Landlord Investor JUNE 2015

BY

INDUSTRY

EXPERTS

COVERING

ALL

ASPECTS

OF

BUY-TO-LET

JUNE 2015

WRITTEN

LANDLORD | PROPERTY | INVESTMENT

DEATH AND TAXES: BUILD A BETTER LIFE FOR YOUR FUTURE

- Jason Hayles

SWINGS AND ROUNDABOUTS FOR LANDLORDS - QUEEN'S SPEECH 2015

- Peter Littlewood

FRAUD AND PROPERTY INVESTING: A CONSTANT THREAT

- Tom Entwistle

HAVE YOU TAX PROOFED YOUR

PROPERTY EMPIRE?

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WELCOME TO THE JUNE ISSUE OF LANDLORD INVESTOR! Editorial Editor Tracey Hanbury editor@landlordinvestmentshow.co.uk Editorial Contributors Bridgebank Capital Capital & Coastal David Humphreys easyProperty Hazel de Kloe Helen Kirby Jason Hayles Karen Bennett Kate Faulkner Kevin Wright Lambert Chapman Landlord Action Marie Parris Peter Littlewood Simon Zutshi Steve Cox Susannah Cole Tom Entwistle

Art Dept.

Design Craig Edmonds Advertising Beverley Meliniotis

Contact 0208 656 5075 landlordinvestmentshow.co.uk /LandlordInvestmentShow @LandlordInShow

We hope that over the past few weeks you have been given a chance to breathe and catch up on your to-do list after the heated election of last month.

In preparation for our first national show of the year, the L.I.S team have been doing quite the opposite. This issue is filled with up to date information on the latest in the buy-to-let sector, complete with post-election opinions and developments.

This includes Peter Littlewood's article, written on the day of the Queen's first speech in 2015. On page 10 you can find out how new legislation and laws will effect landlords across the U.K. This month we find out how to tax proof your property empire as Jason Hayles explains the many ways to deal with inheritance tax on page 26.

CONTENTS Buy-to-Let Analysis Industry Update Investment Financial L.I.S Update New Investor Great Property Tips Tax Advice Expert Advice Your Property Partner Landlord Insurance Lettings & Management Industry Spotlight

06 10 14 26 34 36 38 42 46 52 54 60 62

Also in this issue, on page 14, Tom Entwistle is exploring the world of fraud and scams, raising awareness to the subject and how it can effect property investment.

And with that, we hope you enjoy!

Tracey Hanbury | Editor Landlord Investor

Tracey Hanbury Tenants History Southbridge House Southbridge Place Croydon CR0 4HA Statements and opinions expressed in articles, reviews and other materials herein are those of the authors; the editors and publishers. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. Tenants History Limited and our contributors will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through the promoted links.

LANDLORD INVESTOR June 2015

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BUY TO LET ANALYSIS

LONDON:

HAVE PROPERTY RETURNS PEAKED?

Kate Faulkner - Propertychecklists.co.uk

THERE IS NO DOUBT THAT OVER THE LAST 20 YEARS LONDON HAS DELIVERED PHENOMENAL RETURNS TO ITS INVESTORS. Back in 2000 average property prices were just £161,086, whereas in March 2015 they reached just under £463,000 (Land Registry data). That’s a phenomenal increase each year of 7%. In one year alone (2000 versus 1999) they actually grew by 29%, making a lot of money for anyone who bought before 1999.

June 2015

LANDLORD INVESTOR

And back in August 2014 it looked like this kind of exceptional growth was going to continue with the Land Registry reports showing property prices in London increased at a rate of 20.7% in just one year.

The latest figures from the Land Registry though are very different.

Property price growth since then has fallen every single month in Greater London. In March 2015, when property prices hit £463,059 and on average they are now increasing at half this rate: 11.3%. The average property price in March 2015 is now just £462,799, so showing an actual fall, albeit pretty insignificant at £260. But that means the average property price in Greater London in the last seven months hasn’t increased at all.

7

BUY TO LET ANALYSIS

WHAT'S THE FORECAST FOR LONDON PROPERTY PRICES? And the future isn’t looking particularly bright either – depending on which forecasters you talk to, some are predicting the lowest property price growth London has possibly ever seen, bar in a recession.

Savills are one of the few forecasters who are brave enough to suggest what might happen over the next five years. As the chart below shows, their expectations are pretty low for London. So far they have been absolutely right that ‘on average’ property prices have been static and only small increases are expected to be seen over the coming years.

As the chart shows, London is predicted to grow at the lowest natural property price growth in the next five years versus other regions across the country.

MAINSTREAM MARKETS FIVE YEAR FORECAST VALUES 2015

2016

2017

2018

2019

5-year

UK

2.0%

5.0%

5.0%

3.0%

3.0%

19.3%

London

0.0%

3.0%

3.0%

2.0%

2.0%

10.4%

South East

3.0%

6.5%

6.5%

4.0%

4.0%

26.4%

South West

2.5%

5.0%

5.0%

3.5%

3.5%

21.1%

East of England

3.0%

6.0%

6.0%

4.0%

4.0%

25.2%

East Midlands

2.0%

5.0%

5.0%

3.0%

3.0%

19.3%

West Midlands

2.0%

4.5%

4.5%

3.0%

3.0%

18.2%

North East

1.0%

3.5%

3.5%

2.0%

2.0%

12.6%

North West

1.0%

4.0%

4.0%

2.0%

2.0%

13.7%

Yorks & Humber

1.5%

4.5%

4.5%

2.5%

2.5%

16.5%

Wales

1.5%

4.0%

4.0%

2.5%

2.5%

15.3%

Scotland

3.5%

4.0%

4.0%

2.5%

2.5%

17.6%

Source: Savills Research

NB: These forecasts apply to average prices in the second hand market. New build values may not move at the same rate.

LANDLORD INVESTOR June 2015

8

BUY TO LET ANALYSIS

BEWARE STOCK QUALITY ISSUES Personally I would be very cautious about investing in London currently. I had a look at buying back into London last year. I only wanted to spend around £250,000 so a tight budget and the choice at that price can only be described as “poor”. The main issue for me was that the property stock on offer was not just in a bad condition on the inside, it was in a really poor condition on the outside. The roof usually needed doing, the guttering was leaking and the windows definitely all needed a makeover.

The problem with buying a property which needs work as a leaseholder or if you share the freehold means that you can’t make the decision to upgrade the property yourself – the decision of what to buy and how much it is going to cost is all down to other people. And the worst position to be in is being a landlord of a top floor flat which has a leaky roof that you either have to pay to fix and then claim the share of the cost from other flat owners or you have to persuade a freeholder to do it. If the freeholder does it, you pretty much have to bear whatever cost they decide to charge and that’s if they actually decide to get it done.

Of course, this was very much the case for properties around the £250,000 mark in Zones 3-4, if you can afford to spend more than £300,000, then the property stock and location you can afford to buy is a lot better, but buying at this price means you are risking a lot of money in one property.

WHAT ABOUT LONDON INCOME RETURNS? For a property to break even and be cash flow neutral, you will need around a 5.5% yield if you are mortgaging at 75% loan to value at the long term mortgage rate of 5%. The average yield in London is a lot less than this. According to LSL property services (link: http://www.lslps.co.uk/documents/buy_to_let_index_ apr15.pdf) the average rents in London in April 2015 were £1,204 which meant a yield of around 4.4%, albeit that this was a healthy increase in rental income of 7.8% year on year.

To achieve this ‘average’ rental income you would have to spend around £330,000 on a property in London and to make that cash flow positive at 75% loan to value (LTV), you would have to have a mortgage interest rate of around 3%, easy to do at the moment, but if the long term mortgage interest returns to 5-7%, then you would need a much higher LTV to make it work for you.

SO CAN YOU STILL MAKE MONEY FROM LONDON IN THE FUTURE? Of course! One of the great things about property investment is that whatever is happening to the market, there is always a way to make money, you just need to know what the market is doing, what the risks are and how to make sure you invest in property professionally – not just buy ‘any property’ on ‘any street’ and keep your fingers crossed! ⌂

FOR MORE ABOUT HOW TO MAKE MONEY FROM PROPERTY IN LONDON IN THE FUTURE, COME TO MY PROPERTY SEMINARS AT THE LANDLORD INVESTMENT SHOWS ACROSS THE COUNTRY:

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June 2015

LANDLORD INVESTOR

9

Download all the FREE checklists a Buy to Let Investor will need Independent expert advice on: • Property prices, rents, returns and forecasts • Analysing your buy to let • How to buy property below market value • How to choose the right buy to-let services

SEE OUR CHECKLISTS FOR ALL THE BUY TO LET HELP YOU WILL NEED www.propertychecklists.co.uk

T: 01652 641 722 LANDLORD INVESTOR June 2015

10

INDUSTRY UPDATE

IT'S GOING TO BE SWINGS AND ROUNDABOUTS FOR LANDLORDS Peter Littlewood Southern Landlords Association

THE PRIME MINISTER HAS JUST DROPPED AN UNEXPECTED BOMBSHELL

BY ANNOUNCING THAT MORE LANDLORDS WILL BE SUBJECT TO MANDATORY LICENSING! This was during a speech on immigration, when he also announced that all landlords will have to check the immigration status of their tenants – this was expected, but the licensing wasn’t.

Until now, the Conservatives have always avoided such a policy. The last Labour administration said it wanted licensing for landlords and letting agent –but never introduced it. They did introduce mandatory registration for landlords, but the Coalition scrapped it.

But this is what Cameron said: “There are other ways we can identify those who shouldn’t be here, for example through housing. For the first time we’ve had landlords checking whether their tenants are here legally.

June 2015

LANDLORD INVESTOR

The Liberal Democrats only wanted us to run a pilot on that one. But now we’ve got a majority, we will roll it out nationwide, and we’ll change the rules so landlords can evict illegal immigrants more quickly.

We’ll also crack down on the unscrupulous landlords who cram houses full of illegal migrants, by introducing a new mandatory licensing regime. And, a bit like ending jobs when visas expire, we’ll consult on cancelling tenancies automatically at the same point.

It’s not just through housing and jobs; we can track down illegal migrants through the banking system too.”

The full speech is at: www.gov.uk/government/ speeches/pm-speech-on-immigration

11

The Devil is in the detail, yet to be published. Whatever the detail, it is bound to place more work on already overstretched local authorities.

THESE WERE SOME OF THE MATTERS THAT WERE RAISED IN THE QUEENS SPEECH (DETAILS TO FOLLOW): FULL EMPLOYMENT AND WELFARE BENEFITS BILL To reduce the benefits cap from £26,000 to £23,000.

HOUSING BILL To extend the Right to Buy Scheme to 1.3 million housing association tenants.

EU REFERENDUM BILL To allow a referendum on continuing membership of the EU. Whilst the Prime Minister is keeping details of negotiations secret, recent press speculation is that his demands will be far less than was anticipated. The EU ‘brethren’ were anticipating substantial demands, and were gearing up to allow many of the changes.

Difficult to know the effect on the Private Rented Sector (PRS).

INCOME TAX BILL Writing in the Sunday Telegraph about his first 100 days in office, the Prime Minister said: "It is a permanent measure to re-write not just the laws of this country but the values of this country. And it will be there as the centrepiece of the first Queen's Speech of my new government."

IMMIGRATION BILL

QUEENS SPEECH The Prime Minister, David Cameron says that his programme will mean that, 'Wherever you live you can have the chance of a good education, a decent job, a home of your own and the peace of mind that comes from being able to raise a family and enjoy a secure retirement.'

As mentioned above, plus a crackdown on illegal immigration; Police given new powers to seize wages paid to illegal workers as a ‘proceeds of crime’; councils to be given new powers to deal with unscrupulous landlords, and to evict illegal migrants more quickly; and a new enforcement agency will be set up.

LANDLORD INVESTOR June 2015

INDUSTRY UPDATE

Whilst it is not known what this will entail, it is anticipated that the current parameters covering mandatory licensing of HMO’s will be amended to either lower the number of occupants; and/or the number of floors; or even include all HMO’s.

12

INDUSTRY UPDATE

THE NATTILY NAMED TAX LOCK COMMITMENT NATIONAL INSURANCE CONTRIBUTIONS BILL/ FINANCE BILL To ensure there will be no rise in VAT; income tax rates; or National Insurance Contribution (NICs) rates.

