Wednesday, July 19, 2017

“A Summer Breeze… for Burglars!”





When the weather is good, there’s no beating the great British summer. It’s the time for enjoying barbecues, outdoor entertaining, children splashing in the paddling pool and balmy evenings.  

However, because there is never any guarantee of really hot weather, British households tend not to have air conditioning, unlike some other countries where sweltering summers are generally guaranteed. So when things hot up, we tend to revert to our manual air-conditioning system – we open the windows!

The problem is that we often forget to close them again, or we deliberately leave them open night and day, providing a perfect opportunity for burglars and opportunists to pounce. Indeed, insurance companies report a 21% increase in claims following an unforced entry during the summer months. Small easily-snatched items such as handbags, car keys, mobile phones and jewellery are among the most popular thefts; lucrative for the thief and really, really, annoying to lose. Burglars can be in and out of a property in seconds, often whilst unsuspecting occupants are in the garden or watching television in another room.

To add insult to injury, insurance companies will not usually honour a claim for such theft unless the homeowner has “taken reasonable steps to prevent loss or damage”. An open window is an invitation to a burglar and hardly demonstrates the reasonable care demanded by insurers.

There are obvious yet often overlooked ways of avoiding the anxiety of a summer theft, such as:
·       Never leave front doors or windows open or unlocked when you are at the back of your property or in the garden.
·       Never leave valuables on windowsills.
·       Use restrictors on windows so they can only be opened part-way.
·       Regularly review your home insurance needs.
·       Support your local Neighbourhood Watch scheme.


Buying, selling, renting or staying put, may we wish you a happy and secure summer!

Tuesday, July 18, 2017

South Ockendon Buy-To-Let Predictions up to 2037

On several occasions over the last few months, in my South Ockendon Property Blog, I predicted that the rate of rental inflation (i.e. how much rents are rising by) had eased over the last year. At the same time I felt that in some parts of the UK rents had actually dropped for the first time in over eight years. Recent research backs up this prediction.

Rents in South Ockendon for new tenancies only grew by 0.7% in the last 12 months (i.e. not existing tenants experiencing rental increases from their existing landlord). When we compare that current rate with the historical rental inflation in South Ockendon, an interesting pattern emerges ..

·       2016 - Rental Inflation in South Ockendon was 4.3%
·       2015 - Rental Inflation in South Ockendon was 6.4%
·       2014 - Rental Inflation in South Ockendon was 0.7%

The reason behind this change depends on which side of the demand/supply equation you are looking from. On the demand side (from the tenants point of view) there is the uncertainty of Brexit and the fact that salaries are not keeping up with inflation for the first time in three years. Critically this means tenants have less disposable income to pay their rent. As an aside, it is interesting to note that nationally, rent accounts for 29% of a tenant’s take home pay (Denton House).

On the supply side of the equation (landlords point of view) Brexit also creates uncertainty. However, the biggest issue was a massive upsurge of new rental properties coming on to the market in late 2016, caused by George Osborne’s new 3% stamp duty tax for landlords in the first part of 2016. This meant a lot of new rental properties were ‘dropped’ on to the rental market all at the same time. The greater choice of rental properties for tenants curtailed rental growth/inflation. A slight softening of South Ockendon property prices has compounded this.  Figures from The Bank of England suggested that first time buyers rose over the last 12 months as some were more inclined to buy instead of rent. Together, these factors played a part in the ongoing moderation of rental growth.

The lead up to the General Election in May didn’t help: after all people don’t like doubt and uncertainty. So now that we have a mandate for going forward over the next 5 years hopefully that has removed any stumbling blocks stopping tenants making the decision to move home.

Whether it be ‘hard’ or ‘soft’ Brexit negotiations (and with the Election result the Tory’s might have to be ‘softer’ on those negotiations) the simple fact is, we aren’t building enough properties for us to live in. Both in South Ockendon, the East and the wider UK, long-term population trends imply that rents will soon be growing faster than inflation again. Look at the projections by the Office of National Statistics.



