Currently we are focusing our energies on a couple of land deals. I went to see one of them on Friday to get a feel for the area and the local village. I was pleasantly surprised. You get blinkered working in London, and tend not to see anything of substantial value outside of London. There is, however, some reason for this, as when there is a decline in property prices, London holds its prices far stronger than the rest of the UK.
However, the market is shaky at the moment, especially above the £1m mark and it seems this current environment of instability will last for at least a couple of years.
This deal has two deviations from our norm, it is outside of London and it is a land deal.
The village, which is only a few minutes’ drive from the site, shows affluence, character and is family focused, in that the properties there were large and substantial; unlike the collection of studios and one and two bedroom flats you find in London, which is reflective of the breakdown of the family nucleus.
The kind of cars you see in the village are also symptomatic of wealth, all of the £50k plus variety.
We often speak of property rising in value, when we say this we do not really mean property rises in value. Of course you have inflationary pressures on the costs of construction, however, what is really happening is the underlying land is going up in price.
The price of something is determined by only two things, one is supply and the other is demand. The supply of land is finite, you cannot create anymore.
Fundamentally it is the land which is scarce and rises in value. This is demonstrated by buildings insurance policies. The reinstatement value is the same, irrespective of where the building is; although it may be slightly more expensive due to parking and working restrictions in some locations, but once you take these out, the construction costs will be pretty similar.
So, the conclusion is, it’s raw land which has the value. Especially considering we are on a very small island to begin with.
This piece of land is located in the north, just slightly to the east of Aylesbury; and it is just outside of the village, which seems to be bursting to expand.
The financials are very strong. The purchase price is £4m, and the post planning value is expected to be at least £10m.
The chances of getting planning are very very strong. Our architects and planners have been all over this deal, and they are of the opinion it will be granted.
The most money to be made on property is not on development but on planning; especially when you view this from how much work is required in comparison to the output you gain. Planning in essence is paperwork, no construction work is undertaken.
This deal represents a chance to come in right at the outset and take the cream. The structure of the deal is also very favorable, only £1.5m is required and the rest is payable on planning. This is important, as when planning kicks in so does the lending. This mean the rest of the money will probably be provided by the bank.
The contracts are in and the deal is ready to be executed. If this sounds like your cup of tea, get in touch.
Agony Agent is here to help!
Q: How can I retain a good tenant in my property?
A: This is a question all landlords should be asking. As a landlord, it is important to recognise that keeping your tenants happy will make your life a lot easier, and your property investment more profitable. If your tenants decide to stay when their original tenancy expires, you’ll not only avoid months of lost rent and time spent searching for new tenants, but you’ll also avoid signing a contract with possibly troublesome replacements. Provided that they pay on time, keep up to date with any maintenance that they’re responsible for and don’t cause any problems, good tenants are worth their weight in gold, and you should do everything in your power to keep hold of them.
Here are my top tips:
Inform tenants of all rules from the start
To avoid confusion and conflict further down the line, make clear what is expected of your tenants at the very beginning of your agreement. Provided that you stick to this, your tenants should be happy, as chances are they will only sign the contract if they can live with its terms; ensuring that they know exactly what they’re signing up for, the tenancy should run much more smoothly. Make these stipulations as specific as possible.
Address complaints as quickly as possible
Whether the problem is a neighbour or a leaking pipe, if your tenants feel that they are a priority and that you take their concerns seriously, they will be much happier to stay. Although it is acceptable in some instances for the resolution of some issues to take their time, you must also know that some situations should be handled immediately.
Keep up with property maintenance
When tenants are proud of the property they live in, they are far more likely to stay. Nobody wants to pay for a place with stained carpets and cracked tiles, so make sure that you stay up to date with maintenance.
Respect a tenant’s privacy
Once your tenants have moved into the property, it is only fair that you avoid visiting without giving them proper notice. Although you have the right to inspect the property, bear in mind that your house is this person’s home, and that inspections can feel intrusive. No-one likes being caught unaware by visitors when their house is in disarray, so try to give at least 48 hours’ notice. The easiest way to do this is by including it as part of the tenancy agreement. That way, everyone knows exactly where they stand.
Offer incentives
Little gestures go a long way, especially in areas where tenants have more properties to choose from. When your renters first move in, try and perform some small gesture of goodwill, whether that’s providing your tenant with a package of moving day essentials or a bottle of wine. During the year, small measures, such as sending a Christmas card, help to create a human face and encourage loyalty. On a less personal level, you may wish to consider holding off on increasing rents annually, or offer to re-carpet or repaint a room.
These tips should help; but if your tenants have their minds set on moving then there is nothing you can do about this, but to keep your fingers crossed that your new tenants will be as good as your last.
