Property Alert 18th June 2013

Welcome to today’s email…

Interactive London Map

If you are looking at London, pay a visit to the site; as well as lots of useful news and commentary, it offers an interactive map of London where you can compare performances in prices and rents over the last 12 months and five years. It also reveals the proportion of international buyers and tenants in each area and the reasons why people are buying there. In brief, Battersea and Clapham have seen the highest price rises over the past year, 7.9 per cent. Rent-wise, Battersea has seen the biggest rise over twelve months at 8.3 per cent. Check out the site.

BTL Mortgage Update

A new range of specialist buy-to-let mortgages has been released by Shawbrook Bank, available via mortgage brokers TBMC. These include three-, five- and ten-year tracker rates up to 75 per cent LTV and are available for Houses in Multiple Occupation (HMOs), student lets, limited companies and portfolios.

Andy Young at TBMC comments, ‘We are delighted to offer this new product range from Shawbrook Bank which provides new options for landlords, especially professionals. As a predominantly commercial lender, Shawbrook takes a flexible approach to lending, looking at the overall proposition of the case rather than ticking rigid criteria boxes.’ As always, talk to a broker.

Offset Mortgage Comment

Writing for The Scotsman, Andrew Hagger of suggests it may be time to look again at offsetting your savings against your mortgage. ‘Here’s an idea of the savings you can achieve with an offset, proving that it is a viable option for those with fairly modest savings or those who intend to save on a regular basis. Say you have savings of £5,000. Offsetting this balance against a £100,000 mortgage at 4 per cent would save interest charges of £8,016 and take one year and three months off the term of a 25 year mortgage.’

‘If you are able to put aside £150 into your savings account each month, then you’ll save £20,518 in mortgage interest charges, cut three years and two months off the length of your 25 year mortgage plus you’ll end up with a savings balance of £39,300 when the mortgage is repaid.’ As ever, it’s a matter of taking every ‘either-or’ option and crunching all the numbers.

All for now. Do have a look at the June PDF newsletters, UK and International Property Alerts, and feel free to send them on to anyone interested in UK or overseas property.

Property Markets Overview

The latest Knight Frank Global House Price Index makes interesting reading. Over the past year, to end of Q1 2013, worldwide residential property prices are up 6.6 per cent. The headline is that this is the biggest rise in some three years. As you’d expect, there are variations. The highest risers are Hong Kong at 28 per cent, Beijing and Shanghai at 23.8 per cent and Dubai at 21.1 per cent.

‘Property prices in all world regions, except Europe, increased in the year to March, with the Middle East performing best, rising by 10.6 per cent on average.’ Biggest falls? As you’d expect, Greece led the way down at 11.8 per cent. Hungary, down 9 per cent and the Netherlands, down 8.3 per cent were other poor performers. More to come.

Brazil – Act Now

Savills new Spotlight report suggests that UK investors need to act fast if they are to buy into Brazil as South American investors are buying into property developments before they are even released into Europe. Yolande Barnes of Savills Research says, ‘Brazilians, alongside other South American nationals, are poised to become more significant players in international real estate markets. As the domestic market grows and as investors have prospered, they will become more inclined to invest.’

‘South America, in general, and Brazil, in particular, have enjoyed the benefits of fast economic growth, but apparently without the attendant excess house price inflation that has become associated with so many of the ‘new world’ real estate markets of the East. Although house price growth over the last five years has averaged 23 per cent per annum in Rio and 17 per cent per annum in S?o Paulo, residential rental yields are on a par with many of the troubled ‘old world’ economies and house price to income ratios are much lower than many of the Asian ‘tiger’ economies.’

Those of you who bought into Brazil via our introduction last year are now sitting on 20 per cent returns and some of you are now entering new 20 per cent return deals before the drop to 15 per cent. We are now only taking replies from known-to-be-serious investors.

US Property Recovery

According to new research from the National Association of Realtors (NAR), US sales are slowing because of shorter supply whilst sales are still rising. Lawrence Yun, NAR’s Chief Economist, says, ‘The robust housing market recovery is occurring in spite of tight access to credit and limited inventory. Without these frictions, existing home sales easily would be well above the five million unit pace.’

‘Buyer traffic is up 31 per cent on a year ago whilst sales are around ten per cent above what they were over the same period. To prevent high demand and low supply impacting the market and to tame price growth to a manageable, healthy pace, the number of new homes available need to be increased by ramping up construction.’ More to follow.

