Property and economic update
For the first time in 11 months the Bank of England Monetary Policy Committee has chosen to raise the base rate by .25% to 4.75%. Not exactly a shock as everyone had been expecting an increase at some, but what is a surprise is that they chose to make the adjustment this month in a move that is widely seen as a little early. Anyway, regardless of this, the base rate now stands at 4.75% so is it time to panic? Of course not.
We are now in an era where much smaller rate changes have a greater desired impact of the market in general. This means that the days of large and regular increases are a thing of the past. With the market under control we believe that very minor adjustments are all that is required to maintain the status quo, and with this in mind we do not foresee significant increases in the rate moving forward, to the contrary, it may be that the next move is downwards.
Anyway, let's take a look at how the market performed over the last month.
The Nationwide house price survey reveals a July increase of 0.8% bringing the average cost of a house in the UK to ?167, 733. This is broadly reflected in the July results for the Hometrack house price survey with a reported increase of 0.6%. Commenting on the results Richard O'Donnell, Direct of Research at Hometrack said "Despite the strong first half of the year, we expect levels of demand to moderate over the rest of the summer and into the autumn with any further increase in interest rates compounding the likely slowdown. Overall we expect average house prices to rise by 4% over the year".
The Halifax house price index returned a slightly lower monthly increase at 0.2%, but the trend is very clear, we are continuing to see small and controlled increases month on month. Future minor adjustments in the Bank of England base rate should maintain control of the market therefore providing a very stable platform for those looking for long term property investment.
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Do your research
Property is without doubt the best investment vehicle there is, but as with any major investment, research is absolutely critical. When we take on a new development we undertake an enormous amount of research so that we can be satisfied the property is a great investment for our clients. If our strict criteria are not satisfied, we simply don't take the development. However, every investor's strategy is different and we urge all of our clients to undertake their own research in order to satisfy themselves that the deal is suitable for their needs. So where should you be looking and what should you be looking for?
There are a number of key questions that you need to answer, such as:
- Is there a good and sustainable rental market?
- Is there good potential for capital growth?
- Of what quality are local tenants?
- What kind of neighbourhood is the development in?
- Are there any plans in place that would result in environmental impact such as, new roads, airports, shopping centres, take away's etc. This could be detrimental or beneficial.
In order to answer these questions you should be concentrating on many factors, for instance:
- What is the local level of unemployment?
- Which businesses are located in the area?
- Is the area attractive to new businesses (are new business parks being built) or are lots of commercial premises lying empty?
- What sectors account for the bulk of employment in the area?
- Is there a large student population?
- What have house prices done in the last year / 5 years / 10 years?
- What regeneration has taken place?
- Is the region attracting funding from central government and the European Union?
There are plenty of information resources available for this type of research. Libraries, local estate agents & letting agents are a good place to start. Of course there is no better way to get a feel for an area than physically going there, although this is not always possible.
Probably the best and easiest research tool is the internet. There are countless web sites containing a wealth of constantly updated information. Some of the most useful are:
www.hometrack.co.uk – Area guides and in depth market reports.
www.upmystreet.com – A great source of Socio-economic information for a given area.
www.landreg.gov.uk – Price trends and detailed interactive datasets.
www.proviser.com – Price trend information and street maps.
www.homecheck.co.uk – Environmental risk reports and area reports.
One particularly good resource is local government websites. These take the following format www.[TOWN].gov.uk, for example, www.cardiff.gov.uk.
Of course there are many other relevant sites and running a search through one of the internet search engines will throw up countless numbers of useful links.
Good luck and happy investing.
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Is now a good time to raise the rent?
In this time of rising interest rates and limited capital growth many investors are keen to raise rental income on their investment properties in order to maintain their rental cover. But is this a good time to raise rentals?
There is no right or wrong answer to this as rental increases are determined by a number of differing factors and most of these will differ depending on such aspects as the type of property and its location. The main points to look at when considering a rental increase are:
- The current rental levels of similar properties
- The date of the last rental increase on your property
- The supply and demand of tenants and properties in your area
- Council tax increases and increases in interest rates
- Tenant feedback during the negotiations
- Maintenance or renovations undertaken or requested
Of all these aspects the supply and demand of tenants and properties is the biggest factor in the ability to increase rentals. If there is more rental property available compared to tenants looking for them, then raising rents will be difficult. However, if there is a shortage of rental properties, then rents will generally be easy to increase. In a time of rising property prices many first time buyers are forced to rent creating increased rental demand and prices can rise.
