Landlord Investor JUN 2016

BY

I N D U ST RY

E X P E RT S

C OV E R I N G

A L L

A S P E CT S

O F

B UY -T O - L ET

JUNE 2016

W R ITT E N

LANDLORD | PROPERTY | INVESTMENT

2016 HOUSING AND PLANNING ACT: THE EIGHT MAIN SECTIONS

- Southern Landlords Association

SADIQ KHAN'S PLAN: IS RENT CONTROL REALLY THE ANSWER?

- Tom Entwistle

AUCTIONED PROPERTY WITHIN FIVE MILES OF LONDON OLYMPIA

- David Humphreys

WHAT IS THE FUTURE OF

LONDON'S RENTAL MARKET?

2016 SHOW LOCATIONS JUNE 21ST LONDON OLYMPIA JULY 7TH INVESTOR RACE DAY EPSOM DOWNS SEPTEMBER 21ST WEST BROMWICH MIDLANDS SEPTEMBER 28TH NORWICH EAST ANGLIA OCTOBER 13TH OLD TRAFFORD MANCHESTER NOVEMBER 8TH LONDON OLYMPIA Thousands of Landlords & Investors Attending // Hundreds of Exhibitors Expert Local Property Analysis // All Apsects of the Property Sector Covered FOR MORE INFORMATION AND TO GET YOUR COMPLIMENTARY TICKETS VISIT:

LANDLORDINVESTMENTSHOW.CO.UK OR CALL 0208 656 5075

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WELCOME TO THE JUNE ISSUE OF LANDLORD INVESTOR! Editorial Editor

Tracey Hanbury editor@landlordinvestmentshow.co.uk Editorial Contributors Alan Rawlins Clive Emson Auctioneers Colin Stanbridge David Humphreys Kam Dovedi Karen Bennett Katrine Sporle Kevin Wright National Landlords Association Paul Shamplina Peter Littlewood Samuel Estates Simon Zutshi Southern Landlords Association Tom Entwistle

Art Dept.

Design Craig Edmonds Advertising Beverley Meliniotis

Contact Telephone: 0208 656 5075 Website: landlordinvestmentshow.co.uk Facebook: /LandlordInvestmentShow Twitter: @LandlordINShow

Tenants History LTD 27 Stafford Road 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.

We hope you are enjoying your summer so far and have been making the most of the weather! Here at the Landlord Investment Show we have been incredibly busy since our Dartford and Stevenage shows, all in preparation for our biggest London show to date.

To coincide with our National Landlord Investment Show in the heart of London, this edition is all about the capital.

In this month’s issue of the magazine, the Southern Landlords Association are explaining the new housing and planning act for 2016 and share their eight main points to take away from the announcement.

CONTENTS Industry Update New Investor Commercial Financial Industry Spotlight Investment Landlord Associations Auctions

06 18 22 28 30 34 44 46

Analysing the new Mayors recent election, Tom Entwistle from LandlordZONE looks at rent control and the proposal of a London living wage, something that could affect tenants and landlords throughout the city.

Also in this feature, David Humphreys from Buying Auction Property is assessing auctioned properties within a five mile radius of London Olympia. This highlights some of the fantastic opportunities the world of auction has for landlords, investors and property professionals.

Be sure to come along to our Olympia Show on the 21st June where we have over eighty exhibitors and are expecting over two thousand landlords through the door on the day!

Another event not to be missed is our Property Investor Race Day at the Epsom Downs Racecourse on 7th July. This will feature exhibitors and seminars throughout the day, followed by an evening of fun with five top quality flat races and a night of live music to follow.

Happy reading!

Tracey Hanbury | Editor Landlord Investor

Tracey Hanbury

June 2016

LANDLORD INVESTOR

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MEET THE TEAM

SHOW LOCATIONS

TRACEY HANBURY EDITOR & SALES DIRECTOR T: 0208 656 5075 M: 07931 308 845

28TH JANUARY - GUILDFORD

24TH FEBRUARY - EAST LONDON

2ND MARCH - COLCHESTER

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27TH APRIL - DARTFORD

18TH MAY - MAIDENHEAD

25TH MAY - STEVENAGE

21ST JUNE - LONDON OLYMPIA

7TH JULY - EPSOM DOWNS

21ST SEPTEMBER - MIDLANDS

28TH SEPTEMBER - NORWICH

13TH OCTOBER - MANCHESTER

8TH NOVEMBER - LONDON OLYMPIA

tracey@landlordinvestmentshow.co.uk

STEVE HANBURY DIRECTOR

T: 0208 656 5075 M: 07429 683 046

steve@landlordinvestmentshow.co.uk

LES HANBURY DIRECTOR

FRAN ROBINS

SALES & EVENTS MANAGER T: 0208 656 5075 M: 07950 284 615

fran@landlordinvestmentshow.co.uk

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ryan@landlordinvestmentshow.co.uk

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beverley@landlordinvestmentshow.co.uk

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craig@landlordinvestmentshow.co.uk

IF YOU WOULD LIKE ANY INFORMATION ABOUT 2015 SHOWS, PLEASE GET IN CONTACT WITH A MEMBER OF THE TEAM OR ALTERNATIVELY, VISIT OUR WEBSITE AT: WWW.LANDLORDINVESTMENTSHOW.CO.UK

June 2016

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C O N TA C T S H AW B R O O K T O D AY

T 01277 751 112 pi@shawbrook.co.uk

W W W. S H AW B R O O K . C O. U K

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INDUSTRY UPDATE

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THE NEW HOUSING (AND PLANNING) ACT, 2016 Southern Landlords Association

IT CONSISTS OF 8 MAIN SECTIONS:

AND WE NOW HAVE YET ANOTHER HOUSING ACT. The Housing and Planning Bill started life in the Commons last year, originally called the 2015 Bill, it took so long to go through the Parliamentary process it finally emerged on May 12th as the 2016 Act. Bill’s get debated on both sides of the House before receiving Royal Assent (i.e. becoming law). This spent considerable time in the Lords, with them making many recommendations. They even published a summary of the amended Bill as they proposed. But when it returned to the Commons all the Lords proposals were ignored – so much for democracy!

Consequently the actual Act was not published until May 25th. I will summarise the main points here.

Note that it applies to England only.

June 2016

LANDLORD INVESTOR

1. NEW HOMES IN ENGLAND: Split into:

1.

Starter Homes;

2.

Self-Build and Custom House building; In general this won’t affect landlords, apart from (perhaps) putting more properties on the market, thus diluting the stock leading to fewer tenants.

2. ROGUE LANDLORDS AND PROPERTY AGENTS IN ENGLAND 1.

Banning orders;

The Government are to consult on this, but in summary means that the First Tier Tribunal will be able to ban a landlord or agent from letting property for a minimum of 12 months. Further offences could lead of a fine up to £30,000 and/or to prison for a maximum of 51 weeks (no I don’t know where this peculiar length of time comes from).

7 Note also that a banned person would not be allowed to hold an HMO license, and the Local Authority would be able to issue a Management Order – i.e. take over the management of the HMO to protect the tenants.

3. RECOVERING ABANDONED PREMISES IN ENGLAND

Any landlord or agent being successfully prosecuted for a housing offence, including all existing ones, would be placed on a central database.

The new rules state:

Database of Rogue Landlords and Property Agents;

1.

Unfortunately the only people with access to this database would be Local Authority officers, even though the prosecution would be carried out in a public court, accessible for any member of the public.

three notices have to be issued stating (among other things) that the landlord believes the property to be abandoned;

2.

the first notice can be issued any time, but

3.

So, for example, if any of our members were to be prosecuted we would not be able to know. Or an agent wouldn’t be able to check a new landlord had been prosecuted was undesirable. Statistics can be made available from the database, but in an anonymised form. This is wrong in my opinion.

the second can only be issued when they are in arrears (to the same rules as a Section 8, Ground 8), and must be between 2 and 4 weeks after the first notice

3.

5.

Rent repayment orders;

4.

Government have eventually realised that landlords don’t like to be forced to repay rents.

In this Housing Act they have introduced the ability for the landlord to be ordered to re-pay up to 12 months’ rent to all tenants affected. This is not only for new offences, but many existing ones as well.

Ouch!

both of these can demand a response to the notice by a date specified by the landlord.

The final notice will be in the final 5 days before the date given (above)

The notices would have to served on the tenant; any occupiers named in the tenancy; and the deposit payer So that will all be easy to use then! I suspect many landlords will continue with the Section 8/21 route.

However, this does mark a departure from an existing norm. Up to now only tenants or the courts could cease a tenancy. The landlord couldn’t – they could ask for it to be ceased. That essentially is the basis for the Section 8 and 21 notices. They are notices of intention, i.e. the intention of the landlord wanting their property, if the tenant(s) don’t leave the landlord has to go to court to get the request to leave translated into an actual court order to vacate.

With this notice, if the tenant fails to respond to the notices if correctly issued, the agreement ceases on the nominated day and the landlord can take the property back.

Note that this is a summary of the procedure, anyone wanting to use it must follow the whole procedure correctly.

June 2016

LANDLORD INVESTOR

INDUSTRY UPDATE

2.

Up to now the law has not recognised an abandoned tenancy. Assuming the tenant has stopped paying rent, as well as disappearing, the only way to regain possession is a section 8 (Grounds 8, 10 & 11), and/ or a Section 21.

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INDUSTRY UPDATE

4. SOCIAL HOUSING Significant changes for social landlords, including no obligation for developers to provide Affordable Housing – known as Section 106 agreements.

5. HOUSING, ESTATE AGENTS AND RENTCHARGES 1.

gives the Government the ability to

introduce regular electrical safety

inspections, along the lines of the annual gas inspection.

No more is known about this at this stage.

2.

It will be possible to share information held by the deposit schemes with Local Authorities, and anyone else the Secretary of State allows. This is further help for the authorities to identify landlords not declaring themselves.

3.

