The Quiet Landlord Exodus: Why South London Renters Should Be the Ones Worrying

Drive around Clapham, Balham or Brixton at the moment and you start to notice something. Flats that were quietly let for years are appearing on the sales portals. A landlord I have known for a decade told me last week he is cashing in two of his three flats near the Common. He is not angry about it. He has just done the maths - and the maths has changed.

Here is what is actually happening, away from the headlines. Property118 reported this week that Capital Gains Tax changes are now the single biggest reason landlords are selling. At the same time, the landlords who are staying in are restructuring hard: company incorporations are up an extraordinary 1,700% as buy-to-let owners move their portfolios into limited companies to shelter what they can from the tax. Overall landlord sentiment, on every survey I read, is weak and getting weaker.

That might sound like a landlord's problem. It isn't. It is a renter's problem, and in South London it is becoming an acute one.

Follow the chain. Every flat a landlord sells to an owner-occupier is a flat that leaves the rental pool for good. Propertymark now counts roughly eight renters chasing every available property. Nationwide has rents up 3.3% over the year, even as house-price growth has cooled to 1.8% - a telling split, because it shows demand pouring into renting exactly as supply drains out of it. Fewer rental homes plus more tenants competing for them equals one thing: higher rents and less choice for the very people the tax changes were never meant to hurt.

This is the uncomfortable truth I keep coming back to. We have spent several years making it less attractive to be a private landlord - higher taxes, more regulation, less flexibility - in the name of helping renters. But you cannot help renters by shrinking the number of homes available to rent. If the goal was genuinely to improve life for tenants in Clapham and across SW London, the answer was always going to be more homes, not fewer landlords.

So what do I tell people? Landlords: don't make an emotional decision. If you own a good flat in a strong South London location, the case for holding - or incorporating and holding - is often stronger than the case for selling into a flat market. The demand for your property has arguably never been higher. Renters: understand that the squeeze is structural, not a blip. When a well-priced flat comes up in the area you want, be ready to move fast, have your references and paperwork in order, and treat a good landlord as someone worth keeping.

Are you a South London landlord weighing up whether to sell or restructure, or a renter feeling the squeeze first-hand? I would really like to hear from you - drop me a line at jeroen@claphampropertyblog.com or call me on 07837 093554.

7 Reasons Why Clapham Buy To Let Landlords Shouldn’t Be Criticised

There is no escaping the fact that over the last couple of decades, the rise in the number buy to let properties in Clapham has been nothing short of extraordinary. Many in the “left leaning” press have spoken of a broken nation, the fact many youngsters are unable to buy their first home with the rise of a new cohort of younger renters, whom have been daubed ‘Generation Rent’ as landlords hoover up all the properties for their buy to let property empires. Government has been blamed in the past for giving landlords an unfair advantage with the tax system. It is also true many of my fellow professionals have done nothing to avail themselves in glory, with some suspect, if not on some rare occasions, downright dubious practices.

Yet has the denigration and unfair criticism of some Clapham landlords gone too far?

It was only a few weeks ago, I read an article in a newspaper of one landlord who had decided to sell their modest buy to let portfolio for a combination of reasons, one of which being the new tax rules on buy to let that were introduced last year. The comments section of the newspaper and the associated social media posts were pure hate, and certainly not deserved.

Like all aspects in life, there are always good (and bad) landlords, just like there are good (and bad) letting agents ... and so it should be said, there are good tenants and in equal measure bad tenants. Bad letting agents and bad landlords should be routed out … but not at the expense of the vast majority whom are good and decent.

But are the 2165 Clapham (or SW4 to be exact) portfolio buy to let landlords at fault?

The Tories allowed people to buy their own Council house in the 1980’s, taking them out of the collective pot of social rented houses for future generations to rent them. Landlords have been vilified by many, as it has been suggested by some they have an unhealthy and ravenous avarice to make cash and profit at the expense of poor renters, unable to buy their first home. Yet, looking beyond the headline grabbing press, this is in fact ‘fake news’. There are seven reasons that have created the perfect storm for private renting to explode in the 2000’s.

To start with, the Housing Acts of 1988 and 1996 gave buy to let landlords the right to remove tenants after six months, without the need for fault. The 1996 Act, and its changes, meant banks and building societies could start to lend on buy to let properties, knowing if the mortgage payments weren’t kept up to date, the property could be repossessed without the issue of sitting tenants being in the property for many years (even decades!) ... meaning in 1997, buy to let mortgages were born… and this, my blog reading friends, is where the problem started.