When considering rental increases you must balance the emotions and reaction of the tenant with maximising your income. In some situations it may not be worth losing a quality tenant for an extra ?10.00 per week if there could be a possible vacancy period of a couple of months. So if you are considering raising your rents, be very careful how you do it.
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"Look at the abundance all around you as you go about your daily business. You have as much right to this abundance as any other living creature. It's yours for the asking." - Earl Nightingale 1921-1989, Author
"Don't be afraid of the space between your dreams and reality. If you can dream it, you can make it so." - Belva Davis, Award-Winning Journalist
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Financial Independence
by Jim Rohn
Shortly after I met my mentor he asked me, "Mr. Rohn, how much money have you saved and invested over the last six years?" And I said, "None." He then asked, "Who sold you on that plan?"
It is better to be a lender than a spender.
To become financially independent you must turn part of your income into capital; turn capital into enterprise; turn enterprise into profit; turn profit into investment; and turn investment into financial independence.
Financial independence is the ability to live from the income of your own personal resources.
If you depend on your company to take care of your retirement, your future income will be divided by five. Take care of it yourself, and you can multiply your future income by five.
I remember saying to my mentor, "If I had more money, I would have a better plan." He quickly responded, "I would suggest that if you had a better plan, you would have more money." You see, it's not the amount that counts; it's the plan that counts.
If you were to show me your current financial plan, would I get so excited by it that I would go across the country and lecture on it? If the answer is no, then here's my question: "Why not"? Why wouldn't you have a superior financial plan that is taking you to the places you want to go?
I used to say, "Things cost too much." Then my teacher straightened me out on that by saying, "The problem isn't that things cost too much. The problem is that you can't afford it." That's when I finally understood that the problem wasn't "it" - the problem was "me."
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"Most of our obstacles would melt away if, instead of cowering before them, we should make up our minds to walk boldly through them." - Orison Swett Marden, 1850-1924, Founder of Success Magazine
"To accomplish great things, we must not only act, but also dream, not only plan, but also believe." - Anatole France, 1844-1924, French Novelist
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Meet a fellow Property for Life investor
Kenny Agoro
"There is no point having money in the bank, to get a great return on your money you need to invest it. I have found over the past 5 years that property is the best way to achieve a high return on my money. By purchasing discounted property in areas which will appreciate in value you put yourself in a win/win situation."
Kenny Agoro has been investing in property since 2001. Initially purchasing an existing property he quickly discovered that buying new build property at a discount would grant him more secure rentals and far greater capital appreciation, a strategy he has adopted ever since.
Property for Life has been working alongside Kenny since the beginning of his portfolio. Kenny is a Bio Medical Scientist based at Hammersmith hospital and as such was lacking in experience and confidence when he first started investing in 2001. After doing some research and purchasing an investment property himself he enlisted Property for Life's expertise to ensure his portfolio would contain properties in great areas which attract desirable tenants and continually appreciate in value.
"When we were starting out my wife and I attended one of Property for Life's free investment academies. The knowledge I gained from speaking with the team that day put me in a great stead for acquiring and managing my subsequent investments."
Now a seasoned investor with 10 properties Kenny is able to impart his wisdom on others around him including his 12 year old son who is eager to build on his dad's success with his own property portfolio! From investing extensively Kenny recognises that new build property consistently offers a great return. "You can't lose when you are buying new build property at a genuine discount. My apartments are all appreciating in value and have rented out with fantastic tenants."
Kenny took advantage of the fact that the investment properties offered through Property for life required little outlay. He notes that it is this structure which has enabled him to build a portfolio exceeding ?1 million over the past 5 years. Having purchased 6 properties through us he has a successful investment portfolio, which having required comparatively little outlay now tops a million pounds. "The structure of the deals and the buying power which comes from purchasing through Property for Life meant I only needed to put down a small amount on each deal which enabled me to spread my investment through numerous properties."
