Streetwise Property Alert 26th June 2014

Welcome to the latest UK property news and views. Heads up! If you are interested in the ‘£10k Off’ London property, you need to move on this today. Another heads up! If you are investing in the Cheltenham JV, please remember the closing date is 30 June 2014. Invest in this and you have a place in the imminent JV2 (assuming you have funds, of course). Meantime…

Property Prices Overview

The latest figures from ONS, the Office of National Statistics, suggests that prices rose by 9.9 per cent in the 12 months to the end of April 2014. That is up from 8.0 per cent in the 12 months to the end of March 2014. As ever, we need to say ‘think micro-markets’ when it comes to doing your due diligence. After all, we should note that the ONS advises that, in the 12 months to the end of April 2014, prices in London rose 18.7 per cent with the South-East and East of England seeing 8.9 per cent and 8.5 per cent rises respectively. Take them out and the average rise is just 2 per cent.

Peter Rollings at agents Marsh & Parsons suggests we have reached a turning point. ‘After a very lively start to the year, where an acute lack of supply and subsequent competition for homes pushed prices higher, we’re now sailing into steadier waters. Stricter controls for mortgage affordability and the renewed housing stock is moderating the market and property price growth has slowed.’

‘In prime London, the ratio of registered buyers per available property has fallen from 24 in January 2014 to 16 in June, so as the market returns to more normal trading conditions, buyers can make the most of the extra breathing space. London has long been akin to its own city state, and is wholly unrepresentative of the broader nationwide picture. If the government or the Bank of England were to slam their foot on the brake too heavily, they risk setting back the emergent housing market recovery outside of the capital.’

BTL Club Update

Lots of interest in The BTL Club we are creating from September – in essence, we will stop sending BTL deals out via the general membership and present them solely to members of The BTL Club.

Yes, it’s free but please do not join if you are not serious about investing as it’s a drag for everyone involved to go through everything only to find at the end that you have £6.39 in your bank account.

We are going to split the club in two with a separate one for London; email back now to be added to the list(s). The London list we will limit to just 100 members and we have about 55 so far; so be quick for that one.

admin@streetwisenews.com

Land Registry News

The Land Registry has announced that it is to be the sole registering authority for Local Land Charges (LLC) in England and Wales, ‘leading to a standardised national fee for the first time.’

Some newspapers are reporting this as happening now. Not quite, ‘preparatory work will begin from April 2015 for a phased migration of the LLC service to begin later that year.’

‘The proposals will provide a one stop shop digital LLC search service, which will improve and standardise the service through faster turnaround times. This is consistent with government’s digital by default agenda and will ease the process of buying property. We have listened to the consultation feedback on LLC and have made a number of changes to the original proposals. For example, the period covered by a LLC official search will not now be limited to 15 years.’ More to come in due course.

London Prime Lettings – News

According to the latest residential lettings report from Chestertons, there was increased activity in Q1 2014, with the number of applicants up 7.7 per cent over the year and agreed lets up 6.2 per cent over the same time. Stock levels decreased by 22.5 per cent. You don’t need to be an economist to work out ‘what happens next’. Chestertons is forecasting rental growth of 2 per cent for the prime London lettings sector in 2014.

‘Looking ahead, due to London’s improvement of the overall economic performance, growth rates are set to outpace the national average over the next couple of years. Once the balance between supply and demand has reached healthier grounds, rents are expected to stabilise across the board. In terms of prime locations Tower Hamlets is forecast to see the strongest growth in household numbers of 29,548 over the next five years.’

All for now, see you tomorrow with some more news and views.

 

Streetwise Property Alert 25th June 2014

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

Istanbul – Prices Still Rising

According to the latest figures from Gyoder, property prices in Istanbul are now rising at twice the rate they were this time last year. They rose by more than 1 per cent in April. Much of this growth is being driven by foreign investors. We’d urge you to consider where the local buyers are purchasing too. As always, you are likely to be letting to and selling to local buyers.

Adil Yaman of real estate agents Universal 21 comments, ‘We would normally expect fluctuations in growth in the early part of the year, which are traditionally times when the market takes a breather. The buying season normally reaches a peak in August with strong growth also seen in June and July. In August 2013, for example, property prices in Istanbul increased by more than 2 per cent in a month, which would add £1,000 to the price of a £50,000 apartment in the city.

‘The city has seen huge investment in its infrastructure, which hasn’t always been popular with locals but the pace of change in the city is rapid and the population is rising with it. So it comes as no surprise that this puts pressure on existing housing stock. Along with the recent announcement of a third airport in the city which will provide a boost to suburban areas like Beylikduzu, all the signs are positive for another year of strong growth.’ More to come.

