2.6% Drop in the Clapham and Lambeth Property Market

The number of residential property transactions in Lambeth will be 2.6 per cent lower in 2018, compared to 2017.

According to my research, the seasonally adjusted statistics for our local authority area suggest with the number of properties already sold in 2018, and the number of properties currently under offer or sold subject to contract (allowing for property sales to fall through before exchange of contracts) we, as an area, will end the year 2.57 per cent lower compared to 2017.

So why are transaction numbers so important to Clapham homeowners, Clapham landlords and potential first-time buyers?

Many economists and property market commentators believe transaction numbers give a more precise and truthful indicator of the health of the property market than just house values. In the six years before the Credit Crunch in 2007/8, the average number of completed property transactions in the local area (the local authority covered by Lambeth) stood at 5,896 per year .. yet in the three years following the Credit Crunch, on average, only 3,147 homes were changing hands per year in the area.

Roll the clock forward to more recent times and last year, in 2017, 3,827 homes changed hands (i.e. transacted and sold) in the area, not far off the local authority’s 23 year overall average of 4,861 homes per year.

In the past, a reduction in the number of properties selling has often been believed to be the first signal of a down turn in the housing market as a whole. Although, the down turn of the credit crunch years (2007/2008) was more a free-fall than a subtle down turn. Look at the graph and the ‘so-called’ halcyon days of the 2000 to 2006 property market were a roller coaster when it came to the number of transactions. House prices were rising in the six/seven years before the credit crunch (2000 to 2006), albeit, the rate of growth of Clapham house prices did slow in late 2005 and 2006 (which does fit in nicely with the graph).

In other articles, I have mentioned the change in the number of houses for sale today compared to last year and further back. Although, the market has seen in recent months (i.e. the short term) an increase in the number of properties for sale, fundamentally, in the medium term, there has been an underlying trend in the reduction of properties coming onto the market for sale in Clapham (and nationally) and this has been one of the main drives behind the lack of properties selling .. Clapham people aren’t moving as much as they were 30 years ago meaning fewer houses are selling each year.

However, this short-term increase in properties for sale hasn’t been even across the board. In certain sectors of the Clapham property market, there is a glut of properties on the market at the moment and so prices and values are dropping on those types as sellers compete for the limited amount of buyers… yet, there are other sectors of the Clapham property market where there is a dearth, a shortage of property, and buyers are fighting tooth and nail with silly offers to try and secure the sale. This means, there are some bargains for you Clapham buy to let landlords. If you look hard enough, you could spot the same trends I have seen in Clapham and find the individual property micro markets that fall into that first sector (with its glut).

So, if you want the inside track on the Clapham property market, whether you are a landlord of ours or another agent, I am more than happy to guide you in the right direction if you drop me a line or an email (contacts details are easily found on this page – and I don’t bite or do hard sell – promise!).

So, to conclude, I believe we will finish on 3,729 housing transactions by the end of the year in the area .. not too far off last year’s figure. Looking at the short term future, now it’s true some (not all) but some potential purchasers of property in Clapham may be exhibiting more caution because of concerns that the Bank of England will continue to put up interest rates– to which I reply – yes of course they will when they are only ultra-low at 0.75%. Anyway, that is the reason why 90%+ of new mortgages over the last nine months have been on a fixed rate. Also, if they do go up a few percentage points – they are nothing compared to the 12%, 14%, even 15% mortgage rates many of my landlords saw in the early 1990’s.

We can all speculate (and I appreciate the irony of that as I write this article) but all I say to any Clapham landlords, Clapham homeowners or Clapham first time buyers is act according to your own life cycle, budget on a modest increase in interest rates in the coming few years (yet protect yourself by fixing it), consider your own circumstances and finally, what you can afford.

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.

New Home Building in Clapham and Lambeth over the last 10 years

Should you, as a landlord for buy to let or for personal occupation, buy a brand-new home?
Well, let’s start by looking at the numbers …

Over the last 10 years, 3,715 new homes have been built in the Lambeth Borough

That is a lot of bricks and mortar! Roll the clock back twenty years in the Clapham property market, and there were two distinct camps of property buyers - folks who would only contemplate living in period character properties with their original fireplaces and beams, and those people who preferred the low maintenance of a new home. Old period homes were ridiculed as money pits by new-home aficionados, while new-home owners were accused of buying boring boxes, all vanilla, all the same, homogenous and bland.

However, it’s not as black and white as that anymore – or not as I see it in Clapham. New homebuilders are now trying to change their cookie-cutter uniform rows of suburban boxes into developments that are as individual as the families that love in them, thus increasing their appeal. Nonetheless, whether you choose a stone cottage, archetypal Victorian semi or terrace, 1970’s/80’s functional home or a untouched new home, whatever home you buy, it can result in supplementary costs that are often not taken into math’s when buying by potential homeowners or buy to let landlords.

So looking at the numbers in greater detail, let’s see what type of new homes people have been buying in Clapham and the wider local authority area ..

I thought the mix of what was built/bought locally over the last 10 years when compared to the national figures was fascinating … it’s interesting (but not surprising) to see a greater proportion of flats built locally and fewer detached and semi detached homes being built, when compared to the national averages. This is because of the nature of the Clapham area, its position in the country, the availability of building land, planning restrictions by London Borough of Lambeth Council and the price of building land.