ALSO ANTICIPATED ARE: Policing Bill - to ban the use of police cells for the mentally ill; extend police-led prosecutions; overhaul the complaints procedure; and change the use of bail; City Devolution Bill - to give devolve more powers to many English cities, including election of local Mayors; Strike laws reform - making it more difficult to take strike action; Employment Bill - to create 2 million more jobs, and 3 million more apprenticeships. Paid for by the decrease in benefits cap; Schools Bill - The Conservatives want to expand their free schools programme - which Labour opposes, with Mr Cameron committing to creating an extra 270,000 free school places by 2020.

Childcare Bill - to increase the amount of time free early education or childcare for 3 & 4 year olds. Also tax-free child care for all children.

Enterprise Bill - to cut red tape, and a new Small Business Conciliation Service to help settle disputes.

Scotland Bill/ Wales Bill - to devolve more powers.

Human Rights Act Repeal Bill - to abolish the Human Rights Act and replace it with a British Bill of Rights.

Counter-extremism Bill - will include new immigration rules, powers to close down premises used by extremists, and "extremism disruption orders".

Communications and Data Bill - known as the ‘Snoopers Charter’. Opposed by the Lib Dems, and current legislation will expire in 2016.

NHS Bill - to commit to an extra £8bn on the NHS. Where will this come from?

Hunting Ban Repeal Bill - anticipated to be defeated by some Conservative opposition, along with Labour.

June 2015

LANDLORD INVESTOR

ACCIDENTAL LANDLORDS SET TO BE BANNED BY THE EU Property owners could find it much harder to become accidental landlords within the next two years as a result of forthcoming European legislation.

Many of Britain's small army of landlords ended up letting out a property originally purchased with a mainstream mortgage - often when they decided to hold onto it as an investment after a change of circumstances, such as moving in with a partner, relocation or failure to sell.

However, the Treasury has said a new European Mortgage Credit Directive, which comes into force in 2016, will result in some landlord mortgages facing regulation - and this would stop homeowners making an easy move to being a landlord At present, buy-to-let mortgages are non-regulated, unlike mainstream owner-occupier mortgages. This is because landlords are usually viewed as business borrowers and thus require less supervision.

Those with a regular mortgage are viewed as consumers and so need tougher rules, and the regulations lenders must abide by were tightened up this April by the Financial Conduct Authority.

It means currently older people can obtain landlord loans, as opposed to stricter age limits on mainstream mortgages - and it means lenders do not have to apply stricter affordability criteria and take almost all new borrowers through a mortgage advice process.

But from 2016, banks may have to start refusing to lend to homeowners not intending to treat their buyto-let portfolio as a business. This could hit those hoping to simply hold onto their existing mortgage and pay a small premium to let their property, or complete an easy switch to a buy-to-let rate. ⌂

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INVESTMENT

FRAUD AND PROPERTY INVESTING: A CONSTANT THREAT Tom Entwistle - LandlordZONE

NOT WANTING TO BE A SCARE MONGER, BUT I THINK THE POTENTIAL FOR FRAUD AND SCAMS IN MATTERS RELATING TO PROPERTY INVESTMENT WARRANT A WARNING. This is particularly so in the light of pension freedom and the potential for the elderly, a prime target group for scammers and fraudsters, thinking about investing in property for the first time.

We are all vulnerable to scams and frauds of all kinds and pick pockets and thieves in public places are a prime example. I read in the Sunday press that surprisingly pick pockets have a habit of hanging around signs warning of pick pockets, they watch their victims tap their pockets, indicating exactly where the valuables are.

June 2015

LANDLORD INVESTOR

A wallet with credit cards and a driver’s licence or a mobile phone are gold dust to these thieves; cash is nothing compared to the rewards they get from plundering your personal details: debit, credit cards and bank accounts, date of birth, home address etc.

With the details they now have they can charge your cards, burgle your home and take over your life – it can take months and years to extricate yourself.

The next line of attack is the phone call. I recently had a call from someone purporting to be from Lloyds bank about a money transfer that had been made.

Wanting to know a little more I played along for a while, but as soon as I said I did not have a Lloyds bank account the phone instantly went dead.

They are hoping that by coincidence you have the Bank mentioned, after all there are a limited number, and that perhaps there was some sort of a transaction recently, enough to scare you into thinking there is a problems, from there the fraud commences.

15

The Microsoft one, where someone with an Asian accent says he’s from Microsoft, and you have a problem with your computer, is almost old hat. I’ve have had at least 5 of these over the years, but even so, an elderly neighbour was cheated out of £600 only a few months ago.

The other one is the boiler room scam: as I invest on the stock market I fairly regularly receive calls about “no brainer” company investments from very articulate and very persistent stock “salesmen”. Some call seemingly from UK based companies, or US but invariably they will be based overseas.

All of these, and even the common “phishing” e-mail scams, rely on the law of large numbers; that the more tries they make, soon or later they will make a hit. If you are old and a bit doddery, or your computer knowledge is pretty sparse, then the odds of their success are shortened considerably. What’s more, these scams are increasingly clever and sophisticated to the point where even the wide-awake computer professionals can be taken in.

These are the general scams we can all fall victim to, but when it comes to property matters there’s a whole battery of other devices the scoundrels can bring to bear.

Property landlords and investors in property have proved to be vulnerable on a number of fronts. If you have lived in the house you now let out it’s inevitable that old mail will get through addressed to you, despite the fact you pay for re-direction. If your personal details happen to be picked up by someone with ill intent, opening your mail, then you can imagine the consequences.

Similarly with limited companies. If you operate investments through a company, you should take advantage of the Companies House security measures available to you, otherwise you might find someone has purchased goods on credit or taken loans in your company’s name.

Somewhat related is a growing number of incidences of bogus solicitors getting involved in property conveyancing and absconding with monies and sale proceeds, or frauds taking place when solicitors process large fund transfers.

When a property sale is completed it is often the case that solicitors process a money transfer to their client’s bank account, often to the tune of hundreds of thousands of pounds, a scary process at the best of times. In a number of cases solicitors have received last minute e-mails supposedly from their client informing them that the bank account has been changed and instructing them to pay the money into the new account. As the e-mails come as the client’s “genuine” address, don’t ask me how this is done, several solicitors have fallen for the scam. Usually done on a Friday afternoon, it means the criminals have time to withdraw the funds before the client or solicitor realises and alerts the bank.

The property market is cyclical just like the stock market and the economy generally. When the market is on the way up, as now, and particularly when it is reaching high levels, people can easily get carried away thinking they will miss the boat if they don’t get invested.

During the noughties property boom, leading up to 2007/8 market crash, the market reached a frenzy with anxious investors falling right into the lap of so called “experts”, investment advisors putting people into dodgy property schemes. Off plan investments which halved in value within months, driving many innocents into bankruptcy, were prime examples.

LANDLORD INVESTOR June 2015

INVESTMENT

If your rental property, or indeed your own home, does not have a mortgage, then there’s been a flood of incidents where fraudsters have been successful in taking out a mortgage on other people’s property and absconding with the funds. Rental properties are particularly vulnerable to this and it has been possible since the Land Registry started publishing property details online, though there are now protection measures available to home owners, and you should take full advantage of them. www.gov.uk/protect-land-property-from-fraud

INVESTMENT

16

Many of these “investments” were accompanied by highly promoted training courses, all at inflated prices, where the organisers talked participants into parting with their savings, and committing themselves to outrageous amounts of debt, sometimes by maxing out credit cards, whilst the organisers took cuts from all the deals concluded with developers, solicitors and finance providers.

Then came along the Land Banking schemes, with the promise of making fortunes when land with no hope of success in getting planning permission. Next came the eco schemes where carbon credits and forestry investments, with the promise of outstanding returns, which never materialised.

Most of these schemes, with their glossy brochures, impressive websites and sharp suited salesmen, did the rounds of the property investment shows. Not all were bad, but some were no better than Ponzi schemes where the investors were taken for a ride.

A case in point was one called Eco House, a scheme which purported to give outstanding returns for investing in social housing developments in Brazil. A couple of years ago we at LandlordZONE® were approached to advertise this scheme to potential landlord investors.

We always check new advertisers out thoroughly before exposing our subscribers to them. So, despite their impressive websites and “offices” in Singapore, New York and the West Indies, their claims looked exaggerated and we thought the whole idea looked risky. We declined their offer because a quick internet search and credit check revealed the whole thing was run through an obscure holding company registered in London, listing their directors with a string of county court judgements (CCJs) and a credit rating of virtually zero – their credit was cash only.

We were therefore not surprised to read some time later that the scheme was in fact a Ponzi, with the main director running away with many thousands of pounds of investors’ money. You can read about what happened with Eco House here: http://goo.gl/6PZ04E This scheme was far from unique and we have come across several others before and since.

What’s so amazing about these types of dodgy property investment schemes, and with the improving property market and pension freedom we could see the emergence of more, it takes only a little due diligence on the investor’s part to see right through them. Yet despite this people who should know better still get taken in.

Greed and fear are two powerful emotions always present with investments, and they often lead to disaster when innocence and inexperience meet slick advertising and persuasive salespeople. Experienced investors have the ability to remove the emotion from their decision making, basing their decisions on rational reasoning and thorough research.

MY ADVICE, WHEN LOOKING AT PROPERTY INVESTMENTS AND SCHEMES OF ANY SORT IS: • Don’t be greedy; if returns look too good to be true, they almost certainly are. High returns on property investments either involve a lot of hard work, for example multi-occupation lets (HMOs), or a lot of risk, Ponzi schemes included.

LANDLORD INVESTOR

M

Y

CM

MY

• Never get involved in anything that starts with a cold call, telephone contacts for example. Always deal with professionals you approach yourself which good solid reputations.

• Do plenty of research. Read the industry journals, speak with property agents and get to know the market you are looking to invest in.

• Always see the assets you are investing in yourself, and if you are being advised, ask to speak to other investors for their views and experience.

• Be extra wary about investing abroad. Get your own English speaking lawyer and make sure you have full legal title to the land.

• If you are going to rely on advisors, courses etc., do some Internet searches for reviews and comments.

• Always do credit checks and referencing before parting with any money – they are quite inexpensive.

• Better still, do your own investing by researching and finding the right properties yourself. ⌂ Tom Entwistle is an experienced investor in residential and commercial property. He founded the LandlordZONE® website in 1999.

June 2015

C

CY

CMY

K

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18

INVESTMENT

HAVE YOU GOT NINJA PROPERTY SKILLS? Kevin Wright Positive Property Finance Most property investors start out using the mortgage system to finance their property purchases, but then your capital is trapped – at least for a while – and your ability to buy more properties is limited. But not if you’re a Ninja Investor!

WHAT'S A NINJA INVESTOR? Property investment is not just for people who have substantial cash reserves – anybody can become a successful property investor with a relatively small amount of available cash.

Ninja Property Investors have developed a mind-set that isn’t limited to only buying properties through a mortgage. With the right techniques they can buy any property that they’ve assessed as a profitable investment – whether it’s mortgageable or not.

TRANSFORMING TO THE CASH BUYER MIND-SET

• The Mortgage Buyer mind-set is to put down your

25% deposit when you buy a property, spend more of your cash on the refurb, then wait several months before trying to refinance to get some of your cash back out.

• Cash buyers have a superior mind-set; they buy

This speeds up their property portfolio growth – or profit generation because they know how to buy more property, faster, with less cash.

property faster, they buy it cheaper, they buy property no other investors can even consider (such as unmortgageable properties) and they make bigger profits.

The secret is to think like a cash buyer – and to do that you need a powerful mind-set to enhance and expand what you can achieve. This will significantly reduce the time it takes to achieve your property goal.

Almost every investor that has the Mortgage Buyer mind-set has it because they don’t have sufficient cash to enable them to think like a cash buyer. There is a simple financial structure that allows you to do this – bridging finance.

June 2015

LANDLORD INVESTOR

19

Bridging finance allows you to make the paradigm shift by being able to mimic the ways that cash buyers buy property without actually needing to have the cash in the bank.

INVESTMENT

Some people think bridging finance is expensive and costs more than it’s worth. Actually, the returns on your investment far outstrip the costs when the deal is right – and it makes it possible to do things that mortgages don’t allow you to do. That’s where the profits are.

Do keep an eye on costs, but don’t become blinkered to the profitability in a deal. If you identified a deal with £40,000 profit to be made and a bridging loan would cost you £10,000 in fees and interest, reducing your profit to £30,000; what would you do? Would you walk away or take the £30,000 profit?

SUCCESSFUL NINJA DEALS: •

An investor bought a property in Lincolnshire

£100,000 below the asking price, creating an

additional £100,000 of equity with the

refurb; for a deposit of only £12.500 – the

purchase price was £250,000. That’s a 5% deposit.

