Property and economic update

As we all expected the Bank of England Monetary Policy Committee raised the base rate by 0.25% from 4% to 4.25%. This is the second rise in interest rates this year and the prediction is that the rate could reach 4.75% by the end of the year.

According to the Nationwide, property has been increasing at £100 per day on average over the last month. This is an increase of 2.1% and brings the average price of a house to £145,918, 18.9% higher that a year ago. Alex Bannister – group economist at the Nationwide expects price increases to cool in the second half of the year, with year end inflation of around 15%. Although a slowdown is almost certain he points out that a property price crash is highly unlikely. He says “Back in the 1980’s the collapse in prices came about following a sharp rise in interest rates (from 7.4% in mid 1988 to 15% two years later) and a 1.4m increase in unemployment at a time when the economy was slowing”.

The Hometrack April survey of the housing market indicates that for the first time, the average price of a house has exceeded £150,000. Hometrack reveal a monthly price increase of 0.7% equaling the March rise. All areas recorded an increase with Cumbria doing particularly well, with an increase of 1.7%. Over the past few months Cumbria has consistenly made the top five regions for growth. They also point out that demand is continuing to outstrip supply, with the number of new buyers registered at 4.6% against the number of properties listed 3.6%. With this in mind it is almost certain that property will continue its current upward trend.

What's new?

We say hello to Franco Pullano and Peter Forsythe. 

Franco joins ‘Property for Life’ as Investment Director.  Franco has many years experience of the UK property market having spent 15 years in the property business.

Peter joins the team as an Investment consultant.  Peter also has extensive knowledge of the UK property market having spent 9 years in the property business.

Very soon you will notice a number of changes to the website.  These changes are designed to make the site easier to use as well as increasing the accessibility of information.  Please take a look at www.propertyforlife.com

How do you secure good professional tenants?

Just how do you secure good, professional tenants? Well according to the tenants themselves here are the five most important aspects that they take into account when looking for a property to rent:

• Reasonable rent – This is the number one factor, nobody wants to feel that they are being ripped off. Always remember that the ‘real’ profit from an investment property comes from capital growth and not rental income. It is vital to ensure that your property remains rented at all times, otherwise you will be paying a mortgage on an empty property. With this in mind, many landlords will actually undercut other properties in order to ensure renting their own.
  
  
• Unfurnished or minimum of furnishings – Most tenants will bring their own furniture and will only require the minimum to already be in the property (the exception to this is a corporate let). Furniture that is personal to a tenant will make the property feel more like home, white goods such as Fridge, washing machine and dishwasher are the exception to this, and the property should be fully fitted with good quality appliances.
  
  
• Plain decoration – Not everyone likes fancy wallpaper and fussy curtains so keep the decoration simple. Painted walls rather than papered walls are far preferable. Laminate flooring is cheap, clean, looks great and is more difficult to damage than carpet (think of dinner parties and red wine). Choose neutral paint colours, most furniture will fit with this.
  
  
• Clean, clean, clean – Absolutely essential! The property should be spotless, as a grubby property will encourage people to treat it the same way and a dirty property will only attract those messy graduates who were messy students.
  
  
• Parking – If there isn’t any parking find out if residents permits are available and how they can be obtained, or at the very least how much the nearest car parks cost. Make this information available to prospective tenants.
  

The important thing is to put yourself in the tenants position. Look at your property objectively and ask yourself, is this somewhere that you would live? What would change if you were going to rent it?
Good luck.

"The little unremembered acts of kindness and love are the best parts of a person's life." - William Wordsworth 1770-1850, Poet

"Courage means to keep working a relationship, to continue seeking solutions to difficult problems, and to stay focused during stressful periods." - Denis Waitley Author and Speaker

Focus on Leeds

Over the last ten years, Leeds has transformed from a northern industrial city to one of the most vibrant and successful cities in the country, with thriving finance, business service and retail sectors. It is the capital of the Yorkshire and Humber region and one of the UK’s fastest growing cities.