Finally, we have a monthly currencies review just come in from Peter at Pure FX

Make One Like It!

Make One Like It!

Have you ever had a favourite item of clothing which wore out and you wanted to buy another, exactly the same?  If you have, the chances are that you couldn’t get one.  Styles and stock change, and unless it’s an iconic style of jeans, your favourite item will have been replaced by something not quite the same. So imagine if there was somewhere you could go where they would replicate your item exactly. You’d have to pay a premium price of course, but it would be worth it to get what you really wanted.

Could there be an opening for someone to provide a bespoke service like this in the UK? Certainly there are plenty of skilled seamstresses and tailors available both here and in the Far East, where prices are very reasonable. The job for the UK based entrepreneur would be one of marketing and co-ordination rather than anything technical. ‘You Bring It, We Make It’ could be your advertising promise.

Property Alert

BTL Overview

Mark Ellis at brokers SPF Private Clients is in the news commenting on getting into buy-to-let. ‘Cheap mortgages and sluggish property prices, especially outside London, have made buy-to-let affordable for many. Interest rates have been at historic lows for more than four years and that shows no sign of changing. Lenders are also easing their criteria, which makes it easier to get a mortgage. If you buy the right property, you can generate healthy investment income now with capital growth in the years to come.’

‘But don’t invest in the hope of making a fast buck. The days of double-digit house price rises are gone. Buy-to-let is primarily about generating income and you should view it as a medium- to long-term investment. In the short-term, your property may even fall in value. But, if you are getting strong rental returns every month, over 10 or 15 years, your investment will pay dividends. If you are generating only enough rent to cover your mortgage now, you could be in trouble when rates rise.’

‘If you’re tempted to get into buy-to-let, do your sums carefully and don’t overstretch yourself. Avoid borrowing to the max. Keep some money for emergencies, and to pay your mortgage during so-called ‘void’ periods, when your property lies empty because you can’t find a tenant.’ More to come – our colleague Mick Rawlinson is about to start a series of weekly BTL articles for us.


London – New Property

We’re seeing lots of interest in the one-off London deals being presented by Adam. I think, for those that have been put out recently, we need to say ‘no more replies – at least for now – please.’ We have members viewing etc this week. Meantime, another introduction!

South London, Surrey – modern, one-bed apartment built in 2012 – Market Value £200k but available for £174k – Discount £26,000 – Currently let and yielding 6 per cent. If you are interested, you will need to reply today or tomorrow at latest and view asap.


Land Banking Feedback

Bought into a land banking deal? ‘Ganging together’ is a useful tip according to one member…

‘I wrote to you last year on this topic as the plot owners on my particular site had managed to gang together and transfer their land into a single legal entity. I am pleased to say that three years’ hard slog is now paying off. We have got planning consent on our 24.2 acre field and we have just gone out to tender.’

‘The reason a lot of these land banking projects will never get a return is because the people who own the plots just sit back and do nothing, hoping the magic fairy will do something for them. All the owners have to get together and put their land back into a single site. Without this, no developer will be interested, no council will be interested – and the land will be aversely possessed by the current user of the land after 10 years. Sadly, the scammers targeted the more elderly who do not have the knowledge or energy to sort out the mess that they are left in.’

Excellent point, thank you. As always, food for thought.

All for now, as ever, please feel free to get back to us.

Movie Star Photo Studio

There was a time, not too long ago, when having your photograph taken was a fairly rare event. That’s all changed today of course, with just about everyone having a camera on their mobile phone. There are a couple of problems though; the photographs typically taken tend to be quite mundane, and they’re rarely printed out. An idea we saw in California could easily be copied anywhere.

It’s a photo studio where you go in and are cast as a character from a film. The studio has costumes depicting a wide range of characters. Customers book an appointment either individually, or as a family, and get to portray their favourite film characters. They are then offered prints in a range of sizes and styles.

Photography is becoming incredibly common (I read somewhere that there were more photographs taken last year than in all of history!) but interesting or high quality photography is less so. Professionals need to find a way to differentiate what they do from the crowd, and this is one way to do it.

