Landlords in South London Twice as Likely to Sell. Opportunity?

The housing market for landlords is becoming increasingly challenging, as more landlords are selling properties than buying them. A new report from research consultancy BVA-BDRC reveals that, in Q2 2023, over one in ten (12%) of landlords in England and Wales sold properties. In contrast, only 5% purchased properties during this same period.

This trend is being driven by a number of factors, including the rising cost of living, the increase in interest rates, and the uncertainty caused by the war in Ukraine. The rising cost of living is making it more difficult for landlords to cover their costs, while the increase in interest rates is making it more expensive to borrow money. The war in Ukraine is also causing uncertainty in the global economy, which is making landlords less confident about the future. Things that are certain are increased taxation, regulation and rents. Room for more profit then?

The increasing regulation of the private rental sector is a factor that is making it more difficult for landlords. The government has introduced a number of new regulations in recent years, which have increased the costs and responsibilities of landlords. These regulations include the introduction of a minimum energy efficiency standard for rented properties, the ban on letting fees, and the requirement for landlords to carry out safety checks on their properties.

The challenges facing landlords are likely to continue in the coming months. The rising cost of living and the increase in interest rates are expected to continue, and the war in Ukraine is likely to remain a source of uncertainty. As a result, it is likely that more landlords will sell properties or cut back on the number of properties they let.

This trend is having a number of implications for the housing market. First, it is leading to a decrease in the supply of rental properties. This is making it more difficult for people to find a rental property, and is pushing up rents. Second, it is leading to a decrease in the number of landlords. This is reducing the competition in the rental market, and is making it easier for landlords to raise rents.

The challenges facing landlords are likely to have a significant impact on the housing market in the coming months. It is important for both landlords and tenants to be aware of these challenges and to plan accordingly.

It is difficult to predict how the housing market for landlords will develop in the coming months. However, it is clear that the challenges facing landlords are likely to continue. Landlords should be prepared for further challenges, including rising costs and increased regulation. Hopefully rents will keep rising to make a fair risk vs reward ratio! If you need help balancing up the numbers on a particular property you are looking at then do get in touch - I can help you crunch the numbers on your next investment for sure!

Is Now The Time To Be Investing in South London HMOs?

An HMO, or House in Multiple Occupation, is a property rented out to three or more unrelated people who share facilities such as a kitchen and bathroom. Investing in HMO properties can be a good way to generate a high rental income, but it also comes with some risks. Lots of onerous regulations make up lots of trip hazards, so read further to see if it's for you!

Pros of investing in HMO properties:

• Potential for higher rental income: HMOs can generate more rental income than traditional buy-to-let properties because you can rent out multiple rooms.
• Diversification: Investing in HMOs can help you diversify your property portfolio and reduce your risk.
• Demand: There is a growing demand for HMOs, particularly in urban areas where there is a shortage of affordable housing.
• Flexibility: HMOs can be a flexible investment, as you can rent out the rooms individually or as a whole property.

Cons of investing in HMO properties:

• Increased management: HMOs require more management than traditional buy-to-let properties, as you need to find and screen tenants, collect rent, and deal with any disputes.
• Regulatory compliance: HMOs are subject to more regulation than traditional buy-to-let properties, so you need to make sure you comply with all the relevant laws and regulations.
• Risk of damage: HMOs are more likely to be damaged than traditional buy-to-let properties, as there are more people living in the property.
• Tenant turnover: HMOs typically have a higher tenant turnover than traditional buy-to-let properties, so you need to be prepared for the hassle of finding new tenants.

Overall, investing in HMO properties can be a good way to generate a high rental income, but it's important to weigh the pros and cons carefully before making an investment. In days gone by letting a property to a group of sharers was the most common thing in the world, and there wasn't all the extra regulation to deal with. There is certainly more to it nowadays. Whether you are renting out the property on one tenancy agreement or many agreements (by the room generally) the same rules will apply for fire safety, licensing and so on.

If you are looking at an investment property and would like a professional to glance it over to see what rent it would fetch then drop me a line, I'd be happy to help!

Landlord Duo Ordered to Pay Tenants £12,500 for Failing to Licence Property - Are you complying?

A landlord duo in London have been ordered to pay their tenants £12,500 after it was discovered that they had failed to licence their property under a selective licensing scheme.

