3 bed or 4 bed homes – Which Sell the Best in Clapham?

A few months ago, I wrote an article on the Clapham Property Blog about the length of time it took to sell a property in Clapham and the saleability of the different price bands (i.e. whether the lower/middle or upper local property markets were moving slower or quicker than the others). For reference, a few months ago it was taking on average 76 days from the property coming on the market for it to be sold subject to contract (and that was based on every Estate Agent in Clapham) … and today … 126 days .. does that surprise you with what is happening in the UK economy?

Well, a number of Clapham landlords and homeowners, who are looking to sell in the coming months, contacted me following that article to enquire what difference the type of property (i.e. Detached/Semi/Terraced/Apartment) made to saleability and also the saleability of property by the number of bedrooms. As I have said before, whether you are a Clapham landlord looking to liquidate your buy to let investment or a homeowner looking to sell your home; finding a buyer and selling your property can take an annoyingly long time… but anything you can do to mitigate that is helpful to everyone.

So, I did some research on the whole of the Clapham property market .. and these were my findings … to start with by type (i.e. Detached/Semi/Terraced/Apartment)….

As you can see, the star players are the detached variants of Clapham property, whilst apartments and terraced/town houses seem to be sticking in Clapham.

Next I looked at what the number of bedrooms does to the saleability of Clapham property..

… and as you can see the five bed properties seem to be taking the longest time to sell ..and to answer the question in the title .. it’s three bed properties!

So, what does this mean for Clapham buy-to-let landlords and homeowners?

There is no doubt that there is a profusion of properties on the market in Clapham compared to 18 months ago … it’s not because more houses are coming on to the market, it’s because they are also taking a little longer to sell. This makes it slightly more a buyer’s market than the seller’s market we had back in 2014/5/6. Therefore, in some sectors of the Clapham property market, it is much tougher to sell, especially if you want to sell your Clapham home fast.

Therefore, to conclude, on the run up to the New Year, if you are looking to buy and plan to stay in the buy to let market a long time, perhaps take a look at the Clapham properties that are sticking as there could be some bargains to be had there? Want to know where they are .. drop me a line and I will tell you a nifty little trick to find all the properties that are sticking.

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The £14,230,233 Ticking Time Bomb for Clapham Landlords

“I just love looking over and keeping up to date the 108 pieces of legislation that govern the rental of residential property in the UK”

...No Clapham Landlord, ever

If you are one of the 2,159 Clapham (or SW4 to be precise) landlord’s that manages your own property, would it surprise you to know that there are 108 separate pieces of legislation that govern the rental of private houses to tenants. Oh, and on top of the 108 pieces of law, there are further 300+ regulations in the mix. Whilst Clapham landlords may once have preferred to manage their Clapham buy-to-let properties themselves to boost their profits, many Clapham landlords are starting to see this as a false economy.

In the last four years, an additional 830 landlords in Clapham have converted from self-managed to having their property managed by a letting agent in Clapham, taking the total number of properties under management in Clapham to 3,377 (out of a total of 5,536 private rental properties in Clapham).

Now, don’t get me wrong, self-managing your Clapham rental property can be a very fulfilling experience, allowing you as a Clapham landlord to build a deep relationship with your tenant and your emergency 24 hour plumber, builder (happy to do small jobs at a drop of a hat), decorators, first name terms with their deposit provider, lawyer and EPC provider to name but a few. (Wow!)

Also, did you know if your tenants deposit isn’t registered, or doesn’t continue to be registered after the end the periodic tenancy upon renewal ... you could be fined up to three times your deposit? With average rental deposit in Clapham being £2,197, each self-managed landlord in Clapham could be fined £6,591 per tenancy if the deposit isn’t currently registered. Therefore...

...if every deposit of every Clapham self-managed landlord’s property wasn’t registered, the total fines would amount to £14,230,233

Now of course, I am not suggesting for one minute all the self-managed landlords of Clapham haven’t registered their deposits, yet almost on a daily basis, I come across horror stories to that effect. Another two (but by no means all) hot issues that the Courts are cracking down on, are doing immigration ‘Right To Rent’ checks on all tenants (yes all tenants) and confirmation proving the tenant received the ‘How to Rent’ guide. If that second issue cannot be proved (a ‘sent’ email won’t suffice), the landlord cannot serve the section 21 Notice, meaning the tenant cannot be served notice to vacate the property.