So, should you buy a new home (because a lot of people locally have over the last ten years)?

Well if you are considering new, take care when buying one, as often the show home isn’t the actual property you end up buying. It’s like visiting the car showroom and falling in love with the model in the showroom (which is spec’d up to an inch of its life) – only to get the base model when handed the keys. Look out for things like curtain rails, tv aerials (or lack of them), kitchen appliances, carpets and curtains … and outside – make sure you aren’t unwittingly buying a square piece of earth instead of the manicured landscaped gardens.

New homes are a lot more efficient on energy consumption compared to the old drafty, high fuel bill Victorian semis, as their owners can testify. Older properties will have maintenance issues, with 100yo brickwork and roofs that might need replacement and extra insulation, rotten wooden windows and a dodgy central heating boiler (all sounding rather a strain on your bank balance if you weren’t aware). The point I am trying to get across is open your eyes and don’t assume .. ask questions and get a surveyor to make a detailed inspection of the property so you know what you are getting yourself into.

Next, I also wanted to break down the new home stats to each individual year in our local area to see if there was a pattern to when people bought a new home. As you can see, there was a drop in new homes selling around the Credit Crunch years (2009) and since then; the general trend has been better! Looking at the much larger second hand housing market in Clapham over the same 10 years, the coloration between the new homes market and second market has been quite strong – which shows the new home builders don’t make (or break) the Clapham housing market – just follow it (although with the planned building locally in the next 10/20 years – who knows if that will continue to be the case?).

So, should you buy brand-new or second hand? If price is your sole motivator, then new homes are always CHEAPER when the economy is bad. However, in normal and good housing market conditions, you will pay a ‘new build premium’. The Royal Institute of Chartered Surveyors admits that this can be as high as 10% extra, when compared to a similar second hand property – so be aware of that (it’s like paying extra for a new car and losing a bit (or a lot) of money as soon as you drive off the forecourt). Although, it’s not always about pure pound notes.

Older houses are bigger (more room) yet take more money to heat. Older houses have bigger gardens (to enjoy) – but you will spend more time tending to them. Older houses are in more established areas (with more facilities), whilst everyone is starting afresh on new homes. It all comes down to personal opinion. One final thought though, at least with new homes there is no gazumping or no upward chain to ruin any sale completion dates …

The choice as they say … is yours!

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.

Nine Babies Born for Every New Home Built in the Past Five Years in Lambeth

9 babies have been born for every new home that has been built in Lambeth since 2012, deepening the Clapham housing shortage.

This discovery is an important foundation for my concerns about the future of the Clapham property market - when you consider the battle that todays twenty and thirty somethings face in order to buy their first home and get on the Clapham property ladder. This is particularly ironic as these Clapham youngsters’ are being born in an age when the number of new babies born to new homes was far lower.

This will mean the babies being born now, who will become the next generation’s first-time buyers will come up against even bigger competition from a greater number of their peers unless we move to long term fixes to the housing market, instead of the short term fixes that successive Governments have done since the 1980’s.

Looking at the most up to date data for the area covered by Lambeth Council, the numbers of properties-built versus the number of babies born together with the corresponding ratio of the two metrics …

It can be seen that in 2016, 10.79 babies had been born in Lambeth for every home that had been built in the five years to the end of 2016 (the most up to date data). Interestingly, that ratio nationally was 2.9 babies to every home built in the ‘50s and 2.4 in the ‘70s. I have seen the unaudited 2017 statistics and the picture isn’t any better! (I will share those when they are released later in the year).

Our children, and their children, will be placed in an unprecedented and unbelievably difficult position when wanting to buy their first home unless decisive action is taken. You see it doesn’t help that with life expectancy growing year on year, this too is also placing excessive pressure on homes to live in availability, with normal population growth nationally (the number of babies born less the number of people passing away) accumulative by two people for every one home that was built since the start of this decade.

Owning one’s home is a measure many Brits to aspire to. The only long-term measure that will help is the building of more new homes on a scale not seen since the 50’s and 60’s, which means we would need to aim to at least double the number of homes we build annually.

In the meantime, what does this mean for Clapham landlords and homeowners? Well the demand for rental properties in Clapham in the short term will remain high and until the rate of building grows substantially, this means rents will remain strong and correspondingly, property values will remain robust.

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.

12.54% of Clapham and Lambeth is Concreted over ... Building Plot Dilemma or Not?

Well the fallout from the recent Budget is still continuing. I was chatting to a couple of movers and shakers from the Clapham area the other day, when one said, “There isn’t enough land to build all these 300,000 houses Philip Hammond wants to build each year”.

...and if you read the Daily Mail, you would be forgiven for thinking the Country was at bursting point ... or is it?

It was 60 years ago the first satellite was launched (Sputnik). All the Superpowers have used them to take high definition pictures of each other for decades, but now satellites and their high-powered cameras are being used for more peaceful purposes. The European Environment Agency (EEA) have been taking high definition pictures of the UK from outer-space to give us a focused picture of what every corner of the Country really looks like … and the findings will come as a surprise.