The tenants, Amanda and Miroslav Jesensky, rented the property in East London for nearly ten years. During that time, two successive selective licensing schemes were in operation in the area. The schemes were promoted by the council via advertising, mail-shots, and information on the council's website.

The landlords, Mohammed and Ghazala Butt, claimed that they were not aware of the licensing schemes and that the council had failed to inform them of their duty to licence the property. However, the judges at the Property Tribunal hearing rejected this argument, stating that "ignorance of the law is no defence" in cases of rent repayment orders.

The judges also pointed out that "becoming a landlord is a serious undertaking" and that landlords have a responsibility to familiarize themselves with the legal requirements to which they are subject. They added that landlords "are not entitled to keep quiet and wait until the local authority catches up with them."

The Jesenskys' original claim was for nearly £16,000, but this was reduced to £12,500 by the judges. The landlords were also given until August 10th to appeal the decision. This case serves as a reminder to all landlords that they have a responsibility to comply with the law. If you are unsure about whether your property is required to be licensed, you should contact your local council for more information.

What does this mean for landlords?

• This case sends a clear message to landlords that they must be aware of the legal requirements that apply to them. If you fail to comply with the law, you could be ordered to pay your tenants compensation, as well as legal fees.
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• It is therefore important to make sure that you are familiar with the relevant legislation and that you take steps to comply with it. You should also keep records of your compliance, so that you can prove to the council that you have met your obligations.
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• If you are unsure about whether your property is required to be licensed, you should contact your local council for more information. They will be able to advise you on the specific requirements that apply in your area.

How can I protect myself as a landlord?

There are a number of things that you can do to protect yourself as a landlord:

• Make sure that you are familiar with the relevant legislation and that you take steps to comply with it.
• Keep records of your compliance.
• Contact your local council for advice on the specific requirements that apply in your area.
• Use a letting agent who is familiar with the law and who can help you to comply with the requirements.
• Get professional advice from a property professional if you are unsure about anything.

By taking these steps, you can help to protect yourself from being ordered to pay compensation to your tenants. If you have any questions feel free to drop me a line and I can tell you all about licensing in your local area!

Clapham Landlords Face Outrageously High Right-to-Rent Fines

The government has announced that it will be increasing the fines for breaches of the right-to-rent rules. This is likely to have a significant impact on South London landlords, as the area is home to a large number of rented properties.

The right-to-rent rules require landlords to check the immigration status of their tenants before renting to them. If a landlord rents to someone who does not have the right to rent in the UK, they could be fined. The current fines for breaches of the right-to-rent rules are relatively low, but they are about to increase significantly.

For a first offence, the fine for a lodger landlord will increase from £80 to £5,000. For a repeat offence, the fine will increase from £500 to £10,000. For ordinary residential landlords, the fine for a first offence will increase from £1,000 to £10,000. For a repeat offence, the fine will increase from £3,000 to £20,000.

These increased fines are likely to have a number of negative impacts on South London landlords. Firstly, they could make it more difficult for landlords to rent out their properties. Landlords may be reluctant to rent to tenants if they are not confident that they can check their immigration status correctly. This could lead to a decrease in the availability of rented properties in South London, which could drive up rents.

Secondly, the increased fines could put some landlords out of business. Landlords who are already struggling financially may not be able to afford to pay the fines. This could lead to them being forced to sell their properties, which could further reduce the availability of rented housing in South London.

Thirdly, the increased fines could lead to landlords discriminating against certain groups of tenants. Landlords may be more likely to rent to tenants who they believe are less likely to be illegal immigrants. This could lead to discrimination against people from certain ethnic groups or countries.

The increase in right-to-rent fines is a significant development that is likely to have a major impact on South London landlords. It is important for landlords to be aware of the new rules and to take steps to ensure that they are compliant. They should also be aware of the potential negative impacts of the new rules and to take steps to mitigate them.

In addition to the above, here are some specific things that South London landlords can do to prepare for the increase in right-to-rent fines:

• Make sure they understand the new rules and how they apply to their properties.
• Get professional advice on how to check the immigration status of their tenants correctly.
• Put in place systems and processes to ensure that they are compliant with the rules.
• Be prepared to pay the fines if they do breach the rules.