Germany Cut-Off

Those of you looking for 12 per cent returns in 12 months should take a look at the Germany investment. But, as advised, this offer will be gone by 1 September. Now is the time to look – email for details.

admin@streetwisenews.com

Brazil – New Offer

Members have invested heavily and very successfully in Brazil over the past two years. We now have details of a new deal. Up to 17.5 per cent yields. Low entry level from £21,000. Returns in 12 months. International escrow facility to protect investors’ funds, managed by independent solicitors. Clear and defined exit strategy. Award-winning developer. Proven and secure track record in similar projects. In essence, you put from £21,000 in and get up to 17.5 per cent yields in a year. Interested? Email back – we have a PDF for you.

admin@streetwisenews.com

Crowdfunding Cut-Off

Are you one of the UK crowdfunders? Please note that funds need to be over by 30 June – that’s the cut-off point. Email back if you are thinking of progressing this. It’s not too late to get the full pack and to visit with me.

Spain – Sareb Update

Spain’s ‘bad bank’, Sareb, is in the news as its head, Belen Romana, has been talking in public at an event in Madrid. ‘It’s time to invest in the property market because it is stabilising in terms of price. New mortgage lending grew 2 per cent in March from a year earlier, marking the first annual increase in four years – and providing another sign of
revival.’

It’s been said that the Bank of Spain could force Sareb to revalue some of the 51 billion euros of assets it took on at zero, if they do not carry certain guarantees and have been in default for over 18 months. ‘We will do what we have to do.’ Interesting – we will have an article on this shortly.

Streetwise Property Alert 24th June 2014

Welcome to your Tuesday email. Missed the UKPA and/or IPA PDF newsletters for June? Email back. Meantime, Peter Faulkner, our ‘Mr Mortgages’ offers his latest thoughts…

Sharply rising UK house prices and Mark Carny’s (Bank of England Governor) comments have fuelled speculation that the BoE will use its new macro-prudential powers for the first time in the near future to manage associated risks and prevent excessive growth in household debt. These powers are themselves set to be strengthened, subject to consultation, following Chancellor George Osborne’s recent speeches.

However, it is not about limiting mortgages further; the market, especially in London, is being influenced not by credit buyers but by cash buyers. More than one third of houses (36 per cent) were bought entirely in cash during Q1 2014, compared with less than a quarter (24 per cent) seven years earlier. The percentage of total housing demand that is financed by cash reached an estimated all-time high of 61 per cent in Q1 2014.

The residential mortgage market remains very subdued, with mortgage debt still shrinking in real terms and on aggregate, households putting over £10 billion of equity into their homes every quarter since mid-2010. However, BTL represents a much larger proportion of total lending.

Average residintial mortgage loan to value ratios have been exceptionally depressed since the financial crisis and – despite the gradual rising trend since 2009 – median first time buyer LTVs remain lower than at any point prior to 2007. While the Bank of England has flagged concerns about rising loan to income ratios, the affordability rule changes arising from the Mortgage Market Review (MMR) mean that new owner-occupiers seeking a mortgage will only be granted a loan that is manageable at considerably higher interest rates (stress testing) and at lower loan to values (larger deposits) and pay more as house prices continue to rise.

UK averages paint a picture of a housing market where the use of cash has become a key driver. There are broader questions for government about the implications of this, though in part it has been driven by a shortage of mortgages: a situation that is being corrected. But for the FPC, whose remit is to maintain financial stability, it suggests that additional intervention into the mortgage market is not warranted.

Affordability criteria for older clients have become a real issue under new MMR rules. Mainstream lenders are just not able to help on most cases due to their affordability formulae with automated rule driven systems. The best chances of success if a client is over 55 years of age are the smaller building societies that still hold mandates and can take a view of cases presented properly. Best in the market at the time of writing for older clients are Buckingham and Market Harborough building societies using a specialist club for packaging.

Auction finance? Last week I mentioned a new product coming out. It has arrived. A client can get auction finance or quick finance for a quick purchase and then convert to BTL after only three months. Most other BTL lenders require minimum of six months or one year. Thank you Peter. More from Peter next week. Email back though if you’d like to chat with Peter.

Finally, we’ve got a flat to introduce in Docklands. In short, it’s a one bedroom flat next to Crossharbour DLR station and just 10 minutes’ walk from Canary Wharf. It also has a reserved underground parking space. It has been consistently let for the past 20 years and is currently let at £1,235 pcm. We are going to introduce it at £350k but can offer it to a serious member who can get going with it this week for £340k; a saving of £10,000. Email back.

admin@streetwisenews.com



Streetwise Property Alert 23rd June 2014

We are looking to overhaul ‘Property Alerts’ from September; new websites, beefed-up weekly services etc. We are also going to limit memberships for the weekly, fuller services (London, France, Spain, America, Lifestyle, Investment, Hotel Property Alerts) and will only be taking on about another 100 or so members for (each of) Spain, America and France Property Alerts in particular. Time to sign up? Read on…

Spain – The Edge Of Recovery

James Daniel, head of the IMF’s Spain mission, has authored a new report on Spain suggesting is it on the brink of recovery. ‘After six consecutive years of house price declines, especially intense in certain periods, everything points towards the end of this scenario drawing to a close, giving way, at the least, to price stability.’