Population Estimates for Thurrock Borough Council over the next 20 years
2016 (actual)
2021
2026
2031
2036
166,894
176,402
185,638
194,235
202,664

Tenants will still require a vibrant and growing rental sector to deliver them housing options in a timely manner. As the population grows in South Ockendon, and wider afield, any restriction to the supply of rental properties (brought about by poor returns for landlords) cannot be in the long-term best interest of tenants. Simply put rents must go up!

The fact is that I see this as a short-term blip and rents will continue to grow in the coming years. With rents only accounting for 29% of a tenants’ disposable income, the ability for most tenants to absorb a rent increase does exist.


Saturday, July 15, 2017

“What is a Covenant?”



A covenant is a term you might hear when discussing a property during the conveyancing process. Covenants are a form of legal obligation that is binding on the owner of a property and passes from owner to owner whenever the property is sold. They form part of the deeds of a property and are recorded at HM Land Registry.  

A covenant is usually established by the builder or original owner of a property and seeks to ensure that certain things happen or do not happen. For example, a covenant might be an obligation to paint the house regularly. A restrictive covenant would prevent you from painting it purple! These types of covenant might exist in for example an exclusive development of homes where the developer and indeed other residents wish to maintain a certain standard of the whole street in perpetuity.

Some covenants are more severe in their restrictions. For example, you may be prevented from parking a caravan or trade vehicle on your drive or not “trading” from your property, which could be difficult to define in practice. Flats often have a covenant stating that you must not create noise or in other ways be a nuisance to your neighbours, any of whom could file an injunction against you through the courts if you are in breach.

Of course, many of the covenants relating to older properties are unlikely to be problematic, unless of course you wish to graze sheep, display charms on a Sunday, or keep a horse inside your house! There have been examples where you are not permitted to change the name of a house or grow a certain type of plant in the garden but these are rare.


Your solicitor will advise if any covenants affecting a property you are buying is especially onerous but as with all these issues they need to be seen in a realistic context and it’s up to you to make the decision as to whether any covenant is acceptable or not, as it will be almost impossible to remove.  

Wednesday, July 12, 2017

Council House Waiting List in South Ockendon Drops by 39.5% in last 12 years


Should you buy or rent a house? Buying your own home can be expensive but could save you money over the years. Renting a property through a letting agent or private landlord offers less autonomy to live by your own rules, with more flexibility if you need to move.

Yet, there is third way that many people seem to forget, yet it plays an important role in the housing of South Ockendon people. Collectively known as social housing, it is affordable housing, which is let by either Thurrock Borough Council or a housing association to those considered to be in specific need, at rents below those characteristic in the private rental market.

In South Ockendon, there are 2,501 social housing households, which represent 31.62% of all the households in South Ockendon. There are a further 5,724 families in the Thurrock Borough Council area on their waiting list, which is similar to the figures in the late 1990’s. The numbers peaked in 2004, when it stood at 9,469 families, so today’s numbers represent a drop of 39.5%.

Nevertheless, this doesn't necessarily mean that more families are being supplied with their own council house or housing association property. Six years ago, Westminster gave local authorities the authority to limit entitlement for social housing, quite conspicuously dismissing those that did not have an association or link to the locality.

Interestingly, the rents in the social rented segment have also been growing at a faster rate than they have for private tenants. In the Thurrock Borough Council area, the average rent in 1998 for a council house/housing association property was £201.28 a month, whilst today its £379.38, a rise of 88% in 19 years.

When comparing social housing rents against private rents, the stats don’t go back to the late 1990’s for private renting, so to ensure we compare like for like, we can only go back to 2005. Over the last 12 years, private rents have increased nationally by a net figure of 19.7%, whilst rents for social housing have increased by 59.1%.

So, what does this all mean for the homeowners, landlords and tenants of South Ockendon?

Rents in the private rental sector in South Ockendon will increase sharply during the next five years. Even though the council house waiting list has decreased, the number of new council and housing association properties being built is at a 70 year low. The government crusade against buy-to-let landlords together with the increased taxation and the banning of tenant fees to agents will restrict the supply of private rental property, which in turn using simple supply and demand economics, will mean private rents will rise – making buy to let investment a good choice of investment again (irrespective of the increased fees and taxation laid at the door of landlords).  It will also mean property values will remain strong and stable as the number of people moving to a new house (and selling their old property) will continue to remain restricted and hence, due to lack of choice and supply, buyers will have to pay decent money for any property they wish to buy.