 

The increase in right-to-rent fines is a challenge for South London landlords, but it is one that they can overcome with careful planning and preparation. Do you need help with your compliance when it comes to letting your property? Drop me a line and let's talk legal to make sure you're compliant!

Rental Market in South London Isn't Working for Anyone!

The lettings market in South London is in a state of flux. Rents are rising, but demand is through the roof. This is putting a strain on landlords and tenants alike.

Rents are rising

Rents in South London have been rising steadily for the past few years. In the past year alone, rents have increased by an average of 20%. This is putting a strain on tenants, who are struggling to afford the rising cost of living.

Supply is falling

As you'll know from my other posts the number of landlords selling up is on the rise - build to rent schemes are popping up a little more frequently but gone are the days where you could rent an affordable victorian property from someone who had a flat as a simple buy to let investment... Landlords are struggling because of onerous legislation and higher interest rates, they are exiting!

Tenants are suffering

The rising rents and falling demand are also making it harder for tenants to find affordable homes. Many tenants are being forced to move out of South London, or to share with more people. This is making it harder for tenants to find a home that meets their needs.

What can be done?

There are a few things that can be done to improve the lettings market in South London. These include:

• Building more affordable homes: The government needs to build more affordable homes to meet the needs of tenants. This will help to reduce the pressure on rents and make it easier for tenants to find affordable homes.
• Reforming the lettings sector: The government needs to reform the lettings sector to make it fairer for both landlords and tenants. This could include measures such as introducing a national landlord register and giving tenants more rights.
• Educating tenants: Tenants need to be better educated about their rights and responsibilities. This will help them to negotiate better deals with landlords and to protect themselves from unscrupulous landlords.

The lettings market in South London is in a difficult situation. Where does this leave you? If you are curious as to what your rental property is worth today why not drop me a line and pick my brains or use my free online valuation tool to get a ballpark figure!

Shocking Drop of South London Landlords!

The Royal Institution of Chartered Surveyors (RICS) has released its latest UK Residential Market Survey, which shows a sharp decline in landlord instructions. The net balance for landlord instructions dropped 36% in June 2023, down from 5% in May. This is the largest monthly decline since the survey began in 2008.

The decline in landlord instructions is being attributed to a number of factors, including the rising cost of living, the Bank of England's decision to raise interest rates, and the uncertainty caused by the war in Ukraine. These factors are making it more difficult for landlords to cover their costs, and are leading some landlords to sell their properties or take them off the market.

The decline in landlord instructions is having a knock-on effect on the rental market. The net balance for rental demand increased to 40% in June, up from 35% in May. This suggests that there is still strong demand for rental properties, but that there is a shortage of available properties. This is likely to lead to an increase in rental prices in the coming months.

The RICS survey also found that the sales market is continuing to slow down. The net balance for new buyer enquiries slipped to -45% in June, down from -20% in May. This is the lowest reading recorded since October 2022. The decline in buyer enquiries is being attributed to the same factors that are driving down landlord instructions.

Overall, the RICS survey suggests that the South London housing market is starting to cool. This is likely to be a gradual process, but it is something that buyers and sellers should be aware of.

Here are some additional thoughts on how the RICS survey relates to the South London market:

• The South London market is particularly sensitive to changes in the wider economy. This is because South London is a popular area for investors, and any changes in the investment climate can have a knock-on effect on the housing market.
• The South London market is also a relatively expensive market. This means that any changes in the cost of living or interest rates can have a more significant impact on the market than in other areas.
• Overall, the RICS survey suggests that the South London housing market is starting to cool. This is likely to be a gradual process, but it is something that buyers and sellers should be aware of.

We've seen evidence of this, as you will know from other articles I've posted. So what to do?

Just remember that if you are a homeowner then upsizing means that NOW is a good to sell - homes larger than yours will command a bigger discount if you have a motivated seller because they will struggle to sell (their pool of buyers is smaller still). You can therefore negotiate a better price. Price in a bit of a drop. If you are moving out of London the same may apply. What happens in zone 1 happens later in zone 2 and so on - the ripple effect. Nonetheless remember that you are looking to move for reasons other than to secure the best price possible, you need to weigh up hassle factor, job location, schools and a host of other things of course. It is impossible to time the market to sell yours at the very peak of its price and buy at the very trough of another property's value at the same time!

