Friday, 31 December 2010

The Best Things About Estate Agents

As we leave 2010 and after much gloom in the Property Sector what better way to start the new year than with a brand new positive look at the long suffering Estate Agents’ industry?

Love them or hate them we just can’t do without them so let’s look at what we like most about them, for the purposes of this blog and to avoid sexual stereotypes our ideal agent is called Wallace:-

  1. Wallace will take time to understand your reasons for selling and timescales. 
  2. Wallace will give you three different valuations:-
i)                    One that ensures your property is under offer within four weeks
ii)                   One that may be possible in a lively market when there are plenty of buyers about but which might need some effort on Wallace’s part to pull off and
iii)                 One which is probably not achievable and will have your property and Wallace’s ‘For Sale’ sign hanging around for a year or two waiting for the market to catch up
 – Wallace should advise you against this last valuation which really won’t do either of you any favours but will warn you that other Agents are likely to wave this temptation under your nose.
  1. Wallace will advise you on any improvements you could and should make to maximise its’saleability and value.  Wallace will provide you with details of people who can help you with these improvements in a swift and cost-effective way.
  2. Wallace will take plenty of bright, clear and smart photographs and/or videos highlighting the best your property has to offer - ensuring clutter and unsightly objects are removed before taking photographs.  Wallace will not take photos of washing, lifted toilet seats, unmade beds, open cupboards, piles of clothing, pet food dishes, pet beds or ash trays.
  3. Wallace will keep up to date with all marketing methods available to ensure your property is found by any potential buyer.  Wallace will embrace new technology, Social Media, online and offline networking leaving no stone unturned in promoting your property. 
  4. Wallace will charge the appropriate fee that ensures your property gets maximum and appropriate exposure. Wallace will not cut corners and avoid costs which are necessary.
  5. Wallace and well trained colleagues will update you and advise you regularly.
  6. Wallace and aforementioned colleagues will answer the phone, arrange and attend viewings during early evenings, Saturdays, Sundays and Bank Holidays.  This, after all is when most Buyers wish to view is it not?
  7. Wallace will understand the nuts and bolts of property and conveyancing. When the survey and legal process throws up the unexpected, causing panic and adverse reactions from potential Buyers, Wallace will respond proactively and swiftly to smooth over the bumps along the way.  Wallace will not allow ‘ransom’ situations to arise at ‘Exchange’.
  8. Wallace will consider the Buyer’s needs throughout – the Buyer is after all the Vendor’s customer.
  9. Wallace will co-ordinate the communication process between all parties keeping the ‘cogs’ well-oiled and moving.
  10. Wallace will not take a day off or go on holiday at Exchange or Completion without delegating efficiently to well trained and informed colleague(s).

I’m looking forward to meeting Wallace in 2011!

Wednesday, 8 December 2010

Will next year be a year of Dreams or Goals for you?

A discussion thread on the Property Tribes Forum was started a few days ago entitled 'What are your Goals for Next Year?' and the subject of Greed came up. There seems to be a growing number of so-called 'Property Gurus' successfully extracting £'000's by sharing their so-called 'Property Millionaire Secrets' even though they rarely achieved this sort of success themselves  - below is a post which I contributed to the discussion, I thought it worthy of repeating here:-

The 'Greed' thing is fascinating.

There are many of us on this forum who have made a good living from their property and built up portfolios steadily over a number of years in a sustainable and achievable way but I wonder how many of you have people knocking at your doors to ask you the secret and pay you even a sensible amount of money for your expertise?

I'd hazard a guess - not many. I often get asked for help and advice but generally on a 'freebie' basis - if I were to mention that my advice comes at £1000 an hour they'd run a mile, I doubt if any would even pay 10% of that - they don't want to hear that it will take them 10 years or more to make a living from their property.

But if I told them they could become a Millionaire in 18mths - even though it almost certainly can't be achieved except in the rarest and most exceptional cases - then I'm sure I'd get a response. Presentation is everything of course and if you can stand up in front of people and give them a good show they'll be taken in - that's a fact, people love the dream and the drama.

I really wish people would see it for what it is - a glittering show designed to appeal to their dreams.

Goals should be realistic. Dreams are Dreams born out of Greed. Goals must be achievable and bring satisfaction and joy.

So will next year be a year of Dreams or a year of Goals for you? 
Link to discussion thread on Property Tribes Forum 

Friday, 19 November 2010

Will You Be Able To Refinance Your Buy-To-Let In Two Years Time?

This week has seen the launch of a new range of Buy To Let Mortgage products which was generally met with a warm welcome on Twitter by Property People.

The fanfare launch focussed on the Two-Year Fixed Rate product of 4.59% with fixed fee of £1995 but little reference was made to the margins above Base Rate these products refer to at the end of the initial promotional period – in the range of 3.5-3.99%.

With Base Rate currently at 0.5% margins of around 4% may seem quite manageable, even reasonable.  But should we believe 0.5% is ‘normal’?  Do Property People really think that Base Rate will be at this level in Two to Three years time? 

If we expect the Base Rate to rise then at what point does this product become difficult for the average Buy To Let Investor to manage?  Whilst rental returns might be good at the moment, returns of 7-10% are rare and this is the sort of return an Investor would need to cover a mortgage of say 6% when taking account of all other costs.

Assuming Base Rate in two years’ time is going to be higher than it is right now, even a 0.5% increase will take that mortgage to over 5%. For a £200k mortgage, every 0.5% increase will cost the Investor another £1k per annum. Will Investors be reaching for the phone to refinance?