Interesting times ahead for the South Ockendon Property Market!

Regards

Paul

Friday, July 7, 2017

“Now We Have a Baby”




Becoming a family is probably the greatest motivator for a move there is, and the choice of home is usually a fairly accurate reflection of the significant social change that people experience at this time.

The property needs of a single person or couple are more likely to be motivated by their social standing, entertainment patterns, convenience or investment potential. However, once a couple becomes a family, new practical, financial and emotional influences substantially shift this focus. Every aspect of one’s life are affected by parenthood and this is fully reflected in the choice of home.

The most important issues now are safety and new financial responsibilities. The open tread staircase, low-walled balcony or garden pond now have to be avoided as safety takes over from personal preferences. But also, don’t underestimate the value of time. You’ll want to spend as much time as possible with your new baby, so think carefully before buying a property which will require your personal involvement in fixing it up. Properties needing work will usually involve dust, chemicals, splinters and all sorts of other dangers. Hoping your baby will sleep through the noise of an angle-grinder or builder’s radio is also somewhat unrealistic and can only add to the additional stresses which come with parenthood.

As your baby becomes a toddler, other factors kick in and layout becomes an issue because of your need to keep an eye on your child at all times. Electrical points need to be capped, sharp edges avoided, and cupboards child-proofed. A secure outside area also becomes important if your child is going to explore their world safely.


And do make sure that the park you want to live near for strolling with a pram has a climbing frame and slide and goalposts! Children seem to grow faster than we want to move! 

Regards


Paul

PS hope you all have a great weekend!!



Wednesday, July 5, 2017

1 in 6 South Ockendon Properties are Leasehold



There are 23.36 million properties in England and Wales with 64% being owner occupied and 36% being rented either from a private landlord, local authority or housing association.

Over nine out of ten of those English and Welsh owner-occupied properties are a whole house or bungalow. Now, most people would assume they would be freehold - however, of those renting nearly half of rental properties, 44% to be precise, lived in other leasehold apartments and flats.

It might be wise to quickly explain the difference between freehold and leasehold. When someone owns the freehold of a property they own it outright, including the land it is built on, whilst with a leasehold property the leaseholder owns the property for the length of their lease agreement. 

Leaseholders must pay the person who owns land (the freeholder) ground rent and other fees. When the leasehold ends, ownership returns to the freeholder although the leaseholder can extend the lease or they can buy the freeholder out, but there are rules and regulations with regards doing that.

Therefore, it would be safe to assume that houses are freehold and flats are leasehold .. wouldn’t it? Not necessarily! Most houses are freehold but some might be leasehold - usually through shared-ownership schemes – but more and more new homes builders are selling houses on a leasehold as well. The protection of the law afforded to leaseholders who own a flat is massive, but sadly lacking to leasehold houses sold privately.

Looking specifically at the figures for South Ockendon, at the last count in RM15 there were 11,711 properties. Since 1995, 10,533 properties in RM15 have changed hands and have been sold. Looking further at those 10,533 transactions in RM15 since 1995, using data from Land Registry and solicitors practice My-Home-Move, 15.63% have been leasehold (higher than the national average of 15%).

However, I am concerned about a few new homes builders selling new houses (not flats - houses) as leasehold. There has been a growing (yet small) trend for new-build houses to be sold as leasehold in recent years. While not all house builders use this model, those that do maintain it helps make developments financially viable.

The issue comes when builders sell the freehold separately to an investment company without informing the lease holder  – which they are legally allowed to do without telling the leaseholder. In England and Wales, the "right of first refusal" to buy the freehold is written in law to leaseholders of flats i.e. the freeholder must offer it to the leaseholders of all the flats of the building first), but not leaseholders of houses.


.. and this is the point I am trying to get across. If you are buying a new home and it’s a house (i.e. not a flat) – please check very carefully indeed whether its freehold or leasehold. If it is a leasehold, whilst you do have rights, they are not as strong as for those people buying a leasehold flat. I appreciate I am only talking about a very small percentage of the property market, but potentially this could end up costing thousands of pounds to those affected.