•

•

•

•

In East Sussex a property that was resold for a profit of £32,800 in just 2 months – was NOT even refurbished and still generated profit.

A property in Devon generated a profit of £62,000 in just 3 months with a deposit of less than 10%.

WHAT ARE THE BENEFITS OF USING NINJA INVESTOR STRATEGIES? You can buy properties that are unmortgageable... 50% Below Market Value (BMV) strategy.

A property refurb project in Kent created £37,000 in equity and the investor borrowed 112% of the purchase price.

You can buy properties much faster.

Another property in Lincolnshire was purchased for a deposit of 5% - just £3,000 – and made £51,000 in only 2 months – also without doing the required refurb.

You can buy properties from auction.

This is Ninja Investment.

You can buy repossessions.

You can refurb properties before you buy them … 100% refurb strategy.

If you’d like to learn how to become a Ninja Investor take a look at www.recycleyourcash.co.uk.

Or call Kevin on 07889 526 979

⌂

LANDLORD INVESTOR June 2015

20

INVESTMENT

"THE 5 GOLDEN RULES" HOW TO MAXIMISE THE RETURN AND MINIMISE THE RISKS Simon Zutshi Property Investors Network

INVESTING IN PROPERTY CAN MAKE YOU A LOT OF MONEY BUT YOU NEED TO KNOW WHAT YOU ARE DOING AS IT IS ALSO POSSIBLE TO LOSE MONEY! To help you maximise your return and minimise the risk of investing we have asked Simon Zutshi, if we can republish his 5 golden rules from his Amazon. co.uk No 1 property best seller, Property Magic.

June 2015

LANDLORD INVESTOR

1. ALWAYS BUY FROM MOTIVATED SELLERS. Instead of looking for a property you like and then negotiating with the seller, a smarter strategy is to look for motivated sellers who will be flexible on the price and or the terms of the sale, and then decide if you want to buy that particular property. If they are prepared to sell at a discount for a quick sale, the amount of discount will vary depending on the motivation of the seller and the general market conditions. In a rising market you may be happy with a 15% to 20% discount. In a falling market you would want a bigger discount of 25% to 40% to give you more of a safety buffer in case prices come down further.

21

We also need to recognise that some sellers may not be able to offer you a discount because maybe there is no equity in their property. However, if they are motivated, they may be more flexible on the terms of the sale for example when you actually pay for the property. Price is not the only factor in negotiation.

This means you may be able to use strategies such as: Exchange with a Delayed Completion, or Purchase Lease Option. These strategies only really work if the seller is motivated.

The main theme in this book is how to find, understand and help these motivated sellers by reaching an ethical win/win solution for all involved.

INVESTMENT

Just to be clear here, I am not saying that you always need to get a discount off the sale. Sometimes property is already a great buy at the full asking price, because the asking price may have already been lowered for a quick sale. This is where knowing the values in your local market, is really important so that you can spot a good deal when you see it.

Many investors get fixated about buying below market value, which means they might miss out on potentially profitable deals because they don’t think they should pay the full asking price. If it is a good deal, I will sometimes pay the full asking price and more, especially if I can add value to the property.

2. BUY IN AN AREA WITH STRONG RENTAL DEMAND. This is a very important rule. As a property investor your aim should be to buy an investment which will not only pay for itself, but also make a cash profit (positive cash flow) each month. There are running costs associated with owning a property, but the basic concept is that the rent you receive from your tenants more than covers all of the costs. If you have no tenants, you have no income, which means that you have to cover the costs yourself. Your investment then becomes a liability, rather than an asset. You need to accept that as a landlord you may occasionally have void periods on your property, which means you have no tenants and so you need to meet the costs You can dramatically reduce potential void periods by only ever buying property in an area with strong rental demand. You want to ensure that if your current tenants decide to leave the property then you can quickly and easily rent it to some new tenants at the full market rent. A general rule of thumb is to buy properties in areas with good local employment, good transport links with local facilities and amenities.

When you know how to do it, you can easily assess the true rental demand in any area by: using the internet to find like comparisons, speaking to local letting agents, and even placing dummy adverts to test rental demand.

If you are not sure about the rental demand in an area, then I would suggest that you don’t buy the property otherwise you may have longer than expected void periods, which will cost you money.

Due diligence is very important before you make any investment decisions.

LANDLORD INVESTOR June 2015

22

INVESTMENT

3. BUY FOR CASH FLOW As already mentioned in Rule No 2, your property should create a monthly positive cash flow for you, so that it is an asset rather than a liability. As prices shot up towards the end of the last property boom, it became increasingly difficult to find properties that stacked up to give a positive cash flow. Many investors were buying properties which would only just “washed their face”, where the rent just about covered the monthly costs. I have a few of these myself. Even worse, in the hope that prices would keep going up, some investors were buying properties that had negative cash flow, whereby the rent was not enough to cover the monthly costs. This meant that the owners had to subsidise the property each month. This is not a good position to be in especially if you have a lot of properties like this.

When the property market crash came in 2008, many investors, both amateurs and professionals, had properties that were worth less than they had purchased them for, and they were costing money each month just to hold them. In that situation, if you can afford to hold the property, you just need to sit back and wait for the market to recover. But if you can’t afford to continue subsidising it, and you are forced to sell, then that is one of the ways you could lose money in property.

Fortunately, the good news for you is that, with the benefit of hindsight, we can learn from the mistakes other people have made in the past, so that you don’t have to make the same mistakes yourself.

You should only ever buy property where each month there is a profit from the rental income you receive after paying all of the expenses including: mortgage payments, insurance, repairs and management fees.

Positive cash flow is king.

Although we expect property prices to rise in the long term, if you buy you investments ‘as if prices will never go up again’ you will be forced to only buy properties which give you great cash flow now. Extra cash flow will help you to build up a cash safety buffer, and will help you cover potential rises in interest rates in the future.

4. INVEST FOR THE LONG TERM BUY AND HOLD Some investors like to buy and sell property to make a profit. This is a good strategy (in a rising market) however, each time you sell a property you will crystalise your profit and you will never make any more money from that particular property. Whereas, if you buy and hold, you can make money from the rental profit each month as well as the long-term capital growth. This way you work once and get paid forever by that property.

I have sold properties in the past and usually regret it when I see how much values go up in the long term.

I believe the real profit in property is in buying and holding for the long term to benefit from significant capital growth. The key here is being able to afford to hold it and this is why Rule No 3 (a positive cash flow) is so important, so that you do not have to subsidise ownership of the property.

If you plan to hold for the long term and your property is rented out creating a positive cash flow, you do not mind short term fluctuations in price.

June 2015

LANDLORD INVESTOR

23

I am reluctant to sell property and will only do it for four reasons:

1.

2.

3.

If something has happened to the rental demand in the area since I first purchased it, and I feel that it may be difficult to rent it out in the long term.

If I wanted to raise funds to pay down some of my mortgages or build a war chest to make further purchases.

4.

If I really needed the cash for whatever reason.

If you do sell a property, I suggest you reinvest some of the proceeds into another property that will give you a better return.

In conclusion I believe it is best to hold property for the long term. That is how you can become very wealthy and pass wealth onto future generations.

5. HAVE A CASH BUFFER When talking about Rule No 3, I mentioned investors who had to sell their properties because they could not afford to hold them. A problem I sometimes hear about is that properties occasionally get damaged or just have wear and tear such that they are hard to rent. The landlord may not have the spare cash to make the necessary repairs and improvements and so the property remains void, which ends up costing the owner even more money. This becomes a viscous circle whereby the landlord can’t afford to make the improvements because he has no rent coming in, but can’t get any tenants because he can’t afford to make the improvements. These landlords often become motivated sellers.

The way to avoid this potential problem is to make sure you always have a cash buffer set aside to cover unexpected expenses. In reality, you can get insurance to cover most of the potential issues, including a tenant not paying the rent. However the more insurance policies you have, the higher your costs and so the less cash flow you will have each month.

I recommend you have a cash buffer in place, which you can use if need be. This could be cash in your bank, a clear credit card, or some cash in someone else’s bank that you have agreed you can borrow if necessary. The size of this buffer depends on your personal level of risk. A few thousand pounds per property might be a good idea. This will help you to avoid becoming a motivated seller yourself.

We do hope you have enjoyed these 5 Golden Rules taken from Property Magic. Simon has just finished the 5th revised and updates edition of Property Magic which will be available on Amazon and all good book shops in July. ⌂ However, if you pre order your copy of Property Magic direct form Simon he has put together some incredible bonuses for you. Full details here: www.PropertyMagicBook.com

LANDLORD INVESTOR June 2015

INVESTMENT

The equity tied up in the property is not generating a very good return on investment, and so I could invest it elsewhere to make a better return.

24

N AT I O N A L L E T T I N G S AWA R D W I N N E R

WE PAY GUARANTEED RENT! Photo: Nish Dattani, Director of Green Assessors, Award Sponsor (left) with Romesh Muthiah, Co-Director of Central Housing Group Ltd (right).

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June 2015

LANDLORDS WANTED!

LANDLORD INVESTOR

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Email: lettings@centralhousinggroup.com

Woodgate Studios 2-8 Games Road Cockfosters Hertfordshire EN4 9HN

Est. 2000

25

deposit protection

6 great tips for renting to student tenants Renting to student tenants is an attractive prospect for many landlords, but it comes with its own challenges. Here’s 6 top tips from my|deposits on how to get it right.

1. Choose the right tenancy agreement Decide if you’re going to issue a Single or Joint Tenancy to your tenants as each has different liabilities and responsibilities.

4. Include the right clauses in the agreement Outline clauses on anti-social behaviour that may cause damage or inconvenience to you or your neighbours.

2. Conduct a detailed check-in

5. Furnish the property appropriately

Conduct a robust check-in report and invite your tenants to attend. Ask your tenant to sign the check-in report or inventory documents.

Provide strong furniture and be prepared for fair wear and tear.

3. Outline your policy on smoking The Smoke-free Regulations 2007 means it’s an offence to smoke in shared parts of residence.

You may also need to claim deductions to the deposit for smoking so it’s important to highlight.

6. Discuss deposit deductions Communication is key. Ensure your tenants are aware of why you may need to make deductions to the deposit at the end of tenancy.

Read the full guide from my|deposits now, for free.

Get your FREE guide on renting to student tenants now.

Visit: www.mydeposits.co.uk/6-tips-for-student-lettings LANDLORD INVESTOR June 2015

26

YOUR PROPERTY PARTNER FINANCIAL

HAVE YOU TAX PROOFED YOUR PROPERTY EMPIRE? Jason Hayles Intelligent Protection Solutions

IT WAS BENJAMIN FRANKLIN WHO SAID THAT IN THIS WORLD NOTHING CAN BE CERTAIN EXCEPT DEATH AND TAXES. So for whatever reason you have decided that you want to build a property portfolio, with low investment rates and no security of a future pension to look forward to, you have taken the steps to take control and invest in property to build a better life for your future.

You have had to invest your own capital, spend time learning the trade, understanding the market, building relationships to get the right mortgage, to get the best property deals and get your sales through to completion. It involved hard work and many sleepless nights, but your efforts are starting to pay off , and now that you've sold a few and have made good profits you've kept some and can see the value of that hard work increasing day by day, year by year, you may even now be a property millionaire.

June 2015

LANDLORD INVESTOR

With the current pension reform we are due to see more and more property millionaires with an expected rise in people investing into property as a future pension, but how many have thought: What do I want to happen to my pension if life changes course and I am not here, the property portfolio that I have worked hard to build?

When we asked many of our property clients what they wanted to happen to their property portfolio, many looked at us with a blank expression, because they all thought about the reasons why they wanted to build a portfolio but not many had thought about how they would pass that pension onto their family.

How would they pass it down the generations to children and grandchildren to pay for university fees, to buy their first property, or even start their own business?

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EXAMPLE: MR AND MRS House

£400K

Contents

£50K

Valuables

£20K

Have you ever worked out your estate, it's very important to have an idea of how much it's worth and realise how much of your estate may have to be paid to HMRC. Take five minutes now to calculate your liability.

Car

£15K

If you are single, everything in your estate in excess of £325,000, or if you are married or in a civil partnership everything in excess of £650,000, could be liable to 40% tax. The calculation will take into consideration all your worldwide assets minus your liabilities, did you know that if your life insurance if not in trust this will add to your estate increasing your liability.

Bank Accounts

£10K

Life Insurance (Not in Trust)

£130K

Inv Property 1

£250K

Inv Property 2

£350K

ARE YOU ONE OF THEM?

There is no inheritance tax in transfer of estates between married couples or civil partners, on second death your estate would have to submit an IHT400 form to HMRC. This would calculate your inheritance tax liability that should be paid within six months.

