A Golden Opportunity?

Over the last 12 months we have seen unprecedented changes in the property market, in terms of legislation and tax changes. Such that many investors are wondering if it is still such a good idea to invest in property.

The reality is that the property market is constantly changing, and as professional investors know we need to learn to adapt to and make the most of the changes.

I believe it is a golden opportunity which is open to us for just the next 12 months.

I think we will see a lot of amateur and accidental investors sell off their portfolios because of the new proposed tax changes for property investors

Surprisingly some investors are not aware that they are sitting on a property time bomb

Koru ConnectionsSo how we can adapt to the ever changing property market?

  • We still live on an island
  • There is not enough accommodation
  • What will happen regarding immigration?
  • The Government is not going to kick people out of the UK
  • Population is growing even without immigration

Interest rates have been reduced to a record low so the cost of borrowing will fall; the expectation is that rates will remain low while the economy recovers. This is good news for existing and new property investors but not good news for savers!

We are also seeing competition between mortgage lenders which can only be good news if you are buying a property.

Why I believe the next 12 months represents a once in a lifetime, Golden Opportunity

  • Take advantage of the uncertainty
  • Buy whilst others are waiting
  • Make sure it stacks up and hold for the long term
  • Be careful of flipping ( buying , refurbishing and selling on )in this market
  • Educate yourself and take action now
  • The next 12 months could be the best opportunity for you to build your property portfolio

Sally & Kevin Cope – Koru Connections – 0845 0569513 – https://www.facebook.com/koruconnections/

I think I’ll buy it myself!

Many times over the years, I’ve been to value a property that I really liked and having shown the details I’ve produced to the vendor they’ve said ‘You’ve made it sound so good that I think I’ll buy it myself!”

This is not that surprising, and not because of my ability to describe an airing cupboard, it’s due to the fact that most people have at some stage in the past made a choice to buy the property they currently live in so are obviously going to have some positive thoughts about it.  There are of course exceptions to the rule such as those who have inherited a property or moved in with a new partner.

lovemyhouseWhat all sellers have to remember is that not every potential buyer is going to be wanting to buy their property for the same reason as you did all those years ago, you probably don’t live in the property now as you did at the start either.  It’s all well and good focusing on what you like about the property, why you think it’s good value and what you ‘need’ to buy your next property, that will have no bearing whatsoever on what someone else will be prepared to pay for it.

The key thing is to identify the most likely purchasers for your type of property and to dress your property up accordingly to appeal to them.  If you have a 3 bed semi in a popular location that’s ideal for a family, there’s little point in presenting your 2nd bedroom as a gym or a library. Having a garden that would win a prize at the Chelsea Flower Show is all very nice but if all the garden is going to be used for is to play football in it is unlikely to add much value.

There are rare occasions when it’s not immediately obvious who we need to attract with the home staging, on those occasions we will always advise to appeal to the masses by making things as neutral as possible enabling people to easily see how they could make the property work for them.

Legislation, Regulation & Aggravation

We’re very close to launching our new website and I’ve been busy writing all the copy from scratch which is quite a mammoth task. One section I’ve just started is about all the rules and regulations for landlords to abide by and having written the list it even surprised me how many different pieces of legislation there are that we have to adhere to.

We have to work hard to keep up to date with all the changes that could cause a problem for us as agents and it got me thinking what chance does an individual landlord have of knowing exactly what to do to protect themselves?

Rules & RegulationsRecently I had a call from a landlord arguing with me about the need to protect a tenant’s deposit within one of the government approved schemes, this is legislation that changed back in 2007 and could very easily result in the landlord not being able to issue notice to the tenant and/or being fined up to 3 times the amount of the deposit paid.

The legionella risk assessment that is now an obligation for all businesses regardless of whether you have a water tank or not also applies to landlords.  This was disputed recently by a landlord who said that other agents had told him it wasn’t necessary, the confusion appears to stem from the fact that the Health & Safety Executive have stated that testing for legionella is not an automatic requirement, which is true. I am not too bothered what other agents advise their own clients but it is annoying when it is incorrect and causes us to have to spend more time confirming to our landlords that it is necessary to assess the risk adequately.

When I think about landlords with a family, managing one or two properties alongside their full time job or business, it amazes me how many people want to spend their free time doing things such as viewings, decorating or dealing with problems when they could be paying an agent to take all the hassle away from them.