As my blog readers know, I always like to ask the important questions relating to the Clapham property market. If you are a Clapham landlord or Clapham homeowner, this knowledge will enable you to make a more considered opinion on your direction and future in the Clapham property market. Like every aspect of all economic life, it’s all about supply and demand, because over the last twenty or so years, there has been an imbalance in the British (and Clapham) housing market, with demand outstripping supply, meaning the average value of a property in Lambeth has risen by 673.89%, taking an average value from £67,800 in 1995 to £524,700 today.

Using the information from the EEA and data crunched by Sheffield University with their Corine-Land Cover project, I posed them a few questions about the local area, interesting questions I would like to share with you …

1. What proportion of the whole of Lambeth is built on?

95.08%. Now I doubt that came as much of a surprise! In the study, land classified as ‘urban fabric’ defined has land which has between 50% and 100% of the land surface is built on, (meaning up to a half might be gardens or small parks, but the majority is built on).

2. How much land is intensively built on locally?

Of that amount mentioned above, how much of it is high-density urban fabric? (i.e. where 80% to 100% is built on – still leaving 20% for gardens) 12.54% - now maybe that surprised you!

3. So how is the land used locally?

Industry - 0.29%
Sports Facilities - 4.63%

Clapham and the surrounding areas might be greener than you think! In fact, I read that property covers less of the UK than the land revealed when the tide goes out. The assumption that vast bands of our local area have been concreted over doesn't stand up to inspection. However, the effect of housing undoubtedly spreads beyond its actual footprint, in terms of noise, pollution and roads.

Now I am not suggesting for one second we concrete over every inch of the locality, but the bottom line is we, as a country, are growing at a quicker rate than the households we are building. I appreciate the emotional effect of housing is greater than other land use types because most of us spend the vast majority of our time surrounded by it. As Brits, we live our lives driving along roads, walking on footpaths and working and living in buildings meaning we tend, as a result, to considerably overemphasise how much of it there is.

In fact, I was only flying home recently back from a short break abroad, when I looked down and I was reminded just how green Britain actually is!

The bottom line is Clapham people and the local authorities are going to have to put their weight into building more homes for people to live in. There is going to have to be some give and take on both sides, otherwise house prices will continue to rise exponentially in the future and Clapham youngster’s won’t be able to buy their own Clapham home, meaning Clapham rents and demand for private rented accommodation in Clapham can (and will) also grow exponentially.

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.

Buy to Let - is it still viable in south London?

An interesting question this week - I had a long standing client phone me and discuss why rents were on the slight decrease throughout his portfolio. It would seem the aftereffects of Brexit, stamp duty changes and many more things are still lingering in the south London rental market - he had to reduce some of his rents by £10pw or so. It's not massive, but a sign of the times still. 

First time buyers

Some may say that renting is less popular now than it was 12 months ago; more tenants are flocking to purchase their own home and stop spending (wasting?) money on rent. Let me tell you that this isn't true. Research suggests that the average age of the first time buyer has stayed fairly stable through the years, as the graph will illustrate. My common sense also tells me that tenants haven't suddenly saved enough for a deposit to go out and buy a property. 

What?So what has caused rents to stagnate? Well firstly we find ourselves in late spring-ish time, which is not quite peak letting time. As you'll know from my previous articles the best time to let your property is in August/September time; a time where students flock to London and the big firms are commencing their graduate programmes (and yes, of course housing is left til the last minute, creating the "gold rush"). This could have a part to play in a low/same rent being achieved on a new let, but we're talking renewals here. My client's tenants must have done a bit of research to ascertain they could get same/similar value elsewhere. They must see value elsewhere, so perhaps still a hangover from last year's new buy to let investors, all quick to offer a competitive price to entice tenants. Hardly professional is it, competing on price?

ImportantOn a new let therefore, it is crucial to differentiate on quality. I have always found it is crucial to dress the property like a show home. The old school of thought is "but they're tenants, they'll wreck it anyway" does not apply anymore (if it ever did!). Quite simply if you provide a quality product you will get better rent and in turn this better rent will more than likely be paid by someone who takes more pride in their home, ensuring that your property and its fixtures and fittings last longer, a win-win. Taylor Wimpey doesn't build show homes because they have nothing better to do, it works! So next time you are letting or selling an empty shell, think again. I have very good links with furniture suppliers and can help you furnish your rental or sales property in order to achieve the maximum price and more crucially achieve a quick transaction; after all, time is money!

Renewals

Alas there is little that you can do if you are finding that your tenants are reluctant to pay a higher price for your product. Perhaps it's time to be honest with yourself - is your property up to scratch? Is it offering the best quality it can? Can you not viably improve it any more? If you answer those questions honestly you will probably predict your rent level for next year...!

My expertise is, as you may already know, in residential buy to let, specifically in South London. Do you own properties that you think need some tweaking in order to get the best out of them? Perhaps you don't own any yet and don't know where to start? I have built entire portfolios for many of my clients and they are very happy with the returns they have been able to achieve. Residential property lettings gives a stable return and as I invest in South London you will know that the capital appreciation is fairly predictable and resilient in tougher economic times. If you are looking to invest or improve your current portfolio touch base via email and see how I can help you today. Email me on jeroen@claphampropertyblog.com and start the conversation.

Is individual room council tax banding killing off HMOs in Clapham?