If you are curious as to what yours is worth pop your details in my online valuation tool or invite me around for a visit and let's get you moving!

Interest rate hikes could mean opportunity for South London Property Investors

Everyone is selling up - but should they?

The Bank of England's latest interest rate hike is likely to lead to more landlords selling their properties, but it could also create opportunities for investors. A survey by Finbri found that 45% of landlords would sell their investment properties if the base rate reached 5%. With the rate now at 5%, it's likely that even more landlords will exit the market. This could create a shortage of rental properties, which could drive up rents. This would benefit investors who are looking to buy properties to rent out. In addition, the number of properties available to rent has fallen by a third in the past 18 months. This means that there is already a high demand for rental properties, and the shortage is likely to make it even harder for renters to find a place to live.

This can can create opportunities for investors who are willing to do their research and take on some risk. Or keep taking on risk and hold on to their investments.

Property will remain profitable

Some property commentators predict that house prices will fall in 2023. However, even if this happens, property will still be a profitable investment. This is because property investors will still receive rent, and they may also be able to claim (some) tax breaks. In addition, the UK population is still growing rapidly. This means that there is a growing demand for rental properties, even if the supply of rental properties decreases.

The rental market

The rental market is expected to remain strong in 2023. This is because the supply of rental properties is still short of demand. In addition, the pandemic-induced tenant eviction bans have led to many landlords leaving the market. As a result, rental prices are expected to continue to rise in 2023. However, the rate of price growth will vary by region. London and the Southeast are expected to see the lowest growth, while the regions are expected to see the highest growth. But what other investments can a South London investor turn to? 2022 was a poor year for global stock markets. This was due to a combination of factors, including high inflation, the ongoing war in Ukraine, and poor global growth prospects. While some may argue that stock markets can give good returns over time, I believe that the risk of losing money is too high. In addition, stock markets do not provide physical assets such as property.

The key to a successful investment portfolio

The key to a successful investment portfolio is being well-informed and following a solid strategy. This includes understanding the risks involved in different types of investments and diversifying your portfolio to reduce your risk. It is also important to remember that investments can go down as well as up. Therefore, it is important to have a long-term investment horizon and not to panic sell if the market experiences a downturn.

If you are looking to exit the market, stay in the market, or expand in this market get in touch and let's talk investments. Not relet your property for a while? Why not check out my nifty online valuation tool to see what your property is worth at the moment?

The £14,230,233 Ticking Time Bomb for Clapham Landlords

“I just love looking over and keeping up to date the 108 pieces of legislation that govern the rental of residential property in the UK”

...No Clapham Landlord, ever

If you are one of the 2,159 Clapham (or SW4 to be precise) landlord’s that manages your own property, would it surprise you to know that there are 108 separate pieces of legislation that govern the rental of private houses to tenants. Oh, and on top of the 108 pieces of law, there are further 300+ regulations in the mix. Whilst Clapham landlords may once have preferred to manage their Clapham buy-to-let properties themselves to boost their profits, many Clapham landlords are starting to see this as a false economy.

In the last four years, an additional 830 landlords in Clapham have converted from self-managed to having their property managed by a letting agent in Clapham, taking the total number of properties under management in Clapham to 3,377 (out of a total of 5,536 private rental properties in Clapham).

Now, don’t get me wrong, self-managing your Clapham rental property can be a very fulfilling experience, allowing you as a Clapham landlord to build a deep relationship with your tenant and your emergency 24 hour plumber, builder (happy to do small jobs at a drop of a hat), decorators, first name terms with their deposit provider, lawyer and EPC provider to name but a few. (Wow!)

Also, did you know if your tenants deposit isn’t registered, or doesn’t continue to be registered after the end the periodic tenancy upon renewal ... you could be fined up to three times your deposit? With average rental deposit in Clapham being £2,197, each self-managed landlord in Clapham could be fined £6,591 per tenancy if the deposit isn’t currently registered. Therefore...