This is where we return to the subject heading:-

Will you be able to refinance your buy to let in two years’ time? 

Much depends on what property prices are going to do in the next two years, the Loan To Value you opted for and whether you still meet all the tough criteria that banks have now set out for their Buy To Let products such as
·        minimum salary required
·        good credit rating maintained
·        number of properties owned
·        rental cover requirements

Many Investors found themselves unable to refinance their Portfolios during the downturn as property prices fell and Lenders reduced the % Loan To Value that they were prepared to offer.  Many withdrew from the market altogether, leaving some Investors with nowhere suitable to refinance.

Do Investors believe that Property Prices are not going to fall again and that Lenders are not going to start closing doors again?

Sunday, 31 October 2010

Renovation & Remodelling a 1960's House

As we near completion of our Project, it’s a good time to post a few ‘Before & After’ photos.   We have used some new and exciting eco products, top quality finishes and first class labour. 

My blogs are sometimes a bit technical, I make no apology for that – far too often we are bombarded with Renovation Projects featuring new Kitchens, Bathrooms & D├ęcor. Little attention being paid to the most important part of a renovation – the structure and fabric of the building:

  • Roof
  • Drainage & Guttering
  • Insulation
  • Services
  • Windows and Doors

Without a sound and efficient structure, the rest has little long term merit, so that’s where we put most of our money and effort.  However, we have also installed some great quality interior finishes too and my best bargain was the ex-display Alno kitchen – over £20k’s worth of kitchen with ‘Bling’ for less than £3k!
After: Bargain Ex-Display Alno Kitchen
Before : Kitchen

Before : Main Bathroom
After: Main Bathroom

After: Main Bathroom

Some of the eco improvements are hidden:
  • A Fully automated Rainwater Harvesting System under the balcony, halving our water bill.
  • The 300mm insulation is well hidden too but the new efficient heating system is now turned off except for one radiator in the bathroom!
  • The Solar hot water tank installed in the basement is awaiting the installation of  Solar Panels on the South Elevation until then we are relying on our new ultra efficient system boiler – also installed in the basement.

Not quite finished yet - we will be installing some external insulation, cladding, more guttering and a couple of windows over the next 2-3 weeks and our Hyperactive Plasterer, Adrian is whizzing around on his stilts into the bedrooms today.

Previous episodes of this Renovation Project can be found here

Sunday, 17 October 2010

12 Things to know about Victorian Houses

Victorian houses were often built with attractive detail rarely seen on modern properties.  But don’t be fooled!  Many were built cheaply to house workers in town centres and fall well short of today's building standards unless updated.

  1. Walls - usually solid brick with vertical timber studs nailed to the brick at 16” (400mm) centres.  Thin slats of wood ‘Laths’ were nailed horizontally to the vertical studs and lime plaster was pushed onto the laths. 
  2. Plaster is soft and absorbs moisture eventually breaking away from Laths.  Some houses have been re-plastered on to new Gyproc Plasterboard.  If you want to fix anything to the walls you will need to find the original studs to screw into as the plaster and/or plasterboard is not substantial enough to hold anything – even a toilet roll holder.  You can occasionally screw into one of the old laths if you’re lucky enough to hit one but on its’ own this will not give you a substantial fixing.
  3. Chimneys (or Draft Shafts!) – the lime mortar may need re-pointing and the chimney re-lining.  A Chimney Sweep can check the condition before using.  Victorian fireplaces should have a shutter (damper) – if you push this open and mortar falls down then you probably need a new liner.  Damp can work through the cracks in an old chimney breast causing damp patches and eventual damage.  Re-lining the chimney can solve many problems but drafts are harder to cure.  A woodstove can reduce chimney drafts. If you board a fireplace ensure you install a vent.
  4. Floors – more drafts!  Airbricks in the outer walls allow airflow below floor level to stop floor joists (supports) rotting. So when you uncover those lovely floor boards you will also uncover lots of drafts.  There are ways to deal with these but none are perfect – mix sawdust with PVA glue or flooring oil and use it as a filler before the final sanding, clear silicone or wood colour decorator’s caulk can also be used to fill the gaps.
  5. Heating - installing central heating pipes under floors will usually mean cutting some of those precious boards.  Take care of those delicate ‘lath and plaster’ ceilings – a few nails banged into timbers to support the central heating pipes can cause the soft plaster below to shatter, leaving you with cracked ceilings. It is difficult to bury heating pipes in to lath and plaster walls so be prepared for vertical heating pipes to be on show.
  6. Electrics – rewiring a Victorian house can be a delicate operation.  Many houses will have surface mounted sockets on skirting boards but this is no longer recommended.  Rewiring can often lead to stripping out the old lath and plaster and reboarding/plastering.
  7. Gutters and downpipes – usually cast iron.  These will need clearing and painting regularly to avoid rust.
  8. Windows – often sash windows and if your house is in a Conservation Area you may not be permitted to replace them, unless you have replica’s made.
  9. Roof – often had no roof felt or felt that doesn’t ‘breathe’.  Central heating can cause condensation build up in the loft leading to rot in the roof timbers. Slates were nailed on and unlike today's fixings weren't rustproof, so loose slates are common.  If the roof covering is replaced then the felt should be replaced with breathable membrane, and the ridge ventilated, reducing the condensation problem.
  10. Damp proof course (if there is one!) – a thin layer of slate a few brick courses up from ground level - make sure outside soil or paving/courtyards have not  built up above the DPC.  If rising damp is a problem a DPC can be injected into the base of the walls retrospectively – at a cost!
  11. Small rooms – often difficult to find adequate space for bathrooms, boilers and storage cupboards.  Ensure boiler flues are well away from window and door openings so that fumes can’t come back inside the house (Building Regs dictate distances for new installations).  Check positions of soil stacks and waste pipes before installing or moving sanitary facilities. 
  12. Outside space – often small with limited access for bike and bin storage.   