‘Prices show signs of improvement after years of accelerating declines. Average national house prices rose 0.84 per cent quarter on quarter and are down just 1.7 per cent over 12 months. This is a big improvement on the double digit annualised declines last year. This is the first time in eight years that sales and prices have improved together. The market hasn’t seen this since the first quarter of 2006.’

‘However, the lack of new housing starts in recent years means the only new homes are those built during the boom and still for sale. A large share of them are in the hands of the financial institutions, being sold actively with price reductions. As this stock reduces, the relative weight of new home sales will decline to ever smaller quotas.’ At SPA, we have some buying checklists coming plus inspection trip visits to Marbella and Murcia and some more BMV deals.

US- Slowing Growth Update

According to the latest report from real estate data provider Clear Capital, we are seeing ‘slowing growth’ in the property market. In a clear reminder of our oft-repeated statement, ‘beware averages’, the report indicates that the annual price rise across the 50 major metro markets is 22.3 per cent but ‘there is some considerable variation depending on location…varied from a fall of 37 per cent to growth of 45 per cent.’ You need to look at micro-markets. In Cleveland, the best-performing zip code area is up 42.4 per cent, the worst is down 23.3 per cent.

More generally, ‘It’s no surprise that the spring buying season isn’t moving the needle this year. The rising price floor in the low tier sector of the market has squeezed investor returns, thereby removing a key demand segment. We don’t expect to see a large pop in prices through the summer buying season. It’s likely we’ll keep chugging along at our current pace, somewhere around one per cent quarterly gains for the rest of the year.’

‘Considering the number of key housing fundamentals that remain stressed, like millions of borrowers still underwater, high levels of student debt, potential borrowers with less than perfect credit, and a job market that is still recovering, we don’t expect a market with waning investor demand to withstand any eye-popping rates of growth. Although it’s not a quick fix to the larger housing problem, home price moderation is really a healthy move for the market overall.’

‘While some might be discouraged by a weak spring buying season, we are encouraged that price trends are finally calibrating back to pre-bubble norms. Despite other headwinds, moderating home prices will serve as the foundation to a more balanced market moving forward. Remember, we’re still in recovery mode which means deals exist. Market participants just need to look deeper. As softer gains continue to unfold, broad stroke investment approaches will prove less and less fruitful. As such, market participants who pinpoint investments will be better positioned for success.’ Interested in America? We may be testing a separate Florida service shortly. Let us know if this
interests you.

France – Prime Market Update

Knight Frank reports that buyers returning to the prime property sector in France. ‘Against the backdrop of the global recession, the Eurozone debt crisis and President Hollande’s austerity measures, France’s prime property market has faced considerable challenges in recent years. Nonetheless, a villa on the Côte d’Azur or a ski chalet in the Alps remain amongst the most popular investments for international second home buyers.’

‘With deflationary risks increasing in Europe, the European Central Bank is considering following the lead of the UK and the US by injecting a round of quantitative easing (QE) into the European economy. This will have the effect of driving down the euro and increasing the appetite for French property from non-Euro buyers.’

‘Where property is priced accurately interest is generated, viewings are arranged and sales are agreed. However, there are still far too many properties that are unrealistically priced and languish on the market due to a lack of realism on the part of some vendors and a lack of transparency in the marketplace. We are cautiously optimistic about the market.’ We have a visit to Paris coming up this weekend – feedback next week – and are about to introduce a new ‘Centre Parcs’ type deal near Paris. All at FPA!

All for now, other than to say email back telling us which services interest you and we will sign you up for free. See you again tomorrow.

admin@streetwisenews.com

Streetwise Property Alert 20th June 2014

Here we are again at the end of the week with some overseas property news and views….

Worldwide Update

Had a read through the Knight Frank Global House Price Index last night to check what’s happening where. Headline points? ‘Dubai topped the annual rankings, but prices rose by only 3.4 per cent in the first quarter. Croatia, Cyprus and Greece were the weakest-performing housing markets in the 12 months to March 2014. The US, Australia and Iceland now sit alongside several emerging markets in the top ten rankings for annual price growth. Fourteen countries recorded a decline in house prices year-on-year, 12 of these were in Europe.

‘For the first time since 2008 no single country tracked by the Global House Price Index has recorded an annual price fall in excess of 10 per cent. The bottom ten rankings reads like a geographical tour of Eastern and Southern Europe. House prices here, while still in decline, are now falling at a slower rate, even in the weakest housing markets such as Croatia, Cyprus and Greece. Singapore and Japan are the only non-European countries in the bottom 14 rankings. Cooling measures and tighter mortgage lending conditions have halted price growth in Singapore, whilst in Japan abenomics has yet to push house price growth into positive territory.’

‘We expect to see the index’s performance strengthen again in the second quarter. All eyes will remain on central banks, in particular the Federal Reserve, the Bank of England and the European Central Bank. The issue is not when interest rates rise but the speed and extent to which they do.