I've been getting a lot of feedback through the investor grapevine that HMOs (House in Multiple Occupation. Generally let room-by-room, nobody knows each other, each bedroom is effectively a household) are getting more and more difficult to run. You will have heard about new regulations, I'm sure, for "vanilla" buy to let properties over the years. You have to carry out Right to Rent checks, you have to deliver the "How to Rent" booklet and much more of course. HMO managers have even more red tape to contend with. I won't bore you with all that now of course.

The real attack here via the council tax. Some councils in the country have taken to banding HMOs by the room, not by the whole property.

What does this mean?

Well in layman terms you as the landlord or HMO manager will be paying the bills (including of course, council tax), and this bill will go up substantially. Naturally a room is of less value than a whole house, but an HMO of say 6 rooms charged by the room will end up costing more than 1 house. A moneyspinner for councils then, isn't it?

I don't care, I don't let out an HMO

This may be. For the moment. You will find that Southwark for instance is clamping down on properties let to multiple tenants and multiple tenancies. If you are, therefore, letting by the room you run the risk of, in the future, being caught in "additional licensing."

But I'm in Clapham/Lambeth

You may be. Lambeth does not have as strict HMO licensing criteria as Southwark, this is true. But it may only be a matter of time before they catch on to this money spinner.

What do I do?

In my experience zones 2 and 3 are extremely high demand areas for letting. ESPECIALLY the bigger properties. In my 14 years of property in South London I have yet to experience a low demand for 3, 4, 5, 6 bedroom properties. They have always been scarce on my agency's books and always fly out the door. So why not let as one unit? Although not fool proof this will certainly help the council be convinced of your argument NOT to band it by room, but by property address. After all you are arguing it's one household, despite the group being unrelated. They are all friends, they cook together, and so forth. Criteria change all the time of course so this may not be fool proof.

What are the other benefits of letting as a whole?

Well I'm a big fan of this, so here's what it means for me:

1. Easier management. Deal with 1 tenant for instance, easier on the communication front.

2. Less repairs, you generally get less wear and tear

3. All of the tenants move in at the same time. If one does want to move out it will be his responsibility to find a replacement. They all want to terminate early? They are to pay for your agent to find a replacement tenant AND pay rent up until a new tenant takes possession.

4. Easier to get finance if you let on 1 AST

5. Generally eliminates the need of HMO Licensing (take advice on this of course, this will be council dependant) If you'd like me to put you in touch with an expert who can advise you on your property's HMO licensing requirements then let me know and I will connect you.

So to conclude - letting is becoming harder, so you as an investor have to look for ways to invest more profitably. This will mean making your life easier and it yielding you better returns, being higher income or lower costs. I am certain that letting a large property as a single unit will be easier and more profitable than letting it room by room, certainly once you factor in your time involved letting rooms and dealing with 6 tenants instead of 1 all year.

If you are looking to pick my brains on your property strategy do get in touch. I can help you define your strategy and help you build a profitable property portfolio. Having been active in buy to let in South London for nearly 15 years you can certainly make good returns. You don't always need to have millions in the bank to invest in London. Do you want good returns? Do you want to improve your current returns? Start the conversation: jeroen@claphampropertyblog.com

£400,000 fine for non-compliance. Are you complying when you are letting your property in Clapham?

Another day, another news article about a rogue landlord. They seem to be plentiful these days. Here's the latest one:

Click here for the article

I'll save you clicking through. In a nutshell, Mr. Landlord chopped up a house into flats and rented them out, despite planners at the council telling him "no, no no." So they took him to court and he was fined £30,000 and his rents and proceeds of £382,000.

Ouch.

That's a fairly extreme example, and let's face it - this particular landlord was a bit audacious ignoring the planners and proceeding anyway. Some say he had it coming, or so the reporters want you to believe for journalistic effect.

Relevance to your letting? A lot really. It just goes to show that landlords are being fined and punished for non-compliance. We have seen a lot of legislation change over the years, I've listed below a few examples with their penalties for non-compliance

Year	Legislation	Penalties
2008	Housing Act 1988 (amended 2008) - Deposit Registration	3x deposit amount and Section 21 can't be used to evict tenants
2014	Immigration Act 2014 - Obligation for landlords to check immigration status of tenants	Fine up to £3000
2015	Smoke and Carbon Monoxide Alarm (England) Regulations 2015	Fine up to £5000
2015	HSE revised Approved Code of Practice (ACOP) 'Legionnaires' disease	Fine up to £20,000

So as you can see, a lot is happening in the lettings sector. This is just a pick of the bunch, there will be more of course. So as a landlord it's important to comply. In addition to these regulations there will be restrictions from your lender as to what type of tenant you can let to (an how many), if you have a leasehold property there will probably be more restrictions - you may not be able to change the interior walls of the property without consent, paint the windows a different colour and so forth - you may not even be able to let it at all without asking parental - ahem - freeholder consent.

Fall foul of these regulations and plead ignorance all you like, it won't be a valid defense. You will more than likely have given some thought to handling some elements of the letting process yourself. But truth be told, when there's fines of £20,000 at risk along with the fact that you can't ask tenants to leave if you don't handle the paperwork to the letter of the law, why risk not getting a good managing agent on board to look after your compliance. It's a good insurance policy to have.