In 2011/2012 the average inheritance tax bill was just under £166,000 and in 2013/14 HMRC received £3.4 billion pounds, a figure that is set to rise by 11% to £5.8 billion by 2019. It is estimated that currently 1 in 10 estates will pay inheritance tax.

Now that you understand your liability with intelligent planning, you can reduce or clear your inheritance tax bill.

Investments

£100K

LESS LIABILITIES Mortgage Home

£130K

Mortgage Inv Property 1

£100K

Mortgage Inv Property 2

£150K

Total Estates Minus Liabilities

£945,000

Less Inheritance Tax Threshold

£650,000 (325,000 each)

Taxable Estate

£295,000 @40% equals £118K to HMRC

LANDLORD INVESTOR June 2015

FINANCIAL

With the increase in property prices, more and more people are finding themselves property millionaires with a liable inheritance tax bill looming over their estate. In a recent report from Vitality Life they estimate that house prices are rising by 5.4% a year with the average house valued at £403,000 in London, with the number of taxable estates by region, South East was the highest at 24%.

YOUR PROPERTY PARTNER FINANCIAL

28

WHAT ARE THE WAYS THAT YOU CAN TAKE CONTROL ONCE AGAIN? REDUCE YOUR ESTATE WHILE YOU ARE ALIVE This could be through utilising gifts, giving away properties and cash to family members and friends etc.

There are rules that apply, with the average person now in retirement for 30 years you may want to keep hold of your assets for as long as possible.

LEAVE SOMETHING TO CHARITY Anything you give to charity is free from inheritance tax. If you leave at least 10% of your estate to charity, this will reduce your IHT liability from 40% down to 36%, leaving a gift in your will is a great way to support a charity that may be dear to you and your family.

MAKE A WILL By utilising trust planning you may be able to reduce your estate and save inheritance tax for the next generation so your assets don't get taxed twice.

TAKE OUT LIFE INSURANCE You could take out life insurance in trust to directly pay your inheritance tax bill. This money is outside your estate and can be a very cost effective and flexible means of clearing your future bill. It can also be used to pay off existing mortgages which will mean that you can pass on your portfolio with no questions asked by the lender to your family, and with no mortgage, you can now get a larger rental income or create generational wealth.

Inheritance tax is often seen by some as a voluntary tax because with planning there are options available to you to make sure that you don't give away your hard earned money to the government.

Don't leave your inheritance tax planning until it's too late, protect yourself and your family against the only two certainties in life: death and taxes. ⌂ Jason Hayles Intelligent Protection Solutions Twitter: Intelligentps Facebook: Intelligentprotectionsolutions

June 2015

LANDLORD INVESTOR

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advertising • branding • brochures • design for print flyers • leaflets • pop-up stands • roller banners stationery • web design

for all enquiries about design work, print or digital email craig@landlordinvestmentshow.co.uk

Web: www.flambardwilliams.co.uk Tel: 0161 244 8500 PropertyOwnersAdvert_88x130_0515_Layout 1 18/05/2015 13:58 Page 1

A LOCAL DEDICATED TEAM FOR YOUR PROPERTY OWNERS INSURANCE When it comes to covering your commercial or residential property, we know what’s important to you.

Call 01883 759 588 for a quote or pop in NFU Mutual Oxted, 8 Station Road West, Oxted, Surrey RH8 9EP.

Our agents are appointed representatives for general insurance products and introducer appointed representatives for life, pensions and investments of NFU Mutual. Our staff introduce to NFU Mutual for life, pensions and investments. NFU Mutual is The National Farmers Union Mutual Insurance Society Limited (No. 111982). Registered in England. Registered Office: Tiddington Road, Stratford upon Avon, Warwickshire CV37 7BJ. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and by the Prudential Regulation Authority. A member of the Association of British Insurers.

LANDLORD INVESTOR June 2015

30

YOUR PROPERTY PARTNER FINANCIAL

THE UK HOUSING LANDSCAPE: PAST AND PRESENT

Karen Bennett - Shawbrook Bank

Sales and Marketing Director, Commercial Mortgages

THERE HAS BEEN SOME DISCUSSION OF LATE ACROSS NATIONAL MEDIA AROUND HOME OWNERSHIP FALLING TO ITS LOWEST LEVEL IN THE UK FOR THE PAST 30 YEARS, WITH THE NUMBER OF PRIVATE RENTERS SOARING. Young people looking to get on the property ladder are being locked out of the market and spilling into the private rental sector in increasing numbers with the implications being numerous.

A starting point is to set the scene with a look back across the structural shift we have seen across the UK housing landscape over the past 20 years. The supply and demand imbalance is noticeable, particularly with the shortage of new housing pitched against increasing household formation due in part to the changing requirements across older demographics, and growing/ new family units.

June 2015

LANDLORD INVESTOR

There are also the affordability challenges associated with rising house prices which may be seen as a function of the supply/ demand imbalance, particularly noticeable in the London & South East. Also affecting this is the impact of the mortgage crisis over the past decade culminating in the Mortgage Market Review (MMR) which has contributed heavily to prospective homeowners finding it hard to finance property.

31

We must also turn our thoughts to the impact post General Election and ask the question of whether or not the issue of home ownership becomes political in nature. Will this new government turn their attention to the private rental sector and landlords, or will this be on the radar of the regulator given the impact the BTL sector has on the property market.

FINANCIAL

The natural consequence of this is that in spite of people not being able to afford home ownership, they still clearly desire to have a home which again forces them into the rental market. We therefore find ourselves continuing on the journey that has led to 20% of all UK housing being rented and forecasted to be 25% within 5 years, and the inevitable comparison with other parts of Europe - for example France which has historically been a nation of renters. In fact the UK now has more rented housing than France which is a reversal of the traditional view of the UK being a nation of homeowners. Supporting statistics can be seen from recent Council of Mortgage Lender data with the level of BTL lending exceeding by £4bn the projected numbers for 2014 (finishing at £28bn for the year).This all lends weight to the thinking that the model of housing provision within the UK has fundamentally changed and continues to change.

With the BTL market being cited as fuelling house price appreciation, recognising that the BOE sees property price volatility and bubbles as a key systemic risk to the financial system, and the share of the mortgage market that BTL now represents (circa 16% and growing) it is understandable why this is an area of increasing focus for the government and the Bank of England. The signposts for political and regulatory intervention are lurking. To ward of such intervention, which has a history of creating unintended consequences, it is incumbent on market participants to focus on sustainability in the sector, prudently taking into account affordability against rising interest rates, along with careful consideration of any appetite to attract more highly geared borrowers by relaxing loan to value limits.

With regard to the shift across the UK housing market, we can confidently say that the private rental sector remains a healthy way of providing quality housing in the UK and is something to be embraced and not curtailed. The industry has within its gift the ability to act in a long term sustainable way and send the right signals to all society, government and the BOE – we must now hope the financial community has the steel to deliver it. ⌂ Please contact us for further information: T: 01277 751 112 E: pi@shawbrook.co.uk “THE OVERALL COST FOR COMPARISON IS 6.2% APR. THE ACTUAL RATE AVAILABLE WILL DEPEND UPON YOUR CIRCUMSTANCES. ASK FOR A PERSONALISED ILLUSTRATION. ANY PROPERTY USED AS SECURITY, INCLUDING YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. A BROKER FEE MAY APPLY.”

LANDLORD INVESTOR June 2015

YOUR PROPERTY PARTNER FINANCIAL

32

THE VALUE OF BRIDGING FINANCE FOR PROPERTY INVESTMENT

ONE OF THE PRIMARY FACTORS FOR CONSIDERATION FOR ALL PROPERTY INVESTORS IS THE ABILITY TO SOURCE THE RIGHT TYPE OF FINANCE FOR MANAGING AND GROWING THEIR PORTFOLIO. Bridging and short term finance is now clearly regarded as a key financing tool for investment projects.

Whilst the structure and the actual manner in which the finance will be utilised may differ, the objective of property investors for securing bridging and short term finance is to enhance their property portfolio, whether it be through property purchase, property conversion or redevelopment to achieve a sale or remortgage at an enhanced, uplifted value.

Bridging finance allows property investors to explore opportunities that may not available to them when securing finance with a traditional lender or that may be missed due to the time taken to secure a term mortgage. Bridging finance is however synonymous with speed, and funds can be fast tracked within limited timescales, therefore ensuring that potentially lucrative investment opportunities are not missed.

June 2015

LANDLORD INVESTOR

Whilst the speed with which bridging finance can be provided is, and has always been, one of its primary benefits, the advantages are in fact much wider ranging than this.

Utilising bridging finance can provide property investors with the flexibility and scope to consider a range of property investment types including residential, semi-commercial and commercial, with a view to converting the property for an alternative purpose.

Property conversions, whether it be commercial into residential dwellings or similar, can offer significant investment opportunity and long term benefits for property professionals, who are able to carry out the property conversion and go on to secure a long term mortgage or property re-sale, often at a greater value.

Bridging finance also broadens the scope of the standard of property that can be purchased by property investors to include those properties that are deemed ‘unmortgageable’, due to the property standard, lack of essential living requirements such as a kitchen or bathroom or condition of the property. Many bridging finance providers such as Bridgebank Capital will provide a bridging loan facility in order for a property purchase to be made and essential refurbishment work to be carried out.

Property investors, whether they choose to sell or remortgage the property following essential works will either increase their property portfolio value or achieve financial gain.

33

Whilst bridging finance can be extremely beneficial, it is essential that borrowers consider and perceive it as a short term, project finance cost that facilitates the re-sale or re-mortgage of a property as a long term investment. It is imperative that property entrepreneurs assess and consider the short term funding in this manner, have an appropriate and achievable exit strategy identified, and fully consider both the benefits and implications associated with entering into such agreements.

A key aspect of successfully utilising bridging finance for a project is aligned to ensuring that the most appropriately structured agreement is implemented by an established and reputable lender. Established bridging lenders have the knowledge and capability to deal with all bridging scenarios, and the ability to overcome the challenges that can be faced in the course of completing an application, and ensuring delays are not incurred.

Bridgebank Capital prides itself on ensuring a truly client centric approach, focused around delivering high service standards and continuous support to borrowers is adopted on each and every case. The fulfilment of clients’ financial demands and expectations is of paramount importance and is at the heart of its operations. Case Managers act as a dedicated point of contact for borrowers and their professional team, throughout the lending process, and are tasked with ensuring that clear, concise communication is maintained at all times. The relationship established between the borrower, Case Manager and the borrower’s professional team ensures that delays in the application process are avoided and that borrower expectations are met and exceeded on every case.

Bridgebank Capital is proud to include some of the most experienced and knowledgeable figures from the professional finance and property industries within its senior management team. It is the knowledge, experience and know-how of these professionals that ensures that short term finance agreements provided by Bridgebank Capital are structured and financially engineered to fulfil borrower requirements and circumstances.

The Bridgebank Capital Group is one of the UK’s leading bridging finance lenders, and provides a comprehensive ‘one stop’ solution for borrowers’ short term finance requirements in terms of size, property type and location.

As a highly reputable bridging finance provider, Bridgebank Capital recognises that each bridging loan agreement is unique, and therefore must be considered on its own merit and that a ‘one size fits all’ tick box approach cannot be taken to evaluating the viability and strength of an application.

"THE BRIDGEBANK CAPITAL GROUP IS ONE OF THE UK’S LEAD­ING BRIDGING FINANCE LENDERS, AND PROVIDES A COMPRE­HENSIVE ‘ONE STOP’ SOLUTION FOR BORROWERS’ SHORT TERM FINANCE REQUIREMENTS IN TERMS OF SIZE, PROPERTY TYPE AND LOCATION."

The Bridgebank Capital Group includes a specialist large loans brand; Quantum by Bridgebank Capital.

This specialist brand was formed with the objective of providing property investors with the enhanced level of property finance expertise required for large short term loan transactions.

Short term loans over £1 million are progressed by the Quantum by Bridgebank Capital team, which is made up of dedicated, corporate lending professionals with specialist property and finance knowledge.

In conclusion, bridging and short term property finance is a key investment tool for property professionals. It is essential however, that borrowers recognise that it can and should only be considered as a short term solution to facilitate a project, with a defined exit strategy identified. ⌂

LANDLORD INVESTOR June 2015

FINANCIAL

Whilst bridging finance can assist property investors by providing the capital required to purchase or refurbish property, it can also be used to release equity within an existing portfolio for the purpose of further investment. Utilising equity within a portfolio provides the flexibility and opportunity for investors to benefit and utilise their existing portfolio for further growth.