China’s Property Prices

We are at work on a BRIC report – Brazil, Russia, India and China – and note that a new study by Standard & Poor’s suggests that prices in China in 2013 rose some 11.5 per cent with some ‘top tier cities rising over 20 per cent in price last year’. However, the market seeks to have turned with year-on-year residential property sales to end Q1 2014 down 10 per cent compared to growth of 26.6 per cent over the same period last year. Even so, S&P states, ‘Property sales volume will rise 10 per cent in 2014 with stronger sales growth in the second half of the year due to price cuts from developers seeking to meet sales targets. Compressed margins will become a structural trend as tougher operating conditions prove most difficult for smaller developers.’ More to follow.

Spain’s Changing Market

An interesting article in OPP Connect draws our attention to the changing face of resorts in Spain. Let’s quote a little, ‘Costa Blanca estate agent Tony Barnes says that last year it sold more properties to non-European Union buyers, including those from China and Russia, than Spanish nationals and European expats. Wealthy Chinese and Russian buyers snapped up properties under the Spanish government’s ‘Golden Visa’ scheme offering residence with property worth more than €500,000.

‘While it is good to see movement in the property market, I have been concerned about the changing face of the popular resorts on the coast. For example, the Chinese have bought several properties on an urbanisation located just outside the town of Javea, and although they are typically purchased by an older person with a business-like aspect, within no time many occupants arrive. In some circumstances, it appears as though dozens of Chinese are sharing a property with only two or three bedrooms. Rubbish accumulates in the gardens, and there appears to be nobody taking responsibility for the upkeep of the properties, which lowers the tone of the urbanisation.’ Um, I think I will restrict my comments here to simply saying that buyers looking for a ‘home from home’ when buying overseas should do some careful research before progressing any purchase to ensure that the locality matches their personality and expectations.

All for now, see you soon!

Streetwise Property Alert 19th June 2014

Welcome to today’s email. We currently have a new service being tested for PCL (Prime Central London) investors – drop us a line if you are one – which includes Wednesday visits to key locations in London. These will run through to August, when I am away, and will resume for September at least until the weather turns. Meantime…

London Postcodes Analysis

London Central Portfolio (LCP), the specialist property fund and asset managers, have analysed transactional data in PCL’s 51 postcode sectors to reveal some interesting facts and figures. Let’s quote, ‘With pockets of non-prime properties located next to traditionally affluent areas and council estates running side by side charming stucco terraces, neighbouring postcodes have distinctly different appeal. LCP’s analysis has enabled them to pinpoint the postcode sectors which offer the best investment record, on the basis of best value for money combined with best growth history.’

‘Capital appreciation is the most important investment consideration in PCL as it is the largest contributor to total returns for residential investments. Indeed, a recent survey from Sotheby’s International Realty said that whilst location is the key focus for 36 per cent of affluent buyers, an almost equal number (34 per cent) are driven by investment returns.’

‘LCP have found that all but one of the top investment postcodes is located in Westminster. These postcodes are concentrated towards the east of Hyde Park in the Marylebone, Fitzrovia and Covent Garden postcode sectors. These are all areas which have gone through a significant gentrification process over the last 20 years. They benefit from Central London’s iconic traditional architecture and the growing desire to be right “in the action” and close to transport links. Although every property needs to be scrutinised on its merits individually; Fitzrovia, Marylebone and Bayswater have been top of our ‘buy’ list for some time.’ Those of you joining me in London next Wednesday will receive fuller details.

Crowdfunding – The Deadline

When we invited members to become shareholders in the Cheltenham JV, the introduction was substantially oversubscribed and we had to turn investors away, some at a late stage. One or two took that well, others less so. To avoid this happening again with the crowdfunding offer, can
I stress that funds need to be in by 30 June. If you are coming in on this 10 per cent per annum offer, paid monthly, with weekly updates, regular visits and the chance to invest as a shareholder in JV2, please ‘get a move on.’ (If I were 17, I’d insert a smiley face or similar here).

BTL – Some Advice

Catching up on my press reading, I note that a Cathy Colston, a successful HMO investor, has been interviewed in the Telegraph. Quoting, ‘HMOs are more complex and involve more input and time. I don’t think they are for part-time buy-to-let investors or beginners. But they do offer the best returns. Younger people are looking for quality accommodation, and it’s in short supply. These people are happy to share with their peers, but the property has to be right. I obtain a yield of 15 per cent across nine HMOs, which are in Bath, Cardiff and Bristol. I need to sleep at night. I’m mindful of the fact that interest rates will rise. I need a yield north of 10 per cent on everything I buy.’

‘My buy-to-let tips? Be clear on your strategy – are you investing to replace an income, for capital growth? Research which buy-to-let model will work best for you. Get educated, and invest time in learning. What funds do you have available and what borrowing can you get? The lending market is a very different place from 10 years ago. What time do you have? Are you looking for hands-off investments or will you be running your own business? Get a good team to work with: mortgage brokers, builders, solicitors and so on. Property can be a very lonely game and is increasingly regulated. Mistakes can be costly.’

