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Saturday, April 25, 2015

A tale of two properties

The general consensus is that property prices apart from in central London, where prices have rocketed have just about recovered their values since the crash. I can prove that actually not only have there been huge variations in property prices based on the part of the country you may have brought in, but also the types of property and the part of the same city.

As they say, a property investor makes their profit when they buy not necessarily when they sell.

Apartment 18, Bloomsbury Court, Beck Street, Nottingham, City Of Nottingham NG1 1DG


The first property is a 3 bedroom city centre apartment. We know that it has changed hands 4 times over the last 14 years and prices paid are as follows according to the Land Registry:

2001 26 Nov - £177,350
2004 18 Jun - £195,000
2006 24 Nov - £124,999
2014 2  Sep - £115,000

LOSS of 35%

180 Rutland Road, West Bridgford, Nottingham, Nottinghamshire NG2 5DZ

2001 22 Jun - £105,000
2005 27 May - £183,500
2011 3 Jun - £240,500

GAIN of 129%

Same city, same size (3 beds).  One of the property's is showing a loss of 35% and in the same period the other has grown by 129%. 

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Friday, April 24, 2015

Regional prices start to re-balance

Finally we are seeing the start of a re-balance in UK property pricing. Some of the larger UK regional cities have managed to claw back some ground on London's explosive gains.
Hometrack's UK Cities House Price Index for April shows for the first time since 2005 some large regional cities have managed to out-perform central London . 

12 larger regional cities,  Glasgow (7.6%), Manchester (6.8%) and Leeds (6.6%) have registered higher price rises year on year than parts of Central London with, Kensington & Chelsea and Hammersmith & Fulham rising 3.4% and 5.1% respectively.

Well it's a start, but Greater London is still got the march on, with the highest annual growth rates, with Newham strongest at 14.2%.

Homelet's data puts the average UK house price at £186,878.

Figure 1: City Level Summary, March 2015
Source: Hometrack UK Cities House Price Index

Richard Donnell, Director of Research at residential analysts Hometrack, said:

“House price growth is holding up better than expected as a result of a lack of new supply of homes for sale and record low mortgage rates attracting buyers into the market.

“Growth in London is still running in double digits and high capital growth rates in recent years have pushed down average loan to values in London, creating further capacity for additional borrowing for households that can pass tighter affordability tests for new lending.

“The pattern that we are currently seeing in regional cities is similar to what we witnessed in London from 2011 – 2013, except the majority of demand for housing in these cities is coming from domestic owner occupiers. It is not being boosted by international buyers or excess investor demand, as was the case in London, hence the more modest level of price rises compared to recent growth rates in the capital.

"As London’s first time buyers grapple over the affordability of the first rung on the property ladder, there is an opportunity to buy ahead of the curve. Boroughs such as Newham, Redbridge, Greenwich, and Barking and Dagenham offer that elusive mix of short term affordability and good capital growth in the longer term."

Pop star leaves landlord in a spin

Anybody who remembers the 80s will likely recall the band Dead or Alive and their big hit "You spin me round (like a record)". It appears like the controversial lead singer Pete Burns is doing exactly that to his poor landlord after racking up debts (mainly non-payment of rent of £34,000).

Apparently the landlord who used to live in the property has become extremely distressed over the ordeal.  It would be interesting to know if the landlord or their agent had gone through a thorough vetting of the tenant. 

Maybe they were bowled over by the tenants celebrity status!?

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Thursday, April 23, 2015

Scottish property prices jump in Feb

Scottish property prices jumped by 1.7% in February to a high of £169,742 according to Your Move Scotland's latest HPI.

This is the fastest rise recorded since the 2007 crash.

Sales were up 14% month on month but remain 4% lower that in  February 2014.

Christine Campbell of Your Move commented

‘The impressive rise in house prices in February has been influenced by the introduction of the new Land and Buildings Transaction Tax (LBTT) in April, as high end buyers sought to complete expensive purchases under the old stamp duty rates,’

Read in full the Scottish House Price Index for Feb 2015 from Your Move

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Brent HMO landlord fined

Brent Councils landlord licensing scheme has handed out its first fine to landlord Douglas Gerard-Reynolds who failed to obtain a licence for his House in Multiple Occupation. Willesden magistrates court handed the landlord a £1,000 fine as well as court costs of £1,457 and a £100 victim surcharge.

Brent have been running their selective licensing scheme across Harlesden, Wembley Central and Willesden Green areas since January 1st 2015. The scheme runs alongside a borough wide mandatory licensing scheme for Houses in Multiple Occupation.

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Wednesday, April 22, 2015

Landlord in a spin over celebrity eviction

A landlord experienced a breakdown from the stress of evicting their 'celebrity' tenant.

The troublesome celebrity tenant, Pete Burns, is best known as the singer of  pop band Dead Or Alive who had a number one hit single, 'Spin me around' back in the eighties. 

Burns was evicted from his rented London flat today after non-payment of rent of £30,000.

