I went for a coffee the other day
with a landlord in Clapham and he was interested in my views on the property
market. I thought I’d share a bit of our conversation as a lot of you may be
thinking about the long term effects price rises have on the market.
He asked a valid question: he
asked me whether the property prices rising in Clapham is merely due to lack of
supply and that estate agents will suffer due to a decrease in the number of
transactions (a lot of properties are being bought now as rental investments,
and as you know they are medium to long term investments) or whether there is
more to it than that. The answer to this is complicated and I am merely one man
of course, offering one opinion, which is as follows:
There is certainly a reduced
supply. But this is London. There is always a lack of supply, I can’t think of
a time other than the recession when there was an abundance of property and not
enough buyers around. Something on the market, presented and priced well, will
sell in a short space of time (sub 4 weeks). If not sold there’s something
wrong – price, presentation, difficult tenants and you can’t get in, it’s a
building site and pitched to end-users to name a few barriers to sale. The
government isn't suddenly going to raise interest rates to make people homeless
overnight, so I'm not expecting a flood of properties to be sold all of a
sudden. So no big knee jerks from the government and supply should remain
fairly constant, with demand staying steady but coming from older buyers, using
property as a pension/investment for kids, bank of mum and dad helping the
youngsters and so on. Trend is that there is more lettings stock and less sales
stock. Will estate agents suffer? Those who don’t do lettings and do it well
will certainly be missing a trick. I have seen a few competitors sell their
lettings arm over the years but to me that’s like a car dealer selling off his
servicing department and focusing on car sales – if the market turns and less
people are buying cars where is the bread and butter? Oops.
Another thing he asked me was
whether the licensing of rental properties was going to have a negative effect
on buy-to-let. I think if you are a dodgy beds-in-sheds type landlord, then yes
– it will have a profound effect. You will have to clean up your act. And true
to this, you’ll be reading more and more headlines along the lines of: “Mr
Landlord fined £50,000 for letting a doghouse to young vulnerable couple” and
so on… Does it matter to genuine, honest buy-to-letters? No. It’s easy enough
to comply with the law, you have your agent do that for you anyway. Many of my
readers will see the value of a good letting agent. They are far more
experienced at stringing a tenancy together, letting hundreds of properties
every year, with all sorts of different circumstances. Certainly different to
letting the same property 10 years running. And if you are – why are your
tenants only staying for 1 year?!
If you have a question, have an
investment you’d like a second opinion on, or just fancy some property patter then
by all means drop me a line on jeroen@claphampropertyblog.com or call me in the office on 020 3397 2099.
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