A landlord could be ordered to make certain

information available to a ‘relevant’ tenant association.

4.

June 2016

Anyone declared insolvent/bankrupt, or doesn’t have the Right to Remain (i.e. their visa has expired) will not be allowed to hold an HMO license.

LANDLORD INVESTOR

5.

6.

Gives the Government the ability to introduce client money protection schemes for all agents – this is long overdue.

It will be easier to deal with rentcharges.

These are an anachronism that go back to Victorian times when someone selling a house to a new owner could retain the right to charge an annual fee. This was even on freehold properties, but generally is normally a very low figure.

6. PLANNING IN ENGLAND Changes to local planning rules, and neighbourhood planning.

7. COMPULSORY PURCHASES To make it easier for surveyors to enter land prior to a Compulsory Purchase Order (CPO).

8. PUBLIC AUTHORITY LAND To make it easier for public bodies to make land available for building houses. ⌂

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INDUSTRY UPDATE

IS RENT CONTROL REALLY THE ANSWER? Tom Entwistle - LandlordZONE

WITH THE ELECTION OF SADIQ KHAN AS THE LONDON MAYOR, LANDLORDS IN LONDON CAN EXPECT SOME CHANGES WHEN IT COMES TO HOUSING THEIR TENANTS.

SADIQ KHAN'S PLAN 1. To introduce a ‘London Living Rent’ option for new

Khan put a lot of emphasis on housing issues in his election campaign and claims to have developed his own plan to “reduce the cost of renting, improve the condition of rented homes and give more stability to renters.”

3. There is to be a major crack down on rogue

Kahn's four pronged attack on London's housing problems as stated below was set-out before he was elected. So whether things will change when confronted by the scale of the problem and opposition in London remains to be seen, but an underlying theme appears to be some form of rent control, or the more polite way of putting it – “rent stabilisation”. Mr Khan expects to:

June 2016

LANDLORD INVESTOR

affordable housing which will cap rents at a belowmarket level, based on the idea that rents should be around one-third of renters’ incomes and not half.

This will, according to Khan, fill the gap between the new social housing he plans to build and homes for private sale or rent, allowing tenants to pay rent and save for a deposit.

2. Mr Khan is to establish a London-wide not-forprofit letting agency similar to those started by Labour councils such as Hackney and Islington. This agency’s aim is to provide an “alternative to private lettings agencies, while promoting longer-term tenancies and stable rents”.

landlords and the Mayor’s office is to publish a regular list of the best and worst landlords in the capital.

4. There is to be a campaign for the power to

freeze rents, and for new rules to make landlords do necessary repairs within a reasonable time, the failure of which would enable tenants to commission their own work and deduct the cost from the rent.

Khan claims that a rent freeze over the last four years would have saved the average London renter £5,615 that could have been saved towards a deposit.

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LONDON'S HOUSING CRISIS

Khan is taking on one heck of a problem, but are his ideas going to solve it, or will they make things worse?

Since the de-regulation of the private rented sector, private landlords have filled a massive void as councils failed to provide much needed social housing. By providing increasing amounts of private rented housing, bringing back into use under-used and dilapidated housing, they have doubled the size of the PRS over 15 years. But there has to be a limit to this, and with population growth at the rate it’s been, particularly in the capital, the only real solution is more new-build.

BUILD-TO-RENT The Government’s Build-to-Rent scheme launched in 2012 as part of a series of government initiatives to increase the supply of homes available for market rent in the private sector is designed to address the problem.

In Germany around 40% of rentals are said to be provided by investment institutions, whereas so far in the UK this amounts to around 2% according to Savills’s research. This shows the huge potential in the UK market for this type of investment, and Savills predict it could reach 10% of all UK rental property stock within 10 years.

It is clear that Government initiatives are designed to incentivise institutional investment, new build properties in towns and cities, whilst at the same time, perversely, tax and regulatory changes are doing the opposite for the small-scale investor.

George Osborne’s policy appears to be to “slow down” booming buy-to-let mortgage applications by introducing some punitive tax measures for smallscale landlords, which he thinks will free-up more existing properties for first-time-buyers.

It seems to me that anyone taking a common sense view will come to the conclusion that making life more difficult for the private landlord, both through the recent government tax and regulatory changes, and now in London, the biggest rental market in the country, through Mr Khan’s plans, will simply drive out private landlords and make things worse for tenants.

June 2016

LANDLORD INVESTOR

INDUSTRY UPDATE

There’s no denying that housing is problematic for many of London’s 2 million private tenants, and if supply isn’t increased the problems will only get worse. By 2027, it is estimated, more Londoners will rent from a private landlord than own their own home. Private tenants in London are paying between one-third and just under half their income in rent, and with recent rent increases that proportion is rising.

The Government’s aim is to encourage more institutional investment and professional management into the private rented sector. Until now most privately rented properties in the UK (well over 95%) have been supplied by small to medium sized landlords, many with just one or two properties to let.

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INDUSTRY UPDATE

RENT CONTROL For those who have not experienced rent control, those not old enough to remember life in England under the Rent Acts, or know about the experience of rent controls in other countries, rent control may appear to be logical next step towards a fair way of solving the housing problems in London. After all, isn’t it about time those greedy buy-to-let landlords got their comeuppance?

That’s certainly not what those in the know, those old enough to remember our Rent Acts, those who live in several rent controlled cities in the US and Sweden, and many economists, would say.

Allister Heath, editor of City AM, writing the Daily Telegraph, said: “…while something drastic needs to be done to tackle Britain’s housing crisis, rent controls would be complete madness: they are one of the stupidest economic policies known to man.”

Likewise, left leaning Swedish economist Assar Lindbeck has famously said: “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.”

Chairman of the Residential Landlords Association, Alan Ward, thinks rent control will do “untold harm” to the rental market and asks if we have learned anything from history, referring to the days under the Rent Acts when security of tenure for life and rent control pervaded and virtually destroyed the rental housing market in Britain.

Given the size of the problem it’s perhaps little wonder then that some far-left politicians and others are making noises about rent control. What is clear is that those making noises either have little or no concept of the basic principles of economics, especially in relation to the housing market – it’s an issue of basic supply and demand – or else they have a political agenda.

There is only one sure way to tackle the London housing problem: either demand must be reduced or supply increased, or a combination of the two. All that rent control would achieve is the exact opposite of this.

Again to quote Allister Heath in his Telegraph article: “The policy has failed with horrifying consequences everywhere it has been tried, including in New York, and is the perfect embodiment of the adage that no problem exists that cannot be made worse through government intervention.”

June 2016

LANDLORD INVESTOR

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Some will already be adjusting their future plans! So, just by the very fact of Mr Khan, supported by the likes of Jeremy Corbyn, Ken Livingstone and Diane Abbott, is intimating that a rent control policy, or some derivation of that, like the living rent and a “rent freeze”, is possible, potential supply may be being reduced as you read this. Introducing a full-blown rent control policy in London will make landlords take fright, if not flight.

Wherever rent control is introduced a fresh army of bureaucrats will start to enforce a rent ceiling on a large section of the property market, leaving the expensive-end properties uncontrolled. The immediate effect is rents start to increase in the uncontrolled sector as landlords dispose of properties on the margin, fearing they may also come under control.

Landlords with lower to middle-end properties, no longer able to charge a market rent, will start to feel the pinch: there’s no longer much surplus from letting, or any incentive to invest further, so what surplus there is will no longer be spent on maintaining the properties. Over time properties begin to fall into really bad states of repair, some to deliberately force out tenants, but all resulting in only the worst properties being offered for rent. The idea that landlords can be forced to spend money when they are making next to nothing will only go to make eviction and sale a priority.

Once protected the tenant is sitting pretty, by dint of being in the right place at the right time, or through their “political connections”, the protected tenant gets a real bargain under rent control, and therefore never wants to move out.

But over time this bargain can turn into a nightmare as the areas under control start to deteriorate, because of the poorly maintained properties. The enjoyment the tenant derives from her dwelling space is ultimately reduced to a level which is commensurate with the rent being paid – in other words, a doss-house on an uneconomic rent.

This process can take years. But in the short-term the lucky ones are benefitting from the reduced rent, whilst their opposite numbers in the uncontrolled sector are paying through the nose. As someone once said to me, “…to live in Manhattan you have to be either extremely rich or extremely poor – there’s no in-between”.

There’s no incentive for those living in the controlled sector to move out when their family moves away, and the space becomes too big for them, as they would if they were paying a market rent.

Rooms lie empty while other people remain homeless on the streets. Furthermore, employment mobility is stifled when those no longer contributing to the working economy stay put, whilst others who are productive have far longer commutes.

June 2016

LANDLORD INVESTOR

INDUSTRY UPDATE

Once investors get wind of the fact that rent control is a possibility, and even now with these very musings about the London market, landlords will begin to think twice about investing their hard earned cash.

INDUSTRY UPDATE

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Surprisingly, homelessness increases under rent control, and the housing shortage gets worse, not better. The argument that rent control is a temporary or short term measure to be brought in because the housing market is not in the economists’ terms “elastic”, because a shortage cannot be made up quickly – just does not wash.

A POLITICAL TRAP Once Government gets involved with controlling rents, they become a political issue at elections and the longer rent control remains in place, the more difficult it is to remove it: inflation ensures that controlled rents fall further and further behind an economic level, until it becomes politically impossible to remove the controls without a public outcry.

All these negatives will still have little or no impact on the advocates of rent control: as Allister Heath again says, “… you are met with a mixture of economic illiteracy, an antiquated, quasi-Victorian class hatred of landlords, generational strife and downright incomprehension.”

For those interested in an economist’s technical explanation of the non-utility of rent control, I recommend you watch this excellent video from another Mr Khan, a Khan Academy video: https:// goo.gl/3UxBYY Pressure from those who advocate rent control comes from people who see only its imagined benefits to one group of people in society. They fail to see, or simply don’t want to see for political ends, the devastating long-term consequences it brings for everyone, including the tenants who it is intended to benefit.