Your agent should be a competent, ARLA and NAEA qualified and member agent. They will be up to speed with the latest legislation and therefore offer you good value. In addition they will be able to help you get the most from your investments. After all, you have property in order to benefit you financially. With a little boost from good advice you may just be able to retire that little bit earlier, or buy that next property which will yield you another £500-£1000pcm. If you like the sound of that why not drop me a line: jeroen@claphampropertyblog.com and tell me what you would like to achieve. I help you get there.

How much does it cost to let a flat in Clapham or Brixton? Nothing, I'll treble your monthly income if you do it right.

I was speaking to a landlord just the other day about his investment. He called me up to ask me about my letting fees. Well in fact he phoned up the office and my colleague answered. She put him on hold and put him through to me, whispering in my ear "I know you shouldn't discuss fees but discuss value on the phone, can you show me how?" 

The gentleman explained to me how he was looking to buy a 1bed apartment on the William Bonney Estate. I commended him on finding something in such a brilliant location. Being the sleuth that I am I punched in the postcode into rightmove as I spoke. Up it came. An immaculate 1bed ground floor flat. Again I mentioned to him how easy it would be to let. "But," I said, "I wouldn't buy this, I think you can get a 3bed for the same money and get at least 50% more rent every month, with more chance of capital growth, better tenant demand and less voids."

He was amazed. A long conversation followed. He couldn't believe that a letting agent was telling him to buy a different flat. "Any agent would want me to buy this property quickly so that I instruct them to let it." He said. Not me. I look at investments all day long, and there's nothing better than helping landlords make a better investment. They get a higher yield and ultimately they are happier to come back to me because I've given them solid advice. They thank me for my advice and ultimately we all win. You see, I've been doing this for over a dozen years now. I know what is a good investment. I know what is not. I am local. Every day. I see demand shift from area to area. Flat to flat. I know what lets and what doesn't. And people come to me for knowledge, advice, expertise. Value that you don't get from high street branded (or bland) agents.

I recommended two other investments straight away that had come to market recently. They fit in with his criteria: he had a busy job and didn't want to get involved with loads of refurbishments; looking for something with minimal fuss to let and take advantage of a rising market. I trust he will be happy for me to advise on furnishings to get the best tenant in the shortest timescale for that type of property, too. He still doesn't know what I charge to let and manage. That's not important to him. Value is important. The fact that if he follows my guidance he would be netting £1000pcm from his investment and not £300pcm. So how much does it cost to let and manage through me? Nothing sir, I just doubled your capital growth over 5 years and gave you treble your cash flow on a monthly basis. After my fees. Using my services therefore makes money, it doesn't cost you money.

Everything is better in summertime. Well in Clapham & Brixton it's definitely the rent!

So, you're letting your property? Now is the time. Take advantage of that summer market whilst you still can. What's that you say? Property available in November? Well get marketing. Now. Because whilst there are stragglers around from the busy summer period you will do very well, despite your property being available in what is usually a slow time of the year.

How does that work? Simples... 

August is the busiest month in lettings. This has always been the case. After that there are some stragglers left over in September, snapping up anything that is left. Even properties with move dates far in advance are taken, simply because they can't rely on anything else coming on to the market. You know the student saying "if you leave it to late EVERYTHING will be gone." Not true of course, there will be plenty of greedy landlords with sky high prices, but nobody rents those. Well-priced, well-presented properties let. Beds in sheds do not. Regardless of imminent homelessness. Which is never really the case. Tenants would much rather sofa surf than lock in for 12 months to a dingy bedsit in an understairs cupboard.

So when is the best time to market? Ideally you want your property available in September to take advantage of the peak in August. People need a little bit of notice to move, they don't walk around with their belongings in a knapsack and move in on the day they view. So with foresight, plan your tenancies to come up middle of September. I say middle, because invariably you will have a few days' void for painting and decorating and fixing things, and over the years that will spill in to October eventually. No disaster, but see if you can negotiate slightly early departures in the long-term to get that desirable availability date back. Why? So that you can expose your property to the biggest audience in the shortest space of time and achieve the best rents, that's why.

Want to hear more? drop me a line or feel free to pick up the phone and give me a call. Happy to talk. Or if it's easier drop me a line on jeroen@claphampropertyblog.com.

Ex-Council property in Clapham & Brixton? Buy now, the stigma is gone!

I was speaking to a buyer the other day and they were delighted with their new purchase. A two bedroom ex-local authority flat on the Cowley Estate in Brixton. They were delighted, despite it needing masses of work in the form of renovation. Having previously been let to a housing association you can imagine the state of disrepair it was in. Thankfully the bathroom was fully tiled, so that was the saving grace, just cleaning to be done there.

But as all good first time buys on a budget go, with a lot of blood, sweat, tears and elbow grease they will have that flat in pristine condition in no time. Or a lot of time, but it doesn't matter. Ultimately they have bought well. Having sold a few on the Cowley estate in my time I couldn't believe the way prices have changed over the years. For the better of course.

The estate itself has undergone a radical change over the years. Security gates with fob entry to keep the rogue parkers and their cars out, a refurbished playground for the children, and a whole host of improvements to windows and communal areas.