‘Research your investment location: know your market, your customers (tenants) and any planning and licensing requirements. Pressure-test your investments against higher interest rates. Would you still have a positive cash flow? Identify opportunities to add value to all your investments. Benefits can be realised when and if you refinance. Most importantly, have a plan. What are you going to do, where, how, and what is your key driver? How will you finance your purchases and refurbishments, and what is your exit strategy?’ Food for thought.

PCL Lettings

Chesterton’s has a new report out on the prime lettings market in London. Key points? ‘One of the main issues the market is facing is the decline in stock availability of 22.5 per cent compared to Q1 last year, which is predominantly caused by the increase in numbers of landlords selling their properties to benefit from the high capital values at present. As a result, tenants no longer have the same degree of choice nor able to negotiate the rental prices.’

The Chestertons Prime London Rental Values Index recorded a fall of 1 per cent in the year to end-March 2014 although certain submarkets show significant variations such as Camden (-6.6 per cent) and Kensington (+4.3 per cent). The average weekly rent for the Index stood at £907 at the end of March. The highest average weekly rental values were achieved in St John’s Wood (£1,872), Knightsbridge/Belgravia (£1,806) and Mayfair (£1,677).’

‘Once the balance between supply and demand has reached healthier grounds, rents are expected to stabilise/increase across the board, with Chestertons forecasting a rental growth of 2 per cent for prime London. In terms of prime locations – Tower Hamlets is forecast to see the strongest growth in household numbers of +29,548 over the next five years.’

All for now, see you again soon – by the by, we have a free ‘impact investing’ report coming shortly for all members.

 

Streetwise Property Alert 18th June 2014

Welcome to today’s email and we start with the weekly round-up on the mortgage front from ‘Mr Mortgages’, Peter Faulker. Over to Peter…

Mortgage News & Views

Bank of England figures released recently reveal a significant increase in BTL (buy-to-let) lending. BTL mortgages accounted for 14 per cent of all mortgage advances in Q1 2014, up 16 per cent on same period in 2013. The big surprise is the amount of lending, up 65 per cent over the period from £4.1 billion in 2013 to £6.8 billion in 2014

The buy-to-let market sector is going from strength to strength. Investors are turning away from poor rates on savings accounts and turning to property. Lenders are now offering cheaper mortgages with easier criteria, (other than rental cover calculations for more responsible lending, which is actually good news)

Returns on traditional savings and investments are very poor. Investors are looking for alternative investments. There are many alternative investments out there that, whilst offering high potential returns, carry with them high levels of risk. Investment property offers a higher degree of security (lower risks) than most other alternative strategies.

Investment in property is not a liquid investment, there are entry costs (purchase costs) and exit costs, (selling costs) and it can take months to exit if the money is needed. The key benefit is the investor not only benefits from higher returns over the long-term but also retains control of the asset. Property is a long term investment and with sensible gearing can provide excellent returns on own money invested.

A number of our clients are re-mortgaging to release enough for deposits and costs to acquire investment property and intend to refinance the investment property in years to come to then pay back their residential mortgage. Not a strategy for the feint hearted but, with solid advice and careful investment property selection, this can work very well.

My secret squirrel tells me that a main mortgage lender is about to launch an auction finance product with a built-in route to convert to standard buy –to-let. This will be exciting – once we know more, rates, costs etc, I will let you know. Or email back to find out more.

admin@streetwisenews.com

Scotland’s Hottest

New research from Savills reveals that the prime sector of the market in Scotland is currently the hottest in terms of activity. ‘Prime’ in Scotland is any property over £400,000 and sales are up 32 per cent year-on-year to end Q1 2014. That compares to 20 per cent across Scotland as a whole. ‘Strong sales are being driven by the hubs of Edinburgh, the Aberdeen area and Greater Glasgow. The Tayside region, which includes the counties of Angus, Perthshire and Kinross, has benefited from the strength of the Aberdeen market, with a 36 per cent annual increase in sales.’

‘Prime values across Scotland are rising, especially in the hotspots of Edinburgh and Glasgow due to the reduction in stock following the rise in prime sales. The rebalancing of supply and demand has begun in the country locations including Tayside where values have stabilised. The prime Tayside market is being led by the lower end of the market up to £500,000 where values have increased. The upper end of the regional country house market remains challenging as there is currently a high supply of stock at this level.’ More to come.

First Things First – Talk To Letting Agents

Just read a headline, ‘Tenants are facing increasing competition for rental property with 59 per cent of letting agents reporting more would-be tenants than properties available, according to the latest Association of Residential Letting Agents’ report for for Q2 2014.’ It set me thinking. I often chat with new and experienced BTL investors and am sometimes amazed at their selection criteria when it comes to choosing their next purchase. ‘It just felt good’, ‘it’s local’, ‘I like the look of it’ and ‘It kind of just smelled right’ are a few of the recent comments made. No mention of rents, mortgage payments, voids, yields and capital growth and so on. No facts and figures, nor much research (let alone visiting in some cases).

One of the first steps I take when looking at a would-be BTL purchase is to call local letting agents. What is the supply-demand mix like? Which way is it going? What about rents? Which way are they going? Where are the best places to buy? And the worst? I then make similar calls to estate agents- we want growth, not just yield. I then call the local council, and so on.