Regards

Paul

Thursday, June 29, 2017

Market Comment – June 2017


Anyone with an interest in the property market generally understands the influence of supply and demand on house prices. Just like any other “commodity”, if everybody wants something that is in generally short supply, the price tends to rise. In the property sector, the media often describes a rising market good and a falling market as bad.

Indeed, as estate agents, our job is to sell our clients’ property for as much as the market will tolerate and, unlike online estate agency alternatives, we are paid in direct proportion to the price we are able to negotiate. The problem is, prices have risen to such an extent over time that the average house is now well out of reach for the average man (sorry, person) in the street. So maybe, socially speaking, rising prices should be seen as a bad thing (although frankly we know which side our bread is buttered).

However, the supply/demand equilibrium appears to be about to change. According to Rightmove, the number of sales agreed at this time of year is the second highest for ten years, only slightly lower than the high of May 2014. So supply is clearly up and, during this time of relatively stable demand, sure enough there appears to be a corresponding dip about to happen in prices, as Rightmove goes on to report that price of property coming to market has dropped by 0.4% this month (the first fall in June since 2009 at the height of the credit crunch) and the first fall this year.

Fortunately these observations could be regarded as fine-tuning and there are no major corrections about to happen. Nevertheless, it may be that the current levels of political turmoil could possibly persuade marginally more people to sell and fewer to buy, in which case the edge could come off property values – but at least this might just free things up to the extent that anyone sitting on the fence as to whether or not to sell might feel more confident that they will indeed be able to find somewhere else suitable to buy.


Please feel free to contact one of our local property experts on 01708 851999 if you’d like to see where your own property sits in the market. You might be pleasantly surprised! 

Regards

Paul

Wednesday, June 28, 2017

South Ockendon First Time Buyers Mortgages taking 38.6% of their Wages

I received a very interesting letter the other day from a South Ockendon resident. He declared he was a South Ockendon homeowner, retired and mortgage free. He stated how unaffordable South Ockendon’s rising property prices were and that he worried how the younger generation of South Ockendon could ever afford to buy? He went on to ask if it was right for landlords to make money on the inability of others to buy property and if, by buying a buy to let property, South Ockendon landlords are denying the younger generation the ability to in fact buy their own home.

Whilst doing my research for my many blog posts on the South Ockendon Property Market, I know that a third of 25 to 30 year olds still live at home. It’s no wonder people are kicking out against buy to let landlords; as they are the greedy bad people who are cashing in on a social woe. In fact, most people believe the high increases in South Ockendon’s (and the rest of the UK’s) house prices are the very reason owning a home is outside the grasp of these younger would-be property owners.


However, the numbers tell a different story. Looking of the age of first time buyers since 1990, the statistics could be seen to pour cold water on the idea that younger people are being priced out of the housing market. In 1990, when data was first published, the average age of a first time buyer was 33, today it’s 31.


Nevertheless, the average age doesn't tell the whole story. In the early 1990’s, 26.7% of first-time buyers were under 25, while in the last five years just 14.9% were. In the early 1990’s, four out of ten first time buyers were 25 to 34 years of age and now its six out of ten first time buyers.


Although, there are also indications of how un-affordable housing is, the house price-to-earnings ratio has almost doubled for first-time buyers in the past 30 years. In 1983, the average South Ockendon home cost a first-time buyer (or buyers in the case of joint mortgages) the equivalent of 3.0 times their total annual earnings, whilst today, that has escalated to 6.1 times their income.

Again, those figures don’t tell the whole story. Back in 1983, the mortgage payments as percentage of mean take home pay for a South Ockendon first time buyer was 31.2%. In 1989, that had risen to 78.6%. Today, it’s 38.6% … and no that’s not a typo .. 38.6% is the correct figure.

So, to answer the gentleman’s questions about the younger generation of South Ockendon being able to afford to buy and if it was right for landlords to make money on the inability of others to buy property? It isn’t all to do with affordability as the numbers show.

And what of the landlords? Some say the government should sort the housing problem out themselves, but according to my calculations, £18bn a year would need to be spent for the next 20 or so years to meet current demand for households. That would be the equivalent of raising income tax by 4p in the Pound. I don’t think UK tax payers would swallow that.

