UK | Property Venture

Prospects for the UK property market beyond tapered SDLT?

House prices seem to be rising inexorably.

House price inflation is at 8.9% – taking the average house price in England to £268,380. The volume of transactions are also up by about 30%.

Yet the monthly price change in April was – 1.9%.* Whilst we should not read too much into a month-on-month change, it might indicate a slowing of inexorable price rises.

The UK property market has continued to surprise. Given the country has been through the protracted Brexit negotiations and then had to face the Covid-19 pandemic, it has remained remarkably buoyant.

Arguably housing is often seen as a safe haven asset during times of political and economic volatility, which may explain some of this sustained activity.

Low mortgage rates**, meaning that borrowing is relatively more affordable for property investors and homebuyers alike, has sustained demand. All at a time when there is still a systemic supply imbalance, meaning prices are pushed up.

Anecdotally vendors have been maximising what they can achieve for their homes during the rush to hit the various SDLT holiday deadlines. This may have mitigated any potential tax savings for the buyer by baking them into vendor asking prices.

Timing entering the UK Property market?

There is never a ‘perfect’ moment for an expat to invest for the first time, but often it can come down to an individual vendor’s readiness to negotiate, not the whole market, although the market obviously influences vendor sentiment and price expectations.

There are indications the property market might now be less heated than it was. The latest Land Registry HPI for April shows that monthly price changes in England are down marginally. This coupled with the big SDLT savings being greatly reduced from 1^st July may mean the rush and sense of urgency could abate in the Autumn/Winter period.

If you would like help finding the right property for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the ‘right’ properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Disclaimer: Property Venture® is not a tax adviser but has outlined information in layman’s terms to enable top line comparisons, nor is it offering advice.

With regard to in-country legislation, letting licences and taxation laws, then you must take appropriate legal or taxation advice during your purchase process, at which time your solicitor or advisor will discuss with you up-to-date legislation and costs

*Office for National Statistics using the latest April data

** Bank of England Base Rate has stayed under 1%, for over a decade, significantly less than during the global financial crash when the base rate in July 2007 was 5.75%

Tags: Expats, investment, SDLT, UK

What works for you Commercial or UK Residential property?

The UK residential property market remains buoyant as a result of the various SDLT holiday extensions and the Furlough scheme supporting employees. Yet some investors have turned to the commercial property market to look for opportunities. Recent and further impending planning Class changes from 1^st August 2021, relaxing the rules around converting many types of commercial buildings to residential, have meant investors are embracing the potential opportunities this brings.

But the commercial property sector also has its inflated price challenges. And it isn’t just the private residential rental market where the government has imposed restrictions on landlords over evictions or seeking to claim unpaid rent. It is also in the commercial sector.

Although some restrictions are lifting like the Residential eviction ban was lifted on 31st May, there are other more lasting changes that will endure. For example new ‘breathing space’ laws, which might affect the types of tenants residential landlords want.

Whichever type of opportunity you are seeking, remember there are some enduring principles that work whichever the sector, particularly when it comes to due diligence.

UK Residential and Commercial Property: 6 Tips

Check UK Property Title

This is useful to do early on in the process, to look for Title defects or covenants and to get an idea of the pricing history, all of which is useful information shaping the decision on whether to invest and also with the negotiation stance

Right area?

Whether commercial or residential, this is important. If for example you are seeking to do a commercial to residential conversion, then it is important to check that the area has a sufficiently residential look and feel for. This will increase the chances the end product will work well and be profitable, either as a hold or sell-on opportunity

Sourcing requires similar skills and sources:

Agents – are useful in both sectors although the type of agents differ in their approaches. Commercial agents may talk more qualitatively about the building rather than the numbers, but all agents are motivated to conduct viewings to be actively promoting a property.

Direct to Vendor is a buying strategy for both sectors. For Commercial property tools like LandInsight and Nimbus are used for Land and commercial and can help when checking Title or identifying the owner to approach directly

Google Street views are powerful to show the history of the building for planning and to show how it has been constructed and extended over time.

Checking Property Floorplans

This is a useful technique for ensuring whatever planned building usage changes, the minimum space requirements are met for residential living

Property Tenant checking

Whilst this is important for residential properties, it tends to come at the end of the Due Diligence process. Whereas for commercial it is one of the first priorities to check out the tenant company. This can be done on Companies House if it is a Limited Company to ensure there is a robust income stream and business model to sustain rental payments.