...if every deposit of every Clapham self-managed landlord’s property wasn’t registered, the total fines would amount to £14,230,233

Now of course, I am not suggesting for one minute all the self-managed landlords of Clapham haven’t registered their deposits, yet almost on a daily basis, I come across horror stories to that effect. Another two (but by no means all) hot issues that the Courts are cracking down on, are doing immigration ‘Right To Rent’ checks on all tenants (yes all tenants) and confirmation proving the tenant received the ‘How to Rent’ guide. If that second issue cannot be proved (a ‘sent’ email won’t suffice), the landlord cannot serve the section 21 Notice, meaning the tenant cannot be served notice to vacate the property.

To many, it’s really a case of DIY or getting a qualified professional in … as those additional Clapham landlords mentioned above have done since 2014. You might say, “Of course you are going to say all this – you are a Letting Agent”. Well the choice really comes down to your time and your knowledge. If a Clapham landlord is not equipped, or able, to devote time keeping up-to-date of legislation and law nor doesn’t want to be bothered 24/7/365 about a blown light bulb, dripping taps, have that confrontational conversation with their tenants about missing rental payments, or arbitrate arguments and disagreements between your tenant and the neighbours, it is perhaps better to pass this accountability/responsibility onto a letting agent.

One thing I would say is all letting agents aren’t the same. Would it surprise you to know that letting agents aren’t regulated?

Clapham landlords that do use a letting agent should not forget that passing over management to a letting agent doesn’t mean they can disregard legislation and they are still responsible for deposit/rent repayment legal directives, civil fines or action if the letting agent makes a mistake. Therefore, it’s important to pick a respectable letting agent from the start.

Nevertheless, for those Clapham landlords that see their job as a professional landlord and want to be intricately involved in the day to day administration of their rental properties, it can be worthy pursuit.

If you are a self-managed landlord in Clapham, and want to know if your paperwork is in order please feel free to drop me a line and I am more than happy to do an ‘MOT’ on it to ensure you are the right side of the law.

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.

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.

‘Taxing’ Time for the 3,159 Clapham Buy To Let Landlords

Over the last twenty years, there has been a shift in the way the Clapham (and the UK’s) property market works. In the 1960’s, 70’s, 80’s and 90’s, a large majority of twenty somethings saved up their 5% deposit, went without life’s luxuries of going out and holidays etc., for a couple of years and then bought their first home with their hard earned savings.

By 2000, 29.3% of Clapham 25 to 29 years owned their own home (compared to 46% Nationally (and 40.9% of Clapham 30 to 34 year olds in 2000 owned their own home – again compared to 64.2% nationally) whilst the remaining youngsters mostly rented from the Council and in some rare cases, privately rented.

Now it’s 2018, and those levels of homeownership have slipped dramatically and now only 15.6% of Clapham 25 to 29 year olds own their own home and 27.5% of Clapham 30 to 34 year olds own their own home.

There was concern in Government since the late Noughties that this shift from homeownership to private renting wasn’t good for the well-being of the Country and things needed to change, to make it a more level playing field for first time buyers. House prices needed to be more realistic and there needed to be a carrot and stick for both landlords and first time buyers.

In the 1980’s and 1990’s, interest rates were the weapon of choice of Government to cool or heat up the UK housing market – and it did work – up to a point. It’s just interest rates also affected so many other sectors of the UK economy (and not always a in good way). The policy of interest rates to control the economy is called ‘Monetary Policy’. Monetary policy is primarily concerned with the management of interest rates (and the supply of money) and is carried out by the Bank of England (under direction from the Government).

It’s just in this post Credit Crunch, Brexit environment, the use of higher interest rates wouldn’t directly affect landlords (as around two thirds of buy to let properties are bought without a mortgage). Therefore, an increase in interest rates would have hardly any effect on landlords and hit the first time buyers - the people the Government would be trying to help!

Also, given muted growth of real income (i.e. real income being the growth salaries after inflation) in the past few years, an uplift in interest rates (from their ultra-low 0.5% current levels) would have a massive effect on Brit’s household disposable income. Yet, over 90% of new mortgages in 2018 being taken are fixed rate and with such low rates, it has made buying a property comparatively attractive.

Instead, over the last 8 years, the Government has encouraged first time buyers and clipped the wings of landlords with another type of economic policy – Fiscal Policy (Fiscal Policy is the collective term for the taxing (and spending) actions of the Government). First time buyers have had the Help to Buy Scheme, Stamp Duty Exemption and contributions to their deposit by HMRC. On the other side the coin, landlords have had the way they are able to offset the tax relief of their mortgage payments against income change (for the worse), an increase in Stamp Duty (for the worse) and they will be hit with additional costs as the Government will be phasing out fees to tenants in the next 12 to 18 months.

