Tuesday 31 March 2020

What can landlords and investors do in times of (Corona) crisis?

Wow, just wow. That’s the feeling I have at the moment. The world, not just the UK, has been taken by storm. Such incredible, drastic measures have never been seen before, with everywhere I look trade has been affected. Restaurants, bars, places of worship; everything has been forced to close and people are banished to their homes en masse. It’s for good reason that I’ve not spoken out as yet, I’m still taking it all in - and the letting landscape is changing on an hourly basis!

What does this mean for you as a landlord?
Financial - Well, for starters your tenants’ employment may be affected. Do they still have a job? Will they be able to pay their rent? I for one have sent out my sympathy to all tenants and asked to reach out in confidence if they have been affected, this to preempt any cash flow issues when mortgages need to be paid. To further preempt I have asked all my mortgage lenders for a payment holiday just in case I will need it further down the line, this to buffer my cash flow. I have received criticism for these in my circles, and really I noticed that people fell into two camps: on one hand they said I should use my own reserves to buffer any losses, and on the other hand some felt that the banks may as well buffer the cash flow, you’re paying for it after all (interest is added to the loan). I chose the latter because a)I don’t know what’s around the corner (tenants that are paying today may not do a month down the line and b)after hundreds of thousands of pounds of down valuations I’ve experienced I feel it’s the least the banks can do for me.

Repairs - I’ve knocked this down to bare essentials to comply with my obligations. Only drastic leaks and so on will be seen to, loose door handles will have to wait (and if you know me I will direct them to a screwdriver anyway)! Heating, hot water and so on are a priority, nothing else. We have since last week had some guidance as to gas safety certificates and the like - basically for the contractors to use social distancing measures- the tenant to stay in another room and so forth.
Communal cleaning on properties that I manage has been suspended to avoid unnecessary contact, as well as inspections.
Check-ins for new lettings are going to be done wearing protective gear and as remotely as possible the show must go on to some extent, but safety first. Government guidance insists that moves are kept to a bare minimum.

Longer term effects
Not just will tenants potentially lose their jobs today or tomorrow, trade will suffer massively as we enter into a large scale economic slowdown. We have only just started to see good movement return after the stamp duty surcharges and countless other things we’ve seen destroy the housing market (ahem, Brexit). Any business offering products and services that people don’t use as often when they have less disposable income - new cars, restaurants, luxury goods like watches, tailored suits (don’t need those when working from home!) will suffer for a long time yet. What about all the people employed in those sectors; they could be your tenants. They will have to pivot to another sector, but with little disposable income retail will suffer, the list is endless. In short, people with a job today aren’t certain of a job in 2-3 months’ time. Less disposable income will mean that rents are likely to come down also, landlords will be competing for those in employment as they become less abundant.

What can I do in the short term?
As mentioned above, I recommend that you have a safety cushion - if you feel that your reserves are lower than your risk tolerance allows then do apply for a mortgage holiday if that makes you feel more comfortable; do know that this will increase your payments slightly over time as the interest is added to the loan.

Speak to your tenants, ensure that they are happy and ask them to let you know straight away if your situation changes, giving you as much time as possible to plan things. Chances are they will be able to find a new job eventually, just realise that them playing catchup will be difficult. If you do have a guarantor in place then it’s worthwhile contacting them in order to talk about paying the rent for the person they’re guaranteeing. A fellow colleague investor has had a few tenants give a month notice (they were on a periodic tenancy, something I don’t advocate but that’s for another blog post!) and go home to their parents, leaving him with many voids - I suspect that “normal” level of moves won’t return overnight. I’m curious to see what will happen in the usual August/September rush!

So in summary, communication is the key! There’s more resources available online from RLA - https://news.rla.org.uk/coronavirus-frequently-asked-questions/ and widely on google. I don’t claim to be an expert in this new minefield we find ourselves in, but the key is to act with common sense and practicality in mind. Tenant can’t pay? Work out a payment plan. If they leave reletting will be tricky. Repair? Essentials only like gas safety and leaks. And so forth.

I hope you found that a useful update! Do stay tuned for property investment tips/tricks and updates and by all means do check out the DownToSouthLondon YouTube Channel for entertaining and informative videos to help you invest with confidence! I also offer coaching on a one-to-one basis so if you are looking to get into property investing and require personal guidance then head on over to www.jeroenhoppe.com.

Monday 9 March 2020

I've been robbed, and this is what I'm doing about it!

My hatred for energy companies has been reignited. So much so I did a video about it...

If you're just as fed up of being ripped off as I am then sign up through this link.
Try Bulb, I've switched all my properties to them! If you sign up through this link you get £50 credit on your first bill too; in fact we both get £50 so it's a win/win!