Property Contractual terms

Are important for both residential and commercial sectors, but more so in commercial as the various Lease clauses change the nature of the contract significantly, more so than for a more standard residential Assured Shorthold Tenancy (AST) contract.

If you would like to talk about residential or commercial opportunities, whether that be Student Accommodation or Hotels then please get in contact or email info@property-venture.com

Disclaimer: Property Venture® has outlined information in layman’s terms to enable top line comparisons. Property Venture® is not offering advice. With regard to in-country legislation, letting licences and taxation laws, then you must take appropriate legal or taxation advice during your purchase process, at which time your solicitor or adviser will discuss with you up-to-date legislation and costs

Tags: Commercial, Due Diligence, Residential, UK

How to continue UK investing during lockdown?

There is so much uncertainty currently.

The Trump: Biden standoff, not only an unseemly moment for the USA but for Democracy globally.

Due diligence can reduce uncertainty when investing in residential property by spending a significant amount of time researching and doing analysis before jumping to site visits.

• Can the area deliver your target yields and capital growth aspirations?

• If it can, is this likely to attract your ideal tenant type?

• And can you afford the type of property you want, whether it be freehold or leasehold, or number of bedrooms?

If you are in rush to beat a deadline, what about the sale status e.g. is there a chain? Has the vendor got other options which means they might be less flexible on price?

All of this before physical site visits, which – for me – are not only to view properties but also to see how professional the estate agent is when conducting the viewing. Are they adhering to best practice Covid guidelines? I tend to use this as a proxy for professionalism. If they’re professional during the sale, they are likely to be professional management agents and serve you well during a lockdown.

If you would like help finding the right buy-to-let properties for you then please get in contact.

My business focuses on helping time-strapped expats and busy business people who don’t have the local presence, or capacity, to acquire the targeted amount of properties for them. Property Venture® is an award-winning, Boutique property consultancy that finds the right investment properties for clients.

Compliant members of the PRS scheme and on the Advisory Board of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. This is what our clients say

Tags: Due Diligence, Expats, Risk & Reward, UK

How Covid-proof is the UK property market?

Only a few months ago we sighed a sense of relief that we had a majority in government and that we could move forwards politically and economically… and then Coronavirus hits the streets.…

The lockdowns across the globe are creating an interim ‘normal’ as property investing, for many, takes a back seat. However, there are still some of you checking property investments out from the comfort of your homes but have many questions like:

How ‘safe’ is it now to invest in the UK property market?
What am I best doing now?
What will happen with property prices?
Can I still get a mortgage?
How will the market look post COVID-19?

How ‘safe’ is it now to invest in UK property?

The UK has long had a supply: demand imbalance and the building industry has been trying to keep up with the annual supply of houses, but has never quite managed to meet target numbers. That remains the case and is now exacerbated by vendors not being able to come to market, or at least not as easily in the past. Estate agents have stopped physical viewings, surveyors have halted site visits and many conveyancers are not rising to the challenge of digital and remote working.

All of this means that supply is constrained, but core demand is still there. UK residential stock is a defensive sector, with vanilla buy-to-lets the cornerstone.

The commercial sectors (retail, office, industrial) will, in all likelihood, suffer greater impact as commerce takes a hit during the lock down period. Although Permitted Development Rights developments will potentially get a boost as more high streets lose retailers.

Sectors such as Serviced Accommodation (short lets), Holiday Lets and some HMOs are finding the times challenging as everyone migrates back to their longer term residences. These sectors will, no doubt recover, but it might take time.

The biggest risk currently is delays in new schemes coming to market, with different parts of the supply chain getting back up to speed after the crisis. Possibly impacting bigger developments more, if there are volume supply issues with materials like bricks.

The key is to plan ahead, understand and prepare for these eventualities as an investor.

What am I best doing property-wise now?

Choose the property sector that best suits your strategy, given any risks mentioned earlier. Don’t over-stretch yourself financially over the next 6-9 months and take sensible risks.