34

L.I.S UPDATES

LANDLORD INVESTMENT SHOW RETURNS TO CROYDON AND IS A HUGE SUCCESS

We are delighted to announce that our third year returning to Croydon was a fantastic event. We would like to thank all of our sponsors, exhibitors and speakers who added to the day which saw over 500 landlords, investors and property professionals attend. We look forward to finalising the date for next years event soon.

"IT WAS A DELIGHT TO EXHIBIT AT THE CROYDON LANDLORD INVESTMENT SHOW, 14TH MAY 2015. WE FOUND THE SHOW HIGHLY BENEFICIAL AND PICKED UP SOME GREAT LEADS. I HIGHLY RECOMMEND THE EXHIBITION/SHOW AND WOULD ENCOURAGE MY COLLEAGUES TO SUPPORT THE SHOW WHEN IT OCCURS IN THEIR AREAS. FRAN ROBINS OF THE LANDLORD INVESTMENT SHOW WAS A "THIS IS THE FIRST TIME WE HAVE PLEASURE TO DEAL WITH." EXHIBITED AT THE LANDLORD Sean Rieder - No Letting Go INVESTMENT SHOW. I MUST SAY THE EVENT WAS SO WELL ORGANISED AND IT WAS GREAT HUGELY SUCCESSFUL SHOW FOR US. ON THE DAY THERE WAS EASILY OVER 500 ATTENDEES THROUGH THE DOOR AND WE MET WITH SO MANY LANDLORDS AND INVESTORS. DELIGHTED TO SAY WE'VE ALREADY GOT BACK WHAT WE PAID FOR OUR STAND AND MORE. WELL DONE LANDLORD INVESTMENT AND WE LOOK FORWARD TO EXHIBITING WITH YOU IN THE FUTURE." Matthew Bonner - Surrey Cherry Picker Hire

June 2015

LANDLORD INVESTOR

Landlord Investment Show would like to invite you to our Landlord & Investor Race Day, to be staged on July 2nd at the picturesque Surrey course located only 35 minutes from central London.

The Landlord & Investor Race day will be attended by Landlords and Investors from across the region.

In addition this evening fixture will give you a great chance to network with Landlords, Investors, Property Professionals and feature top quality flat races in the heart of Epsom’s finest feature - the Downs.

What better way to spend a summer evening combining business with pleasure, than at Epsom’s Landlord Investor Race Evening.

For more information and to book your COMPLIMENTARY tickets for the day, simply visit:

LANDLORDINVESTMENTSHOW.CO.UK/RACEDAY

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YOURINVESTOR NEW PROPERTY PARTNER

BUILDING YOUR PROPERTY BUSINESS:

WHERE DO YOU START? Why Property Works - Hazel de Kloe It's an exciting feeling, isn't it? The prospect of getting into property and building a healthy income is enough to whet anyone's appetite for this business! Especially as it is portrayed as relatively straightforward to start...or is it?

IT MAY BE THAT YOU ARE COMPLETELY NEW TO THE WORLD OF PROPERTY, OR PERHAPS YOU'VE JUST STARTED AND HAVE ONE OR TWO PROPERTIES UNDER YOUR BELT. In fact, wherever you're at, it is no mean feat to enter into and build up a successful property business.

Regardless of the size of portfolio you intend to put together (you may want to buy just one property or maybe you have the idea of ending up with twenty or one hundred!), there are certain guidelines you will need to follow to ensure your chances of success.

With the majority of businesses (including building a property portfolio) failing within just the first year of launching, isn't it a good idea to give yourself the best possible start?

June 2015

LANDLORD INVESTOR

Having spent the last 14 years building our property portfolio, there are a few things I've learnt along the way. Out of those last 14 years, I have also spent 7 of them educating others' how to build their own portfolios. I have discovered there are some important stages you need to master to massively increase your chances.

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All too often, I see people who have been 'whipped' into an excited frenzy about getting into property, only to come crashing down when they realise just how much is involved to 'get it right'. They often become disheartened when they are perhaps not taken seriously by the agents or cannot find that 'elusive first deal'. My approach is to lay down the right foundations, keep a level head and to build on this as you go along.

As we all know, having the right mindset is vital to seeing you through the ups and downs in your business endeavours and enable you to have the sticking power needed to find your way around and through any obstacles you come across. Having clarity about what you want to achieve, how you're going to achieve it and why you're doing it in the first place will catapult your chances of success in this industry.

MONEY Property is one of the most money-intensive businesses you can get into. Whether you are working with your own funds, and/or those of someone else (including banks, JV partners, bridging finance companies, etc), you MUST be certain of what you are doing. It is therefore crucial that you are aware about what your thoughts are towards it. You may have heard the saying 'what you think about, comes about'.

So many of us have a 'fear-based' attitude towards money (i.e. not wanting to lose it, scared about whether we can make it work, having a 'not enough' mentality) which can really hamper your ability to work with money and indeed make money. Understanding what your core beliefs are about money will at least provide you with the answers about how to mitigate any risks when handling your finances.

NEW INVESTOR

THEY CAN EASILY BE BROKEN DOWN INTO THREE MAIN CATEGORIES: MINDSET

Remember, your ability to raise money as well as manage and make money will determine your level of accomplishment. Isn't it worthwhile then to take some time to scrutinise your feelings and thoughts about it? Chances are, if you are not yet making (much) money from property, there is likely to be a latent belief around money which may be stopping you from making progress.

MANAGEMENT Your ability to manage multiple activities within this business will also be a major factor to your progress.

Not only will you need to manage your finances and properties efficiently and effectively, but also the multiple roles which you as a property investor and landlord will need to be proficient at. As your business grows, you will need to be able to build your team and learn to manage other people, which, as we all know, can be a whole other challenge!

Possibly the most important person to learn how to manage, however, is yourself. For me, property has been more a journey of self-discovery and personal growth than anything else. If you are able to master your own inner workings as well as react positively to any situation which comes your way, you will be building your portfolio from a great standpoint.

In essence, your property business will grow as you do. Having been in business now for a number of years, I've come to realise 'you don't go into business, you grow into business'. ⌂ As a useful guide to help you along the way, I have put together a special new free report entitled 'What To Know Before You Buy Your Next Investment Property'. If you would like to get hold of a copy with my compliments, please feel free to contact me below: W: http://bit.do/wtkfreereport E: enquiries@whypropertyworks.co.uk

www.whypropertyworks.co.uk

T: 01303 766 455

LANDLORD INVESTOR June 2015

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GREAT PROPERTY TIPS

BUY TO SELL SUCCESSFULLY:

TO MAKE SERIOUS POTS OF CASH! Susannah Cole The Good Property Company

In the last of this series of three articles on Buy to Sell, I look at how to retail the property, so that you get the highest number of viewings, and then a fast offer, working with your buyer to ensure it is sold, and you get to bank the cash!

ADDING VALUE, AKA MAKING IT BEAUTIFUL The first thing to remember is (no offence, and I hope none taken!) you are not the expert here. Who is? The estate agent and high street retailers, so let’s take on board what they do to make property look amazing, thereby attracting a fast sale and a high purchase price.

ESTATE AGENTS First thing I do when I get the keys, way before I have contracted with the builder, is to invite our selling agent in to check with them my plans for the house.

The main thing I am checking is ‘does what I want to do make sense for that area?’ For example, a key criterion for many home purchases is the following layout;

• An open plan kitchen diner, • Three or four bedrooms, including • A master bedroom with an en-suite, • Ideally a bathroom upstairs.

Why? Look at demographics; now have two parents working in many households, in order to make ends meet. That means that the precious time between work finishing and bedtime is the only time a family or a couple can spend together to socialise. In that same time, food needs to be cooked, so the trend for open plan kitchen living room, with social space as well as cooking space, is one of a changing lifestyle for your potential buyer. This important room allows both socialising with loved ones, and cooking the family’s supper to happen at the same time, which is likely how your buyer needs to live these days.

June 2015

LANDLORD INVESTOR

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Stripped wooden floors may add a lot of desirability, depending on your target market. However you need to check all of this with your local agent as they are the expert in understanding the localised market place for which features buyers feel are important when they make a choice on which house to view and buy.

If your target market is the Investor Market, then a simple bedroom size comparison is important. For an Investor purchaser, it is vital all the bedrooms are doubles and not singles, as this impacts strongly upon their ability to rent out the rooms to tenants.

Taking this into account, you may want to move walls, which I have frequently done, to ensure you have decently sized rooms.

HIGH STREET RETAILERS

A great resource is house magazines; I subscribe to Living Etc. to monitor interior trends. I also ask our photographer to shoot shots like those you might see in house magazines – close ups of items, that frankly have little to do with the floor plan of a house, but add glamour, comfort and warmth to the impression of living in the house.

Briefly, to avoid costly mistakes, I’ve done a quick checklist of Do’s and Don’ts for you:

DO • Consider your end customer types.

• Understand the key criteria for them.

• Consider the most cost effective way to add that value.

• Understand that you are only one ‘type’.

• Talk to the experts – in this case, the Estate

Agents, who see buyer behaviour, daily and will be well equipped to guide you as to the ‘must haves’.

Take tips from the experts, Ikea, Next home, House of Fraser, John Lewis, Conran shop and others, they are selling lifestyle and you need to too. They pay people with PHDs to dress their showrooms, to attract buyers. Use their amazing resource, freely on show to educate you how to do it, and replicate their glamorous show style in your own Buy to Sell Property. Remember lifestyle; you are selling the dream of a perfect life in this property.

• Be guided by the builder, but do not let ‘the tail

Add value not just by the physical alteration. Add dreamy, perception value; employ a professional photographer and style the property as in a magazine. Write up the property brochure in a warm, inviting and positive tone, highlighting ways to live in the property. Be conscious that all this takes time; in our business, it takes our team 4 days to style up a house, ready for sale. Essentially you are furnishing a 3, 4 or 5 bedroom house, in a couple of days, and then posing it up! This also requires a carefully chosen posing kit, with colour tones throughout the house for continuity. I use the same style and the same colours in every Buy to Sell project so that I can use the same base posing kit for every house.

I furnish all the rooms, but do not put in wardrobes (as they are bulky); I put in enough lifestyle indicators, such as bottles of wine and wine glasses, breakfast trays in bed, and tons of comfortable and glamorous cushions, to create a warm and inviting space.

• Refurb as if you were living there.

• Fiddle with the builders once they are in.

• Leave the builders to self manage – disaster!!!

• Forget about Building Regs and Certificates,

wag the dog’.

• Pay attention to detail.

• Remember Kerb appeal; buying a house is an

emotional choice, and often the decision is made within 30 seconds of arriving at the front door.

DON'T

needed for the legal sale process.

• Get worried – this stuff is a process, 1 in 3 sales fall out of bed, plan for it.

LANDLORD INVESTOR June 2015

GREAT PROPERTY TIPS

In addition, the demand for some level of luxury has increased, so I find generally that a master bedroom with an en-suite is a real winner.

GREAT PROPERTY TIPS

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ENCOURAGING AN OFFER & CONVEYANCING THE SALE This is an area that most investors forget to focus on, they assume once they have an offer everything will go smoothly. Remember 1 in 3 sales falls out of bed, your job is to beat that statistic.

How? Remember that Property is a Team Sport. Your team is vital here, and your Estate Agent is your team member.

How will you get them to focus on your property first?

• Weekly scheduled 15 minute calls in the diary.

• Fortnightly office meets, to understand the numbers.

• Respond to their suggestions, interrogate

(respectfully) the market statistics, to see how your project is delivering against the norm

• Have a folder per property, and record

conversations, taking action on advice given.

Do NOT harangue, blame or be rude, or cut down their commission – they are on your side!

Once you have an offer, this is not yet the time to relax!

I speak with our agents at least 3 times a week, and my solicitor at least twice a week, checking that the sale is progressing nicely. I want to know the key milestones are being hit.

• Has my buyer paid for a survey and is it satisfactory?

• Have they paid out for searches and are they in, no problem?

• Are all enquiries satisfied?

• Has the mortgage offer been received and when can we schedule the exchange and completion dates.

It is amazing how much you still need to be involved in this part of getting the sale ‘over the line’.

I strongly (from painful personal experience) suggest you do not leave it to the estate agent conveyancer and both sets of solicitors, as it will take longer, and in the meantime, your buyer may experience the classic buyer’s remorse and pull out. Get involved, which leads to a successful sale!

June 2015

LANDLORD INVESTOR

POST PROJECT ANALYSIS Remember Plan, Do, Review?

