Welcome to Wednesday’s email of news and views…

According to letting agents Makeurmove, nearly one-third of landlords experienced rent arrears in H2 2013. It’s a growing issue. Richard Francis at the online site takes up the story, ‘Rent arrears are becoming the fastest growing debt problem in the UK and this is a big problem for landlords across the UK. In fact, the number of landlords and agents seeking vacant possession through the courts is at its highest level since 2009 and up 12.7 per cent on the previous year.’

What to do? Richard goes on, ‘It is vital that landlords screen potential tenants, as it is easier to avoid arrears, than it is to recover them. Non-payment, late or partial payment of rent remains the biggest worry for landlords. Good letting agents like us are highlighting the risks to landlords and are recommending strict vetting procedures, backed up with rent and legal protection insurance to help landlord against the non-payment of rent.’

‘Good communication is critical in preventing arrears. It is important to start the dialogue as soon as you know your tenant is experiencing financial pressure. Take a professional and understanding approach and have a clear process to follow if arrears continue.’ More to come.

The latest residential market survey from the Royal Institution of Chartered Surveyors reveals that last month saw the highest number of homes being sold per chartered surveyor since March 2008. Full steam ahead!

‘The housing market is starting to thrive once more. Sales are at their highest level in almost six years and this is being reflected right across the UK. Growing availability of affordable mortgages has released some pent-up demand from a market that, in recent years, has seen many viable buyers unable to enter the market.’

‘On the face of it, this seems like good news but unless we see a marked increase in the number of homes coming up for sale we could well be looking at a price rises becoming unsustainable in some areas.’ Fact is, we are, in some locations, seeing a huge supply-demand imbalance. More to come.

Okay, so you have tenants in place and it’s all going wrong. The Balgores Property Group, estate agents and letting agents from Essex, tell us you are not alone. In fact, the chances are it could be a whole lot worse. Their Howard Lester says, ‘Recently, a landlord came to us for some help, after his tenants had stopped paying the rent after ninemonths and prevented any access to the property. It was not until bailiffs broke the locks after a court possession order, that it was discovered that the property had been completely stripped bare. The tenants had taken the central heating, light fittings, carpets, a shower cubicle, curtain and blinds, plus all of the landlord’s furniture.’

Words of advice? ‘The most important thing to prevent damage is finding the right tenant. Of course you can only obtain certain amount of reference, but these won’t paint you the full picture of the tenant. However, if you can get a positive landlord or previous agent’s reference, this has been proven to reduce issues during tenancies.’

‘The next step is to maintain a consistent level of property inspections. If you can build a good relationship with your tenant and inspect the property on a quarterly basis, this will deter tenants from causing damage. Whilst inspecting properties, it is important that you make reports and take photos. Too many agents and landlords will only scribble notes on a small piece of paper, never giving you a full picture of the condition on a quarterly basis.’

‘The best step is to have a fully detailed inventory of the property. Many landlords believe if a property is unfurnished an inventory is not needed. On a standard two bedroom apartment which is unfurnished, the inventory consists of 50 to 55 pages. The detail shown on a professional inventory is everything from light fittings and light switches, to the insides of cupboards and draws. This is the best way to ensure you get money from the tenants deposit to cover any damage they might have caused. With an inventory, you are more likely to obtain the full amount you are claiming for.’ Food for thought.

All for today, see you tomorrow.

Welcome to today’s news and views…

A new report by chartered accountants UHY Hacker Young reveals that more and more overseas buyers are now investing in the UK and especially London. The number of overseas landlords renting out properties in the UK rose by 6 per cent in 2013 to 2.04 million. That figure was 1.46 million back in 2007. Will the recent announcement of plans to CGT overseas landlords from April 2015 have an impact on these numbers? Over to UHY Hacker Young…

‘The UK economy is one of the world’s most liquid, and UK property is seen globally as a safe haven from the effects of a financial crash or from national governments. Increasingly, overseas investors are targeting buy to let properties, and in particular their investment in new build properties is funding a much needed boost to the supply of quality homes in the rental market.’

‘While HMRC has already increased its tax take on foreign owned properties in recent years, the Government’s Autumn Statement is looking to ensure that the Exchequer gets an even greater share of the substantial revenue generated by London’s high end property market. The incoming measures are designed to address concerns that a housing bubble is being created by foreign buyers who regard flats and houses, particularly in London and the South East, as a safe investment.’