So who is buying these flats? Well it's not just buy to let investors that want to rent to LHA tenants. The buyers are young professionals who are buying to live in. And whether the new occupants are tenants or buyers, the number of people returning home from work in their suits and skirts (clearly just stepped out of the office in the City) was amazing. A real change.

These new buyers were telling me all of their friends were buying ex-local authority apartments. It's not just the Cowley estate that has massively improved over time, but others locally as well. Lambeth has been on a mission to improve their estates over the past few years and it certainly does show. The influx of professional buy to let landlords, together with competing first time buyers after value for money property is changing the demographic of these estates altogether.

I remember one of my first encounters in a block on Union road. Three girls came to see it. I arrived early, there were kids screaming, youths being thuggish and laughing around a burning car, boys on mopeds pulling wheelies. Nice. But gladly that doesn't happen any more, and prices have nearly doubled since then, in terms of rentals and sales.

So moral of the story? Ex-local authority flats are the new hot thing. If you're buying to live in or invest, the influx of suits that are a bit savvy is hard to avoid. Coming to an estate near you.

If you'd like some pointers with your purchase, investment or otherwise, feel free to pick up the phone and give me a call. Happy to talk. Or if it's easier drop me a line on jeroen@claphampropertyblog.com.

So, tax changes ahead – what does it mean for you and your property in Clapham and surrounds?

Not much, really! Well, that’s a slight understatement. The impact of the taxation changes facing Buy to Let landlords will vary of course. To see exactly how they will impact you let’s look at what has changed:

• Rent a room relief up to £7,500 per annum from £4,250
• Principal home exempt from IHT (up to £1million)
• Interest payments on loans capped at basic rate of tax (currently 20%)

For most of my readers they will be looking at renting whole properties, not necessarily a room in their own home. So the Rent a Room relief, although an admirable initiative to get spare rooms filled in homes (and thus taking the strain off social housing and perhaps even the PRS) is not going to affect many serious BTLers.

The same goes for IHT exemptions. These don’t go for BTL properties, so tax still due upon sale of 28%.

Interest payments. Now ears must perk up. Although it is reported that 2/3 of BTL property purchased is not subject to finance a you will have read my articles on gearing and you will have geared up to 80% to make the most of investing with your bank’s money! So… instead of subtracting all of the interest you pay from your taxable profits you can now only deduct 20%. What does this mean?

Mr Investor has a BTL property on top of his £40k per annum job and his tax return looks like this:

£15600            Rental income

LESS

£1560              Wear and tear

£1800              Letting fees and such

£10,000           Mortgage interest

Leaves

£2240 profit or taxable income. Which at the rate of 40% tax means a tax bill of £896 leaving NET income at £1344.

Under the new rules (and bear in mind this will be phased in FROM 2017 to 2020, so let’s not get excited just yet…):

£15,600           Rental income

LESS

£1,560             Wear and tear

£1,800             Letting fees and such

Leaves

£12,240 profit or taxable income excluding mortgage interest

£2,000 We apply the interest rate deduction of 20% of 10,000 (mortgage interest)

Leaving £10,240 taxable, which at the rate of 40% tax means a tax bill of £4096 leaving NET loss of £1,856.

A loss?? Yes indeed a loss. In this example the property is indeed running at a loss. However this is just one example. It may appreciate particularly well in value, so the monthly loss of £150 may be worth it if you can refinance the property and release equity to buy another property, preferably one with a better rental yield in order to help the negative cash flow on this one.

So to summarise:

• These measures will be brought in over the years 2017-2020. Plenty of time to prepare, gear your portfolio correctly and adjust your strategy for better yields
• Bear in mind lots of landlords will ask higher rents to compensate. The net effect is likely to be so dramatic as my example if rents jump up sharply. And they will most certainly be higher in 2 years’ time than they are now.
• Buy better yielding properties to help aid cash flow (you should be doing this already, not just buying for capital gain). Spread the risk. You should have a portfolio of mixed capital appreciation and rental yield properties for safe investing

If you have any questions do get in touch. I’m always on hand to offer advice or opinion. Email me on jeroen@claphampropertyblog.com or call me on 020 3637 4474.

Listen up, I'm talking about Clapham & Brixton Property at the Property Masterclass!

For those of you who follow the blog closely will have notice that more and more topics are being addressed thanks to the beauty of interaction. Those not keen to comment publicly can always reply to me via email and receive a personal response. After all, why not make use of my years of knowledge to help you build your property portfolio? Which leads me to the next thing which is even better – a meeting in person. You may be an aspiring landlord, you may be a seasoned developer. All the same you will value the face to face contact. So let’s meet!

An old colleague and good friend of mine Suzanne Vincent has asked me to speak at her Property Masterclass at the end of this month and I'd like to invite you to come along. There will be a free drink on arrival and a reduced table menu. Whether you are a seasoned investor looking to network with local professionals or whether you just want to find out more about investing in property and saving on inheritance tax for your children, there will be something for everybody. A good chance to meet local people, network with like-minded professionals and ask questions relevant to your circumstances. So please join me on Tuesday June 30^th 8pm at the Cambria - lovely pub off the beaten track and tucked away in a lovely residential area on the Camberwell/Brixton borders. Loughborough Junction and Brixton are your closest stations and no more than 5/10 mins from those respectively. The food is fantastic and the company will be too for sure.

