Rents are rising for Clapham Landlords - are they rising for you?

Those of you that know me know that I'm a keen lover of BTL. A steady, passive income stream. Whether you are into single let ASTs or slightly more work/reward and you invest in HMOs, truth remains is that many people I meet are struggling with the FEAST/FAMINE that comes with building, development, buy to sell, you name it.

Nothing beats a steady income stream. Steady, yes you read that right. It's steady. After all, if rents aren't paid you've protected yourself with a rental warranty, right??

So why am I so keen, especially now when the government has it out for us poor landlords?

Simple. Today is January 31st. The day of the self-assessment tax return. The day when a lot of landlords will be hit with the hard reality that their taxes have gone up, because they've not been paying attention. They've let their investments ride on the capital appreciation of years gone by, being able to refinance their way out of trouble. Not any more. These landlords will be calling their agents tomorrow if not today and demand rent increases because hey, costs have gone up! And if everyone's costs are going up (taxation) then tenants will bear the cost. To an extent. You can't just ask what you want and expect to get it, come on landlords you're not a millennial!

But the truth is that a lot of landlords will be hit with higher agency fees in the next 6 months too as the tenant fee ban comes into effect. That's another 10-25% on top of the letting fee. I've run an agency; my income was split 75/25, with 25% of revenue coming from tenant fees. That's a profit margin in a business if the agency doesn't take action!

But rents can't rise forever, you say? Yes they can. ONS has wage inflation at 3.3% in the 3 months leading up to November 2018. Tenants, on average, have the means to pay. Landlords, on average, have significantly increased costs this year. You do the maths! Rents were up in the final quarter (in London) by 2%, and voids down to 4 days from 5 days the year before as reported by a large independent estate agency which operates Londonwide.

These are cold hard facts. Yet I was at a well-known property networking meeting last night and landlords were advised to be cautious and not to raise rents beyond the tenants' ability to pay. This goes without saying of course. My age old adage is to charge market rent. What is fair for me, before I consider what is fair for the tenant. After all they are not going to be paying the tax bill; I'm obliged to operate as a business and charge a fair market rent; ultimately those that do not and undercharge will find themselves without profit and sell up sooner rather than later. Being a landlord is not a charity-led enterprise after all!

Buy To Let still is my favourite property strategy. It's long-term, the gains are good over time and most of all it's still the most reliable source of income - as a great man once said, don't wait to buy property, buy property and wait.

Clapham ‘Home Owning’ Movers and Shakers in 2018

It’s now commonly agreed amongst economists and the general public that the dramatic rise in Clapham property prices of the last six years has come to an end.

Read the National newspapers, and they talk of doom and gloom in the British housing market with such things as strained buyer affordability (as property prices have increased over the past six years at a far faster pace than average salaries), a lack of new properties being built and the Brexit uncertainties over the last two and half years being blamed for the slow down - yet in the last 12 months, people have still been moving, buying and selling in Clapham at levels similar to the last six years - something tells me we have a case of ‘bad news selling newspapers’.

So instead, let me share with you what, exactly, is happening in the Clapham property market, and more specifically, who is moving and why in Clapham. Most of the sales in Clapham over the past year were flats, which on average sold for £571,150. Terraced properties had an average sold price of £1,246,050 and semi-detached properties averaged at £1,586,600.

In Clapham in the homeowner sector in 2018 (i.e. owner occupation), 309 households moved within the tenure (i.e. sold the home they owned and bought another one) and 60 new households were created (i.e. they moved from living with family/friends and bought their first home without privately renting).

What does this mean for Clapham buy to let landlords? Well looking at the graph, it appears bad news for landlords. There were 144 households that moved into the home owning (owner occupation) tenure from the private rented sector, whilst on the other side of the coin, 113 Clapham households moved to the private rented sector from owner occupation … which appears on the face of it, a reduction in the private sector.

My research has calculated that in 2018, an additional 150 new households in the Clapham private rental sector were created

...and it will continue to grow at those levels for the foreseeable future.

I have one final thought and opportunity for you Clapham property investors. 75 owner occupied households in Clapham sold in last year where the homeowners had passed away. These properties can be a potential goldmine and offer great returns. The reason being is some members of the older generation who have owned these homes for decades have spent money on high capital items (double glazing / central heating etc.) but not spent money on more superficial low-ticket items such as up to date carpets, kitchen, bathroom and decorating (vital if you want to sell your property for top dollar). These properties can often be bought cheaply because most buyers can’t see past the avocado or brown bathroom suite from the 1970’s and the dated decor, so if you were to buy wisely and do the works, you could sell it on for a healthy profit.

So, whatever is happening in the world with Brexit, Trump, China, and the Stock Market … the Clapham housing market is in decent shape for the medium to long term. If we do have small corrections in values in the next 12 to 18 months, in the long term, house prices have always returned ... and returned with vengeance. Like I say to anyone buying a property, be they a first time buyer, landlord or homeowner ... property is a long game ... and if you play the long game, you will always win (although isn’t that true in most aspects of life?).