When not to call the Fire Brigade

I had a call on Saturday afternoon from our out of hours call answering service informing me that one of our tenants boilers was on fire.  I was quite shocked to hear this and obviously asked them to put the call straight through to me, it turns out that it wasn’t actually on fire but the boiler cover did have some scorch marks on it.  I was pleased that they had decided to call me on my mobile to ask if I wanted to take the call as it really could have been an emergency.

fire-engineI discovered that the tenant had an electric shower and an immersion heater and was therefore able to cope without the boiler for a couple of days. I asked him to turn the boiler off until we could get a gas engineer out after the weekend which he was very happy to do.  It would have been very easy to call out a heating engineer over the weekend but it just wasn’t necessary on this occasion.  The landlord thanked me for not incurring him in extra cost, he’ll still have the cost of someone going out to look at it but not at a premium rate.  Our general rule of thumb on deciding what action to take, is what I would do if it was at my own house and common sense usually rules.  Tenants don’t always appreciate this unfortunately as they sometimes feel that because they are paying to live there, we should be able to magic up a solution when despite our best efforts it is not always immediately possible.

When you manage as many properties as we do, maintenance issues come up on a daily basis, some of which need instant attention whilst others are naturally less pressing.  We have an online reporting tool which is also available as a mobile phone app to allow our tenants to report any maintenance issues clearly and easily.  It’s amazing how often we receive several almost identical queries in a short space of a time, as people start turning boilers back on after the summer we’re bound to get a number of boiler faults so it looks like our heating engineers will be kept very busy over the coming months.

Are Estate Agents worse than Double Glazing salesmen?

When the lists of least trusted occupations are published in the newspapers each year Estate Agents usually rank quite highly (or lowly, depending on how you look at it!). According to an Ipsos MORI survey in 2015, as an industry we are trusted by just 25% of the public which is the same as journalists and only 3% higher than politicians.  It doesn’t specifically mention mechanics or double glazing salesmen so maybe that’s why they’re not below us (apologies to any mechanics or UPVC salesmen reading).

double-glazingI visited a property last week where the vendor seemed somewhat confused about my arrival at his door but he invited me in anyway.  I provided my opinion on likely marketing figures and suggested what could be done to enhance the appeal of the property to which the vendor told me to ‘Give it a go!’.  I felt that he didn’t understand exactly what I had gone through with him and wasn’t keen to get him to sign any agreement, despite the fact it would probably have been very easy to get him to do so at almost any rate of commission.  I had his son’s number, as he had initially called up to book the appointment and called him to discuss the situation, he confirmed that his Father was suffering from some form of dementia and that the family were helping him to move closer to them.  My view was that I was going to treat the gentlemen just like I’d have wanted anybody to deal with a relative of mine and I felt secure in knowing that I was doing the right thing by not taking advantage of the situation.

Having started in the business 25 years ago I have spent enough time seeing and hearing of how some agents feel the job should be done and can fully understand why the profession is held in such low regard by many.  When you look abroad, the real estate agent is generally a licensed profession where you have to have relevant qualifications and accordingly is far better thought of.  There are moves to further regulate the Estate Agency business, which most trustworthy agents will welcome, as it will hopefully weed out those who perhaps shouldn’t be entrusted with people’s most valuable asset.

Thankfully in our local area we mostly have good agents with plenty of integrity to go along with their qualifications, but as we dive headlong into the world of online only ‘agents’ who get rewarded regardless of whether the property gets sold or not, I’m sure that there will be some characters who will do their best to give the public what they really expect of us.

Is Energy Efficiency really that important?

EPCs?

If you are selling or letting a property, it requires by law to have an Energy Performance Certificate (EPC).

Most of the time having me carry out a survey is just part of the process you go through, I come round, I draw a plan, I take pictures of your lightbulbs and I stick my head in your loft space. It’s a tick off your ‘to do’ list!

You also probably only see the coloured grid that looks like the stickers on a new freezer but the report is actually about 4-5 pages long and includes details of construction, any insulation and heating system, along with estimated running costs, and any recommended improvements

It is also a public document which can be seen by potential buyers and tenants online.

The EPC is actually valid for 10 years so you may think of it as a ‘done and forget’ piece of paper but does it still represent your property? If you have made improvements to the heating system, added insulation or made any changes to the structure of the property then does it still represent your property? If you had gone to the necessary expense of installing a new boiler would you want the EPC to still have a recommendation to ‘install a new boiler’?

sue-colemanLikewise when you are looking at a property to buy, if you looked thoroughly at the EPC and looked at the recommendations and saw a list – loft insulation, replace boiler, draughtproofing, heating controls….. Would that not make you look a little closer, or does it even give you a little bargaining power.

Whatever you may think. energy costs can only go one way and that it up, and the running costs of our homes impacts greatly on our comfort and lifestyle.

Admittedly we are all generally swayed by a nice kitchen, spacious bathroom or easily maintained garden, don’t overlook the EPC.

Sue Coleman

DEA Torbay

www.deatorbay.co.uk

01803 400094

sue@deatorbay.co.uk

When is a bedroom a bedroom?

On the face of it, it seems a fairly straightforward question that should have a straightforward answer but when it comes to marketing your property for sale, there are certain regulations you have to be aware of before it can be The World's Smallest Bedroom?counted.