The topics we'll be covering are:

• Property Finance
• Lease extension and freehold enfranchisement
• How to present for a sale or let
• Investing in Property

Please RSVP directly to Suzanne so she can organise accordingly on suzannelvincent@gmail.com.

If you are looking for a friendly chat about property or the weather by all means give me a call in the office on 020 3397 2099 or drop me a line on jeroen@claphampropertyblog.com. 

Property values up in Clapham up by 18% and Brixton by 20%

A landlord came in to seem me the other day and he was keen to hear more on my take on the market. He had been investing in established areas such as Kensington and Chelsea for years and had made a lot of money in doing so. He was telling me that over the years he had made great investments in SW3 but was curious to hear more about the property market South of the River Thames, particularly Clapham and Brixton.

I was all too glad to oblige. I've seen a lot over the years. Clapham and Brixton have changed. For better, in the property sense. What I've seen over time is that Clapham has been Brixton’s affluent neighbour. This is still true to a certain extent; property prices are indeed higher there. Indeed places like Clapham Old Town and Between The Commons (arguably Battersea but we’ll agree it’s a desirable area bordering Clapham Common so let’s call it Clapham today) have always been desirable and you will see a lot of families living here. Less flats, more houses. And these prices, just like properties in Chelsea have gone up a good amount over the years.

What’s the problem then? Buy the most expensive house you can afford in the nicest possible area and you will have the best investment? Yes and no. Maybe a great investment from a capital growth perspective. Not the best investment from a yield perspective. You see here’s the thing. The desirability of those houses is very much restricted to a certain target audience – families. And as you will know from various research people are waiting longer and longer to start families. Single occupation units are on the rise. Why do you think all these room let people are doing so well? So let’s look at Brixton for instance. Hip, young trendy, the Dalston of 2014 it was called. Or Hoxton or Deptford, I can’t keep up with this skinny drainpipe jeans bearded lot… Anyway point I’m making is that properties are CHEAPER to buy in Brixton than they are in Chelsea. And more desirable for the hip and trendy young folk. Which is good, because they want to rent. They don’t want to be tied down with a wife, kids and a labracockadoodledoo (or whatever). This means that rental demand is better – it always is in cheaper segments of the market. Cheaper cars sell in greater volume than Bentleys and Rollers…Families don't want to rent as much, so your expensive house won't yield as well as a smaller house or flat in Brixton for example. With yield I mean the % of rent vs purchase price.

Now Mr. Landlord reminded me that his property’s prices went up by 17.8% in the last two years. I reminded him that SW4 property prices went up by 18.4% over that period and SW2 property prices went up by 20%. And with better rental yields than in Chelsea he had seen the light. He quickly asked me to source some investments for him!

If you’re ever passing by Clapham Park Road or you fancy a chin wag about the weather or property (I know a bit more about the latter truth be told) come in and see me! Or drop me a line on jeroen@xandermatthew.com or hop on the phone 020 3397 2099. Happy to talk investments and property all day long.

Two tenanted flats in Emerging Outer Prime SW2 – growth guaranteed!

2x Tenanted flats and opportunity for refurbishment (nearly) guaranteed!

http://www.auction.co.uk/residential/data/full_text/may2015/pos74.pdf

So what are we talking? A pair of 2 bedroom apartments, that’s what. Let on tenancies and yielding £26400 per annum. Let’s assume they are in average condition; and I make that assumption because they are achieving an average rent. I would have thought anything in good condition would fetch around £1400pcm in that neck of the woods. It’s a promising location – as you will have ready in my previous articles this part of SW2 is going to see some good growth in years to come. For nay-sayers – just look at the prices near a station. More people as opposed to less people are going to cycle, walk, take the bus than ever before. Growth is guaranteed..

So what’s it worth?  for the would-be investor to decide. I’m thinking that the layouts will vary slightly, but for all intents and purposes the rent both of the flats COULD be £33,600 if let at 1400pcm, which isn’t impossible, providing they are in good condition. You might need to spend some money on them to get that maximum yield. If you spent some money on the decoration, bathrooms and kitchens perhaps more like £1450pcm per unit which makes it worth nearly £35,000 per annum. In order to decide how much you’d be willing to pay you need to decide the minimum yield you want from the property and be prepared to walk away if bidding goes above that. At the current rents 5.8% yield would mean a maximum purchase price of  £455,000. If you are looking at the properties being capable of producing more like £35,000 though you’re looking at 600k all-in. Don’t forget that you will need to spend money to make money in that case so work out costs when you go and view them.

Looks like a bargain really, bearing in mind that Foxtons has three on the road for sale (and it indeed looks like the same block) for £450k!

Option A is to keep on to them, do nothing apart from a bit of decoration and perhaps push up the rents a bit. Refurbish to a good standard 5 years before looking to sell (or when the current standard of décor is not attracting good tenants). This will end up with a low-yielding property in the last few years of ownership, but frees up cash now for the cash yield to allow that expense.

Option B: budget for full refurbishments now (approximately 15-20k per unit) and allow an exit price of 425-450k

This would leave a likely maximum purchase price of 350,000 per unit to allow for refurb costs and selling fees in order to make a bit of a profit. Perhaps in the region of £30-40,000 per unit? Spend 250k per unit plus 50k for costs and refurb leaves a healthy profit of around 100k per unit. Could be done in 6 months. But with numbers like these I wouldn’t be surprised if the guide price goes out the window!