This part is important – reviewing your work to date will allow you to deliver better, more profitable projects next time. Review the Financial Analysis, the Project Delivery and identify your Key Learning Points, focussing on what went well, and what could be improved. ⌂ Good luck, I wish you every success in your property projects.

To get in touch email Jess on: education@thegoodpropertycompany.co.uk, or call 0117 942 8914.

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TAX ADVICE

IS YOUR HOUSE IN ORDER? Lambert Chapman Tax Team OUR WORK INVOLVES PROVIDING ADVICE TO LANDLORDS ON; •

Whether costs are capital or revenue, thereby receiving tax relief in the year incurred or when the property is sold.

•

Record keeping so that our work is easier and as a consequence cheaper for you.

•

Calculating capital profits, or losses, when properties are sold and determining whether your profit is trading income or capital gains.

For many, the purchase of a second property is an integral part of their retirement planning, whilst others look at it as a separate business to provide secondary income on top of an existing employment.

Either way, dealing with the tax aspects of the property’s ownership each year is a vital part of your financial requirements and that’s where we might be called upon.

Many people think that there is no tax liability connected with running a property. Having set the income received to match the mortgage payment out, they believe that there is no profit and therefore no requirement to declare anything to the Inland Revenue. Unfortunately setting your affairs up in such a way sees the mortgage cleared in a shorter period, but can leave you without cashflow to settle any tax liability arising.

For rental properties, the important tax saving cost is the mortgage interest element of the repayment as it is that that is offset against the rent that you receive. In the current economic environment where interest rates are low, the opportunity to break even is limited and the majority of landlords are faced with an annual tax bill to settle.

June 2015

LANDLORD INVESTOR

We can also provide advice on tax matters relating to transactions on your own home if your garden and grounds are in excess of half a hectare.

The rental statement produced is reported on your self-assessment tax return and Lambert Chapman produce almost 1,500 self-assessment returns each year. We have the experience to handle all of your self-assessment issues, whether they be share options, trusts, non-residence or just a straight forward employment income return for the high earner.

Lambert Chapman LLP is an approachable and independent practice of Chartered Accountants, Auditors and Business Advisors with offices in London and Essex. We provide a full range of services to help our clients achieve their business objectives, offering you a one-stop-shop for all your accountancy needs.

Please call Tax Partner Chris Harman or our Tax Team for further information on 020 7148 0872. ⌂

Landlord Accounting Services Self-assessment tax returns Rental property accounts Tax planning & advice Lambert Chapman LLP is an approachable and independent practice of Chartered Accountants, Auditors and Business Advisors with offices in Braintree, Maldon and London.

We provide a full range of services to help private landlords file their tax returns efficiently and help property developers unlock their business potential by offering a one-stop-shop for all your accountancy and taxation needs.

Contact Nick ChrisForsyth Harmantotoarrange arrangea a complimentary introduction meeting meeting to to discuss your property portfolio. portfolio

Making life simpler for you Nick 326266 ChrisForsyth: Harman:01376 020 7148 0872 nick@lambert-chapman.co.uk chris@lambert-chapman.co.uk www.lambert-chapman.co.uk Offices in Braintree, London London and and Maldon Maldon

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By cutting costly high street branches, and letting you do some bits yourself, we can help you save hundreds on your next let.

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LANDLORD INVESTOR June 2015

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EXPERT ADVICE

EDUCATION & TRAINING: BYB - BEFORE YOU BUY - TRIPLE-L

David Humphreys Property Investor Online

THERE ARE A NUMBER OF BYB DECISIONS THAT ALL INVESTORS NEED TO MAKE BEFORE BUYING ANY PROPERTY BUT PARTICULARLY BEFORE BUYING THEIR 1ST. One of the headline BYB decisions is Location, Location, Location (Triple-L). First coined by Phil Spencer & Kirstie Allsopp for the Channel 4 television programme of the same name, or at least Phil & Kirstie were the program hosts, and the term/words are now regarded as an essential part of the property buying decision process.

Now there are a number of the factors to consider when deciding on Triple-L, most if not all of which can directly impact on the performance of your investment. Literally Triple-L can be the difference between making your investment a “roaring success” or an “unmitigated disaster”.

The first can have you basking in the glow of success; the second can make you wish you had never heard of the supposed “joys” of property investment particularly if you are trying to avoid financial ruin.

1st problem, how do you define a "Location", before you even start looking for your particular Triple-L.

June 2015

LANDLORD INVESTOR

Most people would think of a Location as an area, maybe a village, suburb, small town but equally, the term can be applied to a large geographical area/region, South East, South West, or a County, Kent, West Midlands, Durham.

A couple of years ago a colleague, Monique Rom & I, developed a 1-Day Workshop on Location Due Diligence, because, in deciding on your Triple-L, a great deal of work needs to be carried out in two stages.

The first, where is Triple-L, second, what happens inside Triple-L. To reach a decision on both, we designed a 17 page Word template for our students to record their thorough Due Diligence on their Triple-L, to make sure of a “basking” outcome, because, as is so often the case, the devil is in the detail, but more on that later.

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We decided that it had to be a relatively small area, certainly not a large geographical area or a small town or, for that matter, even a Metropolitan District, Barnsley or London Borough, Wandsworth.

We looked at electoral wards but it was almost impossible to work out, or follow the boundaries of an electoral Ward and even Wards were often too large an area to be defined as and treated as a single investment location with the necessary, high degree, of commonality across the area.

Then it occurred to us that people do not live in "locations", they don't have "locationers" living next door or opposite. The people living next door, or opposite for that matter, are neighbours, and so we defined our "investment location" as a “neighbourhood” and gave it a ¼ to ½ mile radius to fall inline with the search radius on Rightmove.

The less dense the housing the greater the physical area so a village/suburb might have ½ mile radius neighbourhoods whilst London Boroughs would seldom exceed ¼ mile.

Wherever you are going to invest, where ever your Triple-L, you are going to need a wide range of statistics on which to base your buying decisions and therefore it is best to work in physical areas that are reported on by others and Rightmove’s search criteria is a classic example. There are others which are equally good, I just prefer Rightmove, and once you are familiar with how to navigate any of these sites, or any research site for that matter, time spent on research reduces yet becomes more accurate.

Back to neighbourhoods, we then found that our neighbourhoods often had natural boundaries, a major road, rail line, river, park for example which meant that the person living in the next house, or opposite, couldn't be termed a "neighbour" if between you there was a physical barrier.

The house on the other side of a “barrier” had to be in a different neighbourhood, which meant that it couldn't really be considered for "comp" purposes such as rent/sale value or occupier demand/preference whereas normally all properties within the one quarter-mile radius are considered.

In Battersea, the rail line separates streets that are only a few hundred yards apart yet 15+ minutes of travel time and not ideal/natural neighbours, you certainly couldn’t talk, even shout, to each other!

To digress a little, I spent some time between 1998 & 2002 developing a portfolio of ex-local flats & houses in London Borough of Wandsworth, a “Triple-L” with a huge housing stock with a huge variety of ELA housing, values, and returns. The Triple-L aspect was “Wandsworth’s” reputation for my target tenant, “Professional Sharers”, and the redevelopment of Battersea Power Station. Wandsworth’s Housing Policy as Freeholders of ELA developments was vital as we would only be buying ELA property.

In reality Triple-L reduced to Battersea & Clapham.

Battersea is a district in Wandsworth, but Clapham, next door, is in Lambeth Borough, different Local Authority, different policies.

The main attractions (within ½ mile) were based around Clapham Junction (Rail) and assumed to be in Clapham, but actually in Battersea, so I mapped out a number of neighbourhoods around Clapham Junction, all in Wandsworth, but all with a ¼ mile max radius.

LANDLORD INVESTOR June 2015

EXPERT ADVICE

To start with we had the greatest difficulty in defining a "Location" particularly as the property market consists of literally millions of “mini-markets”, not a region even though Halifax/Nationwide/Land Registry divide the UK into 10-13 regions for stat purposes, not a County/Unitary Authority, another stat division, Metropolitan District, London Borough etc.

EXPERT ADVICE

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Roads also become natural barriers. You wouldn’t want children running between roads on opposite sides of York Rd/A3205 yet they could do between streets on one side or the other which brings me to another point about Due Diligence, you have to literally “walk the streets” to get to know, and understand, all the neighbourhoods that make up a Triple-L. Whilst York Rd may be obvious from a map as a busy road, especially with the help of Google because it is an “A” road, and the same applies to Trinity Rd which splits Battersea from Wandsworth Town; only by walking can you experience the difficulty of using Latchmere Rd, a hill with narrow pavements & under rail line bridges, to travel a short distance. I mention these streets because today, with the help of Google, you can literally take a “walk” and see exactly what I am talking about, but you can’t “smell” the street, literally or metaphorically. Trains aren’t quiet or sweet smelling!

Generally you should break up a Triple-L into 5-8 neighbourhoods before comps are no longer comps and a new Triple-L starts.

We have already established that people live in neighbourhoods and not locations, by the same token people with similar interests and aspirations live in the “same” neighbourhood. Families with young children will all target a good school, convenient for shopping, quiet at night with limited pubs & takeaways whilst students are not interested in the school, yes to the shopping, not concerned about “quiet”, and want unlimited pubs and takeaways. Offer either the other neighbourhood and you will fail, no “basking”!

Now your Triple-L may include a “family” neighbourhood and a “student” neighbourhood, allowing you to operate 2 very different strategies, but, be aware, there is a high degree of incompatibility between these two rental demands that you will need to resolve, possible by physical separation, a natural barrier, road/rail, or distance. Students want to be close to uni, 10 min by bike/walk, families are quite happy to live further away, even if they work at the uni.

June 2015

LANDLORD INVESTOR

THE NEXT FACTOR TO CONSIDER IS TIME. THE TIME IT TAKES YOU TO REACH YOUR TRIPLE-L. The further away you live the more difficulty you will have in dealing with every aspect of your investment strategy from your initial Triple-L research & due diligence, through viewing and buying prospective properties, fixing up and furnishing, letting or selling and, if letting, ongoing management including all that entails, particularly emergency repairs.

The difficulties you will suffer translate into time, not just time travelling to and from, but in dealing with all these aspects, because initially you will be totally unfamiliar with the locality and very reliant on others to advise or act on your behalf, even down to the getting to know the "good", "bad" & "ugly" neighbourhoods, developments, even streets, even one end of a street from another, all of which can make a difference to the success of your investment.

You know the neighbourhood that you live in; you are familiar with it and inherently understand the people who live there, your neighbours. You would think that you could move to another location say 50 miles away and quickly develop the same familiarity, subconsciously taking with you the tools you used to become familiar with your home neighbourhood.

Often this is simply not the case; the tools just don't work or not with the same degree of efficiency & reliability.

Today, a great deal of the statistical analysis of a location needed to grade it as Triple-L can be carried out on the web but you still need to visit the location, develop the relationships with the local people you will need in your Power Team, Estate & Letting Agents, Builders, Gardeners, even Cleaners, and it won't be a case of using the first person you meet or even only using one person in each case.

Remember, you are going to be a "newbie" on the block and any worthwhile member of your Power Team will already have developed a tried and tested relationship with another investor and, if that investors lives locally, they are "one of us" and not an interloper like you and they will get preferential treatment.

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You may be lucky, they may be polite and waste some of their time taking down your details because, for every 100 newbies who walk through their doors, maybe one or two, certainly less than five, have realistic aims & objectives based on local costs & returns, so why bother with you when they have their “A” list of reliable proven investors who make a quick (same day) decision and speaks the local lingo.

I spent some time developing a portfolio in the Valleys of South Wales and to reach the Valleys, I had to come "across the bridge", out of "Thatcher" country.

That immediately made me a distrusted, even disliked, outsider. Whilst I earned some trust and was "liked", as long as I would drink with them on Friday night buying the beers, I remained an outsider for the years I worked in the Valleys even though I was buying, fixing up and letting very distressed property, employing local tradesmen, some of whom hadn't worked a full year in the last 10.

I left the Valleys for personal reasons and broadly speaking enjoyed the years I spent there, particularly because of the enormous amount of distressed terraced houses (little competition), which I was able to buy at auction, redesign, fixup, let and eventually sell.

Would I return? No. Should I have effectively relocated weekdays from London "across the bridge"? No. And at that time I was already highly experienced in all aspects of property investment. Had I been a novice, I think I would have been metaphorically burned alive unless I was from the "Valleys”!