So, if the Government haven’t got the money… who else will house these people? Private Sector Landlords and thankfully they have taken up the slack over the last 15 years.


Some say there is a tendency to equate property ownership with national prosperity, but this isn’t necessarily the case. The youngsters of South Ockendon are buying houses, but buying later in life. Also, many South Ockendon youngsters are actively choosing to rent for the long term, as it gives them flexibility – something our 21st Century society craves more than ever.  

Regards

Paul

Sunday, June 25, 2017

Rental Yield 5.6% South Ockendon - Flat


Good morning readers! Just browsing through Roightmove this morning and came across this well presented one bedroom ground floor flat with its own garden to the rear. The property is being marketed via Edward Clark Estates at a market price of £160.000.




From the Agents photographs and description, the property seems to be in really good order and would make an ideal rental investment. 

So let's take a look at the figures. Assuming that you need:

1. Pay the full market price for the property.

2. Taking into account that properties of this type, location and calibre rent out for £750 per calendar month.

The rental yield on this property would be 5.6%. I think that you would agree this is quite a healthy return on your investment!

NB Please do beware that this is a leasehold property and management fees and ground rent will apply. 

Regards

Paul

PS Enjoy your Sunday whatever you are doing. I'm just on my way out to take Zep for his morning walk






Saturday, June 24, 2017



“Phew, what a scorcher” as the tabloids would say. The current hot weather is a mixed blessing; if you’re on holiday, then the warm sunny days certainly bring out the best of the British coast and countryside. But if you’re working either outside or in a non-air-conditioned office then life can be very uncomfortable.

But what of homebuyers? Does the hot weather bring them out, or does the thought of trudging round home after home in the heat deter them? We’ve found that there are real upsides to a hot summer which can work to your advantage if you are serious about selling.

For example, some other sellers (who are effectively your competitors in the market) may decide to withdraw their property for the summer. They might assume that buyers will either be too hot and bothered, or more concerned about their holidays than looking at property. Alternatively the sellers themselves may just want to veg out, with paddling pools and other summer paraphernalia littering the garden. Buyers looking round can be seen as an invasion of privacy (especially if topless sunbathing is involved).

You can take advantage of these flawed arguments if you are keen to sell. Firstly, serious buyers remain serious despite holidays and hot weather. These are buyers whose move is likely to have been prompted by real reasons such as a job move, marriage, divorce, growing family, debt etc. With fewer speculative buyers around you know that every viewing is likely to be from a serious buyer. Those people who remove their house from the market for the summer miss these critical purchasers and the corresponding decline in the supply of competing properties for sale can enhance the saleability of your own - and even its price.   

Secondly, the buyer of a property is very likely to reflect the social life stage of the seller when they themselves bought the house. So a family house will sell to a family. So don’t feel the paddling pool, barbecue, water pistols etc detract from the sale – they can enhance it, because they connect with the most likely buyer. A house is a home after all and you are selling a lifestyle, so why not use this to your advantage.


Finally here’s our HOT TIP: Offering prospective buyers a cold drink during viewings on a hot day can work wonders! 

Wednesday, June 21, 2017

“Don’t Be Fooled by Multi Branches”



Many of my clients tell me that, when considering which estate agent to appoint, they were tempted to use one of the larger regional firms with several branches. They were told that more branches equals more buyers, which on the surface sounds appealing.

But don’t be fooled. The “more-buyers/faster sale” claim is standard practice among multi-branch estate agencies. However, the reality can be quite different, with vendors being given false hopes at best, and a lack of accountability at worst.

Firstly, most sales negotiators are targeted on their sales, and whilst their managers may encourage them to “share” their buyers with their sister branches, many would rather swim in a pool of piranhas than let one of their buyers go to another agent – even within the company!

Secondly, if a buyer registers in a particular branch, it suggests they want to buy in the area covered by that branch – not in the area covered by another branch. Being offered “out of scope” locations can annoy purchasers who feel they are being “palmed off”. If they are indeed looking in another area, then the efficiency of the internet will certainly ensure that they are also registered there as well.