I hope you enjoy my content. If you are looking to dive in to the wonderful world of property investing then do reach out to me via email or get in touch via my social media channels. I offer coaching, mentoring and more so be sure to check out my website www.jeroenhoppe.com for more information on what I can do to help you.

Friday 6 March 2020

220,000 less landlords in the PRS 😱😱😱

Hamptons claims there are over 220,000 less landlords in the PRS due to the impact of policy changes.

So what does that mean...?

For those of you that read my 30%APR Store card story you will know exactly what I’m on about. It’s been popular for a few years now to bash “evil, fatcat, money-grabbing” landlords. The powers that be have cottoned on to this and, targeting the younger voters, responded with tax increases, increased regulation and generally landlords got a negative vibe from Parliament, this probably to promote the widespread idea that homeownership is a must for most. Shame! 

What has happened is exactly as predicted really. Younger voters are keen because hey, who wouldn’t want a stab at the people who you’re paying this rent to, right? The attack on the PRS has left many a battle scar, but before I go into that I would like to take a moment and thank the government for the Help to Buy system. Under this scheme the government will loan a substantial chunk of the buyer’s deposit interest free for 5 years. Free money! Guess what happens though when these young buyers have free money though..? Right, they’ll spend it. As a consequence developers have now been accused of profiteering because they have all this government money pumped into their pockets through this Help-to-Buy scheme… Just can’t win, us property folk, can we??

Back to my train of thought. So:
1.     Purchase prices have actually gone up (for new builds that is, older (rental) housing stock doesn’t seem to be going up as much because of less incentives (if any) and also the flood of these ex-rentals on to the sales market. As ever, the younger generation prefers to pay more and move right in, so a doer upper is normally not a consideration.
2.     There is less rental supply, mainly due to landlords selling up.
3.     What rental stock there is left is run by and large by bigger, more astute, professional landlords. They know how to maintain property well and charge accordingly. That, combined with
4.     The ban on tenant fees and cap on deposits means it is less outlay for tenants to get into rented accomodation, but again these fees are just loaded into the rental price.

Perhaps the last item there was done in order to create a more fluid rental market, but in my humble opinion the UK Rental market is fluid enough. In Germany for example renters are expected to commit for much longer terms and are, often times, even responsible for furnishing the place with a kitchen. Assured Shorthold Tenancies are anything one month upwards, so commitment isn’t a problem, but I guess the government wanted to lower the financial barriers to entry…

So as a result of the “attack” on the PRS the government and its clan of generation renters has succeeded not only in reducing the choice available to renters but also increasing the price of everything that is left! The number of landlords has fallen to the lowest level in seven years. There were 2.58 million landlords in Great Britain in 2017, now down by some 222,000 according to Hamptons. That’s cold hard data there!

What do you think is the future of the PRS? Comment down below and tell me your thoughts!

I hope you enjoy my content. If you are looking to dive in to the wonderful world of property investing then do reach out to me via email or get in touch via my social media channels. I offer coaching, mentoring and more so be sure to check out my website www.jeroenhoppe.com for more information on what I can do to help you.

Monday 2 March 2020

I don't care about your pretty pictures on Instagram!

There, I've said it, I literally do not care. One iota. Well maybe just one, it's a pretty picture so it will look great on your instagram right??

Wrong. (Prefer video? -->https://youtu.be/iuGnugWB4FY)

What looks good to a property person is numbers. Cold hard cash is what gets me going. Don't get me wrong, I love the excitement of a new project. I love seeing it all come together. And yes I have a loving relationship with interior design trends which I like to incorporate just like the next person.

In this day and age sex sells, and sexy pictures get likes. Attractive pictures of amazing co-living spaces are very nice to look at and do well on ye old facebook, linkedin and instagram feeds for sure! But does that make a good developer? Maybe you shouldn't be looking to JV with those that are posting great pictures on social media sites without having a good look at their spreadsheets first.

You see, spreadsheets and numbers, that's what it all comes down to in property investing. 90% of it at least. Will the deal work? Will it be profitable? Are there multiple exit strategies? What if things overrun? What if the costs are higher? How is the downside protected?

I mean, I love a pretty picture, but what I'd love to know is "did the project actually make money?"

What do you think? Will you be grilling posters of pretty projects in more depth in the future? Let's see past the pretty pictures and dig deep in to how well they can present the numbers. Like in Dragon's Den, most great "businesspeople" (ahem) fall to pieces when quizzed on the numbers. The same is true in property. I don't see enough grilling, but hey, let's stay positive, if they've got to the stage of pretty pictures they must have done well, right?

Food for thought...

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