To many, it’s really a case of DIY or getting a qualified professional in … as those additional Clapham landlords mentioned above have done since 2014. You might say, “Of course you are going to say all this – you are a Letting Agent”. Well the choice really comes down to your time and your knowledge. If a Clapham landlord is not equipped, or able, to devote time keeping up-to-date of legislation and law nor doesn’t want to be bothered 24/7/365 about a blown light bulb, dripping taps, have that confrontational conversation with their tenants about missing rental payments, or arbitrate arguments and disagreements between your tenant and the neighbours, it is perhaps better to pass this accountability/responsibility onto a letting agent.

One thing I would say is all letting agents aren’t the same. Would it surprise you to know that letting agents aren’t regulated?

Clapham landlords that do use a letting agent should not forget that passing over management to a letting agent doesn’t mean they can disregard legislation and they are still responsible for deposit/rent repayment legal directives, civil fines or action if the letting agent makes a mistake. Therefore, it’s important to pick a respectable letting agent from the start.

Nevertheless, for those Clapham landlords that see their job as a professional landlord and want to be intricately involved in the day to day administration of their rental properties, it can be worthy pursuit.

If you are a self-managed landlord in Clapham, and want to know if your paperwork is in order please feel free to drop me a line and I am more than happy to do an ‘MOT’ on it to ensure you are the right side of the law.

Do let me know if you are looking to invest and you could use a hand. if you are a ready and able investor sign up to my list that will bring packaged deals to your inbox! If you are looking for no-obligation advice then drop me a line and let's start the conversation.

Clapham First Time Buyers Need 15.2 Times Annual Salary to Get on Housing Ladder

What is it to be British? Our stubbornness, long-suffering stoicism, our vexation at injustice, our obsession with football and rugby, we are weather obsessed external awkward noncommittal modest people whilst underneath seething like a volcano because someone jumped the queue….. and our No.1 obsession is with the property ladder.

This ‘love affair’ with owning our own home has been both good and bad for the UK as a whole; giving people financial freedom in their later years whilst also reducing the quantity (and quality) of housing provision whilst adding the extra pressure of a ‘them and us’ society. Strong words I know .. but let me explain more.

I honestly believe that most Governments since the end of the 1970’s, Conservative and Labour, have attempted to nourish our addiction to home ownership (to keep the housing market on track) with the Council House Right to Buy sell off in the 1980’s, tax relief of mortgages, relaxation of the mortgage rules in the late 1990’s/early 2000’s and most recently, the Help to Buy scheme.

But the Brits haven’t always had this obsession.

Roll the clock back 100 years and, in 1918, just under a quarter of all Brits owned their own homes and the other 77% rented. Go back 50 years to 1968, and only 46% of people owned their own home, the rest rented. This homeownership thing is quite a recent phenomenon.

According to my research, anyone looking to get a foot onto the property ladder as a first-time buyer in Clapham today, AS A SINGLE PERSON, would need to spend 15.2 times their earnings on a Clapham first time buyer property.

Using the numbers from the Office of National Statistics (ONS), the average value of a first-time buyer property in Clapham today is £400,000, compared to £212,500 in 2007. If we divide those property values by the average annual earnings of first time buyers - in 2007, that was £23,426 pa and that has risen to £26,235 pa .. giving us the ratio of 15.2 to 1.

However, what must be remembered is that these are raw statistics from the ONS and don’t take into account other factors, like most people buy their first home as a couple. Also, mortgage rates are at an all-time low and who can remember mortgage rates of 15%+ in the 1990’s, meaning borrowing today is relatively cheap. Also, 95% Loan to Value first time buyer mortgages have been available since the end of 2009 (i.e. you only need to save a 5% deposit) and first time buyer rates of 2.19% fixed for 5 years can be obtained (correct at time of writing this article)… it is cheaper to buy than rent .. fact!

I believe there has been a mind-set change to owning a home. Home ownership was the goal of the youngsters in the latter half of the 20th century. Britain is changing to a more European model of homeownership, where people rent in early to mid-life, wait to inherit the money from their parents when in their 50’s and then buy.. thus continuing the circle - albeit in a different way to the last Century.