Estate Agency is an intensely local business and I am grateful to the many local homeowners who have entrusted their move to M&P Estates Ltd over the past 17 years. I believe it is not only my depth knowledge of the Thurrock area, its people and its property, my straight-talking sincere advice or hard work that matters most to them, but also the fact that in employing me to sell their home, they receive  my personal accountability. At a time when most agents draw from the same pool of buyers, it is accountability in agency that makes the difference. Accountability affects communication, commitment and results – the three key components of a successful relationship with your chosen local estate agent.


Why not call me personally on 01708 851999 find out how I can help you maximise your own sale – without any unfounded claims! 

Regards

Paul

Monday, June 19, 2017

“Should I make an Offer?”


As a buyer you are in a powerful position, both in terms of the effect your buying decision will have on your own life, and on that of the person from whom you buy.  

If a property were some form of commodity like petrol or milk, then you would simply buy the cheapest stock available. However, buying a home is much less mercenary, and emotions run high.     

Over the years, homebuyers have become used to the idea of making a “starting offer” below the asking price, but it might be worth considering a few aspects of the implications of making a low offer. 

Firstly what does a low offer say about you to the vendor? That you don’t have the money and that any subsequent increase might stretch you beyond your ability to complete the purchase? Does it suggest you don’t really like their home, risking offence? A low offer can often start off the relationship with the vendor on the wrong foot.

And what if your low offer is accepted? Will the vendors experience regret and continue to market the property hoping to find a higher price with someone else? The chances of such a buyer being found are high as people usually want a property that someone else wants. We receive more interest about properties which are “under offer” than we do about those for sale!   

Ultimately it’s about commitment. An offer at, close to, a realistic asking price tells the vendor you are committed to the property. In return the vendor is likely to demonstrate a level of commitment to you that will result in a successful purchase.

Ultimately, you are buying a home; is it worth losing your dream property for the sake of getting (and possibly losing) some sort of “deal”. Most properties sell for about the “right” price – all you have to be is the “right” buyer! 

Regards

Paul

PS If you require any advice or assistance in buying or selling a property then why not give me a call on 01708 851999 or email me at paul@mpestates.co.uk



Thursday, June 15, 2017

946 Thurrock Landlords – Is This a Legal Tax Loop-Hole?


In November 2015, George Osborne disclosed plans to restrain the buy-to-let (BTL) market, implying its growing attractiveness was leaving aspiring first time buyers contesting with landlords for the restricted number of properties on the market.  One of things he brought in was that tax relief on BTL mortgages would be capped, starting in April 2017.  Before April 2017, a private landlord could claim tax relief from their interest on their BTL mortgage at the rate they paid income tax – (i.e. 20% basic /40% higher rate and 45% additional rate).

So, for example, let’s say we have a Thurrock landlord, a high rate tax payer who has a BTL investment where the rent is £900 a month and the mortgage is £600 per month.  In the tax year just gone (16/17), assuming no other costs or allowable items …

  • ·        Annual rental income £10,800.
  •        Taxable rental income would be £3600 after tax relief from mortgage relief
  •         Meaning they would pay £1,440 in income tax on the rental income


And assuming no other changes ... the landlord would have income tax liability’s (at the time of writing May 2017) in the tax years of ...

  •         (17/18) £1,800
  •      (18/19) £2,160
  •      (19/20) £2,520
  •       (20/21) £2,880


Landlords who are higher rate tax payers are going to have be a lot smarter with their BTL investments and ensure they are maximising their rental properties full rental capability.  However, there is another option for landlords.

The Thurrock landlords who own the 946 Rental properties
in the borough could set up a Limited Company and sell their
property personally to that Limited Company

In fact, looking at the Numbers from Companies House – many landlords are doing this.  In the UK, there are 93,262 Buy To Let Limited Companies, and since the announcement in November 2015 – the numbers have seen a massive rise.

  •          Q2 2015 / Q3 2015 – 4,193 Buy to Let Limited Companies Set Up
  •         Q4 2015 / Q1 2016 – 5,403 Buy to Let Limited Companies Set Up
  •          Q2 2016 / Q3 2016 – 3,007 Buy to Let Limited Companies Set Up
  •       Q4 2016 / Q1 2017 – 7,149 Buy to Let Limited Companies Set Up


So, by selling their buy to let investments to their own limited company, owned 100% by them, these landlords could then offset the costs of running their BTL’s as an 'allowable expense' - effectively writing off the cost of 100% of their mortgage outgoings, wear and tear and upkeep, letting agent’s fees etc.  