Secondly, in the early 2000’s, those same building societies and banks were relaxing their lending criteria, with self-certification (i.e. you did not need to prove your income), mortgages 8 times their annual salary, and very helpful interest only mortgage deals helped to keep repayments inexpensive.

Thirdly, the totally inadequate building of Council Houses (aka Local Authority Housing) in the last two decades and (so I’m not accused of Tory bashing) - can you believe Labour only built 6,510 Council Houses in the WHOLE OF THE UK between 1997 and 2010? Giving the Tories their due, they have built 20,840 Council Houses since they came to power in 2010 (although still woefully low when compared the number of Council Houses built in the 1960’s and 1970’s when we were building on average 142,000 Council Houses per year nationally). This meant people who would have normally rented from the Council, had no Council House to rent (because they had been bought), so they rented privately.

And then 3rd, 4th, 5th, 6th and 7th …

• Less of private home building (again look at the graph) over the last two decades.
• A loss of conviction in personal pensions meaning people were looking for a better place to invest their savings for retirement.
• Ultra-low interest rates for the last nine years since the Credit Crunch meaning borrowing was cheap.
• A massive increase in EU migration from 2004, when we had eight Eastern European countries join the EU. That brought 1.4m people to the UK for work from those countries – and they needed somewhere to live.

Thus, we got the perfect storm conditions for an eruption in the Clapham Private Rented Sector.

Commercially speaking, purchasing a Clapham property has been undoubtedly the best thing anyone could have done with their hard-earned savings since 1998, where property values in Clapham have risen by 394.4%...

…and basing it on the average rental in Clapham, earned £476,928 in rent.

Yet, the younger generation have lost out, as they are now incapable to get on the property (especially in Central London).

The Government have over the last few years started to redress the imbalance, increasing taxes for landlords, together with the Banks being tighter on their lending criteria meaning the heady days of the Noughties are long gone for Clapham landlords. In the past 20 years, anything but everything made money in property and it was easy as falling off a log to make money in buy to let in Clapham – but not anymore.

Being a letting agent has evolved from being a glorified rent collector to a trusted advisor giving specific portfolio strategy planning on each landlord’s buy to let portfolios. I had a couple of instances recently of a couple of portfolio landlords, one from Herne Hill who wanted income in retirement from his buy to let’s and the other from Chelsea, who wanted to pass on a decent chunk of cash to his grandchildren to enable them to buy their own home in 15/20 years’ time.

Both of these landlord’s portfolios were woefully going to miss the targets and expectations both landlords had with their portfolios, so over the last six/nine months, we have sold a few of their properties, refinanced and purchased other types of Clapham property to enable them to hit their future goals (because some properties in Clapham are better for income and some are better for capital growth) ... And that my blog reading friends is what ‘portfolio strategy planning’ is!

If you think you need ‘portfolio strategy planning’, whether you are a landlord of ours or not (because the Chelsea landlord wasn’t) ... drop me line or give the office a call. Thank you for reading.

Do let me know if you are looking to invest and you could use a hand. if you are a ready and able investor sign up to my list that will bring packaged deals to your inbox! If you are looking for no-obligation advice then drop me a line and let's start the conversation.

£2,641.52pm – The Profit made by every Clapham Property Owner over the last 20 years

As we go headlong into 2018, I believe UK interest rates will stay low, even with the additional 0.25% increase that is expected in May or June. That rise will add just over £20 to the typical £160,000 tracker mortgage, although with 57.1% of all borrowers on fixed rates, it will probably go undetected by most buy-to-let landlords and homeowners. I forecast that we won’t see any more interest rate rises due to the fragile nature of the British economy and the Brexit challenge. Even though mortgages will remain inexpensive, with retail price inflation outstripping salary rises, it will still very much feel like a heavy weight to some Clapham households.

Now it’s certain the Clapham housing market in 2017 was a little more subdued than 2016 and that will continue into 2018. Property ownership is a medium to long-term investment so looking at that long-term time frame; the average Clapham homeowner who bought their property 20 years ago has seen its value rise by more than 434%.

This is important, as house prices are a national obsession and tied into the health of the UK economy as a whole. The majority of that historic gain in Clapham property values has come from property market growth, although some of that will have been added by homeowners modernising, extending or developing their Clapham home.

Taking a look at the different property types in Clapham and the profit made by each type, it makes interesting reading..

