and future situation of the Clapham private rental property market is important, and I frequently liaise with Clapham buy-to-let investors looking to spread their Clapham rental-portfolios. I also enjoy meeting and working alongside Clapham first time landlords, to ensure they can navigate through the minefield of rental voids, the important balance of capital growth and yield and ensuring the property is returned back to you in the future in the best possible condition.

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.