Projects nearer completion may be ‘safer’ for investors, given the inherent delays there are going to be in the supply chain for new projects and developments. There may well be some keen prices on early-stage off-plan and new builds, as developers seek to bring cash flow into their businesses, but the risk needs to be evaluated alongside your own financial position and appetite for risk.

What will happen with property prices?

Whilst transactions have fallen away as viewings are not happening, it is less certain property prices may tumble given the level of demand for property is still present.

Many valuers have a 3-month Covid-19 Clause which indemnifies them for their valuations, so we will tend to see normal property valuations continue in the short term. But after 3 months, there will be no historic, robust, 3 month comparables. We might then see valuations being written down to cover surveyors who will be thinking about their Professional Indemnity Insurance, but demand will still be there. There are more likely to be delays bringing residential property to market than significant down valuations.

Can I still get a mortgage?

Some lenders are reducing loan-to-values (LTVs) and increasing rates, not all lenders though. Banks still want to lend. Property offers security versus many other forms of lending with little or no security.

It might be useful to consider the banks financial position, given the stronger lenders with a solid financial backing are more likely to persist with a decent flow of lending and less likely to tighten their risk-management.

How will the market look post COVID-19?

Comparisons have been drawn with the Credit crunch of 2008. During the credit crisis, the FTSE declined 43% from peak to trough. UK property prices declined 19% from a peak in Sept 2007 to a trough in March 2009 (Land Registry).

The 2007-09 credit crisis involved different dynamics, given it was financial, with an almost-complete collapse in the banking system. Millions of people lost their jobs, their homes, their savings or their businesses as credit dried up. While the economic disruption now is immense, the long-term effects on the economy are likely to be far less severe given the speed of government intervention.

UK government stimulus now is more than ten fold the stimulus package in 2008. This gives rise to the view that the bounce back will be quicker than post 2008.

If developers survive the shut down, it could take 3 times the length of the shut-down to recover. Some contractors and consultants may not survive even if developers do, which will create delays as developers seek to replace key members of their build team.

On the upside, we could be living with another 3-5 years of ultra low interest rates, which will ease the borrowing situation and enhance leveraged-investor returns.

If you would like help with planning ahead, understanding and preparing for these eventualities as an investor then please get in contact.

I work with time-strapped expats and entrepreneurs who don’t have the capacity, local presence or gaps in their know-how to build property portfolios in the right way for them. (Or who are simply stuck with little progress). This means you can carry on your day-to-day lives without spending disproportionate time getting sucked into investing.

Our clients get regular updates on hot deals and the latest changes in the property market. Want these? Go here

Property Venture® is an award-winning, European investment property specialist and sits on the Advisory Board of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. Take a look at what our clients say

Sources: Inspired by ‘Trusted Land’ Webinar, Invest-like-a-Pro, CER

Tags: Commercial, Covid-19, Residential, UK

If Santa were a savvy property investor what might he do?

Father Christmas would do well to think about this with a clear head and before drinking any sherry. Why?

Because he would need to have clarity of purpose

He would need to give careful consideration to where in the world he might invest. If in the UK he might think about maximising his income from an investment and might consider putting his money into higher yielding HMOs (Houses of Multiple Occupation) or Serviced Accommodation. But, with that comes higher levels of involvement on his part. Given his sporadic appearances across the country, at odd times of day, he might not have the commitment or consistent levels of time and effort needed to manage these more labour-intensive types of property investments. Of course, he could find a managing agent to act on his behalf, but he would still need a certain level of ‘presence’ to keep on top of them and make sure they are representing his interests properly.

Something like a Managed Leaseback home might suit his ambitions and lifestyle well. It offers a bit of income from when it is let out, but he could still make personal use of it for when he is off-duty. Even better if it is somewhere hot like the South of France, or in a ski resort so he could take a break immediately after Christmas. Mind you he might be a bit fed up with snow by that stage, who knows?

Reality of investment timeframe

Father Christmas would also need to be realistic about how much time it will take to buy a property, particularly if he needs to apply for a mortgage. The buying process is likely to take longer, especially if dealing with a local foreign bank for a mortgage. He really doesn’t want to be forking out for expenses upfront, if he is not fully geared-up to buy.

He also needs a reality-check on what time he can dedicate to building a property portfolio alongside his busy job and tight schedule. If he wants to forge ahead nevertheless, he might need some help and support in finding and buying the right properties for him and his ambitions.