By the by, please do remember we currently have a batch of London’s cheapest deals – under £130k and already tenanted – for serious, would-be investors. If you want to receive details of some excellent deals and are ready and able to progress this week, please email back. We will provide full information to you.

admin@streetwisenews.com

Knight Frank’s latest report reveals property prices in Turkey rose 12.5 per cent in 2013 and suggests there is more to come. Julian Walker, at leading agency Spot Blue, agrees, ‘Istanbul has led Turkey’s property market in 2013 and I believe will continue to do so in 2014. International investors like it not only for its capital gain prospects and buy to let opportunities, but also because it operates in multiple currencies, including US dollars, euros, Sterling and the local Turkish lira. Furthermore, this year the Turkish lira has lost value against most major currencies, making it a cheaper currency in which to buy for foreigners,’

‘Istanbul in particular has attracted interest from Gulf and Russian investors this past year. There are buy to let opportunities springing up in the booming suburbs in areas such as Halkali, Beylikduzu, Bahcesehir and Erenkoy.’

‘There is also the availability of chic second homes in more central fashionable districts on either side of the Bosphorus. Also, if they’re buying for lifestyle purposes, then Bodrum on the Mediterranean Coast and other marina resorts on the Bodrum peninsula are also popular spots, thanks to the selection of smart, private villas on offer there.’ More to come, do let us know if you are looking at buying in Turkey.

We will, from later this week, have access to some 18,000 properties for sale in Spain – quite simply, if you are looking to buy in Spain, we will have something for you.

But! We know from painful experience that many members are, to be blunt, daydreamers who will never buy. That’s fine by us – except when it comes to replying to introductions. You see, some suppliers get ever so slightly edgy with us if we forward contact details of members who
um, er well, would possibly, um maybe, quite like, er, a half-price property with, um, a 100 per cent mortgage, er, possibly next year if, um, the ‘other half’, er, receives an inheritance.

Fact is, we’ve had two suppliers in 2013 who won’t deal with us because we are ‘too soft’ and forward details from all and any members. So, if you are buying in Spain, for sure, please send us your specific criteria and I am 99.9 per cent sure we will have something for you.

Marc Pritchard, Sales and Marketing Director at Taylor Wimpey España offers a summary, and a very fair one given the vested interest, of the market in Spain. ‘For the past 50 years, we at Taylor Wimpey España have primarily been selling high quality second homes across Spain to buyers from across the globe to find the perfect place in the sun. It’s no wonder the Costa Blanca and Costa del Sol are extremely popular, boasting miles of white sandy beaches, great climate and cuisine not to mention prices in both areas starting to bottom out, I truly believe the Spanish property market in prime locations is on track for a great 2014.’

‘In terms of location, by far the most popular for our buyers is the Costa del Sol. Known globally as a European hotspot for glitz and glamour, it’s still the place to be seen for many and has become a real magnate for savvy Middle Eastern and Russian investors, hoping to take full advantage of the golden visa law set to be imposed this year.’

‘Another hotspot for 2014 is definitely Mallorca where, after having very successfully launched four new developments, Taylor Wimpey España will launch another two new projects early this year. The Costa Blanca is booming too and we are in the process of finalizing another major new development. With several options pending on the Costa del Sol too, the biggest problem across all three regions we currently operate in is finding good plots to start developing, as we are running short!’ More to come.

All for today, but do get back to me if you are in the market for ‘starter BTLs in London and/or properties in Spain.

admin@streetwisenews.com

Thank you for your ‘definite’ replies for attending the ‘Investing In 2014’ seminar in London on 1 February. Full details will be sent (to ‘the definites’) in the next 24 hours. We still have spaces, but be quick please. Meantime, some news and views…

I’ve got to say that it’s increasingly hard to secure ‘starter BTL’ properties in London, I’ve just been talking to one broker who tells me, ‘this (i.e. this quarter) is the last chance to buy in London before the bottom rung disappears’.

It’s certainly going that way. We currently have a batch of London’s cheapest deals – under £130k and already tenanted – for serious, would-be investors. I’m not going to put these out to the whole membership; frankly, we get swamped with 100+ replies from those who have no intention or ability to progress.

But if you want to receive details of some excellent deals and are ready and able to progress this week, please email back. We will provide full information to you. But remember, please – no ifs or buts, no nuts!

According to estate agent, W.A. Ellis, London is the place for lettings – 2013 saw a 50 per cent rise in tenancies compared to 2012 and a year-on-year rise in rents of 2.8 per cent. Lucy Morton at W.A.Ellis summarises and offers a note of caution and advice, ‘Although rents did increase last year overall, in the lead up to Christmas, we did see prices reduce by as much as 20 per cent in order for landlords to secure a tenant and prevent void periods.’