I am undeniably seeing more Thurrock landlords approach me for my thoughts on setting up a BTL limited company, so should you make the change to a limited company? 


In fact, I have done some extensive research with companies house in the 15 months (1st January 2016 to 31st March 2017 and 81 Buy To Let Limited Companies have been set up in the RM postcode alone).

Well if you are looking to hold your BTL investments for a long time it could be very favourable to take the short-term pain of putting your BTL’s in a limited company for a long-term gain.  You see, there are huge tax advantages to swapping property ownership into a limited company but there are some big costs that go with the privilege.

As the law sees the new Limited Company as a separate entity to yourself, you are legally selling your BTL property to your Limited Company, just like you would be selling it on the open market. Your Limited company would have to pay Stamp Duty on the purchase and if you (as an individual) made a profit from the original purchase price, there could be a capital gains tax liability of 18% to 28%.  The mortgage might need to be redeemed and renegotiated (with appropriate exit charges).

On a more positive note, what I have seen though by incorporating (setting up the Limited Company) is landlords can roll up all their little buy to let mortgages into one big loan, often meaning they obtain a lower interest rate and the ability to advance new purchase capital.  Finally, if the tax liability is too high to swap to a limited company, some savvy buy to let investors are leaving their existing portfolios in their personal name whilst purchasing any new investment through a limited company?  Just an idea (not advice!).

It’s vital that landlords get the very best guidance and information from tax consultants with the right qualifications, experience and insurance.  Whatever you do, always get the opinions from these tax consultants in writing and you shouldn't hurry into making any hasty decisions.  The modifications to BTL tax relief are being progressively eased in over the next three years so there is no need to be unnerved and rush into any decisions before finding out the specifics as they relate precisely to your personal situation, because with decent tax planning (from a tax consultant) and good rental / BTL portfolio management (which I can help you with) ... whatever you do - let’s keep you the right side of the line!

Regards

Paul

Monday, June 12, 2017

“The Right People”



Despite the fact that many people regard estate agents as more or less the same, there are in fact numerous selection criteria on which to judge the good from the bad, and the exciting from the mildly indifferent.    

For example, there are many services and innovations which can make a difference to how effectively your property is marketed, and how the subsequent sale is handled. These could be the use of 3D floorplans, subscription to several property portals, 360 degree virtual tours on a particularly impressive website, multi-media window displays, on-line progress tracking, chain management and interactive “for sale” boards to name but a few. 

However, despite the advances in technology we still believe that it is the people that make or break a service-led industry such as our own. 

Selling your home is an intensely personal and emotive experience, and unless a sale is handled with sensitivity, courtesy, consideration and care, then such add-ons are wasted.

We believe that excellence in recruitment is as importance as achieving high prices or securing fast moves for our clients. Our staff are a reflection of our core values, based on a transparent service from dedicated property professionals who exhibit the highest levels of personal integrity.

We believe that regular and meaningful communication is key, delivered by pleasant and personable people who are thoroughly on your side throughout your move. Of course, they may not always tell you what you want to hear – but then there are plenty of estate agents who will – it’s your call! We believe sincerity is worth more than flattery!  


Why not give one of our friendly property marketing experts a buzz today on 01708 851999 and find out what really makes the difference. You might be pleasantly surprised.

Friday, June 9, 2017

ELECTION SPECIAL MARKET COMMENT


The unexpected hung parliament might appear to have once again cast a shadow over the housing market. Or maybe not!

We know that the stability and strength proposed by Theresa May might not be delivered after all. But is that really so bad for a market already in danger of overheating? Certainly the lack of available properties for sale has helped to escalate prices to unsustainable levels in some areas. 

It is well known that job security, employment levels and interest rates play arguably the greatest roles in determining the shape of the property market. Yet these were seldom presented burning issues by any party during the election. An increasingly uncertain Brexit does of course suggest an increasingly uncertain future. However, in the twelve months since the Brexit referendum the market has actually risen by a respectable 4.1% (source HMLR) so perhaps its ill-effects were overestimated.