The final bill after legal costs is reported to be £34,000, but whether the landlord will ever see it paid remains to be seen after Pete Burns declared himself bankrupt.

The tenants eviction was carried out by Landlord Action.

Paul Shamplina of Landlord Action, commented

“This has been a complete nightmare for the landlord, he has lost over £34’000 in rent and has suffered a breakdown because of the stress caused by the tenants not paying him the rent and various incidents at the flat, where he’s received numerous complaints.”

“Unfortunately he was too understanding to Mr Burns problems, which has resulted in him being owed over £34,000 and lost so much time , as well as affecting his own well being.”

See pictures and read more on the Pete Burns eviction in the Mirror 

Prime ministerial property rises

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Tuesday, April 21, 2015

My tenant has given me a 'shopping list'!

I've been chatting to one of my long standing tenants.  He's got a veritable shopping list of things for me to do.  It reads as follows:

Hi chris

Heres what needs doing. Its more than it looks. Most of it quick diy jobs
BATHROOM Plug hole chrome has come off.Needs changing Taps need descaling Bath panel needs changing Tiles back of bath gone black as damp coming from below Window frame gone manky Tiles above sink need regrouting and tidying up
BEDROOM Wallpaper coming off in few places on 2 walls. Need stripping (probably) and repainting Big damp spots on chimney breast OFFICE Needs decorating
STAIRS Wood chipping off on banister. Needs planing down sanding n repainting
KITCHEN Window sill got weird black stuff on it always been there

Thanks Masten
Where does this leave me?
OK lots to do.  On the back of this I've chatted with the tenant.  He wants a nice home to live in.  I want him to have a lovely home to live in.  I did mention to him that he is currently paying £500 per month.  A neighbouring property is currently being marketed at £600.  Depending on your maths this is 20% below the current market rate.  So, time for a rental increase.  He agrees with the logic.  So we have reached a rental compromise of £550.  My tenant gets and improving home, I get a bit more rent and some of the capital cost back in rent.  Given that he agrees I can just issue a new tenancy agreement rather than going through the rigmarole of issuing a section 13 notice.

A score draw possibly?!

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Monday, April 20, 2015

Rightmove's April House Price Index

Rightmove's April 2015 House Price Index has been published.

April's HPI was up by 1.6% over the month, with the average property now costing £286,133, a 4.7% increase from this time last year.

  • Highest ever average asking price, now £286,133.
  • Shortage of supply to meet record spring search activity on Rightmove.
  • New seller numbers down 4% so far in 2015 compared to 2014.
  • Searches in March up almost 20% year-on-year to 115 million.
Right move director, Miles Shipside, commented: 

“Record high housing demand and an under-supply of homes have delivered a new all-time high in the price of property coming to market in the month before the election. The high cost of housing is a big concern for many home-hunters, so the contents of the respective party manifestos and well thought-out sustainable solutions to the lack of affordable housing supply will be high on many voters’ agendas too. While the annual rate of price increases may be dropping back, down from 5.4% last month to 4.7% this month, it’s of little comfort to buyers as even more modest increases stretch buyers’ finances into new territory with prices at record average highs. Furthermore, the rapid fall in general inflation means that the inflation-adjusted rate of house price growth remains high.”
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The future of Universal Credit

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Savers mull property pension

A survey of over 900 retirement savers over 40 has revealed that more than 50% are already investing in buy-to-let or are actively considering the asset class.  Specifically the survey reveals that 45% of the 915 interviewed would consider investing in buy-to-let.

The survey follows on from the changes in the pension legislation where retirees are able to take a lump sum rather than an annuity making the possibility of a buy-to-let purchase a realistic possibility for the first time.

Should I invest in a buy-to-let pension ?

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Council's £4000 payouts to landlords

According to a Guardian piece, councils in London and the South East are making cash payments of up to £4000 to private landlords to take in homeless families.

Westminster council pays up to £4,000, Tower Hamlets  offer a £2,500 payment for one-bedroom flats and as much as £4,000 for two or more bedrooms properties.Haringey andBarnet, bot offer one-off payments of up to £3,000 and Southwark council is offering up to £2,000 .

The need for these one off payments /sweeteners reflect the increasing reluctance landlords have to renting to housing benefit tenants, both because of perceived risk and the failure of more restrictive housing allowances to match up to the open market rents on offer.

Read the full Guardian article - Council pay landlords £4000 to home tenants

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Friday, April 17, 2015

Buyers suffer pre-election jitters

LSL's House Price Index for March shows a slowing property market as buyers suffer from pre-election jitters (aren't we all?).

The LSL Index fell to its lowest growth rate since 2013, with the annual change down to 5.6%(£14,620).

Despite the slow-down, the market still saw a rise, with the average property price across England and Wales setting a new high -  £275,123.

The agency chain blamed the election for the sluggish market, with supply down 5% on last years first quarter.