Friday, 3 September 2010

Who Jo Met Today - Sam Collett

The inspiration for this blog has come from a friend, Sam Collett who writes a regular blog called ‘What Sam Saw Today’.

Sam is a ballsy, inspirational property lady who has moved mountains and continues to do so every day in her world of property investment and development; auctions; sales and if that’s not enough she writes eloquently and has bundles of enthusiasm which just overflows to anyone near her.

This talented lady owns a high street property management agency, a free property matchmaking portal for Landlords and tenants, has won a prestigious National Landlords’Association Property Women of the year award 2010, writes a regular column for Your Property Network magazine, had articles published, writes tons of blogs and posts, organises property meets and still manages to drive hundreds of miles every week sourcing cracking property deals which she generously shares with others – having the ability to find too many for her own consumption!

Sam is supportive and her knowledge on Investments and particularly Auctions is awesome so you could do yourself a big favour and seek out this talented Property Lady, follow her antics and learn – she is a rising Star who is likely to evolve into a dazzling Planet very soon.

I had the pleasure of spending Bank Holiday Monday with Sam which inspired me to start a series of Blogs called ‘Who Jo Met Today’. It is fitting to start the first blog about Sam herself and I hope to continue meeting and blogging about inspirational property people over the coming weeks and months.

Find out more about Sam:-

Blog - What Sam Saw Today

Website : VirtuaLetz

Saturday, 7 August 2010

13 Top Tips for the Student Landlord

13 has always been my lucky number so here are 13 of My Top Student Landlord Tips.

1. Invest in the fabric of the building, it needs to be robust, durable, dry and fresh. Water is the Landlord’s biggest enemy so make sure the chimney, roof, leadwork, gutters, windows, drains, ventilation, heating and plumbing are all well designed and maintained. Electrical wiring should be checked and certified at least every 10 years and Gas supply/appliances tested annually.
2. Join a good Landlord’s Association. I use The Guild of Residential Landlords for excellent information on Tenancy Law, HMO guidance, Fire Safety in HMO’s and legal advice/back up all for a modest annual subscription.
3. Rent – check out the best student locations in your targeted area and the ‘Let By’ boards to identify the most proactive Agent dealing in student lets. Pay them a visit and establish how to get the maximum rents, where and how much to invest. Speak to the University’s Accommodation Officer who will give you guidance in rents and other useful information but bear in mind they are on the Student’s side and not the Landlord’s so treat the information with a certain amount of healthy scepticism.
4. For ‘shared houses’ get a Joint and Several tenancy, whereby the students are jointly responsible for the total rent and bills. Save yourself hassle, don’t include bills in the rent. Students are adults and need to learn to be responsible. Get Parental Guarantees from each tenant and keep the parents informed of any late or missing rental payments – peer pressure works wonders with late payments.
5. Gardens and outside spaces – keep them low maintenance and provide an area where they can sit and socialise. Provide plastic chairs, a table, secure bike storage and an outside drying area (preferably covered). A few basic tools such as shears, secateurs, trowel and fork will leave them no excuse to avoid keeping on top of weeds and shrubs/hedge growth.
6. Carpets and flooring – A good quality carpet will last 8-10 years if cleaned each year. A commercial carpet cleaner can be hired quite cheaply and are excellent at bringing the dirtiest carpets back to nearly new. Floor tiles are a great investment if fitted correctly – tiles laid on flexible floors without the correct adhesive can crack and come loose.
7. Beds – A good quality clean, second hand bed is worth so much more to a student landlord than a cheap new one which tend to last just a couple of years. The quality second hand ones last many more years. Always use mattress protectors – the waterproof ones are horrid and will be removed by the students so I don’t advise using these.
8. Other Furnishings – each room should have lined curtains and/or blinds which should be washed each year, bedside table, chest of drawers, wardrobe, mirror, bookshelves, desk, chair, worklight and at least 2 double sockets. Ikea Malm furniture is cheap, durable and looks smart. I recommend good quality second hand office desks from an office furniture supplier and upholstered office chairs with four legs rather then adjustable chairs on wheels which tend to break easily.
9. Lounge and Dining – provide sufficient comfortable fire retardant lounge seating for the number of tenants in the property together with a dining table and chairs. A breakfast bar is acceptable but where possible a table is better. It is usually unnecessary to provide a TV. If you do then you must ensure there is a TV license for the property. Students’ families usually have a TV they no longer require - I have never been asked to provide one for them so save yourself the hassle of being responsible for another appliance.
10. Kitchen – provide a clean fresh kitchen with sufficient hygienic worktop space, washer/dryer (no indoor airers to avoid mildew), fridge/freezer sufficient in size for the number of tenants, oven, hob, microwave (counts as a second cooker for HMO purposes), toaster, kettle, iron and ironing board. Pots, pans, crockery, glasses or cutlery are unnecessary. Students bring their own and it saves dealing with breakages and inventory issues associated with numerous small items.
11. Cleaning Equipment –If you want a clean house back then invest in a good quality vacuum cleaner such as Henry or Hetty, don’t go giving them your old ones no longer working at their best. Provide a mop, bucket, broom, dustpan and brush, cleaning/microfibre cloths and gloves if you want a proper job done.
12. Advertising – the University’s Accommodation Office will advertise your property on their list for a small fee, usually around January for the start of the next Academic year but you will usually have to do your own viewings and tenancy set up unless you come to a deal with a Letting Agent on this. Your chosen Letting Agent will also work on a ‘find and tenancy set-up’or full management arrangement. I prefer the latter as I have an excellent Agent who gets me the best tenants -probably as he knows he will have to deal with any issues that arise now he’s on full management! He also gets me the best rents, sorts deposits and much more. You can also advertise online with organisations such as Accommodation for Students or Upad who offer different levels of service.
13. Added Value - Can you add an extension, loft conversion or conservatory (only suitable for non sleeping accommodation) to increase the number of tenants accommodated? Can you split a very large room into two? Look at all options that might increase your rent but do your sums – for me an extra student might mean additional income of £4-5k so £55k is the maximum I would spend to gain an additional student. This also helps me determine how much I would spend on a house in the first place.