Buy One, Give One Away

We’re all familiar with offers like ‘Buy one get one free’, and ‘Buy two for the price of one’ – so familiar that they can sometimes wash over us without creating an impact. To get attention, you sometimes need to do something a little bit different. One offer idea I came across recently in the United States was ‘Buy One, send one to a friend for free’.  The idea is that when you order a product, the company send a lesser product to a friend with your compliments. So, for example, you order a shirt and are then asked to designate a friend to receive a tie. Or you order a crate of wine and a friend receives a bottle of the same wine.

This seems like a ‘win-win-win’ situation. As a customer, you get to do a favour for a friend. The friend gets a free product. And the company get to make contact with a new potential customer, effectively financed by the original purchase.

Is this something you could use in your business? I’m sure it could be used in mine.

Teaching Online

It doesn’t seem so long ago that if you wanted to make your living as a teacher, you needed to get a job in a school, a college or give private lessons at home, or at the home of your students. The advent of online services like Skype and Youtube has literally opened up the world to tutors and teachers. Just about anything that could previously only be taught in a face to face situation, can now be taught online.

Not only does this mean that your students can come from anywhere in the world, but it also opens up myriad new viable subjects and courses. If you live in Rochdale, the chances of finding enough students locally, who are interested in learning ancient Peruvian, for example,  are not high. But when you can garner your ‘class’ from the entire world, it becomes a much more viable proposition.

So is there something you could teach online – it could be a language, a skill or something else?  If so, there could be people from the four corners of the globe, just waiting for your PC based class to start enrolling students.

Watch Out For The Elephant In The Room

If most people were accused of selling s**t they’d be offended, but Miroslav Bobek isn’t most people. He’s the director of Prague Zoo in the Czech Republic, a place where they’ve just launched a lucrative sideline selling Elephant dung.

For around $4 you can buy a bucket containing 3 pounds of dung. Apparently there’s nothing finer for your garden. Given that an adult African elephant can produce 300lbs of dung a day, there’s no shortage of supply, and a quick calculation suggests that each elephant could be worth $400 a day in dung alone.

I’m not suggesting you buy an elephant for the purposes of selling its dung; I  suspect the food that produces the dung would more than offset any profit…even if you had room in your back garden for the elephant!!  However, this story is a reminder to give some thought to any waste products which are created as a result of your business or enterprise. Could there be a market for them? Could they be converted into something saleable? Could you be taking profits to the tip…or worse still, paying someone else to take them away?

Property Alert 11th June 2013

Welcome to today’s email of UK property news and views…

BTL ‘Extras’ – A Reminder

Charles Brittain of investment adviser Invest Connect is in the news talking about the importance of contingency funds. ‘Buy-to-let repossession orders are on the rise because of rising rent arrears and void periods. If investors and landlords do not have a contingency fund in place to cover unforeseen circumstances, then they could fall into financial difficulty and potentially lose their property.’

‘As a general guideline, 30 to 35 per cent of one year’s gross annual rental income should be put aside to cover rent arrears, void periods, maintenance, repairs and refurbishment, plus white and brown goods replacement and the ongoing rental costs, such as gas safety certificates and letting agent fees. This contingency may not be used and should not be seen as an additional annual cost, just part of the investment business plan from the outset for investment protection.’

‘Buy-to-let is very profitable in the long term but only if you do your sums properly and structure your investment wisely. A property investment is similar to running a business, so you need a business plan, cash-flow forecast, finance and funding. The maintenance costs for a new or recently refurbished property are likely to be minimal at first. But over time, those costs will grow, particularly when larger-scale refurbishment is required.’


BTL Costs

Charles offers a checklist of initial costs…

Energy Performance Certificate

Gas safety certificate

Letting agent’s fees

Tenancy Deposit Scheme fees

Assured Shorthold Tenancy fees

Landlord insurance

Council tax and ground rent

Service charge

Buildings insurance

Utility bills

White goods and furnishings

Other costs? We have a fuller checklist to follow shortly.


London – A Changing Market

A new report from Cluttons, ‘One Size Does Not Fit All: Diverse Opportunities in London’s Rental Market’ makes interesting reading for existing and would-be investors in London. Key points? The number of private tenancies has risen by 80 per cent over the last decade. That supply has increased to meet demand. About 50 per cent of Londoners rent; that compares with 30 per cent across the country.

Londoners aged 20 to 40 years are the main clients for property rental, according to the report and they rent for longer. ‘Younger people are choosing to rent for longer periods, especially if they plan to stay in the capital only for a few years, or wish to live centrally, thus avoiding long commutes from outside London’

‘There is a growing differentiation between those that put a high value on proximity and amenities when choosing where to live and those that react to rising housing costs with soul searching over lifestyles that are prepared to compromise on accommodation, in order to keep living costs down.’ More to come.