REACHING CONCLUSIONS A major study by Professor Christine Whitehead and Kathleen Scanlon, Research Fellow at the London School of Economics, on Rent Stabilisation and the international experience, concludes: “Most countries have stronger regulatory frameworks than in the UK - but it is also the case that only in the UK has there been large-scale growth in the private rented sector, although liberalisation has mainly enabled rather than been the direct reason for expansion.

“Equally in most countries, controls on rents on initial lettings and new tenancies have generally been associated with a declining sector and lower investment. Some form of ‘mirror’ rent system works better in areas where demand is relatively stable, but requires very considerable flexibility in areas of housing pressure. In those areas where supply is inadequate, queues, avoidance, evasion and the exclusion of more vulnerable households becomes the norm.”

Clearly, the latter applies in spades to London, and you can hardly describe demand there as “relatively stable.” Blaming buy-to-let landlords, who risk their own capital to provide a valuable public service, will not solve anything. It goes far beyond that. The housing shortage, which is pushing up prices and rents, is caused by a failure to invest, restrictions on building and antiquated planning rules, among other things.

The politicians should be focussing their efforts on getting the London housing market moving; encouraging more investment, both public and private, by providing incentives to landlords and relaxing planning restrictions where it is appropriate and sensible to do so.

Tom Entwistle is Editor of LandlordZONE® and an experience residential and commercial landlord himself. ⌂

June 2016

LANDLORD INVESTOR

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INDUSTRY UPDATE

IS YOUR AGENT SIGNED UP? Katrine Sporle The Property Ombudsman New figures confirm a record number of agents are now following TPO’s Lettings Code of Practice, which offers enhanced safeguards for consumers.

PROPERTY OMBUDSMAN BACKS LETTINGS LEGISLATION BROUGHT IN TO PROTECT THOUSANDS OF LANDLORDS AND TENANTS The Property Ombudsman (TPO) has spoken out in support of lettings legislation which makes it a legal requirement for every lettings agent and property manager in England to belong to a Government-approved redress scheme.

The lettings redress legislation was enforced to ensure every landlord and tenant can have their complaint independently reviewed, in the event of a dispute arising that they are unable to resolve with their agent.

TPO, which is the UK’s largest government-approved redress scheme, now has 13,624 lettings agents signed up and following the scheme’s unique Lettings Code of Practice, which offers consumers enhanced safeguards that go above and beyond basic property law.

June 2016

LANDLORD INVESTOR

The scheme has seen a 14% increase in membership since the legislation was introduced on 1 October 2014, with 85% of all lettings agents signed up to TPO. Consumers are urged to make sure they only deal with a TPO agent to ensure that, should a dispute arise, they have grounds to raise the matter with the Ombudsman, who has the power to instruct agents to pay a compensatory award .

Explaining the impact of the lettings legislation, Katrine Sporle, Property Ombudsman, said: “TPO helps more the 16,000 consumers every year and the cases I see concerning lettings disputes are certainly on the rise as more people are renting than ever before. We applaud the government for introducing legislation that helps us protect even more landlords and tenants from unfair practices.

17

Katrine added: “I can only review complaints concerning agents that have joined TPO so landlords, tenants, buyers and sellers must choose their agent wisely and use the scheme’s online ‘Find a member directory’ to check if their agent is offering them the best safeguards available.”

TPO now has 34,469 branches signed up and following one of the schemes property Codes of Practice.

Agents that join TPO have signed an agreement to adhere to the highest service standards possible.

TPO’s Sales and Lettings Codes are the first and only property Codes of their kind to be approved by the Chartered Institute of Trading Standards (CTSI) .

The scheme is a totally independent, not-for-profit organisation, which has provided a free and impartial dispute resolution service to consumers and property agents for more than 25 years.

Your complaint may be considered by the Ombudsman, if you believe that the agent has: • infringed your legal rights; or • failed to follow the rules and obligations set

for agents under any code of practice to

which they may subscribe; or • treated you unfairly; or • been guilty of maladministration (including

inefficiency or undue delay) in a way that r

sults in you losing money or suffering

avoidable aggravation, distress and/or inconvenience To find out more about TPO, visit www.tpos.co.uk, where consumers can download a series of free Consumer Guides and search for member agents through the scheme’s online ‘Find a member’ directory. ⌂

June 2016

LANDLORD INVESTOR

INDUSTRY UPDATE

“I hope the increase in membership we’ve seen means that the number of rogue agents operating illegally without redress registration is diminishing but they are still out there so it is imperative that consumers always check if their sales or lettings agent is signed up with TPO.

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NEW INVESTOR

ESSENTIAL ADVICE FOR NEW LANDLORDS Peter Littlewood Southern Landlords Association

THIS ARTICLE WILL OUTLINE SOME DOS AND DON'TS OF LETTING. WHILST AIMED AT 'NEWBIES', IT IS OF EQUAL HELP TO 'OLDBIES' - I.E. EXPERIENCED LANDLORDS. The one thing we won’t do here is to offer investment advice. For that we can do no better than to point you at the investment section of this magazine, starting on page 34.

WHICH MARKET? I am often asked ‘what is the best market to go into’.

And the answer is very easy – the one you are comfortable with. And secondary, get the location right for your particular letting model.

There is no point in going for what appears to be a profitable model if you don’t understand it; are uncomfortable running it, and it is in the wrong location. A well-known Conrad Hilton quote is that the 3 most important is about deciding on a new hotel are ‘location; location; location’. No point in having a great model if it is in the wrong location.

June 2016

LANDLORD INVESTOR

LET'S LOOK AT THE POTENTIAL MODELS: STRAIGHT LETS By this I mean the traditional single agreement to one person, or one set of people – probably a family.

This has been the bedrock for landlords for a hundred years.

Pros – generally easier to manage; probably only one person making the decisions; Cons – higher risk factor in that all your eggs in one basket. All or nothing - if that person/family moves you’ve lost your income.

19

SHARERS

But it’s easy isn’t it? You just buy a large house; put a lock on every room; stick in some cooking facilities; put in an advert and wait for people to come flocking.

Then sit back and rake in the money.

Indeed some people do that, and often they are the ones who get HMO’s a bad name.

LET'S GET SOME FACTS RIGHT: You might intend to avoid HMO’s at all costs, and just let to a nice family. But let’s say that the family are a boyfriend and girlfriend who have a mutual child.

Then you have your straight let.

But what happens if they split up and continue living together? Then you have an HMO. How can this be?

The definition of an HMO is where more than 2 unrelated people live together sharing vital facilities (bathroom; toilet; cooking facilities); but’s there no problem with a small HMO.

•

must have a written agreement – an excellent idea anyway;

•

must take references for the tenants – a good idea;

•

must have a 5 year electrical certificate – can’t see anything wrong with this, and under the new Housing Act, this will probably come in for all lets anyway;

•

the property managers details (normally the landlord) must be on view somewhere.

So if you put your contact details up you aren’t worried if you have an HMO or not – unless you come under additional HMO licensing. You will need to check with your Local Authority for this.

The pros and cons are virtually a mirror image of the single let: Pros – A higher earner, also spread the financial risk.

Assuming you have a joint and several liability single agreement the group are all equally liable for the rent. So if one leaves, the others are legally liable to make up the difference.

If you have individual agreements for (say) 4 sharers, and one leaves you have only lost ¼ of your rent (in my example); Cons – more management required; the potential for more problems

June 2016

LANDLORD INVESTOR

NEW INVESTOR

The (now) ubiquitous HMO. Not very common a few years ago, but now according to some politicians the ‘scourge of society’. This is a bit rich when the same politicians also plead for more housing for single people – ergo the HMO.

THE RULES COVERING A HMO ARE:

NEW INVESTOR

20

STUDENTS

HOLIDAY LETS

This is an area where you must fully understand the nature of the tenant you are dealing with. It helps even more if you were a student once, in rental accommodation and thus understand the problems.

Firstly you must ensure that you meet the Inland Revenue criteria for a holiday let:

For example, generally students will be exempt from Council Tax, but they will need to claim their discount at an early stage, else the landlord might get the bill at the end of the year.

Student accommodation will generally require broadband, and will be fully furnished, with quiet area’s for them to work – yes they are supposed to be working. But they will also require an area for them to ‘play’. They will also need to have everything explained to them, as it is probably their first time away from home, and all those things that happened by ‘magic’ (like light bulbs being changed) suddenly don’t happen anymore.

Also you must realise that if you have a property with a garden it will get ignored. There are two reasons for this 1) the tenants will not be there during the growing season; 2) they won’t be interested. The answer? Put a gardener in, add it to the rent. Also put a cleaner in for the common areas. That way the property will be looked after better, and the cleaner and the gardener will act as ‘spies’ – legal spies.

Pros - Experienced student landlords love their way of life, because they generally have their whole year mapped out; know their outgoings and incomings for the year; and (often) have a captive audience. Additionally it is as close to guaranteed rent as you can get, provided you take it from them as soon as they receive their grants – i.e. before it goes down their neck!

Cons - many others hate it because of all of the above, and/or they don’t understand students.

•

the property must be available to let as a holiday let for at least 210 days of the year;

•

it must have been let as a holiday let to the public for at least 105 days in the year;

•

the accommodation must not be let for periods of longer-term occupation for more than 155 days during the year.

There is an HMRC leaflet explaining all this . Why are there such restrictions? Because the tax situation for holiday lets is far more favourable than normal lets – see an appropriate tax specialist to find out why.

Pros – more, far more rent per week – but questionable if more per annum.

Cons – a lot of management, including cleaning and laundry.

LEASE TO THE LOCAL AUTHORITY. Normally a commercial repairing lese, whereby the Local Authority has to return the property in the same condition.

Pros – no management, and the rent guaranteed.

Cons – obviously less rent; generally 75% of the market rent – but your free to enjoy it!