This all seems like too much work for some investors; I regularly take ‘help’ calls and receive emails from investors who bought into, say, a Sunderland readymade BTL deal – a ‘give us some money and leave the rest to us’ type offer. Even if someone is doing this, that and the other, does it not make sense to at least do some basic due diligence? Otherwise, how do you know? It smells right? It smells of something – and it’s not the sweet smell of success.

All for now, see you on Thursday with some more property news and views.

Streetwise Property Alert 17th June 2014

Members always seem to be interested in Florida, the US and other hotspots so let’s talk overseas property today…

US Property Update

The media seem to understand prices rising and they seem to understand prices falling – all in a ‘boom’ or ‘bust’ way, of course. What they seem to struggle with is slowing growth or, for that matter, slowing falls – in essence, prices are still rising or falling but not as much as they were. And so we come to the US where the latest S&P/Case-Shiller index shows prices are up 12.4 per cent for the year ending Q1 2014. That is the smallest 12 month gain since last summer and is being presented as ‘doom and gloom’ by many.

Michael Gapen, senior US economist at Barclays Capital in New York, calls it correctly, ‘The upward trajectory of prices remains in place, but with a slower rate of appreciation. There’s still reason to suspect that home prices will rise as credit availability on the margin, is actually getting better, labour market progress is gaining strength and average income is improving.’ More to come; let us know if you are looking seriously at the US this year. We have one or two behind the scenes services, plus a new one when I am back from New York/Boston etc in late August.

US Dollar – Pure FX Review

Sterling inches down against the buck! The pound fell a cent to 1.68 versus the US dollar in May, chiefly because the US economy got into gear. For instance, the greenback jumped last month as the US created 217,000 new jobs, lifting the USA above its pre-financial crisis job total. Moreover, the US dollar also climbed, because both America’s manufacturing and services industries enjoyed robust growth last month. Given this, the Federal Reserve will be gradually drawing closer to hiking US interest rates, accounting for the buoyant buck!

Member-To-Member Ads!

Let’s give these another go with a motivated sale of a Detroit 4 x bed offering a 24 per cent net return in a great neighbourhood/location.

Deceptively large 4 x bed, 1 x bathroom, 1000 sq ft property.

Detroit recorded 11 per cent growth annual increase in last 12 months.

24 per cent net return based on $800 per month.

Below Market Value!

Located in a VERY good area of Detroit between Harper Woods and Grosse Point.

HUGE 24 per cent realistic net return.

Only $27,500 to purchase (approx £16,000).

Purchase price includes full refurbishment.

Management Company in place.

The current owner paid $48,000 in 2011 and have had the property tenanted until recently when the last tenancy ended.

Property is currently vacant as owner has suggested the property will benefit from a refurbishment – basic redecoration and cosmetic kitchen and bathroom work. quotes in from three local firms for $4,000 – $5,000.

Purchase for $22,500, then pay $5k refurbishment for full refurbishment before handing over to management company to place the tenant – all of these works overseen for you by a team on the ground in Detroit.

Tenants have already been pre-screened and are waiting to move in following refurbishment works.

Email back!

admin@streetwisenews.com

Canadian Dollar – Pure FX Review

Down a creek, without a paddle! The pound dived 3.5 cents against the Canadian dollar in May, to 1.8225. Why? Well, because, like the US, Canada’s economy is shaking off its winter blues! For instance, Canadian factory sales touched a five-year high in March. Moreover, loonie inflation reached the Bank of Canada’s 2.0 per cent target for the 1st time since 2012 last month. Lastly, given this, the Bank of Canada may have to start hiking interest rates above 1.0 per cent sooner rather than later.

Brazil – New Offer

Members have invested heavily and very successfully in Brazil over the past two years. We now have details of a new deal. Let us know if you might be interested…

Up to 17.5 per cent yields.

Low entry level from £21,000.

Returns in 12 months.

International escrow facility to protect investors’ funds, managed by independent solicitors.

Clear and defined exit strategy.

Award-winning developer.

Proven and secure track record in similar projects.

In essence, you put from £21,000 in and get up to 17.5 per cent yields in a year. Interested? Email back – we have a PDF for you.

admin@streetwisenews.com

Brazilian Real – Pure FX Review

The real looks due to dive! Sterling held steady close to 3.76 versus the Brazilian real in May, yet could easily gain against Brazil’s currency soon. Why? Because Brazil’s economy is falling off a cliff! For instance, Brazil is forecast to come to a near-standstill in 2014, with just +1.5 per cent growth. In addition, business investment plummeted -2.1 per cent between January and March, while the forthcoming World Cup is expected to give Brazil no economic boost whatsoever.

Barbados – One For You?

We made some contacts in Antigua when we were out there last summer and that network has slowly rolled out across the Caribbean. We note that a recent report by Chesterton Humberts gives a thumbs-up for Barbados, particularly for ‘the key overseas markets of UK and Canadian buyers who have been benefiting from improving domestic economies and a good sterling to dollar exchange rate.’