Like many other investors Kenny is looking to use his portfolio to secure a comfortable future. "When you retire you rely on what you have invested in life. Property grows year in year out and I intend to use the equity and appreciation in value of my portfolio to afford my family and I great joy as the years go by." The team at Property for Life are delighted at Kenny's success and have enjoyed working alongside him as his confidence and knowledge has grown.
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What's new?
Since its introduction 2 years ago, our mortgage department has grown and developed each and every month. Now supporting 4 resident mortgage consultants and having written over ?100m worth of business, the department has now become a separate business unit and will be known as Money for Life Ltd with immediate effect.
Money for Life will trade as an appointed representative of Property for Life and will continue to supply industry leading mortgage services to Property for Life's clients, however, this exciting change will enable Money for Life to develop into other areas including commercial mortgages and general insurance thereby further increasing the excellent levels of service to which Property for Life clients have become accustomed.
The Money for Life website can be found at www.moneyforlife.uk.com
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What's available?
We currently have the following investment opportunities.
UK property
Meadowfields, Hindley Green, Wigan, Lancashire
Manor Grange, Shafton, Barnsley, Yorkshire
92 Otley Road, Shipley, Bradford, Yorkshire
Overseas property
France
Les Crets, Meribel, French Alps
Chalets du Forum, Courchevel, French Alps
Le Britania, French Alps
La, Closerie, Normando
Val de Loire Resort, Loire Valley, France
Parc aux Airelles, French Alps
Jasses de Camargue, Southern France
Residence des Arts, Paris
Residence les Ecourts, French Alps
Spain
Terrazas, Costa del Sol, Spain
Terrazas de la Torre, Murcia, Costa Calida, Spain
Mar Menor 2, Mar Menor, Costa Calida, Spain
Roda Golf & Beach Resort, Roda, San Havier, Murcia, Spain
Corvera Golf & Country Club, Corvera, Murcia, Spain
Dona Lucia, Estepona, Marbella, Spain
Dona Julia, Costa Del Sol, Spain
Estepona Beach and Country Club, Estepona, Spain
Benatalaya, Marbella, Spain
Caribbean & Florida
Punta Perla, Dominican Republic, Caribbean
Florida land packages
Eastern Europe
Sun Palace, 3rd District, Budapest, Hungary
Erkel House, Budapest, Hungary
Orpheus Ski, Bansko, Bulgaria
Please go to www.propertyforlife.com/property/ for full details and look out for more great opportunities coming soon!
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Upcoming events
Over the coming months we will be attending several exhibitions in addition to our ongoing Property Academy programme. If you would like to attend a Property Academy session please call Laura on 01252 737575 or email laura@propertyforlife.com stating which session you would like to attend and how many places you require.
Exhibitions
September 15th – 17th – The French Property Exhibition, Olympia 2, London
September 22nd – 24th – Property Investor Show, Excel, London
Academy Dates
September 9th – The Coppid Beech Hotel, Bracknell
October 14th – The Montague Hotel, Central London
November 18th – The Cobham Hilton, Cobham, Surrey
December 2nd - The Cheshunt Marriott Hotel, Near Enfield
For further information regarding the Property Investor Academy Programme please follow the link www.propertyforlife.com/whyinvest/education.html
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Do you fancy a spending spree at one of the UK's leading department stores?
The new look Property for Life referral programme can offer you just that.
All you need to do is tell an interested friend about Property for Life and you could soon have a minimum of ?250 in gift vouchers to spend in any John Lewis or Waitrose store.
Quite simply, for each person introduced by you who then purchases a property through us you will receive a cool ?250 in John Lewis gift vouchers. If they purchase more than one property you will receive ?250 in gift vouchers for each property they purchase. You could soon be well on your way to that spending spree.
Remember, the more people you introduce the more chance you have of grabbing at least ?250. So why not tell your friends and family about Property for Life? Make sure they register on-line at http://www.propertyforlife.com/register. When registering it is important that they select the recommendation option in the 'How did you hear about us' section of the form and include your name in the 'other' box.
Please note that the referral programme is on a per property not a per person basis. Please see http://www.propertyforlife.com/services/referalprogramme.html for further information.
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