Generally speaking a bedroom can only be called a bedroom if it has a window, is up to current building regulations (or the building regulations at the time it was built/converted) and is of a sufficient size.  Examples where this would not be met is a loft conversion without standard stairs to access it, a room with only an internal window using borrowed light or a room you simply couldn’t put a bed in.  We recently had a property to let that you could fit a cot in but a bed would have almost filled the room so we made the decision to not call it a bedroom, to avoid misleading anyone.

It is possible to call a dining room a bedroom if in common usage it would be used as a bedroom even if the current occupiers don’t use it as such.  It would only be possible to do so if there were no connecting doors or access to other rooms though.  For us most of the time it’s about the balance of the house, there is no point in having 6 bedrooms if that leaves you with a small lounge, a kitchen and a bathroom.

Ikea Studio flatThat’s not to say that you can’t make the most out of  a very small room with some very clever interior design, just take a look at what Ikea do with their studio flat layouts in store.

If you have a very high ceiling in the room there is always the possibility of using a cabin bed with wardrobes etc underneath.  Another alternative is to steal a bit of extra space from a neighbouring room, it doesn’t have to be as complicated or expensive as it may at first seem. Just be careful not to be left with 2 single bedrooms instead of a double and a study or a nursery!

How to save 3% on your next buy to let…

After the government brought in the 3% stamp duty surcharge for 2nd home owners back in April there was initially a slight decrease in the number of buy to let purchases. A lot of buyers have now simply factored the cost in to the overall return from their investment and assuming a property is kept for 10 years it is only the equivalent of 0.3% a year.

Save 3% on your next buy to letOne way to avoid the surcharge is to look at buying a mixed use development as these do not attract the charge whatsoever.  Whilst traditionally small investors have shied away on the basis that it may need a different set of skills to manage a commercial property, most landlords should be capable of dealing with a shop, an office or a service business.

We’ve currently got a mixed use development on the market for £260,000 just up the road from our Town Centre office in Tor Hill Road. It comprises three 1 bedroom flats and a hairdressers on the ground floor, generating in excess of £23,000 per annum with potential to grow that to around £25,000 giving a gross yield of around 9%.  The stamp duty would be £3,000 as opposed to £10,800 if it had been a fully residential building.  There are some mortgage considerations to be aware of when buying a mixed-use development in that some lenders won’t consider them but there are enough that will to make it still a competitive market.

Back to School & the ‘Empty Nest’ Syndrome

Back To SchoolAs I write this, my youngest daughter has just returned from her first day in year 12 (or Lower 6th as most of us will remember it), in another couple of years we’ll probably be just a few weeks from her starting at University.  We’ll then be empty nesters and at the stage in our lives when we might consider if our current house is too big for our needs or not.  We get called out by a lot of people in a similar situation who are assessing their options for the future.  Most of the time the decision is not an easy one and on reflection the majority tend to opt to wait a bit longer before starting downsizing.  What we often see is the way the house is lived in changing, that long awaited hobbies room can finally become a reality or the dining room can become a little more sophisticated.

At the other end of the spectrum is when the children start a new school, a friend of mine’s daughter started at her primary school today and they ended up with a different school than they were initially hoping for.  It’s still a good school but they’re a lot closer to a couple of others they’d have been equally happy with.  As it happens they’re not planning on moving to be closer to the school yet but maybe in the future that will be something they’ll consider.

Empty NestProperties in good school catchment areas can make a massive difference to both the desirability and value of them, it is not unknown for properties on one side of a street to be 10% or even 20% more expensive than the other just based on the primary school you can get your child into.  It’s a classic verification of the old Location Location Location adage but of course catchment areas can change, new schools can open up and Ofsted reports can vary dramatically with each inspection.  All you can do is plan ahead based on the information that is currently out there!

Room sized remnant

Carpet SaleLike any good agent, before I go out on a market appraisal I do my research on the property to see if it is currently on the market or if it has been recently.  Often I am astounded at the quality of the photographs my competitors have taken especially when it comes round to the angle that they have taken the photo from.

One I saw recently was as if they had some sort of carpet fetish, every shot had about 50% of the frame taken up with the floorcoverings which only left the other 50% for the rest of the room.  I’m not saying that you should ignore the flooring, particularly if it’s of a good quality and in keeping with the decor of the property.

I won’t embarass the other agent by revealing who they are but suffice to say if my most most junior staff member had come back to the office having taken those photographs I would have sent them straight back out to re-take them.

Wooden Floor

I’m quite tall so my natural height to take a photo is higher than a lot of people’s so I simply bend down to get the right aspect or use a tripod to get the best shot possible.  It’s not rocket science but it does take time to check the photo’s at the property and re-take any that haven’t come out as well as we may have hoped.

You only get one chance to make a first impression, why would any vendor or landlord be happy with poor photography?

There are lots of good websites with terrible estate agent photo’s featured on them, this is probably the best one as it comes with some hilarious captions:

http://terriblerealestateagentphotos.com

If you spot any horrors that you’d like to share let me know and I’ll add them to this article.