‘Void periods did creep up last year but the figures are slightly distorted as the lettings market has become more seasonal. For the last two years in particular, the key lettings months have been between April and October – in these periods, a property can let within a week, whereas void periods can be substantially increased if a property becomes available between November and March. The changeover season in the lettings calendar continues to be during July when we notice a marked increase in our tenancy terminations. This is driven by not only the end of the school year for families, but also the end of the academic year for universities. Year on year, we are noticing a substantial increase in high net worth overseas students flocking to study in London which adds to this.’

‘Presentation was key in 2013 and will continue to be paramount in 2014. A badly presented property will sit on the market and warrant a rent reduction, therefore distorting rental statistics even further. A property well-presented and priced correctly should let within a month of commencement of marketing, particularly in the key calendar months. Once a property is let, our average tenancy hovers around the three year mark.’

‘It is always difficult to predict market conditions 100 per cent accurately but I believe that it will be more of the same for 2014 although with the economy picking up, indications are that the City will be hiring thus creating more tenants. I therefore predict that rents will increase by marginally over 3 per cent in 2014.’ Check the site! It’s at waellis.com.

Still talking BTL, Landlord Assist say that landlords should focus on getting reliable tenants who will pay month in month out rather than focusing on pushing up rents and grabbing whoever will pay the higher amounts. Graham Kinnear at Landlord Assist takes up the story, ‘Landlords should focus their efforts on finding the right tenants rather than risk void periods and the possibility of arrears by pricing themselves out of the reach of new tenants.’

‘We fully expect a growing number of tenants and first-time buyers to try and make the step on to the housing ladder. This could lead to a greater choice of properties to rent in parts of the country, and more competition between landlords for the best tenants. Normally when the sales market picks up it has an impact on the rental market.’ Food for thought, for sure.

All for now, but do get back to me if you are in the market for ‘starter BTLs in London. And note we have the UKPA newsletter now ready for you.

We have, for some time, been working on new services – for the UK, for example, we have just launched a service for lease option investors. We are also developing an across-the-board service for high net worth and sophisticated investors. Meantime, we are also offering one-on-one sourcing services now in France, Spain and Florida (which will roll out further). Sign up now to France, Spain and America Property Alerts services to find out more. Meantime, some recent news – and offers -from these services…

Colliers International’s 2014 Global Investor Sentiment report makes interesting reading, offering a range of investors’ views across worldwide markets. For Western Europe, 41 per cent of investors expect to see improving investment conditions this year. Not as high as you’d like? Better than MENA, Middle East and North Africa, where the figure is just 15 per cent.

Generally, and we quote, ‘Investors in Europe are seeing opportunities in secondary stock in need of capital expenditure to bring them up to an institutional investment grade standard.’ Most popular location? ‘Germany is on course for another strong year and is the preferred European target market for investors, followed by France.’

Talking France, the report states that a disproportionate amount of capital has gone into the safe haven markets of Europe – Paris, London and other leading cities. It suggests that there may be better value elsewhere. If the interest is there – we need a show of hands – we can put together some commentary on the property markets in various cities across France. Let us know?

According to official government sources, prices are rising in Spain – or, at least, they are in four of the 17 regions. The Balearic Islands lead the way with a 4.8 per cent rise year-on-year. Daniel Chavarria Waschke of Sotheby’s International Realty explains, ‘Other markets such as Greece, Egypt and Turkey may have lowered their prices to attract more tourists but the Balearics have taken the bold decision to target the higher end of the market. The calibre of stock and property prices have gone in an upward direction and interest levels remain extremely high.’ Interested in this sector of the market? We have a report coming – email back if you are buying here in 2014.

admin@streetwisenews.com

Shannon DeRosby of Summerlin asset Management offers a good summary of key criteria for would-be investors in Florida. ‘Supply numbers are great and all (down some 30 per cent year-on-year) but without knowing demand they are pretty much worthless. As an investor, you want to know whether or not that supply is going to be consumed by the market. When demand exceeds available supply—that’s when prices rise. To gauge demand in a market, I’m looking for things like the average days listings are on the market, the percentage of asking price received by sellers, and the number of homes being sold—both pending and closed. So let’s see how the Florida real estate market stacks up.’

‘Depending on the type of real estate investment you plan to make, you might want to consider other demand metrics as well. In a place like Florida, for example, tourism is huge. If I were considering purchasing a home to use as a vacation rental, I’d want to look at tourism levels and demand for vacation accommodations. The fact that over 55 million people visited Orlando last year—making it the number one tourist destination in the world—would be something real estate investors should take note of.’ More to come on Florida.

If you’d like to sign up to these services, feel free to email back with, as relevant, FPA, SPA and/or APA in the subject line. We’ll do the rest. If you have some specific ideas regarding 2014 purchases, do get in touch too. We will have more details shortly on the high net worth and sophisticated investors’ service.