Enjoy the job - it's very rewarding if you do it well.

Wednesday, 14 July 2010

Nationwide Building Society Directors' Remuneration Letter of Complaint

14 July 2010

Mr G Howe
Nationwide Building Society
Nationwide House
Pipers Way
SN38 1NW

Dear Mr Howe

I am in receipt of my voting papers and Summary Financial Statement for the year ended 4 April 2010 and despite being an extremely busy person I feel that I can not just ‘cast my vote’ without making comment on the Remuneration of the Directors.

I have studied the detail provided and it is clear from the levels of remuneration for 2009 and 2010 that there has been no acknowledgement by the Directors of the financial difficulties that the country and the banking sector are in. Whilst the Society may have contractual obligations that it is committed to from previous years when times were better, it is completely within your powers to have acted by 2010 on what was clearly a serious problem emerging in early 2008.

Whilst the Society may be one of the strongest in the sector there really is no justifiable reason why anyone on our very small and fragile planet should be worth more than £150,000 per annum remuneration. The situation is made even more distasteful and inappropriate as some of the directors are working for other companies and presumably receiving remuneration from these positions too. How can anyone give 100% to their position if they are working for other organisations too?

It is important that Nationwide Directors wake up to the real world like the rest of us have had to and accept that things are changing. I feel that I have no choice but to vote to re-elect the Board of Directors as what is the alternative? However, morally I feel it is my duty as a member to point out that I am not at all happy with the levels of remuneration or with the Directors apparent lack of acknowledgement that remuneration MUST be reduced drastically to reflect the actual work that any one person, no matter how skilled, can actually contribute.

Yours sincerely

Jocelyn King

Wednesday, 7 July 2010

Windfall from Low Interest Rates on Mortgage

Do you have the benefit of an older mortgage linked to the Bank of England Base Rate which has tumbled to 0.5% possibly saving you hundreds or even thousands of £’s each month?

I have received yet another booklet from Mortgage Express, one of the Mortgage Providers who sold products to Buy To Let Landlords at reasonable margins, such as 1.75% above BOE Base Rate before the Credit Crunch.  The booklet claims to offer support to struggling landlords.  Mortgage Express no longer sells mortgages and seems to have one goal in mind – to reduce their loan book.  The message in all their literature has the same theme - either sell up or make lump sum capital repayments to reduce your debt. 

Whilst this might not be bad advice for some people it is only right that people understand the motives behind the message ‘we need you to repay your debt as we are in trouble’ – that’s how I read it.

I am not going to offer advice to anyone as to whether they should use any surplus cash to repay their mortgage debt but I do think people should be given a balanced view and consider their own circumstances as repaying their low interest mortgage debt might not be the right thing for them at the moment.  I would prefer that people think about things as a whole:-

  • Is the debt on their home or on a Business Asset eg Buy to Let? – Business loan interest is often tax deductible and is unlikely to be this cheap again.
  • Are there any other debts which are attracting higher interest rates, eg overdraft, credit cards, home mortgage – maybe these should take priority?
  • What interest rates can be earned after tax from putting the money in to savings accounts? Yorkshire Building Society are offering 3.5% before tax (2.84% after tax) for a 2 year fixed bond.
  • How else can the money be invested and is it possible to get a higher return than the current debt is costing?
  • What effect will it have on my tax payable if I repay some of my business debt?

There is a bigger picture than just reducing your mortgage commitment.

I am paying between 1.75% and 2.25% to Mortgage Express for some of my Buy To Let mortgages but my home mortgage attracts a higher interest rate with another provider. It makes no sense to me to repay Mortgage Express any lump sum, I would rather pay off my home mortgage or put it into a savings account earning 2.84% net of tax until interest rates go up, then consider reducing the debts.  Never forget that people only become insolvent when they run out of cash so Cash is King.

But on the other hand, I also believe that there is a great opportunity to make a good return at the moment from building individual quality homes – the huge shortage of new build properties brought about by the Credit Crunch can only bring more opportunities for those who can still find the finance to build.  So maybe I can get a better return by reinvesting in new build rather than repaying low cost debt.  Even buying land and getting Planning Permission to build might be a very good investment right now.

I am aware of course that interest rates can only go up and there is a risk, but business always brings risks and this is one that on balance I believe might be worth taking.

