In light of what I believe to be a the ever-growing negative effects of social media on our health and wellbeing, I’ve decided to come off Facebook, Twitter (X) & LinkedIn.
Thankfully property search is still very much a people business where personal interaction and human connection are what it’s all about. So do get in touch. Just pick up the phone or email, and let’s get your search underway.
Look forward to hearing from you.
Best wishes,
Daniel
When there’s been a recent crash, lenders are generally super cautious and bring-in a raft of measures to make sure it doesn’t happen again. One of these are strict affordability criteria applied to new mortgage applicants. Whilst annoying for those who have lower deposits who now struggle to find a lender who considers them an acceptable risk, it does keep some sort of control on the demand for homes and some sort of check on house prices which might otherwise get out of control.
As time goes by however, the banks’ memories fade, their balance sheets start to look healthy once again and the very measures that protected them in the crisis now seem limiting. They start to believe the once sensible restrictions are now getting in the way making more profit!
For someone who’s lived through a couple of crashes, it then starts to sound a bit familiar. One major indicator I believe, that we’re entering the last phase of a prolonged period of property price growth is the removal or easing of lending criteria by banks. So would you believe it, on 28th Feb a consultation was launched by the Bank of England on whether it might be time to lift some of the lending criteria restrictions imposed back after the last crash. A decision will be made in May.
If they decide to remove the restrictions and make borrowing easier, watch out! We could well be seeing a super-charging of the property market yet further and an inching closer to the end phase of the boom.
Subscribers to the 18-year property cycle model will certainly be watching with great interest as by rights, they’d be expecting a 2024/5 crash and this would tie-in rather nicely with that prediction.
Whatever your view, if quick profit is your aim then it’s more important than ever right now to apply a bit of caution, do your research and buy sensibly. Keeping an eye on news like this is important. Ultimately property is best viewed as a long term investment and the stats clearly show that if you invest on that basis, you shouldn’t go too far wrong over the long term.
Covid has caused significant changes in the way we view the places we live, and as a result, over the last 12 months there’s been a major move out of towns and cities and in to the countryside.
Studies have shown that lower prices & the chance for outside space have played a role in that decision for people, along with the desire for safer and friendlier places to bring up a family. However, one recent study suggests as many as 41% of those who moved from the city to the country in 2020 put it down to wanting to be ‘around more nature’.
Rents down
That trend might be about to change though. New research by First Mortgage suggests that despite the surge in moves away from the city, one fifth of those who moved in 2020 are planning to return to the city within the next year. This is particularly true of younger people who in many cases gave notice on their city rental homes back in March 2020 & went to stay with friends or family, only to be now considering a move back.
When you look at rental figures in some of the UK’s biggest cities, there’s good reason.
In a recent article (link below), Rightmove said: ‘Our data analysts report that rents in the capital are falling, which has given people a window of opportunity to relocate now before they rise again’.
Time to head back?
It’s certainly seems that there could be bargains to be had. According to their figures, at the end of 2020, inner London’s average asking rents had fallen by 12.4% over the year. Edinburgh city centre was down 10% and Manchester city centre down 5.3%.
So with lockdown restrictions easing, bars, cafes and restaurants opening soon and the promise of life getting back to some sort of normal, it could be a great time to grab yourself a rental bargain.
Sales prices up everywhere
The sales data for cities shows that although some inner cities saw demand fall, prices in most towns and cities have outperformed all expectations. The northern towns have seen the biggest demand thanks to major regeneration and investment projects, significant business relocations and the HS2 rail project. Covid is a major factor though. It’s made people rethink their life choices. They’re willing to foregoe the attractions of the capital now, in order to reap the benefits northern cities in particular have; lower prices, quality of life and the great outdoors right on the doorstep.
Hometrack’s January report shows just how much of an impact the increase in demand has had on prices. Liverpool was the star with a 12-month rise of 6.3% followed by Manchester (6%) & Leeds at 5.8%. (Incidentally this is my tip for the top in 2021/22. Even London prices in the last year rose by 2.9% which is more than you might have thought.