So, what does this all mean for the 3,159 Clapham landlords?

The days of making money in Clapham buy to let with your eyes closed are long gone. There are going to be testing times for Clapham landlords, yet there is still a defined opportunity for those Clapham landlords who are willing to do their homework and take guidance from specialists and experts.

It’s all about looking at your Clapham portfolio (or getting a property professional to do so) and ascertaining if your current portfolio, mortgage and gearing are designed to hit what you want from the investment (because that is what it is – an investment) in terms of income now and income in the future, capital growth and when you plan to dispose of your assets.

I have seen many Clapham landlords (both who use me and my competitors) to manage their rental property or find them tenants – and on many occasions recently, I have told them to SELL – yes sell some of their portfolio to either reduce mortgage debt or buy other types of property that match what they want in the short and long-term from their investments. I know that sounds strange – but my role isn’t just to collect the rent .. it’s also to give strategic advice and opinion on the landlord’s portfolio to help them meet their current and future investment goals.

The opportunities will appear in the Clapham property market for Clapham landlords from gentler growth in property values linked with a restrained Clapham property market, meaning if you put in the time, there will be deals and great bargains to have. Many landlords in Clapham (both clients and non-clients) send me Rightmove links each week, asking my opinion on the suitability of the investment. Some are exceptional – whilst others are duds. The bottom line is, private renting will continue to outgrow first time buyers in the next 5 to 10 years and as we aren’t building enough homes in the UK, which means rents can only go in one direction – upwards!

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.

£534,838 – The Typical Profit Each Clapham Landlord Could Make in The Next 25 Years

I am of the opinion that buy to let investment in Clapham, in the long-term, will bring substantial returns for landlords, irrespective of latest regulation and tax changes.

Taking a very conservative (with a small ‘c’) view, I believe landlords will see a projected net profit of £908,044 per property over the next 25 years through capital gains and rental. When inflation is taken into account that works out at £534,838 (in today’s money) or around £21,394 per year. The breakdown applies to a basic tax-paying landlord placing a characteristic 25% deposit on a £123,600 apartment.

Capital gains make up a substantial part of a landlord’s returns. Again, being conservative, I have assumed that Clapham house prices over the next quarter century (between 2018 and 2043) will rise at half the rate they did between 1993 and 2018 (the preceding 25 years), therefore the example Clapham property in the previous paragraph would grow in value to £385,762, providing gross capital gains of £262,162.

A typical Clapham landlord receives, on average, rent of £20,880 per annum per apartment and so, over a 25-year period, that example property would generate a total rental income of £798,138 (again – very conservatively assuming a compound annual growth rate in the rent of 1.71% per annum).

Nevertheless, there are costs to running a buy to let property (mortgages, void periods, repairs, agents fees etc) .. and over those same 25 years, I have estimated that to be £152,256 .. giving the net profit levels mentioned in the second paragraph.

Now of course I have had to make assumptions to reach these figures, yet I hope you would agree, I have been very unadventurous with my assumptions.

The Clapham (and UK as a whole) buy to let property market is experiencing a massive sea of change. Regulation and tax changes have altered the dynamic in the property market, diminishing its appeal to inexperienced and amateur landlords, and these new tax changes mean higher tax bills for higher rate tax landlords. Yet, despite these rising costs, there are still healthy returns to be found in Clapham buy to let investment for knowledgeable and steadfast landlords. Nonetheless, the days of anything making money and idle speculation are long gone.

Buy to let is a long-term business undertaking, necessitating commitment and expertise. Don’t put your head in the sand and think it doesn’t affect you. Clapham buy to let landlords must be equipped to start business and tax planning, take portfolio management advice to ensure their investments will meet their investment goals, appreciate the risks as well as the rewards, and, most crucially, the obligations they have towards their tenants.

If you are a Clapham landlord, irrespective of whether you are a client of mine or another agent in Clapham (or even you do it yourself), feel free to drop me a line or pop into the office for an informal chat on the future direction of the Clapham rental market and where opportunities may lie.

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.