However, I want to put aside all that historic growth and profit and looking forward to what will happen in the future. I want to look at the factors that could affect future Clapham (and the Country’s) house price growth/profit; one important factor has to be the building of new homes both locally and in the country as a whole. This has picked up in 2017 with 217,350 homes coming on to the UK housing ladder in the last year (a 15% increase on the previous year’s figures of 189,690. However, Philip Hammond has set a target of 300,000 a year, so still plenty to go!

Another factor that will affect property prices is my prediction that the balance of power between Clapham buy-to-let landlords and Clapham first-time buyers should tip more towards the local first-time buyers in 2018.

The Council of Mortgage Lenders expects the number of buy to let mortgages to drop by 34% from levels seen in 2015. This is because of taxes being increased recently on buy-to-let and harder lending criteria for buy to let mortgages, which means I foresee a gradual move in the balance of power in favour of first-time buyers rather than buy-to-let landlords. First time buyers will also be helped by The Chancellor eradicating Stamp Duty for all properties up to £300,000 bought by first-time buyers in the recent budget.

This means Clapham buy-to-let landlords will have to work smarter in the future to continue to make decent returns (profits) from their Clapham buy-to-let investment. Even with the tempering of house price inflation in Clapham in 2017, most Clapham buy to let landlords (and homeowners) are still sitting on a copious amount of growth from previous years.

The question is, how do you, as a Clapham buy to let landlord ensure that continues?

Since the 1990’s, making money from investing in buy-to-let property was as easy as falling off a log. Looking forward though, with all the changes in the tax regime and balance of power, making those similar levels of return in the future won’t be as easy. Over the last ten years, I have seen the role of the forward thinking letting agents evolve from a ‘rent collector’ and basic property management to a more holistic role, or as I call it, ‘landlord portfolio strategic leadership’. Thankfully, along with myself, there are a handful of letting agents in Clapham whom I would consider exemplary at this landlord portfolio strategy where they can give you a balanced structured overview of your short, medium and long-term goals, in relation to your required return on investment, yield and capital growth requirements. If you would like such advice, speak with your current agent – or whether you are a landlord of ours or not – without any cost or commitment, feel free to drop me a line.

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.

Emerging Outer Prime - 3bed SW9 6%yield STILL ON MARKET - BUY NOW!

I've been absolutely inundated with requests for larger properties in readiness for the summer market. The summer market always brings out the students and hopeful graduates in search of accommodation to share with their friends. As my colleagues and I have said in the past, the properties with the lowest voids are generally the “better value” ones as opposed to top or bottom of the range. Nobody wants a Lada, few can afford a Rolls...

I have found something in exceedingly average condition that you could buy and do nothing to. In its current condition it would probably let for £380-400ish per week, which means a 6% yield at asking price. Or perhaps in the order of £425pw when you've spent money. Same yield, so why bother really?

It is very similar to the recent one I posted on Saxby Road, and with a little bit of work could fetch a lot more. To you Mr/Mrs Investor the choice to refurbish or not. New bathroom, mew kitchen and redecoration throughout would set you back in the order of £20k I would have thought. But don’t go too far. You don’t want to present a Rolls Royce to the market, only to end up with would-be tenants after a nicer block for their money, or something closer to the station. Match quality with location and your target audience - 1st jobbers and students aren’t after Villeroy and Boch, they want value for money. Clean, tidy, presentable with half decent furniture goes a long way. And please, no IKEA, it doesn't last the test of time. Wood laminate is passe, even for the early twentysomethingers. Solid wood (not mahogany or oak, let’s not get too excited) looks expensive but isn't and it lasts!

Check out this ideal investment in what my colleagues and I like to refer to as “Emerging Outer Prime Market” territory. Further from the station, better value. Cyclists and bus-goers rejoice in this bargain beauty:

http://www.rightmove.co.uk/property-for-sale/property-50972900.html

Bear in mind this one is still on the market despite us posting it a month ago - surely a bargain is to be had here on price!! Make this vendor an offer they can't refuse and get completed before the August Rush. We're nearly in May so considering 8-10 weeks of conveyancing it will be ready in the nick of time for peak demand. My colleague Brook was on to a winner here. Nobody has picked up on that yet. Will you get in there with a cheeky bid now this vendor has had ample time to market and nobody is realising the potential of this great rentable flat?

Call me or email me for further advice on Buy-to-Let opportunities, investments, or tenancy matters on jeroen@xandermatthew.com or 020 3397 2099.