As always give me a call on 020 3397 2099 for a chat or drop me a line on: jeroen@xandermatthew.com – I’m always on hand to answer any property related questions.

Auction Week: Emerging Outer Prime SW2 - basement with planning for conversion to a studio flat

For sale: a void underneath a building!

For those with some expertise in creating something out of nothing this could be a great project. A bit unclear whether it still needs excavating, but one thing is certain; the end product is to be a desirable studio flat in “Emerging Outer Prime” Streatham Hill.

http://www.auction.co.uk/residential/LotDetails.asp?A=932&MP=24&ID=932000174&S=L&O=A

* you may need to register to be able to log in (free)

Plans are here: http://planning-docs.lambeth.gov.uk/AnitePublicDocs/00549400.pdf

Studio flats on these roads should fetch in the region of £215,000 to £230,000. So with a potential resale of £215,000 plus a guide of £30,000 plus some legals and building work makes for a handy profit of £150,000plus. Unless of course the bidding goes crazy….

But, will planning permission be granted? There have been objections in the past on the road by the looks of things, so perhaps the vendor was wiser to await the decision before throwing this one under the gavel.

Interesting for the right buyer with the right experience to see it through.

So, if you're in the market for a good opportunity to develop something from nothing then have a look at this one.

Call me or drop me a line if you'd like to talk property. 020 3397 2099 or email jeroen@xandermatthew.com.

Happy investing folks.

No better time than auction time! – 8 tenanted units at bargain price in SW16

If you are looking for some good buy-to-let investments it doesn’t hurt to keep an eye on local auctions. Although in the past they have been mainly reserved for developers and projects to “add value,” more and more properties are coming up that are simply tenanted and are unable to be sold via normal estate agency channels.

This week I’ll be focusing on auctions and the properties coming to market in Allsop’s auction due to be held on the 28^th May.

Let’s have a look at our first properties. Plural, that’s right as it’s a group of 8 flats due to go under the hammer. Don’t worry, if your pockets aren’t as well-lined as an oil sheikh’s there will be an opportunity to bid on them individually.

http://www.auction.co.uk/residential/LotDetails.asp?A=932&MP=24&ID=932000223&S=L&O=A

*You may need to register (free) with Allsop to log in

Lots 211-218 – guide price £2million collectively

Eight Leasehold Self-Contained Purpose Built Flats

•   Each Flat subject to an Assured Shorthold Tenancy 

•   To be offered either Individually or Collectively 

•   Total Current Gross Rent Reserved

£107,180.04 

per annum (equivalent)

So what are we talking? A bunch of 2 bedroom apartments. Let’s assume they are in average condition – and I make that assumption because most are achieving an average rent. I would have thought anything in good condition would fetch around £1300pcm in that neck of the woods. It’s a good location, near to Streatham Station and it’s a nice 1960s looking purpose-built block. Valley Road is near to Streatham High Road so close enough to shops and the likes. Good long-term prospects.

So what’s it worth?? Well that’s for the would-be investor to decide. I’m thinking that the layouts will vary slightly, but for all intents and purposes the rent on all 8 COULD equal £115,000 per year if they were relet at current rents (you will see that some tenants have been in there for a good while now so the tenancy would require a review in order to get the maximum yield). If you spent some money on the decoration, bathrooms and  kitchens perhaps more like £1300pcm per unit which is nearer to £125,000 per annum. In order to decide how much you’d be willing to pay you’re really going to have to decide the minimum yield you want from the property and be prepared to walk away if bidding goes above that. At the current rents 5.8% yield would mean a maximum purchase price of £1,850,000 or roughly £230,000 per unit or thereabouts, but beware the guide is set higher – so you may find yourself bidding against seasoned investors looking to refurbish and add a bit of value, and perhaps even go for top dog rents. My advice would be to keep it nice but simple, Streatham isn’t Kensington & Chelsea (yet!) so it will be difficult to achieve ludicrous rents if you go overboard on gold taps and the like. However… http://www.rightmove.co.uk/house-prices/SW16-2EW.html?

Recent sales suggest that owner occupiers are paying up to £300k for these properties.

A good buy? At the right price most certainly. Strategy? Option A is to keep on to them, do nothing apart from a bit of decoration and perhaps push up the rents a bit. Refurbish to a good standard 5 years before looking to sell (or when the current standard of décor is not attracting good tenants). This will end up with a low-yielding property in the last few years of ownership, but frees up cash now for the cash yield to allow that expense. Option B: budget for full refurbishments now (approximately 15-20k per unit) and allow an exit price of £300,000 – see example here; http://www.zoopla.co.uk/property-history/12-beechcroft-close/valley-road/london/sw16-2ew/32705180 This would leave a likely maximum purchase price of £230,000 per unit to allow for refurb costs and selling fees in order to make a bit of a profit. Perhaps in the region of £30-40,000 per unit? Spend 1,850,000 plus 160,000 for refurb leaves a profit of around £200,000. Could be done in 6 months…

As always if you’re keen to pick my brain drop me a line on jeroen@xandermatthew.com or call me for a chat on 020 3397 2099.