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.

Top 25 Most Saleable Streets in Clapham

Following on from my last article, if you recall I said that Kings Avenue had the most properties sold in the SW4 Clapham postcode, yet I felt that this information wasn’t telling the whole story, as some roads in Clapham have more properties on them than others. Therefore, I promised that I would compare the average number of properties sold by the actual number of properties on that street, to find out the streets whose owners proportionally moved (or sold) more often than the rest of the locality.

To give some foundation to the article, in 2017 Clapham homeowners had, on average, lived at their existing address for 17 years and 6 months. However, when I looked at the difference between homeowners with and without a mortgage; Clapham homeowners without a mortgage had lived in their Clapham home for an average of 23 years and 9 months compared with 10 years and 1 month for homeowners with a mortgage. Interestingly, Clapham’s Lambeth Council house tenants have on average resided at their present home for 11 years and 4 months, whilst finally for those who rent from a private landlord, tenants generally have lived in their property for an average of 3 years and 11 months (up from 3 years 5 months only five years ago).

The SW4 street in the top 25 saleable streets with the highest number of households on it is Kings Avenue, which has 466 residential addresses. Yet since 1995, only 511 properties have changed hands (some multiple times!) .. which means the street’s saleability or churn rate is 109.7%.

However, the street or road that has the highest saleability or churn rate is Sandmere Road … which has 159 households on it, yet since 1995 there have been 280 house sales … a saleability rate of 176.1%. Here is the full breakdown of the top 25 streets …

So, as you can see, some interesting statistics and a lot more correlation between saleability rate and property values (unlike the article last time where we compared value to ‘out and out’ raw sales figures).

Therefore, what does this all mean to Clapham homeowners and Clapham landlords? Well these 25 streets are the best performing streets out of the 231 streets in the Clapham (SW4) area so if you live/own a property on those 25 streets … you are sitting on a very saleable street. If you want to find out how saleable your street is .. please drop me a line and we can discuss this further.

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.

Kings Avenue, Clapham …the road where people move the most

Many folks say moving home is the most stressful thing. Moving home is like someone (and that someone is usually you and you are the cause of this devastation) has collected all your worldly goods, put them into brown boxes and into a lorry making your whole life look like a Amazon delivery van, only to spend the next six months unpacking it all, whilst unable to find important things like your bank cards, ‘those’ shoes or special jewellery!

We wish we could be instantly transported like in Star Trek “Beam me up Scotty to a blissful moved in state”. Yet the week you move, it’s like an episode from the original 1960’s series Star Trek, when the crew had a transporter accident with an ion-storm sends Kirk and Spock into an alternate reality, where the caring Federation is the merciless Terran Empire, and the USS Enterprise is a warship and chaos eschews!!!

Star Trek aside, when you decide to move and before the stress of living out of cardboard boxes for months descends; first you trawl the portals (Rightmove/Zoopla/On The Market) to find a new house, which out of the hundreds of properties available to buy, you will probably only view around four or five of them, for no more than 20 minutes each. Then, you will arrange a second viewing of one or two of those initially viewed properties for the estate agency industry stated average of 30/45 minutes maximum (fascinating when you think most people take hours to decide what clothes or shoes to buy but minutes to spend hundreds of thousands of pounds on their next home!). Then you put your property on the market with an estate agent, find a buyer for your Clapham property, agree a price for both, then instruct solicitors. The property becomes sold ‘subject to euphuism’ ... sorry ‘contract’ … as solicitors and surveyors and mortgage companies pick holes in the paperwork, threatening to wreck the chain at any moment, whilst you can’t get too attached to the property you want to purchase in case the sale falls through … phew - stressful or what??!!

Is it worth it? Worth the stress? The brown cardboard boxes? Well many Clapham people think so.

In the last 12 months, 324 families have sold and moved home in Clapham (SW4)

Yet the question I want raise is ... do people on certain streets in the SW4 postcode move more often than others? Well, the answer might surprise you. I looked at the Land Registry for the all the property sales going back 23 years (to 1995) in the SW4 postcode whilst also calculating the average value of a property on a particular street/road (to see if there was a correlation between price and moving). So initially looking at the top 10 streets in the postcode, in terms of pure out and out house sales, Kings Avenue is the winner with an average of 22.22 house sales per year (since 1995) as on the graph below.

And to look at the bigger picture, the table below shows the top 25 streets, with the average value of a property on that street. As you can see, there is no correlation between the average value of a property and the number of times a property gets sold on that street.

However, I still felt the information wasn’t telling the whole story … some roads in Clapham have many more properties on than others, so I wanted to then compare the average number of properties sold by the actual number of properties on that street, to find out the streets whose owners proportionally moved (or sold more often) than the rest of the locality.

In the next article, (and I promise I won’t mention Star Trek again), I will answer that question in great depth ... and the results should (as they did me) certainly raise an eyebrow. The question is ... do you live on one the top 25 Clapham most saleable streets in Clapham (SW4)?

Come back to my Clapham Property Blog for the next article to find out!

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.