Leeds’ colourful past is embraced by the invigorating and dynamic future vision for the city. Rapid industrial growth during the nineteenth century transformed a successful town into a thriving city. This has resulted in some of the countries most stunning Georgian, Victorian and Edwardian architecture, much of which has recently been lovingly restored and preserved. This can be seen in the attractive renovations of the Corn Exchange, Victoria Quarter and County Arcade.

Alongside this restoration Leeds is experiencing an explosion of exciting and cutting edge new developments. Office buildings are rising from the ground and filling with new companies and in response new housing developments are springing up all over the city. In conjunction with the new developments, the Leeds Waterfront has exploded into life with a mixture of business and housing supported by shops, restaurants and hotels; all driving the City's growing status as a European centre.

Over the last 10 years £2.3 billion has been invested in large property development schemes and a further £3.3 billion is in the pipeline. In the last 20 years, more jobs have been created in Leeds than in any other UK city outside of London. And in the next 10 years, Leeds is expected to generate a third of the region’s total employment growth.

Leeds is home to over 75 different nationalities, and this rich mix of people and skills has produced a thriving artistic and cultural centre. The City supports exciting theatre and dance, great opera and music, prize-winning galleries and museums, a wealth of sporting events and facilities, and countless bars, clubs and restaurants. Combine the differing communities within the city and surrounding villages and add the spectacular countryside of the Yorkshire Moors and Dales to give a centre of infinite variety and energy.

All of this is having a huge impact on the value of Leeds property. The city experienced property growth of 23.9% during the last year and 21.9% the year before and indications so far are that this is continuing into 2004. This makes Leeds a great city in which to invest in property.

What happens if the rates go up?

We have recently been asked this question by a number of people, and perhaps I should re-title this article ‘what happens when the rates go up’? There is no doubt that interest rates are on their way up, but where does that leave you as a property investor? The simple answer is, in just as strong a position. Let’s take a look at this in a little detail. Over the last 50 years property has increased in value almost every year. Although there was a drop between 1990 and 1994, when evened out over a 50 year period we have seen a doubling of property prices on average every 7 years. During this 50 year period interest rates have ranged from current low levels to the high teens, yet people still purchased property and still achieved very significant returns.

In January 2000, the interest rate was 6% considerably higher than its current 4.25% levels, yet if you purchased a property in January 2000, dependant on where you had purchased it, you would have made anything from 35% to over 100% profit.The most important financial consideration during a time of rising interest rates is whether your tenants rental payments can continue to meet the mortgage repayments. What if mortgage rates climbed back to 6% or higher? As long as your rental income can continue to comfortably meet the increased payments then there is not a good or bad time to invest. Just look at the number of people who made a small fortune in property during the early 1990’s when interest rates were at 15%.

Our advice, keep investing but make sure that your rental income can maintain the repayments when they increase.

"Don't ask yourself what the world needs - ask yourself what makes you come alive, and then go do it. Because what the world needs is people who have come alive." - Harold Thurman Whitman Philosopher and Theologian

"By working together, pooling our resources and building on our strengths, we can accomplish great things." - Ronald Reagan Fortieth President of the USA

What happens to your deposit?

Another question that we have been asked recently is, what happens to my deposit once it has been paid to the developer on exchange of contracts, and can I get it back if the building is not constructed as a result of the developer becoming bankrupt or worse?

The deposit is held and protected under a system that provides a number of safeguards if the worst should happen. It works in the following manner.

Once paid, the deposit is held by the developer’s solicitors as a stakeholder until such time as either the property completes or alternatively two conditions have been met. These are:

• Planning permission is granted for the development.
  
  
• The seller complies with a special condition which states that he will secure for the purchaser, Buildmark cover by NHBC or Zurich insurance or other similar cover approved by the Council of Mortgage Lenders.

Under the Buildmark cover the NHBC or Zurich insurance will, in the event of the builder failing to construct the home due to his bankruptcy, voluntary or compulsory liquidation or fraud, repay you any amounts that you have paid under the contract up to a maximum of 10% of the purchase price.

Additional service - Landlord action

What do you do if you end up with the tenant from hell? Contact our new partner Landlord Action.