Value: a property with innate value or just simply cheap?

Some investors think they have got a great deal if they have bought cheaply. But this isn’t always the case. For example if it does not have the correct planning or build permits or licences, its value can be severely diminished or unsaleable or illegal. Or if the property is in a poor location with a scarcity of amenities, or transportation links, then it might not represent great value. Father Christmas will want to have some ‘value’ when he comes to sell, or pass it, on.

Exit: does Santa have an end game plan?

It always helps to know what might be the situation in 5, or 20 years’ time. For Father Christmas – who is getting on a bit now – he might need to consider how he passes his property on in a tax-efficient manner. Inheritance rules differ quite a bit from the UK to Continental countries like Spain or France, where descendants tend to have more rights to parental assets than is automatically the case in the UK.

I work with time-strapped entrepreneurs – like Father Christmas – and expats who don’t have the time, local presence or have gaps in their know-how to build property portfolios in the right way for them. This means you can carry on your day-to-day lives without spending disproportionate time getting sucked into investing.

If you would like to discuss your situation or find out more then please get in contact.
Our clients get regular updates on hot deals and the latest changes in the property market. Want these? Go here

Tags: portfolio, Top Tips, UK

What results when politicians tamper with property markets?

I was prompted to write this when I read about the St Ives’ property market, in Cornwall, UK.

The town attracts holiday makers, visitors and habitants, given it is an idyllic seaside town.

United Kingdom_Coastal Properties_Boat-Sea-scene

The problem for the locals, is that it has attracted nationwide interest in its property market and the blame is laid on this wave of home buyers for pushing up the property prices, to the extent that they can’t get on the housing ladder.

So the Local Councillors thought the way forward was to restrict new build home sales to local residents and not to buyers intent on using them for second homes. It was also deemed to be in the interests of the local micro-economy to try to reduce the overreliance of it on tourism.

You can see the logic.

But three years’ on, the average property price has grown 3 per cent year on year from the £323,000 in 2016 when the local referendum took place about introducing this policy. That is c. 14 X the median earnings in Cornwall. So the policy may have abated the price growth – although many micro property markets have experienced subdued price growth across the UK during this period – but buyers have turned their attention to investing in second hand homes. It’s a bit like blocking off one part of a stream, only for it to find a different route, or way round the obstruction.

The seaside town’s rule that new homes are kept for primary residences has been criticised for hampering supply. New builds account for 5% of house sales and the ruling has deterred developers from building new homes.

How to tackle property demand and supply issues?

There are initiatives in run down areas and uninhabitable spots, of selling houses for a nominal sum of say £1 a house, on condition a minimum amount is spent on renovation and making it liveable.

Then there’s help to get a foot on the property ladder through Housing Association shared ownership, Help to Buy and there are tax disincentives to buying second properties in the form of a stamp duty surcharge.

But these are not necessarily all that relevant to St Ives (apart from the tax), given it is an idyllic seaside town, hardly run down, but less frequented in Winter and with limited career prospects beyond tourism. And this new-build policy does not necessarily address short-term lettings, which must irk many locals too.

One view is that it is a tourist business and so the town should be run more along business lines. Which partly means welcoming investment and the spending power of tourists during the Summer months and managing the trough season better. In today’s world of remote working perhaps investment in infrastructure, including broadband and other incentives for businesses would be a more worthwhile effort to create a better year-round future so that it isn’t always bigger cities that attract workers and year-round home owning.

Inspired by an FT article September 2019

If you would like to discuss your situation or find out about suburban and city investment opportunities then please get in contact.

We work with time-strapped Ex pats and Entrepreneurs who don’t have the time, local presence or have gaps in their know-how to build property portfolios in the right way for them. In essence, to buy better in less time.

Our clients get regular updates on hot deals and the latest changes in the property market. Want these? Go here

Tags: City Investing, Coastal Property, prices, UK

Why would Expats consider PIXI properties?

Well by this I don’t mean tiny dwarf-like properties, I mean ones that meet 4 core PIXI acronym criteria. Continue reading Why would Expats consider PIXI properties?

Tags: Buy to let, HS2, investment property, Risk & Reward, UK