This means the demand for privately rented accommodation will, in the long term, only continue to grow. If you would like to know more about where the hot spots are for that growth in Clapham, then one place would be my property blog http://www.claphampropertyblog.com/ or if you want to drop me an email or telephone call, feel free to pick my brain on the best places to buy (and not to buy) in Clapham to ensure your rental investment gets you want you want. The choice is yours!

Do let me know if you are looking to invest and you could use a hand. if you are a ready and able investor sign up to my list that will bring packaged deals to your inbox! If you are looking for no-obligation advice then drop me a line and let's start the conversation.

How Would a Hard Brexit Affect Clapham House Prices?

I have been asked a number of times recently what a hard Brexit would mean to the Clapham property market. To be frank, I have been holding off giving my thoughts, as I did not want to add fuel to the stories being banded around in the national press. However, it’s obviously a topic that you as Clapham buy to let landlords and Clapham homeowners are interested in ... so I am going to try and give you what I consider a fair and unbiased piece on what would happen if a hard Brexit takes place in March 2019.

After the weather and football, the British obsession on the UK property market is without comparison to any other country in the world. I swear The Daily Mail has the state of the country’s property market on its standard weekly rotation of front-page stories! Like I have said before on my blog, there are better economic indexes and statistics to judge the economy (and more importantly) the property market. If you recall, I said the number of transactions was just as important, if not more, as a bellwether of the state of the property market.

Worries that the Brexit referendum would lead to a fast crash in Clapham (and national) property values were unfounded, although the growth of property values in Clapham has reduced since the referendum in the summer of 2016.

Now, it’s true the Clapham property market is seeing less people sell and move and the property values are rising at a slower rate in 2018 compared to the heady days of the first half of this decade (2010 to 2015), but before we all start panicking, let’s ask ourselves, what exactly has happened in the last couple of years since the Brexit vote?

Lambeth and Clapham House Prices have dropped by 1.55% since the EU Referendum...

...and yes, in 2018 we are on track (and again this is projected) to finish on 3,879 property transactions (i.e. the number of people selling their home) ... which is less than 2017 ... and not too far below the long term 12 year average of 4,071 transactions in the local council area.

So, it appears the EU vote hasn’t caused many major issues so far, however, if there was a large economic jolt, that could be a different game, yet how likely is that?

The property market is mostly influenced by interest rates and salaries.

A hard Brexit would subdue wage growth to some degree, yet the level of the change will depend on the undetermined type of Brexit deal (or no deal). If trade barriers are imposed on a hard Brexit, imports will become more expensive, inflation will rise and growth will fall, although at least we are not in the Euro, meaning this could be tempered by the exchange rate of the Pound against the Euro. In plain language, a hard Brexit will be worse for house prices than a deal.

So why did the Governor of the Bank of England suggest a disorderly hard Brexit would affect house prices by up to 35%?

I mean it was only nine years ago we went through the global financial crisis with the credit crunch. Nationally, in most locations including Clapham, property values dropped in value by 16% to 19% over an 18-month period. Look at the graph and if we had a similar percentage drop, it would only take us back to the property value levels we were achieving in 2015.

And let’s not forget that the Bank of England introduced some measures to ensure we didn’t have another bubble in any future property market. One of the biggest factors of the 2009 property crash was the level of irresponsible lending by the banks. The Bank of England Mortgage Market Review of 2014 forced Banks to lend on how much borrowers had left after regular expenditure, rather than on their income. Income multipliers that were 8 or 9 times income pre-credit crunch were significantly curtailed (meaning a Bank could only offer a small number of residential mortgages above 4.5 times income), and that Banks had to assess whether the borrower could afford the mortgage if interest rates at the time of lending rose by three percentage points over the first five years of the loan ... meaning all the major possible stumbling blocks have been mostly weeded out of the system.

So, what's next?

A lot of Clapham homeowners might wait until 2019 to move, meaning less choice for buyers, especially in the desirable areas of Clapham. For Clapham landlords, Clapham tenants are also likely to hang off moving until next year, although I suspect (as we had this on the run up to the 2015 General Election when it was thought Labour might get into Government), during the lull, there could be some Clapham buy to let bargains to be had from people having to move (Brexit or No Brexit) or the usual panic selling at times of uncertainty.