Monday, 21 June 2010

Renewable Heat Incentives

Following on from my Feed In Tariffs Blog (see April 2010 Blog Archive on the right), we now have a further Incentive Scheme under consultation and to be introduced in April 2011 called the Renewable Heat Incentives (RHI).

Unlike the Feed In Tariffs scheme which is designed predominantly around paying you to generate electricity, the RHI scheme is designed to reward homeowners for installing Renewable Heating technologies with an annual payment for the expected life of the product.  The payment is predetermined based on typical output at a typical kWh rate.  For example a Solar Panel which provides hot water has a life expectancy of 20 years and may produce around 2200 kWh per annum at a deemed rate of 18p making an annual payment of £400 for 20 years.  Unlike the Feed In Tariffs scheme there will be no metering of actual units produced for this scheme.

The scheme also covers technologies such as Solid Biomass Boilers (15 years @ 9p per kWh), Ground Source Heat Pumps (23 years @ 7p per kWh), Air Source Heat Pumps (18 years @ 7.5 kWh).  Payments to be inflation linked and tax free.

All installations must be Microgeneration Certification Scheme approved as per the Feed In Tariffs.

All of this is still under consultation so could change before April 2011 but it is looking like a very attractive scheme for Homeowners at the moment. More information on the RHI scheme

Friday, 11 June 2010

The Road to Freedom - How we did it

Do you own a Property Portfolio and your own house with reasonable equity, long for financial freedom and want to travel but fear is holding you back?

Speaking from experience my advice is to stop worrying and start planning. In this blog I will share with you some of our journey on the road to freedom.

First, this is not for people making substantial money from their Portfolio – they don’t need to read this. It is for ordinary people like us who have to be very strict with their finances. It is possible to travel, have fun and live on approximately £14-15k per annum but you need discipline and you must accept it will not be a Millionaire’s lifestyle.

Our property portfolio is mortgaged to around 65-70% LTV and I have a 10 year cashflow forecast on excel. Assuming mortgage interest rates of around 6% and building in contingencies for voids, unpaid rents & running costs it looked like the portfolio would remain £15k or more in the black for the foreseeable future.

Second, you will need to release yourself from any emotional attachment you have to your own home. We built our own home, a barn conversion which we loved but we really wanted freedom and this house was the key. We rented it out, took out a 65% Buy To Let mortgage, bought a Campervan, set aside £30k for contingencies and put the rest in a good savings account.

We spent the next 12 months travelling Europe and as long as you don’t expect to eat out much or buy too many material possessions you really can do it on a very tight budget and have the time of your life. We have been to some of the most famous cities in Europe and camped out on romantic beaches, swam in warm clear blue waters and made dozens of wonderful friends of many nationalities.

Third, you will need a list of good Trades people for call outs and maintenance issues with your properties. Preferably responding via email as this is cheaper, although our best Carpenter still refuses to email – but he is a gem so we accept the additional phone bills! If you can afford an Agent on full management then go for it. We have this luxury on our Student houses as the Agent achieves such good rents that he more than covers his fees but for the other properties we just keep a list of reliable Trades people at hand and leave spare keys with the most trusted people.

During our travels we have carried out minor building works to our properties, responded to electrical emergencies, water leaks, blocked drains, faulty showers, toilets, door locks and installed a new cooker.

Fourth, you will need to be very flexible with your living arrangements. In the summer of our first year of travels we returned and moved into one of our student houses whilst carrying out the annual clean up/maintenance. This is the first time we have lived in the buzz of a city and it was great to be able to walk to pubs, restaurants, theatres and shops for a change. Then, just before Christmas some tenants moved out of one of our other properties so we repaid the £170k BTL mortgage from our savings and moved in to this one, making this our Principal Private Residence - not forgetting to make the appropriate election to the Tax Man of course!

Since then we have remortgaged that house, let it out again and bought a renovation project which is now our PPR or ‘home’ if you prefer the term. Whilst carrying out the renovation we sold the campervan and bought a caravan which we store in France. It’s much cheaper to keep and gives us just as much freedom.

I am typing this Blog from a campsite in the Loire Valley with free wifi. I am sitting in sunshine, by a stunning swimming pool with a beautiful Louis XIIIth style chateau as a backdrop. Our Carpenter has just sent us photos of the new fascias, gutters, porch roof and fencing he installed for us on a property in our absence. We know that we can trust him to do a good job and he is proud that we trust him to do the works while away.

It would give us the greatest pleasure if someone else reads this and is inspired enough to ‘go for it’ – life is for living so live it.

Friday, 2 April 2010

Can you make money from Green Energy Feed-In-Tariffs? – The Truth

So you’ve seen the headlines - ‘making money from installing renewables’ or ‘being paid for producing energy’ some even quote higher returns than other investments. On 1 April 2010 the Feed-In-Tariffs (FITs) came into force for electricity generation.

I took a closer look to see if it is really as good as the headlines make out.

Taking a typical 2.1kw per hour solar PV station retrospectively installed on a South facing roof (they do work on daylight so Southerly aspect not essential)

Install the PV station before April 2012 and if the installation meets the scheme’s requirements (Microgeneration Certification Scheme approved installation) then your energy supply company will pay you 41.3 pence per unit produced, irrespective of units used – measured by a smart meter they install. They will also pay 3p per unit exported to the Main Grid – units generated but not used.

Money is also saved on the energy produced by panels and used.

Confused? Well I was at the beginning but it’s sunk in now.