Average House Price - £275,123 
LSL Index - 267.7 
Monthly Change % -  0.2 
Annual Change % - 5.6 
Annual Change % (excluding London & SE) - 3.5

Director, Adrian Gill commented: 

“Property prices in England and Wales continue to hit new heights, yet the cogs of the machinery are flagging to the most laboured pace we’ve witnessed for sixteen months. Slowing to 5.6% in March 2015, annual house price growth has now been waning for half a year, and hasn’t been this sluggish since November 2013. But with homes on average worth £14,620 more than a year ago, it’s a far cry from anything worth lamenting from a bird’s eye view – even if people on the ground might feel somewhat differently. While price inflation simply isn’t as rapid as it was, the stamina is still strong, and prices edged forward another 0.2% in March. "

"With the General Election tightening its tempo every week up until May 7th, cautious buyers are holding back to wait and see which way the chips fall." 

Thursday, April 16, 2015

Graph of UK property ownership

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Landlords watch out for the 'Red Mist'

Rents have been rising steadily...Great!

Rental voids are at historic lows brilliant

House prices are rising again superb!

The sun is even shining.  It's a great time to be a landlord!

The only thing is the grey clouds or should I say a 'Red Mist' on the horizon for landlords.

If you think that things couldn't get better then have a look at what Labour have planned for the private rental sector if they get back into power in May.  Make sure your vote counts if you want to keep away the 'Red Mist' ruining the promise of a cloud free summer.

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Wednesday, April 15, 2015

Graph shows housebuilding decline

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ONS report signs of a slowing market

Key points from the Office of National Statistics House Price Data for Feb 2015 are -
  • Prices up 7.2% on the year, slowing from  the 8.4% figure in Jan.
  • Annual inflation now 7.4% in England, 1.1% in Wales, 6.4% in Scotland and 14.2% in Northern Ireland.
  • Annual house price growth is showing signs of slowing across the majority of the UK.
  • Biggest increases in the East at 10.7% and in London of 9.4%.
  • Excluding London and the South East, UK house prices increased by just 5.9% on the year.
  • On a seasonally adjusted basis, average house prices increased by 0.6% between January and February 2015.
  • First-time buyers paid 7.4% more on average than in Feb 2014. 
  • Owner-occupiers (existing owners), paid  7.2% more 7.2% than Feb 2014.

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When will interest rates rise?

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CML reflects increasing BTL popularity

The Council of Mortgage Lenders report that 15,900 buy-to-let loans were completed in February.

Although of fall of 13% on January's figure, the rate is 11% up on February 2014 figures and we are still yet to see the effects of the pension reforms.

Homelet's rent data for Feb 2015

Homelet's latest rental data for Feb 2015, shows London rents stable, whilst outside the capital is seeing rises.

Homeless puts the average UK rent at £899, another small rise, with the figure being £889 in Jan 2015 and £873 in Dec 2014.

Seven out of twelve UK regions have recorded a rise in rents in the three months leading to February 2015 with the best performing region being the North East with a 3.1% rise.  Rises were recorded in the South West, East Anglia, the North West of England, Northern Ireland, the South East and Yorkshire & Humber.

The regions reporting falls were, Greater London, the West Midlands, Wales, the East Midlands and Scotland.

Homelet's data puts UK average rental growth over the past 12 months at 10.2 %.

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Tuesday, April 14, 2015

Phenomenal buy-to-let returns - I'm sceptical

I'm sceptical about some research from the Wriglesworth Consultancy on buy-to-let investment returns.  Going on my experience of holding a small portfolio of 8 properties in the Midlands.  The figures that suggest for every £1000 invested in 1996 would by the final quarter of 2014 be worth almost 15 times this amount seems phenomenal and a little unbelievable.  Even with the beneficial impact of gearing which increases any landlord potential returns by being able to leverage their investment capital  and thereby increase the returns by almost 3 times seems to over estimate the returns I've experienced.

Figures seem over inflated
It leaves me thinking that these figures over egg the returns.  Clearly, a big part of looking at returns for any asset class is the period you pick.  As not only a property investor and landlord I also have a significant portfolio in shares.  Having kept my nerve after the financial crash I know that my portfolio of shares has more than doubled since the dark days in 2008.  Residential property does have a large advantage over equities in that rarely does the value reduce in real terms which means that you very rarely have to nurse a capital loss (although landlords buying over priced city centre apartments may have different stories to tell).

Landlord returns have benefited from low borrowing costs

The revelation for many landlord has been the historically low interest rates since the crash.  This means that net annual rental returns which for many landlords have been very small are now significant.  This obviously increases dramatically historic returns.  I also suspect that these figures also reflect an aggregate figure for UK residential property market which of course includes London.  If you strip London house price rises out of the equation I suspect that the figures would still be good but slightly less stellar than the returns that these figures suggest.  For peoples reference the relative returns for investment of a £1000 in the period from the final quarter of 1996 - 2014 is as follows:

1. Buy-to-let £14,897 (geared investment borrowing 75%)
2. UK commercial property £4,494
3. UK government bonds £3,329
4. UK equities £3,119
5. Cash £1,959

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