It’s not all good news for renters
There are plenty of places that did buck the rental trend during Covid however. Provincial towns have seen big rent rises for the reasons outlined. You’ll find no such bargains here in Exeter for example (see link below). Rents here have risen here by a whopping 39% in the last 5 years!
Exeter’s fortunes are changing for sure, and what’s not to like? A beautiful Cathedral city, 5 miles from the coast, a top University and schools and Dartmoor right on the doorstep.
So what can you take-away from all this?
Rightmove article on London rents. March 10th 2021
Exeter’s 39% increase in 5 years. 17th Nov 2020
https://www.devonlive.com/news/devon-news/exeter-sees-highest-rent-increase-4706752
Hometrack price analysis. January 2021
https://www.hometrack.com/uk/insight/uk-house-price-index/
It’s an unusual time for property, as it is for every other aspect of life at the moment, but particularly for those who buy for investment, I’m confident property will continue to perform well in the coming years.
Whilst many clients are understandably happy to hunker-down and simply focus on getting through the coming weeks unscathed, others are tuned-in to buying opportunities that may start to present themselves as the lockdown continues.
There’s talk for example of discounts by major developers on some new-build developments. It seems some might be beginning to prioritise money in the bank over their desire for profit. I’m investigating this and will be letting my investors know what I discover in the coming days.
In the meantime, the Property Podcast is an excellent resource that I regularly listen to for up-to-date, sound advice on all things property. You might find this episode particularly helpful if you’re either in the process of buying during the outbreak or were thinking of investing and considering what your next move should be:
https://propertyhub.net/podcast/coronavirus-should-pull-out-deal/
This year new tax changes designed to take the buzz out of the buy-to-let market began to bite and yet investors kept investing. Not in the over-priced south though. This time, the smart money moved north.
Foreign investors spotted the signs early and saw the tax benefits in buying many, & buying cheap. Others followed suit and though we’ve seen prices climb, the general feeling is that this only the beginning.
I’m about to complete on my 4th northern buy-to-let house search in as many months. This time it’s Manchester, without doubt a city that’ll benefit most from the lift in the north’s fortunes. With really significant investment projects taking place like the £1billion injection in the airport transformation project, the new southern bypass and HS2, to name a few, it’s hard to see how it could do much else. Not to mention having recently been identified as the top city outside London for direct foreign investment projects in the UK.
Remember as well, following Brexit the Government are determined to keep the United Kingdom, well, united. They intend to do this by moving money and investment that traditionally has stayed in London, in to the many large, innovative Northern powerhouse projects that are happening across the region.
If you’d like to get in on the act in Manchester or any other rising stars like Birmingham, Liverpool, Leeds or Sheffield, then get in touch.
A £125,000 terraced buy-to-let in south Manchester will cost you £30k with the mortgage taking care of the rest. You can expect a rental of around ££650/month. This represents a 6%+ yield. In this instance though it’s capital gain that should be your main motivator, as the north features more & more on UK and overseas investor’s radar.
I’ve been spending a lot of time in the north just lately and there’s a buzz around the northern property scene. Two trips in as many weeks for interested clients and it’s clear I’m not the only one looking. Would-be southern landlords are turning-up in the most unlikely places, drawn by lower prices, higher yields and the chance of a credible source of passive income. My enquiries from keen newcomers are up. I’ve also been encouraging my existing landlord clients to re-think their strategies and look north too.
This comes at a time of recent tax changes causing some to lose confidence in the buy-to-let model. Whilst it’s sensible to do your research (check out this ‘Which’ guide) tax surely only exists on houses that make profit; and there do appear to be profits to be made.