Food Preparation Profits

Go to Marks & Spencer food hall and for a premium price, you can have your vegetables prepared to within an inch of their lives. In fact, all there’s left to do is cut open the packaging and throw them straight in the pan.  Produce tends to be a lot cheaper in other outlets, but you have to wash, peel, cut and whatever else you do with veggies. You can probably tell that I don’t cook!

Anyway, what if (say) there was a stall in your local market which sold nothing. Instead, it took the fresh vegetables that market customers had just bought, and pre-prepared them to the customers instructions? M&S presentation, but at a little over market prices. Might such a stall prove popular by combining low prices with convenience? I’m not sure really, you’d need to try it to find out.

Property Alert 10th June 2013

Welcome to today’s news and views on the overseas property market…

South-West Florida Boom?

According to the local Herald Tribune, South-West Florida is seeing something of a boom in the property market. The newspaper reports on a recent panel discussion featuring a range of real estate professionals. ‘Michael Saunders, founder and chief executive of the real estate brokerage firm that bears his name says, “We were in a dead period for a while, but now we have a market on steroids. It’s a real problem trying to find housing for those who want to work and raise a family here”.’ Interested in buying here? Let us know. We will send you a four-page report. Tell us what you want to buy here and we will make it member-specific.
Spain – Selling Tips

English-speaking estate agency HomeEspaña, with four offices on the Costa Blanca, offers some selling tips…

Be realistic about price, especially if you want a quick sale, and remember that as a private vendor, your property could be competing with bank repossessions on price. Anticipate completion to take six to eight weeks from the point of accepting an offer, however if you have a cash buyer who is happy with the paperwork, you could have a sale wrapped up within two weeks. If you are resident in the UK, it’s likely you’ll need to make a trip to the Costa Blanca, not least to be at the notary’s for completion if you haven’t granted power of attorney. Try to remain available to make a trip out to Spain if it means keeping a sale opportunity alive.

Agency fees in Spain vary, depending on the estate agency. It could be an agreed rate of commission paid on the purchase price, sometimes also by the buyer. Another typical model is an estate agency agreeing to achieve a certain price for a vendor and then adding their fees to that price when they advertise the property. For example, as a vendor wanting €100,000 from the sale of your property, you might see it advertised for €105,000-€110,000 – the difference is your agent’s fee. So long as all parties are aware of the fee structure, including the buyer, there should be no disagreements.

Usually, it’s best to include all furniture and appliances in the sale of your property, unless you are a resident on the Costa Blanca and moving into an unfurnished home nearby. Even if you are moving back to the UK, the cost of bringing things with you, and possibly having to store them, isn’t usually worth it.

Don’t waste money unnecessarily when repatriating the proceeds of your property sale to the UK. Too many vendors are not aware of the hidden costs that come with transferring money to a UK bank from a Spanish one, until it’s too late. For starters, just paying the banker’s draft from your buyer into a Spanish bank account usually incurs a charge, typically €100-€200. Once the draft has cleared, asking your Spanish bank to exchange the euros into pounds and deposit them in your UK bank account will mean you get stung again – firstly, by a transfer fee, typically around one per cent of the value of the transaction, then by a poor exchange rate.

Be mindful of any fees and capital gains tax that will be deducted from the proceeds of your sale. Even if no capital gain tax is owed, as a non-resident vendor your notary will take a 3 per cent withholding tax, which can be reclaimed using a tax representative in Spain.

If you are selling on the Costa Blanca, do check out English-speaking estate agency HomeEspaña. We can put you in touch.
Paris News

Les Calvert of echoes what we have said recently about Paris. Let’s quote Les, ‘Paris is experiencing a dent in interest levels due to high pricing of properties. Apartment prices in particular have been rising and investors believe that they are too expensive. Real estate analysts say that 25 per cent of the apartments in Paris are finding it hard to attract buyers. Sellers are unwilling to lower the prices of their properties. While buyers believe that apartments are over-priced, sellers maintain that it is fair value. Buyers are therefore becoming more selective and exploring options in other markets to get maximum value for their money.’ Result? Stalemate! We have a syndicate going over to Paris later this month to look at properties and deals etc; we can send a report to those of you who are looking to buy there.