To put this in financial terms:-
You pay approximately £12500 for the PV station
You receive approx £750 per year from the energy company for the energy your panels produce – like a grant for generating your own electricity but based on units produced.
You receive approx £25 per year for exporting energy your panels produced that you didn’t use and you save approximately £110 on the electricity your panels produced that you did use and therefore didn’t need to buy from the grid.

Total money received/saved = £885 or 7% return on investment – this is the figure the government and other ‘interested’ parties like to quote.

But where did the initial £12500 come from? Well you either pay cash or borrow it. Either way there’s an additional cost in interest lost on savings or interest paid on the loan – can’t ignore that cost. And whilst the PV panels may last many years and are guaranteed for approx 20 of them, they do actually depreciate. If someone is buying your house they’re unlikely to give you the full £12500 extra if your PV panels have been up there for a few years – like any other plant or equipment they lose value and are not entirely maintenance free. So your £12500 plus interest costs and maintenance should be added to the equation.

Over the 20 years the cost pa is £625. Add finance costs or the income you deprived yourself by putting your £12500 into PV panels and the whole deal looks to just break even.

BUT – I will give you three very good reasons why I believe you have no choice but to embrace the scheme sooner rather than later:-

1. Where are the energy companies getting the money to pay you to generate electricity? Well, apparently the Government has agreed to them charging higher tariffs to people who don’t install MCS renewable technologies. So if you don’t get on the band wagon prepare to pay the price in years to come.
2. The tariff you start on is fixed for 25 years and increased with RPI, but the ‘Start’ tariff is set to drop in 2012 – for the example above the tariff will be 37.8p per unit from April 2012.
3. We all have to take responsibility for our massive consumption of electricity and the impact we are having on our own planet.

So the Truth, using the PV scenario – you are unlikely to make much money but under the right circumstances you will probably at least break even and in my view it will be well worth the effort.

More information on the Schemes and Tariffs available can be found here

Tuesday, 23 March 2010

Student Lets - The Future Looks Bright

Headlines have recently been full of speculation on imminent cuts to Government funding and Britain’s Universities have been in the limelight. There has been much talk amongst Property People about the impact on Landlords like us who own and let Student Properties.

Rarely a year goes by when we don’t have to amend our strategic plan to accommodate the Government’s latest changes in regulation and funding, often with very little notice to adapt. So where we can be ahead of the game we take the opportunity.

Today I have been looking at historical and current student numbers & applications and in my view the future looks bright.

The following figures are compiled from information on the UCAS website for all UK applications to Higher Education. Further info
Total UK
2008 502461
2007 454148
2006 432196
2005 444630
2004 413334
NB: top up fees introduced in 2006

The statistical section of the website is not fully updated for 2009 but figures released on 8 February 2010 in the press release section show that UK applications to Universities for 2010 have hit an all time record at 570,556.

Although cuts are predicted to University budgets for 2011-2012, the Universities have indicated this will more likely impact on quality than numbers on roll.

Couple the above information with the changes in Planning Regulations regarding HMO’s (Houses in Multiple Occupation) whereby Planniing Permission will be required for Change of Use to a HMO from 6 April 2010, then you can see that much of the existing stock of Privately Owned Student Properties are likely to be much sought after for the foreseeable future – as long as Local Authorities do not introduce the planning changes retrospectively which seems unlikely.

There will always be exceptions to this and much depends on an individual university’s performance. My advice to anyone who intends to purchase or hold existing Student Accommodation is to do your research. The property should be as close as possible to the University – students want to fall out of bed and into University and the property should be kept in good condition – students deserve a decent place to live even if they are a bit untidy.

For my own purposes I have researched Exeter University Student numbers which some of you might find useful. I got these directly from the University’s own website.

Student Numbers
2009 17210
2008 15523
2007 14252
2006 13369
2005 13827
2004 13554
2003 12930
2002 12442

Since I invested in Student houses in Exeter, Student numbers have increased approximately 33%, my houses are within 15 mins walk of the University, 10 mins from the City Centre and are maintained in excellent condition.

Many people argue that the Universities are building plenty of their own accommodation. In Exeter this is taken up by 1st year and overseas students who generate significant funding for Universities. I only deal with 2nd & 3rd years who no longer want to be in University Accommodation and are unlikely to be accommodated by them anyway.

Consequently I have never had a problem letting my properties at the best market rents and I can see nothing that is likely to change that.

Thursday, 18 March 2010

Property - Investment or Business?

If you are buying a property to earn income then you probably think of yourself as a Property Investor and you’d be forgiven for thinking that as everyday we are bombarded with this term in the media. Even the Tax Office want us to slip in neatly to this description and treats Property Investment differently than other businesses.

I don't really like to use the word Investment for what I do and I believe it's why some of us make money from property whatever the market is doing.

These are some of the things I do to keep my business alive & kicking:-

• Five year rolling strategic plan
• Five year cash flow forecast made up of 3 interlinked versions - one each for high, medium & low interest rates. I constantly tweak these to check I've got sufficient funds for at least 2 years even with high interest rates.
• Full feasibility studies for each project I consider, linking it in to cash flow to test it's strengths/weaknesses
• Keep flexible to new opportunities and the changing property cycles
• Never forget my tenants are my customers who need to be given reasons to stay with me
• Keep up with latest regulations, economic news & forecasts
• Tax planning with a Tax Consultant
• Keep up to date accounting records & separate bank account for business
• Carry out annual portfolio valuation and appraisal, taking action as necessary
• Rolling 5 year Maintenance Schedule which also links in to cash flow forecast
• Protect my rents with Rental Insurance
• Review rent annually
• Have varied portfolio (not put all eggs into one basket)
• Network - learn & share

Those are not necessarily in the order of importance but if I were to put one at the top it would be the Cash flow Forecast with at least 2 years' cash taking a pessimistic view on the next 2 years.