Here a bit of guidance and a few suggestions on how you might go about it:
‘The South’ is perhaps best avoided for a bit. There are still some places with prices rising and moderate rental yield but mostly the value is North. The stats suggest this starts around Birmingham and goes north from there where yields are higher and prices are lower but rising
Think about your strategy. Is it a high yield you’re after or capital growth? The distinction is important. I personally think a place like Stoke, where prices are extremely low, is a place for landlords who want yield, but isn’t all that likely, at least in the near to mid-term, to jump in value as much as bigger cities like Liverpool, Manchester & Leeds. Here you have desirable places to live, work and bring up a family. Plus they’re firmly on the radar for some very big investment projects that are happening too. For capital growth I’d be more inclined to put my money here
Realise the value in your existing properties. If you’re a landlord already who’s seen a significant increase in the value of your houses or flats over the past few years, you need to be bold. Look at using the equity you’ve amassed by re-mortgaging or sell one or two. Something I’m doing myself in fact. You’ll be surprised how far your money stretches in the north & a rental yield of 6% is quite achievable
£30k will do it. Less in some areas. You can borrow the rest on a buy-to-let mortgage (the amount’s calculated the rent you’re likely to get on the place you intend to buy). A house costing £120k is within your grasp with £30k and at current rates, you’ll pocket at least £250/month after you’ve paid the loan & agent fees, whilst all the while, sitting on an appreciating asset
Communications are key. While a city’s prices may rise generally, areas with particularly good links will do best. That and big business or development plans for an area, of which there are many going on now
Do some serious research. You get big differences from area to area and even street to street. If you’re short of time or busy at work, employing a property finder who knows an area or will research it for you is a sensible thing
Be ready to move fast. If you have the cash, great; you’re in the strongest position for sellers who want a quick deal. If not, have a mortgage ready to go. I can help you with that
Pay the right price but don’t over-do it. There’s an expression: ‘you make your money when you buy’. Whilst it makes total sense and I’m all about ‘the deal’, there’s also a touch of ‘you snooze you lose’ to things at the moment. You make your own call on what represents good value of course and I can advise on that. You don’t want to spend over the odds but will £127k over £125k seem so significant in five years time? While you pour over the detail, others are generally getting on with it and in a rising market, that’s where you need to be
Don’t be scared-off. Property seems a scary prospect for the uninitiated. It really isn’t difficult once you get started. Like everything, do it once and it gets easier. Do it again and it’s actually very rewarding and enjoyable.
If you’re worried about not knowing how to do it, get people around you that do. I have contacts in finance, mortgages, conveyencing and lettings that will take care of everything, (incidentally I don’t take commission from any of my contacts) so you get the investment you’re after with minimal fuss and can immediately start enjoying your new life as a buy-to-let landlord and with a new passive income stream
Mine was a relatively small build so I opted to self manage. You may choose to employ a project manager. Either way, whether you’re a budget conscious landlord or planning a grand design style make-over, it’s important to get a few things right
Planning
Go and see the planner before submitting your application. It saves wasting time on things they’ll turn down. In addition, it sets-up a good relationship early on & in my case really sped-up the process once I submitted my application. 5 weeks in total
Choosing a builder
Never easy. Tempting as it is, price shouldn’t be the only factor. Recommendation is best. If you don’t know them, ask to speak to previous clients, visit a past project, read reviews/social media comments. There are organisations like the FMB where you can find a list of builders met at least some basic quality criteria
After whittling 6 quotes down to 2, it came down to who I thought was most honest, I could work with and also tolerate for 4 months!
Building inspectors
I’d been told councils can be difficult. I’m not sure that’s true but I used a private company (JHAI) all the same. They act as a kind of middleman between you and the council. The chap was helpful & efficient, advising at all the important stages. Reasonably priced too.
Give as much detail as possible when seeking quotes
For better or worse, I did my own drawings (sketched-over from scale drawings from the surveyor). Not entirely recommended! 