247 Clapham Landlords Plan to Expand Their Buy To Let Portfolios

A noteworthy number of buy to let landlords in Britain plan to buy more properties over the next year notwithstanding the frustrations, challenges and seismic changes in the private rented sector. According to Aldermore, the specialist Buy To Let lender, their research shows around 41% of portfolio buy to let landlord’s objective is to grow their buy to let portfolio (i.e. Portfolio landlords are landlords that own more than one property).

So, I thought, “Are Clapham landlords feeling the same?” If so, if these numbers were applied to the Clapham private rental market, what sort effect would it have on the Clapham property market as whole?

Talking to the landlords I deal with, most are feeling quite optimistic about the future of the Clapham rental market and the prospect it presents notwithstanding the doom and gloom prophecies that the property market will shrink. Many of those Clapham landlords who are looking to enlarge their portfolio are doing so because they still see the Clapham rental market as a decent investment opportunity.

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.

With top of the range Bank and Building Society Savings Accounts only reaching 1.5% a year, the rollercoaster ride of Crypto currency and the yo-yoing of the Stock Market, the simple fact is, with rental yields in Clapham far outstripping current savings rates, the short term prospect of a minor drop in property prices isn’t putting off Clapham landlords.

The art to buying a Clapham buy to let investment is to buy the profit on the purchase price, not the anticipation of the future sale price.

No matter what the historical economy has thrown at us, with the global meltdown in 2008/9, dotcom crash of 2000, ERM in 1992, the three day week, oil crisis and hyperinflation in the 1970’s (the list goes on) ... the housing market has always bounced back stronger in the long term. That’s the point ... long term. Investing in buy to let is a long-term strategy. The simple fact is, over the long term with the increasing demand for rental properties, predominantly among Millennials as many cannot afford to get on the property ladder, and with councils not building enough properties of any kind, many youngsters are having to resort the private rental market for their accommodation needs.

So, what of the numbers involved in Clapham?

There are 277 landlords that own just one buy to let (BTL) property in Clapham (or SW14 to be precise) and 603 Clapham landlords, who are portfolio landlords. Between those 603 Clapham portfolio BTL landlords, they own a total of 1,265 Clapham BTL properties and they can be split down into the size of landlord portfolio in the graph below…

If I apply the Aldermore figures that means 247 Clapham landlords have plans to expand their BTL portfolio in the coming year or so.

However, the Aldermore Research also showed that 8% of private landlords intended to reduce the number of properties they own. They put this down to continuing Government intervention in the housing market (as many landlords mentioned too many limitations and higher taxation) while some believed that tenants are excessively protected to the disadvantage of the landlord.

I would say there is no repudiating that the buy to let market has taken a bit of a beating, thanks to a plethora of Government regulation, new mortgage underwriting rules in 2014 and George Osborne’s tax changes. Yet there still remains an overall consciousness of optimism among the vast majority of Clapham buy to let landlords. Despite these latest changes, many landlords still view buy to let as a good investment, as long as you buy right and expand your portfolio taking into account the second rule of buy to let … assess your position on the ‘buy to let seesaw’ of capital growth and yield.

If you want to buy right and assess your own portfolio on the yield/capital growth seesaw ... drop me a note. I don’t bite and the opinion I give, whether you are landlord of mine or not as the case may be, is given freely, without obligation or cost. The choice is yours. Thank you for reading this article. To read others, please visit my Clapham Property Blog.

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

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

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

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

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

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

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

So, who is to blame?

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

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

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

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

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

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

Is the end is nigh for bad landlords in Clapham!?

For those of you who managed to make it down to the Clapham Property Meet and heard my eviction talk you will know that there is plenty of regulation to comply with when renting out your property. Get caught out and it could spell disaster. Literally! If you do spell things wrong on a notice then it could mean the invalidity of an important move-out date that you sought, and/or whether a judge will throw out your request for possession, if it does get that far.

But what does all this regulation really mean for renters and landlords in Clapham? Well for starters it will increase barriers to entry. More regulation (or red tape as some people refer to this as) means that it is more difficult for the average man to just start letting out their property. They are made to comply with a myriad of safety checks, and should they not comply the penalties are severe. 