THE DO'S AND DON'TS. The main ‘do’ is to get properly informed. You can do no better than to take the Foundation Course with Llas (London Landlords Accreditation Scheme) .

The main don’t is do anything illegal, or incorrect – too many to go into here. Take the Foundation Course to find out.

The SLA have produced a useful tick list of all the things to remember when letting. Contact me to get one .

June 2016

LANDLORD INVESTOR

21

FINALLY.

Interestingly, some marketing people use 7 P’s. The extra three are:

Retailing marketing people have for some time used the concept of the four p’s. This basically says that if you get the appropriate Product at the correct Price with the right Promotion in the best Place you will earn money.

Get these right and you are on the way.

•

Physical evidence – the evidence that shows the service was performed. In rentals case the civility with which your tenants treat you;

•

People – the people who carry out your work for you;

•

Process – the processes and systems that allow you to carry out your job.

For landlording I would add another P – perseverance. Another Conrad Hilton quote is ‘Success seems to be connected with action. Successful people keep moving. They make mistakes, but they don't quit.’

Oh this article could be so much longer; but the Editor is giving me rude looks! So I had better carry on in the next issue with ‘getting ready to let’. ⌂

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June 2016

LANDLORD INVESTOR

NEW INVESTOR

It is essential to understand that this business is no different from any other. You are offering a product to earn money from.

22

COMMERCIAL

THINKING ABOUT INVESTING IN COMMERCIAL PROPERTY? READ THIS FIRST. Alan Rawlins - Kaleidoscope Property

A NUMBER OF INVESTORS ARE CONSIDERING ADDING COMMERCIAL PROPERTY TO THEIR PORTFOLIO. Here, Alan Rawlins of Kaleidoscope Property Consulting gives some action points to consider when thinking about a move into this area of the property market.

A couple of weeks ago I was asked to speak at a Landlord Investment Show event. My presentation covered useful information for investors who were contemplating a first step in to the commercial property market.

Some of the audience were quite experienced investors in the residential market – with significant HMO portfolios – and it was interesting to note that many of them had a “How hard can it be?” attitude towards the commercial property route. After all, they said; if you know the ins and outs of residential property then commercial can’t be harder – can it?

June 2016

LANDLORD INVESTOR

COMMERCIAL PROPERTY CAN BE A MINEFIELD Professional commercial property landlords have amassed incredible wealth through private property companies, Pension funds and other large investors; with an increasing portfolio of commercial assets under management over the past few years.

Likewise there are a large number of smaller investors who have quietly created long-term income streams from physically poor looking properties which produce great cash flow. It’s these successes which have encouraged others to get on the commercial property bandwagon.

Conversely, there have also been some spectacular commercial property failures over the years mainly as the investor has not asked key questions before signing on the dotted line.

23

A WISE INVESTOR DOES THEIR HOMEWORK

The commercial asset will normally be seen as a cash generating business in its own right. However, these types of asset present their own challenges. When a property comprises maybe 10 or 20 different types of tenancies, each one poses its own potential issues which must be investigated before you make an informed decision on how much you are willing to pay for the asset.

Only a couple of years ago some of these larger lots now at auction would have been offered to a targeted list of pre-selected buyers and a successful sale would have been concluded following this so-called ‘open’ market exercise.

These days, vendors of property with an angle to exploit - such as redevelopment, conversion or mixed use potential - have shifted many of these sales to a more public option in the belief that they will secure a better price. This is where the inexperienced residential investor comes in. They will have reviewed the sale particulars and identified a ‘resi conversion’ angle for the property. They may then acquire the asset without fully understanding what they are buying, or knowing whether what they want to do ‘subject to planning’ is practical or even possible.

I offer these five points to help you with your commercial property acquisition plans, and to try and prevent you from making costly errors.

Don’t assume that the property is vacant, even if the particulars stress that it is. Instead, make sure you ask the following questions: • What happened to the previous tenant?

• Was the last tenancy subject to a lease?

• If so, has that lease expired, or was it bought

to an end through forfeiture or surrender?

• Did the tenant go in to administration?

• Has the landlord placed the property in administration?

Do make sure that your advisors look in to the details here as even if the tenant has vacated the premises it may still be subject to a lease. If it is still subject to a lease this can be exceedingly difficult and time-consuming to resolve, and will probably cause delays in the acquisition process. However, if you’re aware of any issues before you begin the process you can make allowances and plan accordingly.

Lastly, if the property you want is in an auction or being offered directly by an agent at a low purchase price you should ask why this is the case. If it looks like a very good deal, be aware of potential downsides. If it looks too good to be true it probably is.

2. TENANCY DETAILS So, the property has got a tenant and you are going to get rental income from day one. But what sort of tenancy is it?

• Protected • Excluded • Licence • Tenancy at Will • Periodic At this stage it’s important to get the tenancy document, tenant’s details and anything else relating to the tenant’s right to be in the premises.

If you are relying on receiving rental income after your purchase, try to make sure the tenant can afford to pay the rent and intends to carry on doing so. Don’t assume that historic trading data gives a

June 2016

LANDLORD INVESTOR

COMMERCIAL

If you regularly follow public auctions you’ll have noticed a shift in the type of stock being offered for sale; especially by regionally-focused auctioneers. Lot sizes have increased; especially of mixed use assets, and the number of properties being put to auction has also risen.

1. IS THE PROPERTY VACANT?

24

COMMERCIAL

4. ARE MEASUREMENTS ACCURATE?

current picture of the tenant’s financial health as this data could be two years (or more) out of date by the time you purchase the property.

There are three more questions you should ask at this stage: •

Does any agreement for lease contradict the actual lease granted on the property?

• Are there any existing Housing Act or Rent

Act tenancies? The upper parts of older high

street retail premises may have not been

refurbed for a considerable period of time

and could still be subject to a protected tenancy •

Are there any easements over the property or any other historic rights of way?

3. GET YOUR LEASE CHECKED BY AN EXPERT Don’t assume that the selling agent has read the lease or understands the impact it may have on the value of the premises or rental income you could achieve.

Make sure you get the signed copy of the lease (with appendices and schedules) and not the unsigned version or earlier drafts as these can be different.

Always ask a commercial conveyancer to review the lease. This could end up saving you many thousands of pounds on the transaction in the long term.

Your commercial conveyancer will carry out the usual searches as well as making sure that the provisions of the lease don’t breach local planning by-laws or other restrictions that might be on the property.

June 2016

LANDLORD INVESTOR

Please check the area and dimensions of the property yourself and don’t assume that measurements in particulars or brochures (even glossy ones!) are correct. It’s likely that the measurements have come from the seller’s records and may have not been verified by the selling agent. Relying on historic data can be costly if inaccurate information is included in contracts and not checked until it’s too late. You should also check if the right measurement approach has been taken as different types of building are measured in different ways.

5. VALUE Now you have all the relevant information you need, does this affect the value you have placed on the property?

There are different methods to follow when arriving at a value which depend upon the type of property being assessed. Should it be ‘Zoned’, ‘Overall’, ‘Gross’ or ‘Net’? Have any adjustments been made for physical attributes? Have any other factors been found in the lease which will affect the assessment of value for the property?

Valuation is not an exact science but relies on the valuer’s opinion, based on their experience, and evidence from comparable properties.

If you follow my five points, know what to look for and what to ask, there are still some good opportunities to be had for the well-informed investor to exploit.

Contact me now on 020 3727 5024 for advice on how you can get your commercial property project off to the best start. ⌂

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Disclaimer: Everything in this invitation can and WILL be substantiated with real life case studies, personal bank statements and real life, financially free people. No attendee will be asked to buy, rent or invest in any property at this event. Marco Robinson or the Marco Robinson Group of Companies owns all properties used as examples. The information delivered in this two day seminar is complete and stand alone. You can act on it independently (with suitable professional advice). Or, if you’d like further support to help build your confidence, attendee’s will be offered opportunities for ongoing education at the end of this event should it suit your interests and circumstances.

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Watch the video at https://youtu.be/iNkjCihrOVU A multi-millionaire property investor will give away a buy-to-let flat in Manchester to the winner of his competition in protest over George Osborne's stamp duty increase.

Investor Marco Robinson is holding the competition in a stand against the Chancellor's tax rise. The winner will be handed the two bedroom property in Manchester, which will have its annual rental income of £6,500 guaranteed for five years.

After the five years, the winner is able to do what they want with the property - which is worth £110,000 and comes mortgage-free as well as fully furnished.

Mr Robinson - who has written a book on property investing called The Financial Freedom Guarantee - said: 'George Osborne's new stamp duty law is a blatant attempt to cash-in on a booming market.

'But it is badly-thought out and utterly pointless. It is doing all it can to crush entrepreneurial activity in what is a fantastically rewarding sector.'

In his Budget earlier this year, the Chancellor introduced a 3 per cent surcharge on all buy-to-let properties and second homes.

The Chancellor also cut the amount of tax relief available to landlords, prompting many commentators to suggest that the changes would be the death of the buy-to-let.

However, Mr Robinson said: 'I don't agree that it the ultimate death knell of buy-to-let

activity. That's why I am giving away a rental-market house.

'Ideally, I'd like to put a buy-to-let investor on the first rung of what is a fantastic and hugely rewarding ladder which can lead to financial freedom. I am doing it to underline that buy-to-let is a superb investment - as long as it is handled correctly.'

By giving away part of my property empire, I am putting my money where my mouth is. I will be proving that despite George's tax laws, buy-to-let is a key investment opportunity. The Government should be doing more to encourage people to invest in property as it still is the path to gaining financial freedom. I am living proof that the model works.’

Entrants to the competition are asked to play a game found on Mr Robinson's Twitter page @marcorobinson7. Entrants will need to take a screen grab of a fast moving image and attach it in a reply to Mr Robinson's tweet. Entrants must also retweet the competition to their followers, as well as post a picture of themselves and Mr Robinson's book, tagging in his Instagram account @marcorobinsonnow.