It was time consuming & the lack of detail made builder’s quotes less reliable and harder to compare. The danger here is the cost bumping-up later when the unexpected crops up. That said, you can save you money with a builder who’s experienced enough to fill in the gaps. With or without architect drawings &/or brief your builder will ask for your general level of finish. Prices, products & quality vary enormously. Do your research & try to give specifics. What exact skirting do you want & from where? Solid oak or panel doors? Metal or plastic fascias & guttering? Aluminium doors? What colour? What type of render? Wood cladding, cementboard? As for joinery. There are a million jobs for a good carpenter as you near completion. Try to get it thrown in to the quote
Electrics
A good electrician will help you but try to have a clear idea of number, type & position of lights, switches & dimmers. Get more sockets than you think. Buy lights in advance e.g. outside wall lights, garage lights, bar lights and so on, & have them ready for the electrician. Try to get the jobs included in the quote that you’ve always wanted done but never bothered like hanging-up that lampshade you always intended to, moving lights & switches in bedrooms etc. A technical point since I almost forgot. A kitchen needs a 60 litre/min extractors or 30 litres/min if over the hob (Building regs). Don’t forget, like plumbers, builders & electricans work closely on things. Get them together as regularly as possible
Plumbing
I had a major water leak that could have been devastating had it not happened before the floor went in. Worth talking through liabilities with the builder should something major like that happen. Builder’s insurance goes without saying. On a personal note, we’re disappointed with the position of the boiler flue (outside a landing window). A result of my of sketchy plan, ignorance of building regs & not being there at installation
Think about details
Where do you want an outside tap? How will pipework be hidden? What style of radiators? Do you want pipes from the floor or wall? Visit lots of bathroom stores. You’ll get a better deal if you know what it costs down the road plus there are installation practicalities you’ll learn about like hiding a cistern in a wall cost £100s more. Some walls are too thin anyway. Sinks hang-off wall battens so make sure they’re in place before the walls go up… Yes I did forget
Decoration
What doesn’t the quote include? Coats of paint? Tiling? Who’s buying the tiles? I was nearly drawn-in by expensive off-whites before coming to my senses. Pure brilliant white looks great
Doors & windows
For large patio doors you’ll need to go aluminium. UPVC won’t support large panes of glass. Prices vary massively so shop around. I went for sliders over bi-folds realising view, not open-ability was my priority. Delivery times are long so order early. Yah and believe it or not, UPVC actually looks pretty good in grey, so if you’re trying to save the pennies and you’re going grey on an aluminium bi-fold, go UPVC on windows and get a colour match. You won’t notice they’re different.
Putting right damage
Get an agreement from the builder that they’ll put right things that occur as a result of the build. In my case a sunken drive due to concrete lorry, a knocked-over fence, major cracks in walls & wallpaper upstairs as a result of the new steels going in (wait a few months for it to settle before re-decorating). Getting trades in later is expensive. Include it in the quote and hold back money for such eventualities
Agree the price of extras as you go
Problem is these decisions are often needed on the spot so difficult but you don’t want any major surprises at the end. I didn’t escape the final final bill scenario either
Factor in blending old with new
Some issues/costs arose as a result of trying to blend old with new e.g floor, celing and walls of the room leading to the new extension needed replacing, insulating and decorating. I hadn’t factored that in and the builder didn’t point it out. It represented the majority of my over-spend
Garages/stores
Agree what the internal finish will be upfront. Skimmed? Fibre-boarded? Painted? Mine’s ok but more rustic than I would have wanted. Is the garage door included in the quote?
Appliances
They vary a lot. Neff is high-end. AEG middle. Don’t assume own brands are bad but do your research. It’s certainly worth comparing outputs of induction hobsI avoided an integrated microwave. Only heard bad things
Garden landscaping
If there’ll be some fixing to the garden needed at the end, is it included in the quote? Can you get some landscaping thrown in too?
Remember too…
•It’s easy to get carried away on spending. Keep records. Useful for the taxman on investment builds and good for keeping you on top of your spending
•Get an airmiles/points card! You can dream of returning to your lovely new home as you jet off to Barbados in business class!
