DBPR asked top London prime property experts to offer their top tips on investing in property in 2017.
Have a Plan
by Simon Barnes, MD, H. Barnes & Co
Firstly, make sure you actually have a plan. Is it a long or short term investment? You will seldom make money investing in property if you have to sell quickly or are forced to sell, so be sure to allow an adequate period – ideally minimum of 12 months, depending on the type of property as certain markets are busier at different times of the year.
Regardless of whether you have an expert/agent advising you, do your own homework as well and research what is happening in the area and what might effect prices in the long and short term. A good example of this is Crossrail which has ultimately increased local values but for a prolonged period actually dissuaded buyers because of the building work. A good long term investment; a bad short term investment.
by Alex Newall, Managing Director at Hanover Private Office
Add value: “There are plenty of ways to add value to your property investments through good asset management. Whether this be extending a lease, increasing rental income, getting a better quality of tenant, getting planning permission for an extension, or adjusting the layout – all these things can add value to your property. Often you can achieve a two or three fold return on investing relatively small sums in adding value to your property.
Maintain: Always keep on top of gutters, pointing, the chimneys and the garden. Whilst these costly and sometimes dull jobs can be seen at the time as throwing money down the drain, it is vital you keep your property in good condition, no matter what the market conditions. If you let it go, it is more expensive in the end to bring it back into a good state of repair.
Dress for sale / letting: If you are considering selling or letting your property, the marketing material and the property itself must be as perfect as possible. If you have planning – include the planning and mood boards, concept images or computer generated images in your marketing material. As ever, a good declutter and de-personalise always helps makes your property appeal to as wide an audience as possible.
Consider re-financing: Look at your mortgage deal and compare it to what is available in the market place. In ever changing market conditions, your ability to hold with lower monthly re-payments, and not be a forced seller is key.
Improve the area immediately around your property: First impressions count and often before a buyer actually sees your property. There are plenty of neighbour schemes for litter picking, tree and flower planting and lobbying your local council. Make the street around your property as pretty as possible. Buyers often look at how tidy a street is, what cars are parked on it etc to make an initial judgement on the location and your neighbours.”
As an Investment
by Mark Parkinson, Director, Middleton Advisors (London)
- If you are looking at it from an investment point of view don’t do it alone. When it is your money it is very difficult to look at a house or flat objectively.
- Concentrate on the position/ location of the property- it is the one thing you cannot change!
In the Country
By Tom Hudson, Director, Middleton Advisors (Country)
- Don’t compromise on location in the country. This remains the main factor that affects value and saleability
- If you are looking to buy within a couple of hours of London, think about good stations and prep schools – buying where these are within a 20 minute drive should help long term holds
- If you are looking further out, prioritise on views, peace and quiet and adjacency to pretty market towns or villages.
The Term and the Class
by Simon Deen, Director (New Homes) at Aston Chase
- Buy for the medium to long term. With the additional 3% SDLT levy on buyers of second homes, the loss of mortgage interest relief for landlords and the increase in the rate of SDLT for properties over £925k, the transactional and holding costs of property investment have never been so high. With that in mind it’s vitally important that investments are based on sensible calculations – the days of buying in the first phase of off plan sales and then ‘flipping’ before practical completion of a building does seem to be a thing of the past, and the trend now seems to be for long term growth with a sensible rate of return in the interim.
- Try and buy a best in class property. If you’re planning on buying a one bedroom apartment in a large new development, try and pick something that differentiates it slightly, such as a higher floor, some outside space, an underground parking space or even something as straightforward as being in the same part of the building as the concierge, gymnasium or any other amenity. This will give an apartment an edge when it comes to renting it, or eventually selling it. This will help minimise void periods and whilst it might cost you a little more in the first instance, it will pay in the long run (see point one!)
- Buy something with excellent transport links and local amenities, even if the area is ‘up and coming’. Most tenants would rather live somewhere with brilliant connectivity and within close proximity to great bars, restaurants and open spaces, even if that means compromising slightly and moving somewhere a little edgier.
A Ten Point Plan
by Charles Curran, Data Analyst and Principal, Maskells
- Check with the local agent what types of properties attract the most number of applicants.
- Check your gearing (mortgage debt) given new legislation and talk to your bank so that they understand what you are doing.
- Make sure you incorporate refurbishment and redecoration into your returns (if your unit is not clean / tidy and looks modern it will not rent).
- Make sure you that your agent does not hide ‘commissions’ in property management charges or that they source from multiple suppliers so they can get you the best prices
- Listen to your lettings agent – there is no point marketing a property which is too expensive given the demand they are getting.
- Not all Letting agents are the same – choose one that you enjoy working with and who takes the time to understand you.
- Make sure you understand the service charge and sinking fund if you are buying in a block (so that you know how much of your rental income to allocate to these costs).
- We recommend using an ARLA registered agent as they will abide by the ARLA code of conduct.
- Ensure that your agent uses the same inventory clerk for check in and check out so that there is consistency in the inventory – something tenants can point to when arguing return of deposits.
- Always make sure you have funds in the account for unforeseen dilapidations and months when the property is not rented out – you will be responsible for covering the outgoings.