Full terms and conditions for the competition are available at:

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28

FINANCIAL

BUY TO LET: THE STATE OF PLAY Karen Bennett - Shawbrook Bank

Sales & Marketing Director, Commercial Mortgages

THE MARKET HAS EXPERIENCED A DEGREE OF NEGATIVITY ACROSS THE MEDIA OVER THE PAST 6 MONTHS...

Specifically with regard to the recent initiatives across the tax landscape, as well as the regulatory changes impacting different segments of the property market.

The cumulative effect of which has certainly had a bearing on activity, but is this reflective of the ‘bigger picture’? Media hype will always have an impact on the growth outlook for the market and the landlord community, but if one takes a step back and adopts perhaps a slightly more reasonable and wide ranging view, the main problem remains unchanged.

Nothing, in any of the new initiatives will magically resolve the mismatch across housing supply and demand and the affordability and mortgage challenges for owner-occupiers.

The volume of available homebuyers and their ability to access the market remains unchanged. The social housing environment is shifting with the provision of social housing continuing to fall, and there are rising levels of population and household formation growth - all of which are creating an increasing need for housing and adding more layers to the fundamental supply/ demand problem.

June 2016

LANDLORD INVESTOR

Taking a step back, the macro environment for long term property investment remains extremely positive irrespective of the headwinds that we find in today’s climate.

Shawbrook has researched sentiment from the professional investor and landlord market evidencing this positivity which we can see in the 2016 “Shawbrook Client Barometer” survey*. 56% of customers plan to purchase an additional property this year in spite of the challenges presented by the new tax changes impacting the buy-to-let (BTL) space.

The SDLT (Stamp Duty Land Tax) levy and mortgage interest relief initiatives are certainly at the forefront of investor minds but we are likely to see the more experienced investors looking to absorb the associated costs as part of a long term investment strategy, whereas the smaller/ accidental landlords may well exit the market altogether.

29

So in spite of the supposed turmoil of a short term negative outlook caused by recent government led initiatives, we believe the future remains fundamentally robust - particularly when one considers the prolonged lower for longer interest rate environment. For the experienced landlord and the lenders looking to support this crucial market, a look outside of the newspapers shows a somewhat different picture and one where opportunity remains for those adopting a sensible, long term approach to their investment strategies. ⌂

So we can say that although challenges abound, by no means are they as dramatic as the media would have you believe. Prior to the “tax hype�, we saw extensive coverage of the profitability of the BTL sector in comparison to other asset classes. This will have encouraged entry into the market of a raft of inexperienced investors that may now be having second thoughts, presenting a potential buying opportunity for the committed landlord working towards a longer term, sustainable investment strategy.

*Client Barometer Survey, Q1 2016, 174 respondents

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June 2016

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40% of those surveyed were looking to mitigate the impact of the new regime by setting up a company structure due to the tax efficiencies on offer, but we would advise those looking to go down this route to seek professional advice complementary to that of their broker. Positively, investors seem to feel that property values will grow or remain stable over the next 12 months, with a similar opinion for tenant demand and rental income following a strong 2015 which saw 43% and 61% respective growth in these areas.

30

INDUSTRY SPOTLIGHT

MEET THE BEST IN THE BUSINESS Colin Stanbridge

London Chamber of Commerce and Industry London Chamber of Commerce and Industry (LCCI) is the capital's largest independent networking and business support organisation. Representing the interests of thousands of companies, we connect businesses and people, and offer our members a wide range of valuable business services.

We also offer our members a wide range of practical and professional services, designed to support your business in its development.

Membership of LCCI offers businesses the opportunity to attend over 200 networking events each year.

LCCI has an established Property and Construction Group which hosts a range of specialised events throughout the year where businesses can connect with industry leaders and senior decision makers across the property and construction sector.

The Chamber’s networking activities showcase how membership of LCCI and its Property and Construction Group can help London businesses grow; from connecting them with the right people, providing a voice to relevant decision makers and supporting their growth.

In his capacity as our Property and Construction Group Chairman Jeffrey Adams, Chairman of United House Group, works closely with LCCI President Tony Pidgley CBE, Group Chairman of Berkeley Group Holdings ensuring significant visibility for the sector and our members.

‘LCCI has a unique voice in the property and construction sector. No other organisation can boast a membership as diverse with such a laser focus on what will work best for the sector in the capital’. - Jeffrey Adams, Chairman, United House Group and LCCI Property and Construction Group Chairman

Furthermore, as London’s most representative business organisation, LCCI influences policy at both a regional and national level and is a leading voice in the debate on issues relevant to the sector. LCCI works with stakeholders and decision makers, across ministerial departments, the Greater London Authority and London councils to promote and advance the interests of the capital’s thriving property and construction sector.

You’ll meet the best in the business at London Chamber of Commerce events.

June 2016

LANDLORD INVESTOR

If you’d like to find out how your company can benefit from membership of London Chamber of Commerce please contact Dean Wade Tel: 020 7203 1944 or email: dwade@londonchamber.co.uk LCCI is proud to work with and support The Landlord Investment Show 2016 ⌂

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Together is a trading style of each of the undernoted companies, which have their registered office address at Lake View, Lakeside, Cheadle, Cheshire SK8 3GW. Auction Finance Limited is registered in England and Wales - Company Registration Number 04949929. Blemain Finance Limited is registered in England and Wales - Company Registration Number 01185052. Blemain Finance Limited is authorised and regulated by the Financial Conduct Authority in respect of second charge loans secured on residential property. In respect of regulated mortgage contracts, Blemain Finance Limited is an Introducer Appointed Representative of Cheshire Mortgage Corporation Limited, which is authorised and regulated by the Financial Conduct Authority. Bridging Finance Limited is registered in England and Wales - Company Registration Number 03166982. In respect of regulated mortgage contracts, Bridging Finance Limited is an Introducer Appointed Representative of Cheshire Mortgage Corporation Limited, which is authorised and regulated by the Financial Conduct Authority. Cheshire Mortgage Corporation Limited is registered in England and Wales - Company Registration Number 02613335. Cheshire Mortgage Corporation Limited is authorised and regulated by the Financial Conduct Authority - Firm Reference No 305253. Lancashire Mortgage Corporation Limited is registered in England and Wales - Company Registration Number 02058813. In respect of regulated mortgage contracts, Lancashire Mortgage Corporation Limited is an Introducer Appointed Representative of Cheshire Mortgage Corporation Limited, which is authorised and regulated by the Financial Conduct Authority.

32

INDUSTRY SPOTLIGHT

'RUMBLE WITH THE AGENTS' RAISES £22K FOR NOAH'S ARK CHILDREN'S HOSPICE Paul Shamplina - Landlord Action

On Thursday 26th May 2016, ‘Rumble with the Agents’, the white collar charity boxing event held at The Holiday Inn Finchley Central in association with Landlord Action, raised £22,000 for Noah’s Ark Children’s Hospice. Noah’s Ark is a North London community based hospice, providing support for children and young people with life-limiting or life-threatening conditions, and their families.

The night saw twelve property professionals from companies such as Winkworth, Kinleigh Folkard & Hayward, PRS and Auction House, all with little or no previous boxing experience, enter the world of white-collar boxing. Participants have followed a fully structured and supervised training programme since the start of the year in preparation for the fight night, which saw them cheered on by friends, family and colleagues in a safe and professional environment.

As well as the six fights, guests enjoyed a sit down three-course meal followed by a raffle and charity auction, hosted by special guest and former world light-heavyweight boxing champion John Conteh.

The signed sporting memorabilia was all highly sought after, with boxing fans out-bidding one another for a signed Anthony Joshua glove, which raised £1200 alone for the charity.

June 2016

LANDLORD INVESTOR

Alison Goodman, Director of Income Generation for Noah’s Ark Children’s Hospice, said on the night: “We are delighted to have been part of such a wonderful evening.

Everyone here, or who donated, and all the boxers have made every precious moment count for Noah’s Ark Children’s Hospice by raising a fantastic £22,000.

Thank you so very much on behalf of all our children, young people and their families. In particular, thank you to Paul and Rita Shamplina who spent so much time and effort organising this amazing event.”

Mr John Conteh added “It is an honour to once again be invited to be part of this fantastic event, which not only gives individuals an opportunity to try their hand at a new and very challenging sport, but most importantly, raises an incredible amount of money for a wonderful charity.” ⌂

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34

INVESTMENT

FAST AND SUSTAINABLE PROPERTY SUCCESS Kam Dovedi Premier Property Education

"WHEN IS THE BEST TIME TO INVEST IN PROPERTY?" AND "WHAT IS THE BEST STRATEGY RIGHT NOW?" Now if you are like me you find the correct time to invest is always the present subject to a strict set of criteria being met, key indicators in the Property Market being assessed and having the deeper awareness of what actually is really happening in the market right now.

These are two of the most common questions which I am asked whether I am training property investors in workshops and courses or I am mentoring and consulting for property investors one to one.

Unfortunately many people don’t have this information, they may be new to investing in property and find themselves frustrated not knowing how and what to do, to capitalise on their investments. Experienced investors may have a strategy that is working for them but as the market changes they don’t know how to adapt to the new conditions.

These investors spend their days researching or taking minimal action and unfulfilling their full potential

June 2016

LANDLORD INVESTOR

which leaves them feeling their investment journey is full of mediocrity, fear and disappointment. Now once the information that I am sharing with you is assessed, you gain faster success take your investment strategy to the next level and make it sustainable.

The one key fundamental factor which allows you to do this is an assessment of the 18 - 20 year UK property market Cycle and the two micro cycles within it which are demonstrated in areas such as the Greater London Urban Area, the fastest growing cities in the UK and many localised hotspots throughout the country.