Emerging Outer Prime London Area Sees High Yield

This 3 bed property in Tulse Hill offers a buyer a chance to acquire a flat that is poised to benefit from high yields. At an asking rental price of £380 per week the yield will be 6.58% which is not so readily available nowadays. Jereon Hoppe (director of Xandermatthew) has discussed the advantages of capitalising on the more competitively priced properties available which are slightly further away (emerging outer prime) from Tube stations such as Tulse Hill. There’s plenty to do in the area with Brockwell Park moments away, locals enjoy swimming in the lido as well as all that the trendy and authentic village of West Dulwich which is close by has to offer.

http://www.rightmove.co.uk/property-for-sale/property-34179831.html?utm_content=v2-ealertspropertyimage&utm_medium=email&utm_source=emailupdates&utm_campaign=emailupdatesinstant&utm_term=buying&sc_id=15889878&onetime_FromEmail=true

Given its location of being within an emerging outer prime area the property stands to benefit from capital growth which the neighbouring prime emerging property areas such as Clapham have continued to enjoy even in the run up to the election. This is largely due to the area being regarded as a hotspot for young professionals and overseas investors too with the trend set to continue due to the undeveloped stock in the area.

Property on the Oaklands Estate outperforms Abbeville Road SW4

What would you choose? A beautiful period property situated in a desirable location, or an ex-local authority in a block? A good question for those new to investment and seasoned investors alike. Most investors prefer one or the other, for different reasons. One may prefer ex-local authority for its better rental yield, and others capital gains from period property. Historically there has always been a trade-off. Is that still true today?

Having taken a sample of data from the Oaklands Estate and Abbeville road for comparison:

Flat 4 Selby House Oaklands Estate, SW4 8AN was sold in 2000 for 118,000 and then again in 2007 for £279,950. This represents an annual capital growth of 13.18%. (It had been sold prior to 2000 but this figure is likely to include the right to buy discount, so was ignored). Our comparison property: 16a Abbeville Road SW4 9NJ was sold in 2000 for 285000 and then resold in 2007 for 555,000, representing a capital gain of 9.99% annually. Both properties are 3 bedroom leasehold flats.

It is very unusual to find that a purpose-built property that outperforms a period property over the same time period. On the face of it therefore the ex-local authority property seems to be a winner. But the real win here isn't just in the capital appreciation, there’s more.

You see with a lower purchase price from the outset and similar rental yields the real reason that an ex-local authority flat is a sound investment is simply because you can buy more of them. You can buy 2.5 flats in Selby House with the deposit you were going to put down on Abbeville road. So not only are you winning by capital appreciation, you will be doing it at a rate 2.5x greater than the investor who chooses a period property.

In the past period properties have outperformed flats in purpose-built blocks – but as the above illustrates this trend is coming to an end. With more first time buyers struggling to get on the housing ladder the demand for (relatively) cheaper homes has risen substantially. This increase in demand has led to a dramatic valuation increase for ex-local authority properties. Do bear in mind that the increase in valuation will only be capitalised upon re-mortgage or resale, and point to note is that period properties did hold their value better in the recession, but if you are not looking to exit the market in the next 10-15 years they are certainly a safe bet today.

So next time you are looking at a period property for investment, think again. One period property for two ex-local authority properties. Double your winnings? I do believe so.

If you are looking at a buy-to-let investment and need some assistance crunching the numbers do get in touch. I’m always happy to help and assist you source a viable investment in order for you to get the best out of the property market.

Jeroen Hoppe

Company Director

XanderMatthew

Buy-To-Let Property Of The Week

http://www.rightmove.co.uk/property-for-sale/property-48669697.html

Look no further than this property if you are looking for a buy-to-let investment that looks decidedly cheap. With a approximate rental income of £1350pcm, this flat would provide any investor with an excellent yield of nearly 6.5%.

Also to be taken into consideration is the fact that several 2 bedroom properties have recently sold in this block for over £350k. As a general rule of thumb, you can allow a £50k - £75k difference between a one bedroom flat and a 2 bedroom in this part of London. It is often said that money is made by the professionals when a property is bought, not when sold – and in this instance whoever buys this flat has a very good chance of locking themselves into a tidy profit, and a property with every chance of capital appreciation.