Your first Triple-L needs to be your "home" or as close to "home" as you can get, allowing for the other factors, such as affordability, that will influence your Triple-L decision. ⌂ The "Location Due Diligence" template is available online at www.PropertyInvestorOnline.com/shop, cost £47, special price for LIS Newsletter readers, £27. Enter promo code LISN2015. The template can be viewed on You Tube with "How to Use" videos, search David Humphreys Due Diligence”

LANDLORD INVESTOR June 2015

EXPERT ADVICE

One of the first people you need to develop a relationship with is an estate agent selling the type of property that fits your strategy, but, you won't be the only investor operating your strategy, you will not have found the Holy Grail. You will be another of the tens, maybe hundreds of investors, who walk in through the doors of the estate agent each year, all Cash Buyers, no mortgage needed!

EXPERT ADVICE

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PROPERTY MAGIC HOW TO BUILD YOUR PROPERTY PORTFOLIO WITH OTHER PEOPLE'S TIME, MONEY AND EXPERIENCE The updated and revised 5th Edition of this amazon.co.uk property best seller is being released in July, and we have spoken to Author Simon Zutshi to find out what is covered in the latest edition of this best selling property book.

PROPERTY MAGIC EXPLAINS HOW YOU CAN PAY LESS FOR EVERY PROPERTY YOU PURCHASE BY FINDING AND HELPING MOTIVATED SELLERS. These are people who need to sell their property quickly and so the speed and certainty of sale is often more important than the amount of money they sell it for. It is very important to understand that we want to help these people solve their property related problems by finding an ethical win/win solution.

Property Magic was first published in 2008 and became an instant hit. The property market has changed dramatically over the last seven years and so Simon has updated the book several times to ensure that it is up to date and topical for the current market conditions.

THE 5TH EDITION OF PROPERTY MAGIC INCLUDES THE FOLLOWING: •

• •

Why would someone sell a property for less than it is worth?

Understanding and finding motivated sellers

How to find an ethical win/win solution that will make you money

5 questions to ask Estate Agents to get them to bring great deals to you.

• •

How to buy property at auction the correct way

•

• •

• •

How to find other people’s money to use for your investing Alternative ways of financing your purchases How to use Momentum Investing to recycle your deposit quickly The only 4 times you should sell a property

How to maximise the monthly positive cash flow from your property

How to legally minimise the tax you pay on your property

How to profit from property without having to get a mortgage

• • •

How to get other people to help you

⌂

Why not pre order your copy of Property Magic and take advantage of our special readers offer...

June 2015

LANDLORD INVESTOR

READER SPECIAL OFFER If you pre order your copy of Property Magic direct from Simon before the end of June, you will receive hundreds of pounds of bonus educational content and material.

Just visit the website today to find out about these bonuses and to order your copy of Property Magic:

www.PropertyMagicBook.co.uk

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YOUR PROPERTY PARTNER

WILL YOUR BUY TO LET GET YOU A MERCEDES? Marie Parris George Ellis Property Services It is often said that opposites attract, but when you are trying to find a tenant for your buy to let property – similarities attract. Identifying some of the traits in your tenants is hidden within your property. Take a light hearted look at Marie’s 6 tenant personality types.

THE CITROEN C1 TENANT THE FORD FOCUS TITANIUM TENANT This type of tenant usually prefers the average one or two bedroom flat. They are not fussed if it is in tall or low rise block or in a house and will also consider all bills inclusive rooms.

They are genuinely easy going types and don’t ask for much, so maintenance cost for the landlord remains low. Likely to remain in the same property for many years as long as there are no major life hiccups for them.

Once in a blue moon they may have overfilled the bath that has caused some damaged or played music too loud that causes the neighbour to complain, but because they are reliable with their rent payments the landlord tends to overlook this mishap.

Often they point out any problems to the landlord or agent when they see them like the broken gutter.

June 2015

LANDLORD INVESTOR

Often attracted to cheap and run down properties where the landlord thinks maintenance is something that you do every 3 years which consists only of looking at the property.

They have aspirations to rent upscale which never materialise. They are inconsistent with the rent and are oblivious to any problems in the property.

This type of tenant calls the landlord once the ceiling from the leak above has now collapse and has destroyed their pride of all possessions, usually their 50 inch TV or play station.

THE AUDI TT CONVERTIBLE TENANT It is all about the sleek design for this tenant. They do not notice there is no broom cupboard as long as it is in the right part of town. This could be the most compact of properties as long as the look is right, this type of tenant will sign on the dotted line as they fall in love with your property at first sight.

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To attract this type of tenant your property needs to be in immaculate condition, otherwise you will miss out if those minor repairs between tenancies are not dealt with before viewings commence. If you are engaging an agency ensure they can answer all their questions – or you will miss out on a “Mercedes tenant”.

As tenants they expect everything (even when it is not an emergency) to be dealt with smoothly and with speed. If it is visible and its spoils their overall look the tenant will expect you to fix it quickly. They tend not stay in the property for long as they outgrow the space, but there is always another ATTC tenant coming along.

THE FIAT PUNTO TENANT This environmentally friendly tenant looks for properties that are energy efficient. They prefer comfort over style in pleasant surroundings.

They are extremely cordial, in actual fact really friendly and will invite you to their raw foodie event, if you happen to speak to them that week. When there is a repair issue they ask soooo nicely, refusal is not an option, even when you know it is their responsibility.

If all is in order on both fronts this type of tenant is ideal as they usually pay before rent is due. They communicate well, but if they do not think you are giving them good service they will start to quote “you must do this repair it is affecting my health…..”

They will return the property back to you at the end of the tenancy in the same good condition, if not sometimes better, making you wonder if they ever used the oven during their occupancy. ⌂

Marie Parris is CEO & founder of George Ellis Property Services, the company operates across six disciplines to include lettings & management across London, an independent tenant referencing service, inventories and sales. Marie provides personal landlord tuition courses – see website for more details.

THE BMW TENANT This type of tenant seeks quality accommodation with a difference. They tend to prefer new builds with that extra touch, like a gym, concierge or underground secure parking. This type of discerning tenant will be looking for spacious living.

They are very charming when you initially meet them and all through the referencing process they are very co-operative.

However, expect this tenant to be demanding and if they do not get what they want they will constantly bombard you with requests until sorted. Landlords or agents should only be prepared to deal with this type of tenant if you can dot the i’s and cross the t’s.

De-regulation Act – No section 21 - you have been warned!

If a landlord deducts money from their deposit and they disagree be prepare for a deposit dispute.

George Ellis Property Services can be contacted on: WEST END 26 Dover Street Mayfair London W1S 4LY Telephone: 0207 763 7200 SOUTH LONDON 261 Beckenham Road Beckenham Kent BR3 4RP Telephone: 0208 778 9686 Email: info@georgeellis.london Web: www.georgeellis.london Twitter: @geproperty

LANDLORD INVESTOR June 2015

YOUR PROPERTY PARTNER

THE MERCEDES TENANT

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LANDLORD INSURANCE

LANDLORDS NEED TO DO MORE TO PROTECT THEIR INVESTMENTS Steve Cox - Alan Boswell Group Independent Insurance Brokers, Alan Boswell Group, recently undertook some research into the claims history of over 21,000 landlords, the results of which produced some interesting reading. The figures showed that many landlords are leaving themselves vulnerable to a multitude of risks. Steve Cox, Property Insurance expert from Alan Boswell Group, discusses the research and reveals what ignoring potential risks, could mean for landlords.

THE FACTS Headline findings from our research highlighted that nearly one in three (29%) of all claims made by landlords is for escape of water, whilst electrical fires were found to be the most damaging. These figures emphasise that landlords need to do more in taking preventative steps around these common causes of claims in order to protect both their tenants and their pockets.

FIRE INCIDENTS ACCOUNT FOR LARGEST INSURANCE CLAIMS Electrical fire accounted for just 13 of the 2697 claims made by landlord clients in the past twelve months, however the total cost claimed was a whopping £687,395 giving an average claim value of £52,876, which was found to be almost double that of any other claim type.

Risk to life is obviously the most important reason to ensure that fire precautions are taken seriously but the risk to financial health should also prompt landlords to improve prevention and detection.

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LANDLORD INVESTOR

Along with accidental fire, unknown cause and arson, electrical fires dominated the top four spots in the list of the highest value claims, with over £3m worth of claims made last year. This was 32% of the total value of claims submitted to the Group.

WATER DAMAGE MOST COMMON REASON FOR INSURANCE CLAIM With fire being the most costly element, water was the most prevalent. Flooding of a property and escape of water through leaking pipes, for example, accounted for over 30% of all claims. This represented almost 5% of all Alan Boswell Group’s landlord clients.

Indicating an alarming finding that 1 out of every 20 landlords are likely to suffer water related damage in any given year.

Although the average value of these claims were found to be considerably lower value than fire, with flooding claims averaging over £13,000 per claim, and escape of water averaging £2,400, it is clear that taking precautionary steps, such as having sandbags if you’re in a flood prone area or keeping pipes well lagged, especially during winter, makes good commercial sense to prevent you suffering a loss.

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HEALTH & SAFETY FOR LANDLORDS In total there was nearly £10m in claims last year, ranging from subsidence or malicious damage.

Whilst good risk management won’t prevent them all, staying well ahead of legislation when it comes to health and safety can help reduce your exposure.

Landlords should not be reacting to changes in the rules. They should be making them, for example, with tougher regulations coming into force later this year making it a legal requirement for landlords to have smoke detectors in their properties we would hope that all landlords are already meeting this basic requirement. Proactively working towards providing the safest environment will make their properties appealing to prospective tenants whilst arguably reducing costs in the long term.

Being reliant on your landlords’ insurance policy to cover any financial losses is not always guaranteed and, clearly, could never fully compensate for any losses to life.

GET THE RIGHT ADVICE It is important to consider the risks which may force you to reach to your insurance policy to make a claim.

Steve is able to provide professional, independent advice on the things you should consider and the most suitable policies which would give full protection should a claim still occur.

Alan Boswell Group offer a range of Landlords’ Insurance products and have recently won General Supplier of the Year at the annual Landlords & Lettings Awards as well as having three of their Landlord Insurance products rated five-stars by Defaqto. ⌂ For further advice contact Steve on: T: 01603 218031 M: 07766 715654 W: alanboswell.com/landlords E: scox@alanboswell.com Alan Boswell Insurance Brokers Ltd offers a range of other services including business, home, travel and car insurance.

LANDLORD INVESTOR June 2015

LANDLORD INSURANCE

Mother Nature had a hand in a considerable number of other claims. Storm damage generated 470 claims costing nearly £1m, and although it can be very unpredictable, simple steps such as securing patio tables down or regularly checking for unsecure roof tiles, can help lessen the need to submit a claim under this category.

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LANDLORD INSURANCE

TAKING THE PAIN OUT OF INSURANCE Helen Kirby - NFU Mutual Managing your property portfolio can be rewarding yet time consuming even without some of the things that go wrong in life. Whether your aims are to maximise capital growth, rental income or both, it’s important to have peace of mind when it comes to your properties and their revenue.

INSURANCE IS NOT ALWAYS TOP OF THE "TO DO" LIST, BUT IT IS CRUCIAL TO ENSURE THAT YOU HAVE THE RIGHT COVER IN PLACE WHEN YOU REALLY NEED IT. HERE IS OUR TOP TEN CHECKLIST ON PROPERTY OWNERS INSURANCE:

1. Make sure that your buildings sums insured 3. Consider what is most important to you. You reflect the full replacement cost to avoid problems in the event of a claim. This may be a very different number to the market value of the property; The sums insured should reflect the full rebuilding cost of the building in the same materials and include an allowance for removal of debris following a loss, architects and surveys fees and any additional costs incurred through complying with modern day building regulations.

are buying a promise and this needs to deliver: Your insurance offer is made up of a price, terms and conditions ( e.g. excesses, limits etc) and the service that you will be provided with. Consider the exclusions and range of cover extensions available under the insurance policy you are thinking about buying and tailor it to meet your needs. Compare that to other products and quotations you have had to make sure that you are buying the right product for you

2. Have you supplied any of your own fixtures 4. Declare to your prospective insurer all the and fittings for use by your tenant? If you have make sure you include an allowance in your building sum insured for that. As a general rule – if you could lift the building and shake it around – items that remain fixed are parts of the buildings sum insured and items that move around are the contents.

June 2015

LANDLORD INVESTOR

claims you have previously made and incidents that have occurred at the premises even where you decided not to make a claim. If they find our later especially at that time you make a claim that things happened that you had not told them about it may create difficulties for you getting the claim settled.