Landlord Action will help landlords recover the property and rent from problem tenants. They operate a simple 3 step system with a fixed fee structure so you know exactly how much the service will cost. Unlike solicitors fees, there are no little extras such as photocopies, stamps or phone calls. Started by landlords, for the benefit of landlords – their services are simple, cost effective and fast. Visit them on the web at www.landlordaction.co.uk or call on 020 8906 3838.

Meet a fellow 'Property for Life' investor

Meet Mike and Linda Bostock. Over the last couple of years Mike and Linda have been building a considerable property empire, with a current value of over £2million. By releasing equity in an existing property Mike and Linda were able to buy their first investment property in Leeds, this has now snowballed into a portfolio of 10 properties, 8 of which are in the UK and 2 of which are in Spain.
Mike and Linda have followed a specific strategy. They buy only 2 bedroom off-plan apartments of between £150,000 and £250,000 in city centre locations, and this strategy seems to have worked perfectly. Mike and Linda have managed to secure all of their properties with discounts in the range of 10 – 18%. The discounts have resulted in considerable instant equity, and when combined with the properties capital growth Mike and Linda have realised substantial profits at a time before most of the apartments have even completed.

“We are in this for the long term which means that whatever might happen to the property market in the near future, we will benefit from the properties, almost certain, capital growth over many years” says Mike. “All of the discounts have been genuine; the property that we have purchased has been independently valued at both the contract price and rental value quoted by ‘Property for Life’. Both the finance broker (CBF) and Breytenbachs Solicitors have been a pleasure to work with, and ‘Property for Life’ and their Spanish partner ‘Alchemy Estates’ have been fantastic, I cannot praise them enough, and I have no hesitation in recommending them to anyone”.

We wish Mike and Linda the best of luck with their portfolio and look forward to a continuing relationship.

What’s available?

We currently have the following investment opportunities.

- The Litmus building, Nottingham
- Issa Quay, Manchester
- Tramway heights, Glasgow

Please go to our website www.propertyforlife.com for full details

Recent events

We recently held a seminar at the East Midlands Hilton, Derby, with Commercial Business Funding (CBF). This proved to be a very successful day and those people who attended were able to see several models of our Issa Quay development which generated a lot of interest. Remember, you can download all the details of this property as well as all the others on our web site www.propertyforlife.com

Upcoming events

Saturday 15th May – Following the success of our ‘Spain in a day’ seminar in Cobham, we will once again be teaming up with our partner company ‘Alchemy Estates’ to bring you another Spanish seminar. This is a great opportunity to come and learn more about one of the fastest growing property markets in Europe and perhaps even purchase one of the properties available on the day. The event will run at the Kegworth Whitehouse hotel, Derbyshire starting at 10.00am.

Saturday 22nd May – We will again be joining forces with our partner ‘Commercial Business Funding’ (CBF) to bring you a seminar based around UK off plan investment property. The seminar will run at the Holiday Inn Garden Court, Wolverhampton and will start around 10.00am.

18th – 20th June – Property Investor Show North. Come and visit us on stand 797 at the show. We will have a model of the Issa Quay development on the stand, for those people who want to have a more detailed look. We look forward to seeing you there.

If you are interested in attending either of these seminars, please contact me by e-mail at adam@propertyforlife.com or phone on 01252 737575.

New registrations

A big thank-you to all those people who have registered this month, we hope that we can be of service to you.

'Property for Life' Referral programme

A quick reminder that ‘Property for Life’ offers a generous referral programme to any individual or company that refers an individual or company to us which leads to a successful property purchase.

The payments are made on an increasing percentage scale based on the number of purchases.
These percentages are as follows:

Nš of Purchases % of Property Price 1- 5 0.25% 6 – 10 0.5% 11-15 0.75% 16 or more 1%

Full details can be found on our website where you will also find a property referral form.

Then start earning cash rewards for recruiting new customers!

Next edition

The next edition of ‘News & Views’ will be delivered right to your computer next month.

Back issues

Please take a look at the back issues of our newsletter where you will find some really interesting articles and information. All back issues are available on our website www.propertyforlife.com