Anita Ashton at Caribbean Mortgage Brokers says, ‘Most overseas property buyers at the moment want short term bridge financing or will pay cash but banks are willing to lend. Compared to last year, we have experienced an increase in mortgage lending of 15 per cent. This automatically widens the audience and is therefore another reason why the Barbados’ property market is picking up.’ We are constantly receiving property details from this part of the world and can easily put together a short report and buyers’ checklist for would-be serious buyers. Do let us know?

Impact Investors!

We have a report coming on impact investing – in essence, it’s ethical investing that still pays a decent return (14 per cent for a sub-£10,000 investment in the case of one we are currently looking at). The offer of the report will follow but as a taster, we’ll quote a few words. ‘Traditional investment thinking is focused solely in financial return. Impact investing disrupts that thinking. Investments can intentionally make both a positive social impact and generate a financial return.’

‘Impact investments used to be available only to institutions. Individuals could only donate to support their causes, but could not take a direct financial stake in their growth and development. With impact investing, now you can. With opportunities from as little as £6,000, you can make an impact and benefit from double digit annual returns.’ More to come.

Canada Market Update

The Toronto-Dominion Bank states that the property market in Canada is overvalued by 10 per cent but that there is a low risk of a US-style collapse. It does, however, draw attention to condominiums – a sector where there is a lot of building taking place and units are very popular with foreign investors but are less popular amongst the home market. Sounds familiar?

‘The high-rise condo market is an area we’re certainly watching closely, and I think all of the other banks, as well and the regulator are too. Just by virtue of the fact there is a lot of new construction of high-rise condos, and there are some questions around…how many of those are being purchased by investors as opposed to people (who) are actually living in them as a primary residence.’ As ever, it’s generally better to follow the home market – exit strategy-wise, at least – than foreign investors who tend to chop and change and move in and out quickly; when they can.

All for now, see you again soon.

Streetwise Property Alert 16th June 2014

Here we are again at the start of another week and some UK property news and views…

Supply – What’s Coming

A just-out report by planning specialists Turley examines the five year housing requirements and land supply positions of 318 Local Planning Authorities (LPAs) in England and Wales, excluding London, between April 2013 and April 2018.

‘Local authorities are required under the National Planning Policy Framework (NPPF) to identify and update annually a supply of specific deliverable sites sufficient to provide five years’ worth of housing against their objectively assessed housing requirements. Our research and report shows that at least 211 of England And Wales’ 318 planning authorities fall short of their five year land supply targets.’

‘The majority of LPAs are falling short of their minimum five year housing land supply requirements, and this has significant implications for the pace of economic recovery. It is also likely to impact affordability for first time buyers wishing to enter the market. The need for housing remains high and is growing yet many LPAs still do not have adopted up to date NPPF compliant Local Plans. This leaves planning policy in a state of flux and uncertainty that will further delay the delivery of much needed homes across England and Wales. ‘The substantial shortfall is, however, only likely to deteriorate as annual dwelling delivery rates remain below those needed to meet the overall requirements across England and Wales.’ Food for thought.

Development Land – Price-Rising

According to Knight Frank’s latest Development Land Index, English land values rose by 7.3 per cent in the year to the end of Q1 2014. Developers expect prices to continue to rise. Most expect prices to rise by between 10 per cent and 15 per cent over the next year.

‘The expected rise in activity in the next 12 months is certainly supported by our survey, which shows that 74 per cent of respondents expect to increase their pipeline of land with planning, while 69 per cent expect to increase their strategic land holding. There is increasing debate about land banks and whether house builders are keeping land and not building it out in order simply to make a profit on re-selling it.

‘This goes to the heart of the question of whether strategic land, on which a house builder has agreed an option with the landowner, which may or may not lead to them gaining planning or buying the land, or which may be bought and have started the long process of going through planning, should be classed as a land bank.’ More to come on land banks.

L0ndon’s Strangled Supply

A report from the National Housing Federation suggests the supply-demand mix has reached ‘critical levels’ in London. Some 52,500 new households are expected to be created year-in, year-out up to 2021. This compares to just 18,310 new homes built during the 2012/2013 year.

The average property price in 2012 was £438,636, some 87 per cent up on the average for 2002. The average price in London is already 16 times the average wage and that difference is expected to rise by a further 43 per cent by 2020. The average London rent is £1,400 a month with rents expected to rise by 32 per cent by 2020.

‘England appears to be moving towards economic recovery, driven significantly by London’s dynamism and the city’s prominence as a global financial centre. But as the capital thrives, the result for ordinary Londoners is an overheated housing market with people struggling to buy or rent a home of their own. If things don’t change, London’s much needed economic growth could be stifled and businesses could struggle. Building more homes could be the crucial difference between a thriving world city and a capital in decline.’ Something to think about for sure.

All for now, see you again soon. We are, by the by, now proof-reading the IPA PDF for June and that should come out to you as an attachment on Wednesday.