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8. You should take out public liability cover for

9. Do you have any plant or equipment at the

premises used by the tenants that operate under pressure (e.g. air receiver or compressor) or that is designed to lift something (eg a passenger or goods lift or fork lift truck). By law this type of plant needs to be inspected by an independent competent authority at regular intervals to ensure it is safe for continued use. You can usually arrange for this service to be provided to you along side your insurance

10. Finally, before you accept an offer - Consider 5. Tell your insurer about any properties that

become unoccupied – unoccupied properties represent an increased risk and the insurers may want to amend the cover or terms. Most insurers generally have a short term period for unoccupancy – it is worth checking with your insurer.

6. Protect your income too: Insure against the

loss of rent that you may incur if the building becomes unusable following a loss. Make sure that you take into account how long it may take to return the building the building to a rentable condition and to find a new tenant when deciding how many months of loss of rent you want to insure for.

7.

Consider whether you need to take out Employers Liability Insurance – to provide cover for someone who is working for you and who sustains injury while in the course of their employment. This is a compulsory cover if you have anyone working with you permanently or temporarily under contract, on a self- employed basis or a work experience scheme.

Although you are not required by law to take out this insurance if only close members of your family work for you should still buy the cover in case they decide to sue you for injury sustained while working for you.

the need for on-going advice and guidance about your insurances – will your insurer or broker be accessible to you when you need them. Are they local to you? What about the claims service – can they demonstrate that they will be there for you when you most need them?

For guidance and support on property owners insurance, including the important things to avoid, make sure you have a good understanding of the market and cover.

For further information, NFU Mutual provides a personal and attentive approach to insurance with all contacts, advice and queries, done either in person or on the phone, or via email. ⌂ Visit the Oxted team at the London Landlord Investment Show held at the Olympia Conference Centre on the 4th June for some personal, friendly advice.

For further information, please get in touch: T: 01883 759588 E: Helen_kirby@nfumutual.co.uk W: nfumutual.co.uk/branches/oxted

LANDLORD INVESTOR June 2015

LANDLORD INSURANCE

injury or damage sustained by any of your tenants or members of the public caused by your negligent acts e.g. failure to maintain your premises properly.

This is known as Property Owners Liability Insurance.

A minimum limit of at least £5m is recommended.

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YOUR PROPERTY LETTINGS & MANAGEMENT PARTNER

REASSURINGLY INEXPENSIVE Robert Ellice CEO & Founder of easyProperty.com

"REASSURINGLY EXPENSIVE". SO GOES THE STRAPLINE FOR STELLA ARTOIS, BUT AS TECHNOLOGY HAS EXPLODED INTO EVERYDAY LIFE, THE OVERARCHING TREND OF THE LAST DECADE IS THAT LOW-COST DOESN'T HAVE TO MEAN LOW-QUALITY AT ALL. 20 years ago, if you’d told me that you could fly me to Cologne for £30 - I’d have counted the wings before I got on. Now, that’s just the sort of price I expect.

From Amazon to Uber, the narrative of the past few years has been that as technology advances, industries evolve and customers are empowered.

The property industry is the anomaly. For the most part, it hasn’t changed all that much since I first became part of it at just 16. That’s what easyProperty is here to change.

June 2015

LANDLORD INVESTOR

“We let our customers choose which services they need, and which they don’t – and that’s all they pay for.”

I teamed up with Stelios Haji-Ioannou, the founder of easyJet, to bring the property industry into the 21st century and offer landlords, vendors, and property professionals real choice, value, and control. We didn’t do it by cutting corners, or skimping on service, but by changing the way we did business.

By doing away with costly high street stores, we’re able to make huge savings and pass them on to our customers. Replacing what can be replaced with technology, and investing in our people and partners. With all the usual services, a highly trained support team on call, and specialist partners posted across the country - what we can provide is not actually very different from what you’d expect with a traditional agent.

What makes us different is the way we provide it.

We let our customers choose which services they need, and which they don’t – and that’s all they pay for. Fair fixed fees on a flexible service, that’s what we do differently.

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Rob answers some FAQs on easyProperty, and how online compares with a traditional agent.

SOME PEOPLE HAVE SAID THAT, FOR THE PRICES YOU CHARGE, YOU CAN'T POSSIBLY BE PROVIDING A DECENT SERVICE. IS THAT A FAIR COMMENT? Absolutely not, we’re an ARLA qualified agent, and from Rightmove to British Gas – we only work with the best.

Our prices are low (particularly when compared with those of high street agents) but it’s not by cutting corners that we offer those prices, nor by teasing people in with headline rates only to squeeze in hidden charges later on. We do it by changing the way we do business.

By cutting out high street branches and embracing technology, we make huge savings on our overheads.

Secondly, because of our brand and the fact that we operate nationwide, we’ve been able to negotiate really competitive deals with our suppliers.

And lastly, because we let landlords pick which services they need and which they don’t – they only ever pay for what they actually need. These efficiencies and economies of scale are what is reflected in our prices – not a lack of quality in the service.

BUT DOESN'T LEAVING OUT THE HIGH STREET STORES MAKE IT DIFFICULT TO OPERATE LOCALLY? It depends what you mean by operate. We may not have local branches, but we do have a local presence across the country. Whether you need a professional photographer, inventory clerk, or highly skilled tradesman - our partners are on standby up and down the UK, and our highly trained Customer Support team are on the other end of the phone.

In fact, if you took our Property Management service (3.6% inc. VAT) then you and your tenants would get a 24/7 repair and maintenance support line. When a pipe bursts at 2am - we think that’s a lot more valuable than having a branch on the local high street that’s been closed since 7pm.

easyProperty.com

“High street agents have been peddling the myth of local contacts’ for years.”

WITHOUT THE LOCAL KNOWLEDGE AND CONTACTS OF A HIGH STREET AGENT, HOW CAN YOU BE SURE YOU'LL FIND TENANTS AS FAST? High street agents have been peddling the myth of ‘local contacts’ for years. The truth is, when people want to find a new home, they go online - where over 90% of property searches start. And when they do, they go nowhere more often than the UK’s leading portals, Rightmove & Zoopla.

We advertise on both, whereas many high street agents have had to drop one (usually Zoopla) in order to comply with the “one other portal rule” that OnTheMarket impose on their agents. So the idea that we’d be slower at finding tenants is nonsense.

If anything, we’ll probably find them faster – and we offer industry-leading tenant referencing at no cost to the landlord too.

YOU SELL ALL YOUR SERVICES INDIVIDUALLY, BUT WHEN YOU ADD THEM ALL UP ISN'T THE COST COMPARABLE TO A HIGH STREET AGENT'S FEES? The average rent in the UK is now £899 a month.

With the average high street agent charging about 10% plus VAT for a “Let Only” service, you get an average fee of £1,100 every time the property is let.

If you added together our individual services to make an equivalent package, it would come to £234 (If you want us to do the viewings for you too, we can show up to 8 people round for £79 an hour, but we know most landlords prefer to host viewings themselves anyway).

And, it then gets cheaper every time you use us - because once you’ve paid for photos, a floor plan, and property description (for example) they are all yours to keep so you don’t have to pay for them next time you let with us. That £234 then becomes £85.

And remember, you don’t have to take any of our services. They’re all entirely optional. We don’t separate it out to make it look cheaper, we separate it out so you only pay for what you need. That’s all. ⌂

LANDLORD INVESTOR June 2015

LETTINGS & MANAGEMENT

A QUICK Q&A WITH ROB ELLICE, EASYPROPERTY CEO

INDUSTRY SPOTLIGHT

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LANDLORD ACTION RAISES £18,000 FOR CHARITY AT "RUMBLE WITH THE AGENTS" BOXING EVENT Landlord Action On Thursday 21st May 2015, Landlord Action hosted a first for the property industry - a white collar charity boxing event. It was a sell-out success with nearly 300 estate agents, landlords and developers attending to help beat the fundraising target and collect more than £18,000 for Rainbow Trust Children’s Charity.

Whilst guests enjoyed a three course dinner, the twelve boxers from Savills, Life Residential, Rushfield Ltd, Panther Securities, Winkworth, Infiniti Properties, Fraser and Co and of course Landlord Action’s very own Paul Shamplina, kept the crowds on the edge of their seats (some out of them and standing on them), demonstrating all the time and effort they have put into training over the last four months.

Special guest John Conteh, a British former boxer who was world light-heavyweight boxing champion, ran a live auction with everyone ‘digging deep’ for some incredible memorabilia. Items included signed football boots, boxing gloves, shirts and even a studio session with musician and DJ legend Mark Ronson, which also included a signed guitar.

The sporting event, which took place at The Holiday Inn in Finchley Central, north London and was filmed

by Channel 5 as part of a wider documentary they are preparing to air in June following the work of Landlord Action.

The night concluded with a speech from Founder of Landlord Action, Paul Shamplina, who thanked all those involved in the evening, with special mention to his wife Rita, of whom he said was instrumental in helping to organise the event, and to Peacock Gym in East London who partnered the event to provide a fully structured and supervised boxing training programme for the participants.

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LANDLORD INVESTOR

Paul added: “For a while now we at Landlord Action have wanted to run an event to support a children’s charity and we chose Rainbow Trust Children’s Charity for all the incredible work they do in providing emotional and practical support to families who have a child with a life threatening or terminal illness.

Being an avid boxing fan there was no better way to raise money for a very worthy cause than to bring together some of my property industry peers for a “rumble in the ring”. Bring on next year”. ⌂

Landlord Action Public Relations: Helen Evison, Landlord Action PR T: 01276 62201, M: 07979 537 335 Paul Shamplina, Founder, Landlord Action T: 020 8906 3838

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INDUSTRY SPOTLIGHT

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CAPITAL & COASTAL SAYS ENQUIRIES VIA ZOOPLA HAVE INCREASED 300% SINCE LAUNCH OF OTM Capital & Coastal Director of Capital & Coastal, Michael Riley, says OnTheMarket’s (OTM) strategic decision to break the dominance of market leaders Rightmove and Zoopla, by asking member agents to advertise on just one other property portal, effectively forcing agents to choose, has led to a 300% increase in enquiries for Capital & Coastal properties via Zoopla.

Director of Capital & Coastal, Michael Riley, says OnTheMarket’s (OTM) strategic decision to break the dominance of market leaders Rightmove and Zoopla, by asking member agents to advertise on just one other property portal, effectively forcing agents to choose, has led to a 300% increase in enquiries for Capital & Coastal properties via Zoopla.

Following the launch of OnTheMarket.com at the end of January 2015, which has the backing of six large estate agency chains, 90% of agents who decided to take the plunge and sign up with OTM, chose to leave Zoopla in favour of Rightmove.

However, Michael Riley, a former head of Head of Sales for Savills and Head of Operations for Romans in the Thames Valley, believes that despite the vast amount of money which has been invested to ensure the success of OTM, it will never generate enough traffic to the site to take ‘poll position’. Meanwhile, his business is benefitting from lesser competition and an abundance of house hunters viewing Capital & Coastal properties, as it remains one of the few South Coast agents listed with Zoopla, giving them a distinct advantage over their competitors.

June 2015

LANDLORD INVESTOR

“The success of a website is not just determined by stock, but traffic coming to the site to visit that stock.

If you are a vendor, you want as many people as possible to be viewing your property to ensure you find the right buyer. There is a risk to vendors that they will end up not achieving the maximum value for their property, as enquiries via OTM will be fewer and vendors may end up agreeing a price too early just to secure a sale.”

Although OnTheMarket has made headway in accumulating listings, visits per day are only 3% that of Zoopla’s (38,000 versus 1.25 million*) igniting concerns for its future. “It is difficult to see how they will turn that around quickly enough to avoid agents switching back” says Michael Riley.

Riley goes on to say that it’s possible that Zoopla could decide to change their business model altogether and become a direct selling agent. “Obviously this would be a bold move for Zoopla but it’s worked in the US so no reason why it can’t here too.” ⌂ *according to property portal watch

For further information, please contact: Helen Evison & Holly Addinall Capital & Coastal PR on 01276 62201 helen@theinhouseway.co.uk holly@theinhouseway.co.uk

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June 2015

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Landlords – we know you’re busy. That’s why we don’t hide any nasties in our small print. No hidden fees or renewal commission, in fact no nonsense at all.

One small transparent and fair fee is all you’ll need to get your property let. So why pay more?

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Source: The Guardian 2014, but as 97% of statistics are made up, don’t quote us on this. There really isn’t ever anything nasty in our small print, but if you’re one of the 7 % who reads it anyway, then thanks. In case you now feel like you’ve wasted your time reading this, here’s a genuine bonafide fact: sea otters hold hands while they’re sleeping so they don’t drift away. Cool, huh?