Indeed, even a hung parliament is not necessarily bad news; during the coalition years of 2010-2015 house prices rose by an average of over 3% per annum.

There is a tendency for the media to exaggerate and “spin” all kinds of political turmoil for a cheap headline, especially with something as close to our hearts as property. Yet possibly the most accurate indicator of the British response to such things can best be summed up in the wartime catchphrase and 21st century tea-towel slogan “Keep Calm and Carry On”.

A house move is usually prompted by a genuine change in lifestyle, such as a growing family, a job move, death, divorce, downsizing etc. Most of these will happen whichever political party is in power, and will continue to dominate our motivations long after even Brexit has been forgotten.

With no pressure on the housing market other than a lack of new homes being built to satisfy the continued demand (and both the major parties have similar new-build policies) our advice to buyer and seller alike would be; if a move would suit you, there is no compelling reason why you shouldn’t do it. And if you are thinking of selling, it might be an idea to act straight away and take advantage of the pent up demand caused by the flippin’ election!

Regards

Paul

PS. Have a good weekend!

   

South Ockendon Flats Out Perform Property Market Average by 6%


According to the Land Registry's latest House Price Index for South Ockendon and the surrounding locality, the value of apartments/flats are rising at a faster rate than terraced/town houses, semi-detached properties and even detached property.

Values of apartments in South Ockendon have increased by 13.43% over the past year, which is proportionally 6% more than the South Ockendon average rise of 12.67%. The last time flats/apartments in South Ockendon out performed all the other types of property by this much was back in the winter of 2004. For comparison, the other property types performed as follows ..
     
  •   Detached homes rose by 12.87%
  •   Semi-detached homes rose by 12.62%
  •   Terraced/Town-Houses rose by 12.11%


This moderately increasing rate of property value growth is opportune – but no one should confuse it with a strong and vigorous healthy South Ockendon property market. Instead, it is somewhat an indicator of the long-lasting lack of property on the market. In fact, I have spoken about the lack of homes for sale in South Ockendon on a number of occasions in my South Ockendon Property Blog and whilst it isn’t as bad as it was 12 months ago – choice is quite limited for buyers.

The average property value in South Ockendon
now stands at £281,700.

When split down into property types ..

  •          South Ockendon Apartments at £161,600
  •         South Ockendon Detached at £472,200
  •         South Ockendon Semi-Detached at £304,700
  •         South Ockendon Terraced/Town-House at £264,600

So why have South Ockendon apartments performed so well, and is it just a South Ockendon thing? When I scrutinised the figures for the rest of the UK, it appears that apartments are pacemakers in the clear majority of the country. Of the 379 local authority areas in the UK, the value of apartments is rising faster than detached, semi-detached and terraced houses in 320 of them.

So, should South Ockendon apartment owners be getting out the Champagne? Well, I would keep it on ice as the Land Registry figures are notorious for short term fluctuations. It’s hard to have faith in the fact that South Ockendon house values rose rapidly last month given that, in the last six months, the Land Registry has frequently made downward revisions to their first published House Price Index figures.

Thankfully, the bigger picture from the Council of Mortgage Lenders (CML) stated that home buying activity last month was up 2% over the same month in 2016 – not bad as we have had the Autumn, Winter and now Spring since Brexit. The CML stated first time buyer’s levels of affordability was being squeezed and that the average amount borrowed by those first-time buyers dropped slightly last month, but the overall amount borrowed (by all buyers) was an impressive 12% higher than the same month in 2016.

So, what next for the South Ockendon Property market? I believe the uplift in the values of apartments is a short-term blip. The real issue is with the way wage growth might not keep up with inflation as the effects of 2016 exchange rate sucks in inflation (meaning real wage growth stagnates). This will mean buyer demand growth will be curtailed and with property values already so full, I believe a renewed hastening in house price growth is unlikely.

I believe we are starting to return to the housing market we saw in the mid 1990’s, Steady demand, steady supply – nothing silly when it comes to house price growth. Therefore, I believe, with what is happening around us – this isn’t a bad thing at all. HMS South Ockendon Property Market…. “Nice and steady as she goes”, says the Captain