Streetwise Property Alert 13th June 2014

Members always seem to be interested in London. Here’s what’s been happening news and view-wise…

London’s Rental Standard

We note that Boris Johnson has launched the capital’s first ever rental standard, a city-wide badge of accreditation, ‘to help millions of Londoners rent with confidence and to give the city’s 300,000 landlords peace of mind that they are complying with the law and doing the right thing.’

The London Rental Standard brings together seven landlord accreditation schemes which will operate under a single framework. The badge will be awarded to all landlords and letting agents who meet a set of significant core commitments set by the mayor. These outline a minimum level of service that renters should expect including transparent fees, better property conditions, better communication between landlords and tenants, improved response times for repairs and maintenance, and protected deposits.’ The full London Rental Standard can be downloaded at the London.gov.uk site.

Thoughts & Ideas

Purple Brick’s CEO Michael Bruce is in the news this week, offering thoughts and ideas across the spectrum. Let’s quote. ‘I want to see property prices become affordable for as many people as possible. The London property market is no longer a ‘bubble’ – it has become a balloon that has risen above the rest of the UK. Just how big is the balloon going to become? Every month it sweeps up more and more regions, leaving fewer people able to afford the rising prices.’

‘My top tip for adding value to your home is ‘space, space, space’. Buyers love it and today they need it. Buy cheaper if possible and extend. First-time buyers trying to get on London’s property ladder should take a longer term view of their ideal home. Look at the current London balloon (not bubble), establish where the perimeter is and buy just on the edge before the balloon engulfs that area. Buy something that needs some work and take your time doing it up.’ Good ideas!

Investors! The Doors Are Open

We no longer introduce London properties to the general membership as we invariably have to wade through 200 daydreamers to find the serious investors. We now run these introductions behind the scenes to some 50 investors. We’ve just had a clearout of 23 members who, having signed up, have not replied to any introduction for three months. (The word ‘free’ is great but it attracts serious investors and nuts alike). Anyway, we have 23 spaces left for serious investors who want a steady stream of (slightly) BMV deals, leaseback opportunities and various other property investments inside the M25. You will also be invited on exclusive tours with me and presentations. All I ask is that you are a serious investor and not barking mad!

Auction Finance?

We have access to funding products which are available and fast.

Example: Clients saw an attractive investment property in an auction catalogue. It needed some work but in advance of the auction they needed to know how much they could afford to bid. We arranged a flexible facility by the lender taking a charge on an existing property to provide them with the auction deposit and a credit limit with which to bid at the auction. The clients were prepared and put their hands up to bid with the confidence required!

100 per cent of purchase price and refurbishment works available – with additional security.

Advances from £10,000 to £1,000,000.

Terms up to 12 months.

England Wales and Scotland.

No upfront fees payable to the lender.

Payment options available.

After eight months the clients re-mortgaged to a buy to let lender at 75 percentage of the improved value (after renovating and renting out for six months) getting their capital back out and is now looking to buy another auction property. Email for details.

admin@streetwisenews.com

How Long To Sell?

Members are usually interested in what else is happening on the market so that they can compare what they are doing with other ‘averages’. We note that the Home website suggests that the ‘typical time on market’ for England and Wales is now 90 days; the shortest since April 2008. As ever, we need to ask ourselves how representative an average actually is. London figures seem to be at the 48 days mark whilst the North-East comes in at 167 days.

Doug Shephard at Home.co.uk says, ‘The UK property market remains highly diverse in respect of marketing times. London seems a world away from the difficult and slow markets in the North. The sub-inflation price rises observed in Yorkshire, the North West, Scotland, Wales and the North East correlate well with the long marketing times shown above and indicates that, contrary to the rest of the country, supply is broadly in balance with demand in these regions.’

‘However, market conditions are currently improving rapidly in the North, Scotland and Wales. Hence, we may soon be able to add some, if not all, to the list of booming regional markets over the next 12 months. Goodness knows how the London and South East markets will look by then.’ Do let us know where you are looking to buy – I am tempted to trial some regional services (Surrey, Kent etc) if there is a sufficient show of hands.

Rental News

Strutt & Parker reports am increase in investors in London since 2012. As an example, more than 25 per cent of buyers in Chelsea are purchasing for investment compared with under 5 per cent back in 2012. ‘The rental landscape in prime central London is fast changing. Investors are no longer fixed on chasing high rental yields and are happy to invest for the capital growth alone. Consequently, investors are incorporating larger family accommodation into their portfolios, resulting in more family houses coming to the market.’

‘With discerning, long-term renters now the norm, more and more landlords are comprehensively refurbishing their properties in order to attract the best tenants and this is also having an impact on pricing and the type of property most in demand. We are finding that there is no longer such as obsession with home ownership amongst our younger tenants. The majority of our tenants are in their 20s and 30s and very used to renting. Singles or couples in their 20s tend to favour one and two bedroom flats, whilst married or cohabiting couples in their thirties, sometimes with one baby, usually prefer three or four bedroom mid-size houses or large lateral apartments.’ Food for thought – and more to come as we are visiting again with investors next week.

All for now, see you again soon.