This is a good thing! The private rental sector has improved vastly over the last 50 years, what with the Protection From Eviction Act, Housing Act, and so on and so forth. There isn't a day that goes by without a newspaper reporting on yet another "beds in sheds" case where a landlord lets a property in an overcrowded state or doesn't comply with the various safety protocols that are in place for both single lets and houses in multiple occupation.

There is less and less room for bad landlords these days; one will have to comply and rent their property in a professional manner in order to get the best returns and rent to respectable tenants. Tenants that cut corners are a risk for the landlord I'm sure that you will agree. 

Legislation may not be completely obvious. It is very easy to find a tenant due to the vast demand of rental properties in London, but it is more difficult to comply with legislation and at the same time maximising your investment. Regulation costs money after all - the vast majority of professional tenants don't mind paying that little bit extra to a professional agent or landlord in order to "buy this safety" as it were. There are, of course, still landlords that cut corners, knowingly or unknowingly. For example from 2018 landlords will not be allowed to let out properties that have a Rating of E or better as I mentioned in a post some time ago: https://goo.gl/1FXHpk. 

More legislation that is not immediately obvious is the serving of the government "How to Rent" booklet. A lot of landlords are being caught out with this, because any tenancy that started after October 2015 will be subject to this legislation: if the booklet was not given to the tenant then the service of a Section 21 notice (notice for a landlord to end the tenancy) will not be valid. Can this be done retrospectively? Yes it can, but you can't serve a S21 notice until 6 months down the line.

Some say that "what you don't know won't hurt you" but I think ignorance is not bliss when it comes to renting out a property worth hundreds of thousands of pounds. It is a big risk not to be able to get possession just by not serving a pdf from the internet. Aforementioned are only some of the hidden rules of renting. I am a career property property professional and I have built portfolios for many clients. If you are interested in investing your money in the London property market then I can help you get the best returns whilst complying with all the relevant legislation so that you needn't worry about risking your capital. I offer a range of investment options such as portfolio building for high yield and maximum capital appreciation with hands-off management (armchair investing) or opportunities to invest your money into refurbishment projects for relatively quick returns on your capital. If you are interested in working with me do get in touch on jeroen@claphampropertyblog.com or come down to the Clapham Property Meet and learn more about investing in the London property market.

I want to look further from the station to find more space, but how will this affect the value of my property if the market changes?

This was precisely the question I was asked whilst having a catching up with an old friend earlier this week, and an excellent question which is well worth addressing. So let’s first state the obvious. Being close to transport is good. Typically, buyers like properties that are close to transport and properties that are located within a 7-8 minute walk from a station also tend to hold their value. Hence investors and developers tend to be a lot more cautious when it comes to putting their money into properties further out than this.

However, I told my friend that a big factor which has contributed to the rapidly increasing prices of the last few years here in London is the shortage of supply. And what do people do when there is not much on the market? Look further out. When in the position of buying and faced with the option of a cramped property relatively close to a transport hub, or a much larger place that is further away from a station, buyers compromise. Suddenly, that 15 minute trek seems much more do-able – especially in a market like London where buyers are typically stretching themselves to get on the property ladder in the first place – and have to compromise on something unless their budget is unlimited!

And what happens to prices as a result? We know that centrally located properties tend to increase in price steadily. However, what we have seen in the last few years is that when supply is restricted the prices of properties further out actually increase more rapidly in percentage terms, as they play catch up with with the more central ones. Properties further out have gone up at phenomenal rates over the last three years. Naturally, should the market be flooded with properties the price increases could be liable to plateau as buyers can afford to be more picky in terms of location.

Ultimately, investing in property in a market as buoyant as London is generally a wise long term decision wherever you buy. As always there is no right answer or wrong answer, it depends on circumstance – but the big factor when considering whether to purchase a property closer or further from transport – when looking from a price perspective – really comes down to how long you are planning to keep the property for. I advised my friend that were he only planning to keep the property for just a couple of years before upsizing or moving elsewhere, it would probably be better to purchase close to the tube station in the location he was looking at, as this would leave him less vulnerable to any short term volatility in the market. If he was looking to keep the property for longer, say 5-10 years as a long term investment, if he looks further afield not only is he likely to get considerably more for his money, it is highly likely to be a shrewd decision financially.

As always if you are eyeing up an investment and would like a second opinion do get in touch on 020 3397 2099 or drop me a line.

Richard Thompson
Sales Manager

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