Currently, we’re in the midst of a tricky development in St John’s Wood. The property was purchased, with a view of keeping it as one family home, for £2.675M. Next door, which was a replica, sold for £3.9M. The house next door, on the other side, was due to come back on the market at over £5M.
So, it was a good deal - at the time. However, as time progresses, the market changes. What was a good deal at the time, is not so good anymore. Every good deal is contingent on time. Move the clock, and the deal may not be so lucrative.
The property was purchased in the beginning of 2015. This was an environment where the threat of a Labour government looked like a reality, with them came the dreaded Mansion tax. This environment was layered with not one but two rounds of stamp duty rises, affecting the top end of the market first. Therefore, the market for houses at this end declined rapidly. We had to go back to the drawing board and decide what to do with the asset. What became apparent was we did not purchase a house, we actually purchased two flats, under two titles and paid the stamp duty accordingly. This is an important point, as two titles means that we are able to construct up to six rooms under each title. We figured if the top end of the market was wobbly, we should focus in on the bottom end. In property, this is the end which is the most immune to fluctuations in the market.
It’s mostly investors who drive the prices up. Their reason for purchasing is two-fold, one to preserve capital and secondly to see an increase. Conversely, if we look at the bottom end of the market you’re not only dealing with investors, there also exists a strong demand from end users, for example, first time buyers whose only goal is shelter. We forget there is a fundamental demand for houses in this country, and the current rate of build is drastically short of meeting this demand.
All of this points to an increased protection from fluctuations in the market by concentrating on the bottom end. We devised a scheme where we could put in ten studios, which are as small as 200 sq. ft. These are expected to rent well, and could be sold as individual units in the future. We have gone one step further to enhance the value in these studios by using innovation. Property is generally a very backward industry, most developments do what’s already been done, they just try to do it better. We really want to add something here, something which will ensure these properties really add value to the occupants. We have come up with a way in which the space becomes multi functional, this means you can get 600 sq. ft. of living space, just not all at the same time. This project is in motion and completion is set for late next year.
Agony Agent is here to help!
Q: How often do I need to carry out Gas Safety inspections on my Buy to Let property?
A: It is a legal requirement for all rental properties to have this conducted every 12 months, or when a new gas appliance is introduced to the rental property. You are legally required under the Gas Safety Regulations 1998 to maintain all gas appliances and flues that have been provided for your tenants. No matter who you are or what type of property that you own, you are required by law to ensure that each gas appliance in the property receives an annual safety inspection; this includes the boiler, oven, hob, fire and anything else that you have supplied in the property.
Even if you have an agent involved in looking after your property, you should always request a copy of your gas safety certificate, so you know that this has been completed as good practice. It will keep you safe in the knowledge that the work has been completed. There are lots of other legal requirements, for example smoke alarms and carbon monoxide detectors. Please do get in touch if you would like further information.
Richard Bond
Flying Your Plane
The mind perceives and receives information through the five senses. It is our thinking, feeling, willing function. And the intelligence is our discriminating faculty, our internal councillor who advises the mind whether to do this or do that. Each one of us is like an aeroplane flying through the sky, and the turbulence that we have to navigate depends upon the mode of nature in which we choose to live.
Some teachings explain that there are three modes of nature in the material world – goodness, passion and ignorance. When we live in goodness life is calm, peaceful, sustainable, prosperous, nurturing and moral. When we live in passion, life can be full of frustration, ups and downs, some anger, high points of happiness and low points of despair. When we live in ignorance, we suffer from delusion and bad character and our life is replete with defects and sadness.
We can greatly help the instruments of our psyche by making choices to live in goodness and eschew passion and ignorance through what we eat, read, listen to, watch, associate with, speak and how we exercise. Why fly your plane through great turbulence when the knowledge is available for you to fly the same plane in calmer conditions for a happier and more successful life?
Abraham Goldberg