Tuesday, 9 March 2010

Adding Value improves your chances of success

So often I hear people say “I’d like to invest in a property but what happens if interest rates rocket, prices fall, tenants trash the property, rents are unpaid, voids etc etc “

Telling it straight, no one knows if these things will happen or not. I can only speak from experience and share with you some of the steps we’ve taken to protect ourselves from the worst that can happen.

Amateur Property Investors tend to forget that it’s a business which you need to manage efficiently and add as much value as possible. Over the next few weeks I will share with you some of the steps we take to ensure our business flourishes and we are protected from the unexpected.

Adding value will give you the edge, improve your success and help to protect you in tougher times.

There was an excellent discussion on the subject on the Property Tribes forum recently which is worth checking out click here

My tip is to always consider difficult properties, they can offer the greatest potential and give you more negotiating power. Many of the properties we have purchased have been the ones that others shy away from and have dust on the details at the estate agent's office. However, one criteria we never compromise on is location. Most other things can be resolved and often cheaper and easier than you might think.

Always do thorough research and be fully aware of the difficulties of a property then tackle it head on. We find neighbours, planners and tradesmen are only too happy to tell you the negative points about a property you might be interested in purchasing. Use these valuable and free tools to your advantage.

When adding value you need to be very disciplined with your budget, shop like it’s your last pennies and always ask yourself twice if you really will get the money back (+ profit!).

Don’t treat your investments like a hobby or an excuse to practice your interior design skills – unless you plan to make a living exclusively from interior design. Your customer really won’t appreciate it. Buyer or tenant, they all like to put their own stamp on a place so keep it simple, clean & fresh. We've sold some high value exclusive property with very simple finishes.

And for the gadget gurus I have to add, please don’t think that adding all the latest sound systems and wireless/remote control gadgets is going to add value to your property. At best it is going to impress and maybe help sell it. It is not going to make you a profit.

Sunday, 7 March 2010

It has taken the blind man 30 years to discover the entire shape of the elephant

After 30 years in Property I was a bit taken aback when a property person who I respect said ‘Jo, you need to define who you are’. We were having a conversation about Blogging and whether I had anything worthwhile to blog about.

I put a great deal of thought to this. My experience in property has been fairly extensive, wide ranging, detailed and very much ‘hands on’. But I’ve never specialised in any one area, preferring to be flexible. Flexibility has given me the ability to grab opportunities when they arise and respond to the unpredictability of the Property Market.

I have watched some Property People follow the herds and grow rapidly in one direction. But like herding elephants approaching an obstacle, the crash is sometimes inevitable. The elephants may have successfully trodden the route many times but as the herd expands and the unexpected happens there is no escape, the herd is too big and an escape route has never been considered.

Some of the best Property People I know have written some excellent articles in Property Network Magazine this month, giving a wealth of advice on how to make a career from Property. It is interesting to read how many different ways there are to achieve success, wealth & financial freedom by investing in property.

The message is clear - there is no ‘one size fits all’ in Property Investment and you don’t have to do the same thing over and over again to be successful. In fact it may be a disadvantage to do just that. If you grow too fast in one direction and the market changes will you have sufficient flexibility to adapt?

My advice is to take whatever opportunities come along - if the numbers stack up and you have done sufficient research. You must have a robust cash flow forecast in place to see the deal through to completion and beyond. Don’t be afraid to do something you haven’t done before, there are so many people out there to help you along the way. Keep networking and keep listening.

As Harry Shearer said “it has taken the blind man 30 years to discover the entire shape of the elephant”. I understand the elephant better now and I stay away from the herds.

I know who I am – a professional Property Person who adapts to change, uses several different strategies depending on market conditions and makes the most of opportunities. Do you know who you are?

Friday, 5 March 2010

How to Value a Property?

The key is to be armed with maximum knowledge.

The internet offers many tools and resources. Some give you the most recent prices that houses in a particular Post Code area sold for such as

You can register at the Land Registry and pay a small fee to obtain title deeds for a particular property at

Other sites give you a bigger picture and list all properties currently for sale and/or sold subject to contract such as,; &

I particularly like which gives you all sort of useful statistics and comparisons

But all should be used with caution, they don’t always tell you the whole picture eg if a house was self built then only the price of the land will show or if the house was purchased ‘offplan’ from a Developer and then the house was built under a separate build contract this will distort the figures. Houses sold before renovation or bought at Auction are likely to give a misleading result.

However, helpful all these tools are, they don’t really substitute thorough ‘on the ground’ research and networking with as many people as possible who might give you ‘more knowledge’.

Developers sometimes use a ft2 selling price for their properties and this is often a useful tool – to a point. The larger the house, the less effective the tool.

My own recent experience of establishing the value of a property using most of these tools gave me an end result which varied from £525K to £725k. My gut feeling was that the property was worth £550k

In the end, there was no real substitute for talking to the best Estate Agents who have a more thorough understanding of what types of customer would target the property, what those customers are looking for and what is the most they are likely to pay before they give up and move on to look for something else. Estate Agents also get it wrong sometimes but armed with all of the above knowledge your ‘gut feeling’ will probably serve you well. The Estate Agents valued my targeted property at £575-£600k. So I don’t think I was too wrong with my ‘gut instincts’.

Tuesday, 2 March 2010

Investment Opportunity?