Brexit, No Brexit, Hard Brexit … in the whole scheme of things, it will be another footnote to history in a decade. We have survived the Oil Crisis, 20%+ Hyperinflation in the 1970’s, Mass Unemployment in the 1980s, Interest Rates of 15% in 1990’s, the Global Financial Crash in 2009 ... whatever happens, happens. People still need houses and a roof over their head. If property values drop, it is only a paper drop in value ... because you lose when you actually sell. Long term, we aren’t building enough homes, and so, as I always say, property is a long game no matter what happens - the property market will always come good.

Growth in UK property values as well as in Clapham seems fated to slow over the next five to ten years, whatever sort of Brexit takes place.

Do let me know if you are looking to invest and you could use a hand. if you are a ready and able investor sign up to my list that will bring packaged deals to your inbox! If you are looking for no-obligation advice then drop me a line and let's start the conversation.

Clapham Property Market: Is Sell to Rent the new Buy to Let?

It doesn’t seem two minutes ago that it was 90 degrees Fahrenheit in the shade (32 degrees Celsius for my younger readers), hosepipe bans looked likely and it was simply too hot to sleep at night, yet early indications were, that as the temperatures soared, the Clapham property market appeared to be doing the reverse and was already starting to cool down.

33.90% less people moved home in the Lambeth Borough in the first part of 2018, when compared to the average number of people moving home (in the same time frame) between 2014 and 2017

The average number of households who sold and moved locally between 2014 and 2017 in the winter and spring months was 353 homes a month.. yet in the same time frame in 2018, only 234 (on average) sold and moved.

So, what is the issue? Many have cited Brexit as the issue – but I think its deeper than that.

Brexit seems to be the “go to excuse” for everything at the moment – my neighbour even blamed it for the potholes! Anyway a few weeks ago, I was out for a family get together in another part of the UK when one of my extended family said that they were planning on buying their first home this autumn most of those present said they were stupid to do so because of Brexit. Nonetheless, half an hour later, another distant cousin said to the same family crowd that they were planning to sell their home; to which most said they were also daft to do so because of Brexit.

Both sides of the argument can’t be right! So, what exactly is happening?

Well if you have been reading my blog on the Clapham property market over the last few months, I have been discussing the threats and opportunities of the current state of fluidity in the Clapham property market, including the issue of OAPs staying in homes that are too big for them as their children have flown the nest, interest rates, inflation, lack of new homes being built and the long term attitude to homeownership.. yet I have noticed a new trend in the last few months.. the emergence of the ‘sell to renter’.

Sell to Renter

I have seen a subtle, yet noticeable number of Clapham homeowners that have been selling their Clapham homes, renting and wagering that, in the next few years, the Clapham property market will tumble by more than what they spend on their short-term rental home, before they buy another Clapham home in a couple of years i.e. a ‘sell to renter’. This type of ‘sell to renter’ is mostly predominant at the middle to upper end of the Clapham property market – so I’m not too sure if it will catch on in the main ‘core’ market?

So, what does this all mean for Clapham homeowners and Clapham Buy To Let landlords?

Well, in the short term, demand for middle to upper market Clapham rental properties could increase as these ‘sell to renters’ demand such properties. I would however give a note of caution to Clapham landlords buying in this sector of the Clapham property market as yields in this sector can be quite low. However, for homeowners of middle to upper market Clapham properties, you might have less people wanting to buy your type of property, as some buyers are turning to renting?

Like I have always said, Clapham properties are selling if they are realistically priced (realistic for the market – not a rose-tinted version where someone will pay 10% over the odds because everyone has access to the market stats with the likes of Rightmove and Zoopla!).

P.S Notice the spike in the graph, where the number of property sales jumped to 628 in the month of March 2016? That was all the Clapham buy to let landlords snapping up buy to let properties before the stamp duty rules changed!

Do let me know if you are looking to invest and you could use a hand. if you are a ready and able investor sign up to my list that will bring packaged deals to your inbox! If you are looking for no-obligation advice then drop me a line and let's start the conversation.