I would like to be clear for you there is no financial, legal or taxation advice. I am sharing with you the perspective of an investor developer who has been in the property environment for over 26 years and has built up a multimillion pound portfolio due to the many systems process and procedures which continue to allow the success that we have and help investors to accelerate their success.

35

The second area of indication is the media. Newspapers, Television, Radio and Online Information.

The third key indication for market analysis is Public Sentiment. Consider what financial institutions are divulging, are they bullish or bearish. What are industry professionals such as FCA regulated mortgage brokers saying about the current property climate. Colleagues Friends and Family, what are their assessment of the UK Market.

Now if you are like me, you trust there are tried and tested strategies that you can implement in every phase of the property market cycle. In fact we have 17 specific strategies that are working right now and will be working in the next 5,10 and 20 years. Once we have assessed these strategies property investors and developers are crystal clear 100% aligned and confident about investing in property now and for the future. This is why at Premier Property we assist property investors and developers in their on going property Journey. ⌂ Website: www.premierproperty.co.uk Number: 01634 838745 Email: info@premierproperty.co.uk

June 2016

LANDLORD INVESTOR

INVESTMENT

There are 3 key areas of indication as to where we are in the market cycle right now. The first key area of indication is finance. By understanding how readily finance is available, how stringent the criteria is and what products are in the market whether it be residential or commercial you can understand whether we are in the recovery, boom or slump phase of the UK Property Market Cycle.

INVESTMENT

36

ARE ILLEGALLY CONVERTED FLATS A GOOD DEAL? Kevin Wright - Ninja Investor Programme For last 20-30 years some landlords have calculated that if they convert their properties into flats, the rental income will be much greater than renting their property to a single tenant. So they converted it and may have been happily earning increased rental income for many years.

Unfortunately, not all of these landlords have taken into account fact that planning permission is required for conversions. There are hundreds of thousands of houses in the UK that have been illegally converted in this way with landlords who have conveniently chosen to dodge the rules or, in some cases, simply weren’t aware (and didn’t bother to find out) that planning permission was required.

Council planners have the right to issue an order demanding that any illegal alterations to a property be returned to original state. Without planning permission they’re completely within their rights.

The problem is that some illegal conversions don’t come to light until the owner comes to sell it. The buyer applies for a mortgage, the lender’s surveyor carries out all the required checks and discovers that the property is listed as a single residence with no planning permission for the conversion; so the lender will decline the mortgage.

It’s hardly surprising as, if they had provided a mortgage, there’s a danger that the council could demand the property is returned to a single dwelling – and the value of the property could then be reduced.

So, am I advising that you don’t touch illegal conversions with a bargepole? No, far from it. The owner has turned their property into an unmortgageable property – now their only choice is to sell to that small group of investors that do not need mortgages, cash buyers.

June 2016

LANDLORD INVESTOR

However, if you’re an intelligent investor who understands bridging finance there could be a really good opportunity for you.

It’s possible to apply for retrospective planning permission – BUT it’s unlikely that the original owner will get this as the Council will take a dim view of him/ her having ignored the need for this at the point of conversion. As a potential buyer it may be a different story and you’re likely to be treated more favourably.

Before you commit to buy meet with the Planning Department and outline your intention to buy, explaining that you’ve discovered that no planning permission was ever submitted. You won’t get a definitive ‘yes’, but they’ll usually give you an indication.

As long as you can prove the property has been in continuous use as flats for 4-10 years, you can apply for retrospective planning permission (check what the local Council requires to ensure you can satisfy their needs).

Bizarrely one of the easiest ways to prove established use is Council Tax as they don’t seem to report change of use the Planning department! Other ways could be through utility bills or the electoral roll.

Bridging lenders will lend on this kind of property and this makes you a ‘pseudo’ cash buyer, which means you can negotiate very favourably with the seller on price and, legitimised with retrospective planning permission, not only does the property becomes mortgageable, but the value increases to the full market value – and that could show a handsome profit for you.

There are knowledgeable investors who use this as their primary strategy. ⌂

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INVESTMENT

SAMUEL ESTATES PRESENTS AURA HOUSE

AURA HOUSE IS A COLLECTION OF 1, 2 AND 3 BEDROOM CAREFULLY DESIGNED, STYLISH APARTMENTS IN BALHAM. Clapham South tube station (Northern Line Zone 2) and Balham rail and tube stations (Zone 3) are all within walking distance of Aura House.

With everything just a stone’s throw away, Aura House enjoys an ideal location. This sought after residential area is within easy reach of the green open spaces of both Clapham and Wandsworth Commons. Aura House offers easy access to the excellent amenities of Balham Town Centre, including a fabulous array of independent and boutique shops, bars and restaurants.

Each apartment offers plenty of natural light and comes with the following: • Balcony or terrace to most apartments • Designer kitchen with integrated appliances • Contemporary bathrooms fitted with Italian

ceramic tiling • Chrome heated towel rails • Thermostatically-controlled showers to the en-suites • Ivory roller blinds to all windows • High quality oak wood laminate flooring • Grain coloured carpets to bedrooms • USB phone charging ports • Sky+ and Freeview ports to living and main bedroom

June 2016

LANDLORD INVESTOR

Samuel Estates, let and manages many properties on new build developments for private landlords and companies across London.

1 BEDROOM Rental

Price

Yield

£1,550 £1,650

£430,000 £455,000

4.4%

SOLD

OUT

Based on: £1,600pcm rental and a purchase price of £440,000.

2 BEDROOM Rental

Price

Yield

£1,850 £2,000

£610,000 £650,000

3.8%

Based on: £1,950pcm rental and a purchase price of £610,000.

3 BEDROOM Rental

Price

Yield

£2,250 £2,500

£700,000 £735,000

3.9%

Based on: £2,350pcm rental and a purchase price of £715,000.

39

FREE FURNITURE PACKAGES We are offering free furniture packages to landlords buying at Aura House for a limited time only.

June 2016

LANDLORD INVESTOR

INVESTMENT

Call us on 020 8673 4666 to speak to us about reserving an apartment at Aura House or visit our website samuelestates.com for further information.

40

INVESTMENT

ARE YOU SITTING ON A PROPERTY TIME BOMB? Simon Zutshi property investors network Many investors are quite literally sitting on a property time bomb, unaware of the financial devastation that may hit them in a few years’ time. In this article we have asked experienced property investor Simon Zutshi, to explain what the problem is and more importantly what you can do about it now.

THE UK PROPERTY MARKET HAS SEEN UNPRECEDENTED CHANGES OVER THE LAST 12 MONTHS, WHICH COULD CAUSE SERIOUS PROBLEMS FOR MANY INVESTORS IN THE POTENTIAL INTEREST RATE RISES The Bank of England Base rate has been at the NEXT FEW YEARS. There are two main factors which could cause difficulties for Buy To Let investors. These are; 1) Potential interest rates rises 2) The proposed changes to BTL mortgage interest tax relief. The combined effect of these two factors could cause a “Double Whammy” effect which results in many BTL properties turning from a positive cash flow into a negative cash flow, which many investors will not be able to subsidise and so may be forced to sell.

Let’s consider each of these factors in turn and then consider what you can do about it.

June 2016

LANDLORD INVESTOR

record low of 0.5% per annum for over 7 years. Many of the pre credit crunch mortgages interest rates where Bank of England base rate + 1.5% to 2% which means that landlords have become very used to a pay rate of between 2% and 3% per annum, which has given them healthy cash flow over the last few years. However, if interest rates start to creep up over the next few years, thus the landlords’ cash flow will drop to the point where I suspect many landlords will not make any profit from their properties, especially single lets properties, such as flats which also have ground rent and service charges to factor into their costs.

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SIMON'S RULE OF THUMB The rate of 6% per annum is useful to use when calculating how much a mortgage will cost you. This rule of thumb is so easy that you can do the calculation in your head. At 6% interest rate, every £20k you borrow on your mortgage will cost you £100 per month in interest. For example, a £140k mortgage will cost you £700 per month. The rent must cover this mortgage interest and all the other costs for you to make positive cash flow. In reality, the mortgage will cost you less per month than this, because you can obtain mortgages at a lower rate than 6% now, but this will help give you peace of mind that as rates increase up to 6% you will still make positive cash flow.

PROPOSED CHANGES TO BTL MORTGAGE INTEREST TAX RELIEF There have already been some excellent articles in past editions of Landlord Investor about this so I am not going to go into too much detail apart from the fact that some investors may find themselves in the position that their property does not actually make much cash flow but as far as the HMRC are concerned, it still makes a profit and so tax would be due. This means a net effect of negative cash flow.

Multiply that across a portfolio of properties and you can see how some landlords could get into difficulty.

If you are a lower rate tax payer or you have unencumbered property (i.e. no mortgages) then you will be unaffected by the proposed tax changes. If you are a higher rate tax payer with mortgages, then you will undoubtedly be paying more tax.

THE DOUBLE WHAMMY It is the combined effect of potential interest rate rises and the changes in mortgage interest tax relief that could cause serious problems for many investors. For the rest of this article, I am going to explain what you can do about this to avoid these potential problems as much as possible.

UNDERSTAND YOUR CURRENT POSITION The first step is to understand where you are right now in terms of exactly how much you make from each of your investment properties. If you don’t already have one, I suggest you put together a simple spreadsheet which lists all your properties and carry out some sensitivity analysis so that you can see what could happen to each of your properties as interest rates go up. This will help you identify which properties may cause a problem when positive cash flow turns negative as interest rates rise. You then need to decide what to do with these properties.

MAXIMISE RENTAL INCOME When did you last review the rents you charge? All too often landlords don’t raise the rents on their property, especially if they have good tenants. Rents have generally gone up over the last few years. Unless you have put your rents up, you may be receiving less than the current market value. Could you carry out some light cosmetic improvements, such as painting your property to increase the rents?