Richard T
Sales Manager
XanderMatthew

Top Places To Make Money in London

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

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

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

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

Brook W

Sales Negotiator

XanderMatthew

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

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

http://www.rightmove.co.uk/property-for-sale/property-48571028.html

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

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

Richard Thompson

Sales Manager

XanderMatthew

Capital Appreciation vs Rental Yield

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

Take this property as an example:

http://www.rightmove.co.uk/property-for-sale/property-50514578.html

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

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

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

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

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

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

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

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

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

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

Example: (based on tax rate of 40% earnings between £31,866 and £150,000)

Purchase Price	£    250,000	£    250,000
Annual Rental Income:	£      15,600	£      15,600
Deposit	£    200,000	£      50,000
Loan	£      50,000	£    200,000
Interest Rate	2.50%	2.50%
Annual Interest	£        1,250	£        5,000
Yield before other costs	£      14,350	£      10,600
Net after tax:	£        8,610	£        6,360

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

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

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

£1000pw with nearly 7% gross yield

Kosta Giannakakis MARLA

Branch Manager at XanderMatthew

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

Click here to see the investment property in question

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

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

Interested yet?

Click here for full details

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

EPC - is your property going to fail?

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

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

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

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

Source: The Guardian Online.

Looking for a bargain at auction? Look no further.

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

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

Click here to see the Savills Auction Property in question - 24 Cleveland Mansions, Mowll Street SW9

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

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

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

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

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

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

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

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

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


* Source: The Telegraph Online

Excellent, a high yielding 3bed maisonette in Stockwell SW8/SW9 Borders

I came across this one this morning and it is absolutely beautiful. Financially of course. A three bedroom, split-level, maisonette in Stockwell. We have had similar properties in the past, which have achieved offers in excess of the asking price simply due to high yield. To see one available at this price is excellent, and certainly deserves attention at this price. With an asking price of £279,950 and an estimated rental of £450pw it works out to 8.4% gross yield at asking price.

Interested yet?

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

http://www.rightmove.co.uk/property-for-sale/property-50225552.html

Onthemarket.com? You mean off the market, surely!

Rightmove and Zoopla and now.... onthemarket.com. Some of you may have heard about the latest brainchild of Agents' Mutual - a consortium of agents that got together with the idea of taking on the great portals - but most of you won't, and that’s my point.

So what's happening?

In essence a few agents have been disgruntled by the annual price hike that presents itself from the big 2 and decided to chance it on their own. Build their own website, do a TV campaign to attract the would-be buyers, job done, surely. Well if everyone thought like that about growing their own vegetables (much cheaper than the likes of Tesco surely) why isn't everyone doing it? For a start the investment required runs into the millions of pounds. They won't see these "savings" for some years to come to say the least. Secondly, the success of any agency big or small hangs on its ability to shift houses. With less exposure on their properties (this new portal cannot possibly get as many hits as Rightmove or Zoopla for years to come) there are less buyers/tenants looking at their properties. This results in less enquiries. Less viewings. Less offers. Less transactions. Less customers that recommend said agent due to poor results. Less income for the agent. Oh look I see a trend.

In the best interests

An agent should always handle their affairs in the best interests of their clients which they represent of course. Drastically reducing the level of exposure that their clients' properties get is arguably not.

The cold hard facts

Let's do a test for our core areas, namely SW4 and SW2.

	For Sale		To Let
Area	SW4	SW2	SW4	SW2
Rightmove	279	420	296	209
Zoopla	205	269	209	258
OntheMarket	84	115	78	35

As is plain to see there are lots more agents that are still on Rightmove and Zoopla than OntheMarket, which is obvious of course. There are never going to be as many properties on day 1. However it will be interesting to see how this changes over time. But bear in mind that if you haven't heard of this new portal, neither will your new tenants or buyers. Even with property listed... where are the buyers looking??

Costs

Rightmove and Zoopla, as any other company, make a charge for their services. These prices certainly increase from time to time. Why? Well, there is inflation, a wider range of services on offer and guess what, everything gets more expensive year on year. Remember penny sweets? Right...

Flop? 

Now believe me I'm all for value for money, but to spend millions of pounds to save a few quid is just nonsensical. What's more, it doesn't serve the best interests of clients. So will I be joining? I will be a few hundred pounds better off today, but tomorrow when the sales and lettings don't materialise because tenants and buyers are looking on Rightmove and Zoopla I will be significantly worse off with less customers and less money in the bank. So no, in summary. Has your agent dropped a well-known, established brand for onthemarket.com? With the figures above it is clear where other agents are, and where the buyers and tenants will be looking for their next home.

What do you think?