•A new home needs new things. Keep plenty in reserve and shop for furniture in good time
•You have a lovely new space. Plan what you want in it or the old tat will creep back in
•Your house will be seriously knocked about. Prepare for major disruption and dust. Seal-off areas, tape & nail doors shut & plug gaps with dust sheets. Still it won’t be enough though. Box-up & ship-out all your most treasured possessions
•Set yourself up for the long-haul. Which rooms will you live in while the building’s going on? Where will you eat? Where will your temporary kitchen go? How do you plan to wash-up? Ideally next to a water supply. Get the builder to set it up for you
•Communicate, communicate, communicate with your builder. You don’t need misunderstandings & fallings-out
•Builders can be messy. A secondhand ‘Henry’ is useful to. Portaloo hire might be worth it if you want to keep dirt outside
•Timing makes things more bearable. Summer’s a better time to be without heating, gas & electric. Less mucky too
Hope that helps & the very best of luck with your next building project
Help to Buy isn’t finished. It’s just changed. And if it’s your first time on the housing ladder and you’re keen on a new-build home, you can still benefit.
Here’s an update as to what’s gone and what’s staying in 2017.
What’s changed?
The Mortgage Guarantee Scheme has just ended. This allowed a 1st time buyer only to buy a property of up to £600,000 in the UK. They needed a 5% deposit, they had to live in it & it had to be their only residence.
What remains and what’s the difference?
The Equity Loan Scheme stays & you can access it if you’re an existing home owner.
– you need a 5% minimum deposit
– the Government will lend you up to 20% of the property value
– it’s only available on new builds
– you can look at houses up to the value of £600,000
There are different schemes in Scotland & Wales, reflecting, in part, lower property values, as well as individual their parliament’s desires. The Welsh Equity Loan Scheme is like the English one but for homes of up to £300,000. The Scottish Equity Loan Scheme is available through participating new-home homebuilders on homes of up to £250,000 (£200k after March). The Government will assess it’s contribution which will be anywhere between 10% & 20% of the property’s value.
Not ready to buy yet?
You could consider the Help to Buy ISA scheme. This is a scheme to help you get a deposit together for your first house.
Initially you can put in £1000 then up to £200/month to which the Government will contribute £50 for each £200. Like any other ISA you get tax free interest on it. The Government will also give you a 25% bonus when you buy a house.
For more information the Money Advice Service offer a helpful first-time buyer guide and you may also find their Mortgage Affordability Checker useful.
In a poll of over 1,000 landlords, half said they expect to see the value of their investments fall considerably in the next few years. Why?
The introduction of two new Government tax changes designed to help first time buyers on to the property ladder.
The new taxes are significant:
1. There’s a minimum of 3% rise in Stamp Duty (paid on purchase) kicking in in April ’16
2. The removal of mortgage interest relief over 4 years from April 2017
It’s great news for first time buyers and provides a much needed leg-up for people wanting to buy their own home.
For landlords it’s not so good. Where mortgage interest is concerned wealthier landlords will suffer most, as every £1 of finance cost they currently incur allows them to pay 40p or 45p less tax. The changes will almost double the effective cost of borrowing for them.
The new stamp duty levies add further pressure. Whilst a mortgage of up to $250k will incur 2% tax, those buying at the higher end will pay as much as 12% on properties over £1.5m.
So is it time to pack it all in?
For many it may be the end to any plans to continue to invest. Those with small deposits for starters, may find upfront costs prohibitively high or simply be excluded by lenders. Supported by the Bank of England, lenders are beginning to up the pressure by being increasingly demanding about who they lend to and the size of deposit they require.
With regards to stamp duty, higher rate taxpayers proportionately will pay the most but those on lower incomes may be able to compete, and with a reasonable deposits may be able to continue to operate effectively.
On the plus side, housing shortages are unlikely to disappear any time soon so good landlords will always find a steady stream of tenants. A few are considering a company structure that avoids some of the tax. That way they pay corporation tax and not the new stamp duty levies.
Some believe the taxes are counterproductive and tenants will continue to suffer as landlords up rents to try to offset some of their new costs.