REPURPOSE YOUR PROPERTIES Just because you have used a property in a certain way historically, does not mean that you couldn’t make a change going forward. If you have a single let property, could you change it into serviced accommodation? Or, if it is in a suitable location with the right number of rooms, could you could you change it into a House of Multiple Occupation? If you have a student property and find that there is now an over supply in the area, could you change it to an HMO for young professionals? Look at each property in your portfolio and work out of you could repurpose it to increase the rental income.

June 2016

LANDLORD INVESTOR

INVESTMENT

Investors who are buying properties now and calculating their cash flow profits based on the current mortgage rates may also be in for an unpleasant shock. I advise all of my students to make sure that any property they are considering purchasing, must give a positive cash flow, even if the cost of their mortgage is 6%, to make sure they plan for possible interest rate rises.

42

INVESTMENT

FIX YOUR MORTGAGE INTEREST RATES Whilst rates are low right now, many investors are taking the opportunity of fixing their interest rates. I am not qualified to give any financial advice and this is just my opinion but I don’t think it is worth fixing interest rates for just two years, as I don’t believe they will change much in that time. However, I am starting to fix some of my mortgages for a five year period.

Yes, the rates might be higher than I am paying right now, but I would rather have the peace of mind that my rates are fixed for the next five years.

SELL YOUR WORST PERFORMING ASSETS I have been investing in property for over 20 years and so some of the properties in my portfolio are not great investments. I certainly would not buy some of them again knowing what I know now. But you do what you do at the time with the knowledge you have at that time. So maybe it is time to sell some of them especially given all the recent changes.

Personally, I don’t like selling property as I have done this in the past and then regretted it, as I have seen values go up over time. But I am a firm believer that you should only own property that will give you a monthly positive cash flow and so right now I am selling a few properties that could become a problem when interest rates rise. I am reinvesting the equity in other properties which generate a much higher cash flow.

If you do sell some of your properties, bear in mind, if the property is not your main residence then you will pay Capital Gains Tax (CGT) on the capital appreciation. You have a personal CGT allowance each year so you may want to stagger the sales over a number of years. Also if you are married you can use your personal CGT allowance and your partners’ CGT allowances if you both own the property. It is a wise idea to get some specialist property tax advice to make sure you minimise the amount of tax you pay.

June 2016

LANDLORD INVESTOR

When deciding which property to sell first I consider factors such as the current cash flow, the length of the existing mortgage, any mortgage early redemption penalties etc. to identify which is the best one to sell first this year, and then which do I want to sell in the next tax year and so on.

Once you have released some equity from your existing properties it is best to re invest this in assets which will give you a better return on investment.

The obvious strategy is houses of multiple occupation due to the high cash flow.

GENERATE ADDITIONAL CASH FLOW Remember that you don’t necessarily have to purchase properties to increase the cash flow on your portfolio. You can use strategies such as Rent to Rent, and Purchase Lease Options to gain cash flow from property without the need for mortgages or big deposits. Also the profits from these two strategies are not effected by the proposed tax changes as you don’t actually have mortgages but instead are paying a monthly rent to the owner which can be offset against your income for tax purposes. If you don’t understand these strategies it may be time to educate yourself about how you can utilise them to your benefit.

CHANGE YOUR TAX STRUCTURE And finally, lots of people have been thinking about moving their portfolio from personal ownership into a limited company to mitigate effects of the new proposed tax changes. There are a few challenges with this and you need to seek professional advice based on your personal tax situation.

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The best part about this particular method is you reset the base value of all your properties to the value at time they are moved into the limited company.

This can be particularly valuable to anyone who has had good capital growth since you purchased your properties. Definitely worth booking a complementary session to find out just how much you could save. There are only a limited number of these complementary sessions so I suggest you book now before they withdraw the offer. ⌂

SUMMARY OF ACTION POINTS: So here’s what you can do to defuse the ticking property time bomb. It is best to take action now, don’t wait until it is too late: Actions for you to consider: •

Update your property details spreadsheet.

•

Include sensitivity for interest rate changes

•

Identify which ones could cause you an

issue.

•

Check for mortgage redemption penalties

and end dates.

•

Can you maximise the rental income?

•

Can

you

repurpose

any

of

your

properties?

•

Which do you need to sell?

•

Can you generate extra cash flow from Rent

2 Rent and Purchase Lease Options?

•

Do you need to change your tax structure?

•

Book in a complementary tax session.

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June 2016

LANDLORD INVESTOR

INVESTMENT

The main challenge that many people have faced is paying Stamp Duty and Capital Gains Tax when they transfer their assets into the Ltd company. However, the structure that I favour is moving the portfolio into an LLP (Limited Liability partnership) and then into a Ltd co. When done correctly this means that you pay no stamp duty and no CGT tax at all. If you would like to have a complementary 45 minute assessment with one of the top 100 accountant firms in the UK, we have arranged some complementary consultations for members of pin. All you have to do is email your contact details to this email address and they will set up an appointment for you. pin@acuityprofessional.com

LANDLORD ASSOCIATIONS

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GETTING STARTED National Landlords Association Very few landlords tend to think of themselves as running a formal business and as a result don’t follow any sort of structured financial plan.

The result of adopting a ‘finger in the air’ approach to letting property is a recipe for disaster which could have a devastating affect not only on your finances, but more importantly on your property and the tenants you home.

In fact, a quarter (24%) of new, or single-property landlords, make no profit from letting property at all, which demonstrates the need for proper planning.

So whether you’re just thinking about taking your first steps in the Buy to Let market or you’re recently new to the property world - getting your finances in order should be at the very top of your priority list.

However, financial planning is just one aspect you need to get right and there are a number of other things to think about in order to run a successful lettings business. While you may get the basics right – for example by not overpaying for a property and by choosing an attractive location – there’s a lot more to being a landlord than meets the eye.

WHO CAN YOU TRUST?

GET STARTED AS A LANDLORD WITH THE NLA The NLA is the largest landlord association in the UK and we already work with over 65,000 landlords. We make it our business to help your business prosper in a competitive market that offers modest yields.

If you’re in need of a helping hand then our Getting Started as a Landlord advice hub (www.gettingstartedasalandlord.co.uk/) offers a range of informative guidance and advice on the various different aspects of letting property, including:

Starting out as a landlord can be an overwhelming experience. There are countless laws and responsibilities that, if ignored, could leave you out of pocket, or even worse, in prison.

•

Considerations before you buy

•

Making the right investment

•

Careful financial planning

•

Managing your tenancy

However, knowing where to start or to turn for advice isn’t always easy. While a great deal of useful information exists through online landlord/property forums you need to be sure that the advice you take can be trusted.

•

Knowing your responsibilities and meeting your legal requirements

June 2016

LANDLORD INVESTOR

• Managing your cashflow and increasing your returns •

Growing your property business

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WORRIED ABOUT WHAT LIES AHEAD? Don’t be; the NLA has it covered. We have a range of landlord-specific services that have been designed to make running your business as smooth and as possible. Whether you’re looking for trusted advice and assistance to help find the perfect investment, or you simply need help with recovering rent from your tenants, our services make navigating your journey as a landlord as simple and stress-free as possible. See for yourself at www.landlords.org.uk/services.

We also offer a range of membership options to suit your specific needs. Don’t just take it from us, see what other landlords have to say about being a part of the NLA at www.landlords.org.uk/membership/ testimonials.

LET YOUR PROPERTY BUSINESS BLOOM Remember, it’s never too late to re-examine your situation. Get on top of your investment with the NLA today and let your property business bloom. ⌂

June 2016

LANDLORD INVESTOR

LANDLORD ASSOCIATIONS

All of our resources have been written by experienced experts here at the NLA who know the market inside out so you can be sure that the information you’re receiving is current and relevant to landlords in the UK.

46

AUCTIONS

SPECIALIST AUCTIONEERING SERVICE FOR LAND AND PROPERTY Clive Emson Land & Property Auctioneers Clive Emson Auctioneers was founded in 1989 by our Chairman Clive Emson to supply a high profile auctioneering facility to corporate and independent estate agents, private clients and statutory bodies.

We believe that our success is due to, and remains, attributable to a firm commitment to quality and service throughout every aspect of our business distinguished by both our Investors in People and ISO accreditations.

The concept of the Company is to provide a specialist auctioneering service for land and property which does not compete with the traditional estate agency, mortgage broking, insurance or any other aspect of the property world. Our business model is simple - all properties upon which we are instructed are offered for sale in the auction catalogue. No more complicated than that.

The 20-25,000 full colour catalogues produced for each of our auctions are available either by post or through a network of over 850 estate agency outlets throughout the entire South of England. Our marketing is supported by more estate agency offices than any other auctioneers practice.

In addition lot details, catalogue downloads, viewings and legal documentation are available through our website. During the marketing campaign and exclusive to Clive Emson Auctioneers the entire catalogue is bound within “The Estates Gazette”, which has a further readership of 100-120,000.

Clive Emson Auctioneers are the leading independent regional auctioneer and 4th in the country nationally. Strategically placed Regional Offices are located in Kent, Essex, Sussex, Hampshire and the West Country from which the Auctioneers and their local support team for that region operate

June 2016

LANDLORD INVESTOR

BENEFITS OF AUCTION There are many benefits, the following being just a few: SPEED - The process can take as little as four weeks from instructions to an exchange of contracts and completion 8-10 weeks from going to the market.

CHANCE OF SUCCESS - Clive Emson Auctioneers consistently achieve success rates in excess of 80% COMPETITIVE BIDDING - A level playing field is created for everyone. Bidding in an auction room gives everyone an equal opportunity to bid. If it’s sold in the room the seller has the knowledge the sale has been made openly and publicly. There’s no future accusations of underselling, hence why auctions are used by Local Authorities, Charities, for Probate, Receivers, Mortgagees etc.

Should you be interested in selling or buying property or land with Clive Emson Auctioneers please give us a call on 0345 8500333. ⌂ Alternatively you can find us on line at www.cliveemson.co.uk or through Twitter and Facebook.