Yesterday I blogged my summary of the Conservatives’ Planning Green Paper.

Today I thought it would be useful to look at some examples of how their proposals might affect us Property People

Looking purely from an Investment Opportunity Angle:-

This 9 bedroom ‘Edwardian Gentlemen’s Residence’ has just sold, offers over £399k with potential to build another house in the garden subject to Planning Permission.

.Under current Planning Policies and the implementation of these policies by the Local Planning Authority where this house is situated, it is likely that Planning Permission will be approved for a building plot in the garden which could be sold for approximately £150k. Conversion of the main house to flats is also possible.

Under the Conservative’s proposals Planning Permission will almost certainly be refused both for the building plot and conversion of main house to flats.

Assuming the Conservative’s win the election and their Planning Green Paper is accepted in both houses of Parliament, was this a good or bad investment?

You might think it’s a bad investment. However, the Conservatives propose that any building can be used for educational purposes under Permitted Development Rights and no Planning Permission required – would this not make a profitable Language School? - 5 minutes walk to the local train station.

Foreign students apparently pay up to £30 per hour for tuition and I guess that a building like this may accommodate 50-100 students so it would not be unrealistic to assume that you could turnover in excess of £20,000 per day when occupied.

But how does this fit with the Conservative’s pledge to ensure local people have a say in how land and buildings are used in their neighbourhoods?

Monday, 1 March 2010

The Conservatives Planning Green Paper

Whatever type of Property Guru you are, the Planning Process is bound to have an impact on you in one way or another. You can't avoid the politics behind the scenes. So with my usual desire to 'research, disect and summarise' I share with you my take on the Conservatives Planning Green Paper.

The main thrust of the document is ‘local participation and social engagement’, giving local people and neighbourhoods control over what kind of development and land use they want in their area by consulting every resident in the neighbourhood in the evolution of their Local Plan.

Regional Spatial Strategies and National and Regional Building Targets will be abolished in favour of a National Planning Framework supported by short and focussed planning guidelines replacing the existing Planning Policy Guidance documents (PPG’s) and Planning Policy Statements (PPS’s). Within which Local Authorities can create their own distinctive policies to create sustainable communities.

Local Authorities have already submitted to Government their projected housing requirements which are known as ‘Option 1’ numbers. As Regional Building Targets are abolished, ‘Option 1’ numbers will be used as a base-line for the start of the collaborative planning process and a 5 year land supply is generally accepted as adequate.

Financial incentives for Local Authorities to permit development of new homes, businesses, schools, wind farms and affordable housing. A local tariff to be introduced for all permissions starting with just a single dwelling, with exemptions for Developers building affordable homes and Self Builders.

Use Classes Order to be amended to permit land and buildings to be used for any purpose as defined in the Local Plan. Buildings to be used for educational purposes (Class D1) to come under Permitted Development and existing class D1 buildings to remain as D1 unless Secretary of State for Schools agrees otherwise..

Classification of gardens as brownfield land to be reversed allowing councils to prevent overdevelopment and stop ‘garden grabbing’. Conversely, brownfield land is to include land previously occupied by Agricultural Buildings (built before a specified date) to facilitate use of disused buildings for other purposes.

Legislation will ensure a ‘duty to collaborate’ between Authorities and upper tier bodies on infrastructure planning. A National Major Infrastructure Unit to be established.

Travellers face new criminal offence ‘intentional trespass’ if local authorities have provided an authorised site in their area, councils to be funded and Travellers to contribute financially to service provision.

Human Rights Act to be replaced with British Bill of Rights

Mining & Minerals – minerals should be used as close as possible to where they are worked – “the proximity principle”

Conservation credits to build up banks for provision of biodiversity schemes

Simplification and expansion of Permitted Development Rights particularly with regard to shops, offices & public buildings

National Planning Framework to prevent development of the most fertile farmland in all but exceptional circumstances.

The Freeing up of Planning Resources with this streamlined system will permit more enforcement capabilities and Planners to return to what they were originally intended to do – designing and implementing visionary plans for their local areas.

So what do you guys think? Will you be voting Conservative?
Read the Conservatives' Planning Green Paper in Full

Sunday, 28 February 2010

Reflecting on the Week

Zurich Building Guarantees Insurance is not always what you expect it to be and I have been looking at their inconsistent approach to dealing with claims for defects in residential property

Most people think that adding additional accomodation to a property adds value, this is often the case. But at what point does the value of the additional accommodation become a less attractive option? It's been an interesting journey researching and establishing how an annex affects the value of a detached property - more on this and other ways to add value to your property next week.

SIPS panels are making a big come back in the UK at last. They are an excellent way of achieving the thermal qualities required for new sustainable homes, they are light weight and can speed up the construction process. But can they be used for renovation and re-modelling of older homes? - well we have decided to give it a go and remodel the upper floor of our house using SIPS panels. Deric is doing all the technicial drawing and specifications whilst I interfere with the 'niceties' of design and the budget - well that's what women do isn't it?

Today saw news that Property Prices are on the slide again - according to Nationwide's figures for February - so is this the start of an ongoing slide, an inevitable correction or just a blip due to bad weather, stamp duty or the January Blues?

The Conservatives have released their Planning Green Paper. Will this bring more or fewer opportunities for Property Developers and Investors? Another layer of reforms for us to come to grips with.

More on all of this later

Jo is a Blogger at last

Today I join the online Blogging Community and hope to share, entertain, engage and inform anyone who has an interest in all things 'Property'.