The 2% stamp duty levy at the lower end might make cheaper properties the more ‘investable’ ones. Landlords may then continue to snap them up, rendering the new taxes ineffectual as a way of encouraging first time buyers in to the market.
Many worry about both capital growth and rental yield. It remains to be seen what will happen in the next few years. It’s the Government’s intention to encourage private home ownership and at first glance this may not be compatible with many landlord’s aspirations. However, the property shortage won’t be fixed any time soon so it’s hard to see how shortages will keep prices and rents down over the medium to long term.
Landlords have had it pretty good over the last few years and the new taxes are likely to bring some balance back to proceedings. My belief is that buy-to-let still represents a good long term investment for those who choose carefully, treat their tenants well and buy and sell at the right time. More than ever, sound financial advise before taking the plunge is important.
One thing’s for sure. If you were thinking about buying in the next six months then don’t delay. You have until midnight on 31st March to complete on any buy-to-let or else be subject to the new charges.
Get in touch now and give yourself the best chance of beating that deadline.
Daniel
For an interesting overview of renting & letting, listen in to this week’s Moneybox live
Some agents are resenting the fees they pay to ‘the big two’ and now appear to have had enough. A consortium including Knight Frank and Savills launched the new site two days ago which, interestingly, allows an agent to only use one other web portal. With fees only ever having risen, OTM could be an attractive prospect for many agents; but what about the users of the sites?
In effect, OTM will be run for estate agents, by estate agents, many of whom have actually invested in the venture in the hope that more agents will follow suit. It’s unlikely to attract them all, not least those with shareholdings in Zoopla or Rightmove.
So why are they switching?
Well one reputable London sales and lettings agent who’s decided to switch told me “Rightmove and Zoopla pretty much had us over a barrel each year with their price increases. We pay RM over £40k a year and Zoopla £20K. With OTM, our fees are about £20K too but they are fixed for 5 years, with the aim that they will reduce once they’ve reached a certain number of clients”.
2 days in, it looks as though Zoopla’s lost more agents to OTM than Rightmove but not nearly as many as investors feared; hence their 12% share price jump.
In the meantime, Zoopla’s playing hardball. Agents report ‘unusual’ visits from people claiming to be buyers, followed two days later by letters demanding the removal of the Zoopla logo from all promotional material; a risky strategy by Zoopla if true – if the mighty Rightmove were to fall, agents will be looking for a friendly 2nd option, and that’s not very friendly!
So who’s set to benefit?
For agents it’s a gamble that depends to some degree on how well they organise themselves. They’ll certainly face lower fees, and you’d like to think they’ll pass that on to their clients (!).
Some question their motives. Alex Gosling of House Simple calls these ‘high street agents’ actions “a cynical, anti-competitive and desperate reaction to a market that is changing”.
But blaming the newcomer for spoiling the party seems disingenuous as agents argue that’s it’s the actions of the big two thats forced their hand.
My agent friend in London is cautiously optimistic. “It should benefit the end user” he says. “There are no fancy frills / adverts / confusing click here and click there. It won’t show how long the property has been marketed for or if there have been any price reductions either, which actually often serves to put potential tenants and buyers off”.
Competition in the long term may well be a good thing but right now it’s true that ‘end-users’ are getting a raw deal. With 3 large sites and countless smaller
ones out there, it’s a more confusing and inconvenient process than it should be.
On launch day, I noticed a distinct drop in the number of properties coming up on Zoopla compared with the day before. I was actually in a village with over 25 houses for sale but the Zoopla-app only showed me three!
Aside from being worrying for Zoopla, that’s just not helpful and many users have no idea that they’re missing out on properties like this.
Time will tell who the winners and losers will be.
Remember, the best way to ensure you don’t miss anything is to use all the sites, not just one. In the meantime, check out onthemarket.com and let me know what you think. Better still, save the hassle of finding a new home alone by getting in touch and letting me do your search for you.