RECENTLY SOLD INVESTMENTS INCLUDE

Auction is ... the key to successful buying and selling Next Auction covering the whole southern region

FOLKESTONE Investment producing £8,040 p.a.

SOLD £168,000

25-29 July Entries Close: 27 June Catalogue on-line: 1 July Suitable Lots for Auction include:

ORPINGTON Flat investment producing £7,200 p.a.

SOLD £92,000

PORTSMOUTH Commercial Investment SOLD £230,000

of rs

Main

DEVON Regulated tenancy SOLD £225,000

> Vacant Residential for improvement, renovation and/or repair > Modern properties suitable for the investment market > Commercial premises shops, pubs, clubs, restaurants etc. > Investments subject to existing tenants > Garage and parking spaces > All types of land > Conversion projects and the Sponso unique and unusual

Tel: 0345 8500333 cliveemson.co.uk auctions@cliveemson.co.uk

48

AUCTIONS

AUCTIONED PROPERTY WITHIN 5 MILES OF LONDON OLYMPIA David Humphreys Buying Auction Property

IN MY ARTICLE FOR THE DECEMBER/JANUARY LANDLORD INVESTMENT SHOW NEWSLETTER I SAID THAT MY PLAN WAS TO BASE MY 2016 ARTICLES ON THE LIS SHOW VENUES This plan went somewhat astray by virtue of being asked to write on one occasion about the election and what happens if and on two other occasions current matters which I felt strongly about, the last being sellers putting into their legal packs huge costs 5-7K + that they expect the buyer to reimburse them for and putting these “special conditions” in the legal pack as late as 48 hours before the auction so be warned, you may have checked the legal pack but you need to check it right up to the day of the auction and specifically check both the Contract & Special Conditions because these costs will be in one or other or possibly both.

June 2016

LANDLORD INVESTOR

So, the National Landlord Investment Show is making its June home Olympia Hammersmith on the 21st, one of the jewels in their crown along with the Birmingham on September 21 & Manchester October 13. Of interest to football fans, both the Birmingham & Manchester shows are at famous football grounds, West Bromwich & Old Trafford.

So what has recently come through the auction rooms within 5 miles of Olympia which, roughly speaking is north to Brent Park, West to Brentford, South to Earlsfield & East to Lambeth & Soho and includes a lot of prime London investment property with a huge range of prices as it includes Kensington & Belgravia to the east, Earlsfield & Fulham/Chelsea to the south, Chiswick & Kew as you head west to Brentford and Shepherd’s Bush as you start off north to Brent Park.

49

LOT 136

Of course, you are unlikely to choose to invest across all these locations but you could possibly choose to concentrate on one quarter but even that area may be too big, I successfully developed a number of portfolios between 98 and 2005 for clients, all the properties were ex-local within 2 miles of Clapham Junction but, as is generally always the case, the first driver will be your cash pot.

Now I’m not suggesting that the figures that I’m going to include in this article are the best that you can buy at, they simply reflect recent auction results for properties “with potential” in that they are unmodernised, they need work and I am working on the assumption that you should be able to buy, fix to a high standard and achieve a valuation greater than the combined cost of purchase & fixup a profit for a buy, fix, flip strategy or NMLI for buy, fix & let following re-mortgage.

So how much cash you we need to become an active investor in these locations on the assumption that we bridge the hammer price at 70% so, if you follow this strategy, your calculations will need to include bridging costs which are not generally cheap.

Lot 143

LOT 143 (Savills-L143-May 9). Stretch out to 2 miles and a freehold 6 room unmodernised end of terrace house in NW10, Harlesden with planning permission for 2 3 bed flats sells for 810 K. (Savills-L143-May 9).

So, before development costs, a cash outlay 250 K is needed. An attractive looking property with bays to the front, this property has history having sold for 650 K Feb 15. As a starting comp, a 2-bed ground floor flat sold for 530 K Dec 15.

LOT 82 (Savills-L82-May 9). Go West 2.5 miles (Google 3) and a 3 room ground floor unmodernised garden flat in Chiswick W4, with bays to the front, sold after auction (Savills-L82-May 9) for an undisclosed amount, probably in the region of 500 K, requiring 150 K cash plus transaction & fixup costs. Fixed up comp value 700 K (March 14). This flat had not been sold previously going back to 1998.

Go south 3 miles (Google 3.4) and you may still be able to buy a 1-bed unmodernised flat over the 2nd/3rd floors in a period building for 540 K, last bid 525K, from the London Borough of Wandsworth (Barnard Marcus-L3-May 17). Not surprisingly, as it is owned by the Borough, there is no sales history but a same-street flat No 4 which might indicate the top of the building sold for 775K Sept 15. To talk to the Borough you will need at least 165K sitting in your cash pot.

Lot 82

June 2016

LANDLORD INVESTOR

AUCTIONS

Lot 136

(Savills-L136-May9). Hammersmith W14 does not produce any results but within 1.5 miles (Google 2 miles) travelling south, an unmodernised 2 room top floor flat (2nd Fl) in Chelsea SW3 sold for 625K (Savills-L136-May9). Cash needed to start playing 210K plus transaction & fixup. The 1st floor flat in the building sold for 800K Aug 13 and a flat a few doors down sold for 895K Jan 15 so maybe there is potential!

AUCTIONS

50

Lot 210

Lot 28

LOT 28 (Savills-L28-May9). West again for 3 miles (Google 3.3) and Chiswick W4 reappears with a 2-room unmodernised first-floor flat with garden that sells for 467K, (Savills-L28-May9); interestingly this property is 1.3 miles west of the 1st property I found in Chiswick W4. This flat is in an attractive converted three-storey semi with the first-floor approximately 6+ feet above ground floor level with front room into a bay.

Interestingly there are no comps for period conversions in the street, just flats in a purpose-built block.

Cash required to play 140 K plus transaction & fixup.

LOT 79 (Savills-L79-May9). Staying 3 miles west (Google 3.4) and going and going from the sublime to the ridiculous, a freehold large semi over 3 floors in Chiswick W4 arranged as 4 self-contained flats unmodernised with development potential is unsold but available at 1.75M, (Savills-L79-May9), a seat at this table will start at 525K. Auctioneers Savills, Vendor, a Housing Association. No sales history on this building but loads of flats in the street with prices starting around the half million mark and heading up past 850 K. Interestingly one semi sold for 2+M Sept 10.

LOT 210 (Savills-L210-May9). It’s back south for 3 miles (Google 3.9) and you could have bought a period 3 bed mid-terraced house in Wandsworth (Savills-L210May9) for 500 K a starting cash pot point of 150 K plus transaction & fixup. No history the street since 2011 when next door sold for 320 K having moved up from 210 K in 00 & 115K in 97! This is one property I would have beaten a path to, I love terraced houses and I love Wandsworth, particularly the ex-local stock.

LONDON OLYMPIA +5 MILES: And so we move out to Olympia +5 miles and the opportunities increase dramatically and range from: (all unmodernised) •

A 5-room terraced house in Battersea, sold for 1.2 M.

•

A 4-room terraced house in Tooting at 505K

•

A 4th floor studio in Marylebone at 187K, cash pot requirement 56K

So what is in the pipeline so to speak though all these Lots will have been auctioned by the time you read this article? Not a lot is the answer if you need the word “unmodernised” in the particulars.

Ealing W13 slightly unusual, a 2 bed semi-d bungalow with development potential guiding at 500K

Lot 79

June 2016

LANDLORD INVESTOR

If your strategy is to buy instant, or at least 28-day, income then you will find quite a lot of choice ranging from multiple units of studio flats down to single dwellings, all AST let.

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CONCLUSIONS

Lot 66 - Auction House

LOT 66 - AUCTION HOUSE (Auction House London-L66-June 7). Starting with multiples, Stockwell SW9, 8 self-contained studio flats in a double-fronted terraced house are guiding @ 1.35 M for a 76.6 K income, 5.7% GY (Auction House London-L 66-June 7)

LOT 83 (Auction House London-L83-June 7). Acton W3, 9 self-contained studio flats in an end of terrace building guiding @ 1.275 M buys a 92.8 K income, 7.3% GY (Auction House London-L83-June 7)

LOT 66 -ALLSOP (Allsop-L66-May 26-Unsold). If you fancy Soho W1, 675K buys you a 35K income from a 5th/6th floor 2-room maisonette, 5.2% GY or 800 K buys you a 43K income with a 3-room maisonette in the same building, 5.4% GY (Allsop-L66-May 26-Unsold)

Also, if you are going to develop a strategy in any of these sectors, start off and stick to one. Even travelling 5 miles across London can be painful and at times you could probably walk/bus faster than drive, and then there’s parking, but, as time is often of the essence for property investors, public transport is generally not an option.

Another reason why distressed stock may be thin on the auction ground around Olympia is that it is worth EA’s listing & selling property at 500 K a pop whereas it is not so enticing for EA’s in the next Landlord Investment Show location of West Bromwich, West Midlands where distressed property can be bought for as little as a 10th or 50 K. So, onto the West Midlands in the September issue, which I am also familiar with, as it is the location for my Auction Masterclasses which are based on the catalogue of auctioneers Bigwood’s who stage their auctions in the Aston Villa FC, 5 miles from the Midlands National Show at West Bromwich FC. ⌂

LOT 114 (Allsop-L114-May 26 Unsold). Roughly the same return, 5.2% GY is available from a 2-room flat Wandsworth. Cost 300 K, Income 15.6 K. (Allsop-L114-May 26 Unsold)

Lot 83

June 2016

LANDLORD INVESTOR

AUCTIONS

First of all it would be irresponsible to draw any firm conclusions from a single sweep across the auction results of any location but it would appear that there is both supply & demand in the north and southwest sectors of a 5-mile radius of Olympia. Whether it is sufficient to support a strategy based on auctions as the principal source of supply is debatable but of course you don’t need many 500 K-1 M distressed properties to get your teeth into to make it worthwhile.