Don't buy property its about to crash - I've been hearing this from the so called experts for the last five years. But guess what? if the naysayers keep this up for long enough then there will come a time when they will be proven right. That could be tomorrow, a month from now or 10 years from now. Despite the worst recession in a lifetime, or at least since 1930, property prices have held their values fairly well. Has property crashed? No. Has it moved downwards slightly? Then the answer is yes. But let's put this in context.
Everything that we invest in moves in cycles. That is it has ups and downs. If you drew a circle on a piece of paper and hold it in front of you at the top is the high. At the bottom the low. Over a period of time any investment will complete a circle (cycle) of highs and lows. But interestingly the low in each investment is normally higher than the previous low. The highs tend to go higher. This applies to property, commodities, shares etc.
Today and every day for the past five years I've been hearing that property prices are going to crash. But what is meant by a crash? If you think property prices will go back to where there were twenty years ago then I'm afraid you will be very disappointed. Inflation and wage rises over the last twenty years will ensure prices don't go that low.
Let me give you an example: A few months ago I was out for a drive with my step-father, who is now in his 80's. We passed a house with a for sale sign. He told me he used to own the house many many years ago. He had bought it for £2000 and sold it for £4000. He thought he had done really well doubling his money. Later I checked the for sale price on the internet and the property was listed for £269,000. Since my step-father bought and sold the property there have been several recessions and investment cycles. Even now house prices have reduced a little as a result of the credit crunch but I would consider it extremely unlikely that the price of the property listed for £269,000 would reduce to just £2000.
History shows us that despite house prices moving up and down on average houses will double in value every ten years. We know that everything moves in cycles and we are heading towards the bottom of the current cycle in the property market. However, if you can get mortgage financing then the best time to buy is now.
No matter what investments you hold, nobody can predict the top or bottom of the investment cycles. The best most investors do is to read the 'change' signals and hope to get into the investment just after it hits the bottom and out of the investment when it has just hit the top of the cycle. An investor then rides the market until they see the signals for the next shift upwards or downwards.
The property market has been in a downward movement for about four years. Indications are that we are nearing the bottom of the property market and may already have started the move towards the next boom market. If we have reached the bottom then buying the house my step-father used to own for £269,000 would be a shrewd investment and you would then be in a good position to ride the next boom. If we haven't reached the bottom then if you bought the property and lost a few thousand in value the losses would soon be wiped out as house prices start increasing again. Either way I believe now is the best time to buy property. If history repeats itself, and it usually does, in ten or fifteen years time the house will be worth over £500,000. Would you be happier waiting for it to reach that level or buy it now while it is worth £269,000.
I know what I would be doing. I'd be buying now at today's prices
Monday 18 April 2011
Friday 1 April 2011
Bond Scheme Runs Out of Money
As a landlord, when letting a property I take the risk that I will have a good tenant, capable of looking after the property, paying his/her rent on time and being a good neighbour. Unfortunately, no matter how many checks I do I often can't tell until the tenant is in the property how good they are going to be.
To protect against damage and rent arrears Landlords ask for Bonds. I know that for a lot of tenants the cost of a bond is something they cannot afford and so over the years Bond Schemes have started to help tenants get into properties. Schemes, such as, Solas Bond Scheme run here in Wales by the Welsh Assembly has been around for many years and is an organisation I have used for several years.
It concerned me last year when they started revoking guarantees on existing tenancies. Claims submitted to them at the end of last year were ignored. It took months of emails and phonecalls to get the paperwork through to make the claim.
Since January, I have been making weekly phonecalls on progress with claims. After many excuses the claims were finally approved but not paid. So for the past few weeks I have been chasing every week for payment.
Today, I received a phonecall, only after threatening legal action, advising they have run out of money and can't make the payment until the new financial year.
What credibility does an organisation have if it can't pay it's claims.
Will I be taking on Solas Bond Scheme applicants again? No
Will I recommend them to another landlord? No
To protect against damage and rent arrears Landlords ask for Bonds. I know that for a lot of tenants the cost of a bond is something they cannot afford and so over the years Bond Schemes have started to help tenants get into properties. Schemes, such as, Solas Bond Scheme run here in Wales by the Welsh Assembly has been around for many years and is an organisation I have used for several years.
It concerned me last year when they started revoking guarantees on existing tenancies. Claims submitted to them at the end of last year were ignored. It took months of emails and phonecalls to get the paperwork through to make the claim.
Since January, I have been making weekly phonecalls on progress with claims. After many excuses the claims were finally approved but not paid. So for the past few weeks I have been chasing every week for payment.
Today, I received a phonecall, only after threatening legal action, advising they have run out of money and can't make the payment until the new financial year.
What credibility does an organisation have if it can't pay it's claims.
Will I be taking on Solas Bond Scheme applicants again? No
Will I recommend them to another landlord? No
Friday 12 March 2010
Who needs Landlords?
Better late than never, I have just caught up on the news concerning the Wilsons. A husband and wife team who gave up teaching maths to become landlords in Ashford. They have a property portfolio of around 700 properties. The article I read, states they suffered badly during the recession and were only saved from being made bankrupt by Bank of England reducing interest rates. It goes on to say about get rich quick schemes and bad business decisions. The tone of the article came across as anti Landlords as did most of the comments made by readers. Yet I saw very little comment made about the number of tenants who failed to pay their rents causing the Wilsons to be in their predicament in the first place or the invaluable role they played in providing accomodation to people who don't own their own homes.
In comparison, my own BTL portfolio is quite small at around 60 properties. Before the recession I experienced very little rent arrears with only one or two of my tenants being in arrears. That changed during the recession to 95% of my tenants having rent arrears. So I can empathise with the Wilsons. Was it my fault that the recession hit so many of my tenants causing the defaults? That certainly isn't bad business practice on my part it came down to bad practices from banks causing the worst recession since the 1930's. The Wilson's didn't create the recession. They didn't cause their tenants to default on rent payments. They didn't cause their tenants to lose jobs. They are the victims of the current financial situation caused not by them but by greedy bankers and governments who failed to take action when it was needed. Yes, they benefited from the Bank of England reducing rates but I'm sure that like me they have many lenders who haven't reduced rates but instead continued to put rates up blaming the economy for increases.
In my town the local council advise they have a shortfall of 6000 properties. My 60 properties are a pittance compared to the actual number of properties needed for homeless families in this area. I like to think I am providing a service and helping families have a decent home to live in which the local council can't provide. Across the country it is a similar situation. Governments and Councils just don't provide sufficient housing to meet demand.
Who needs Landlords? The whole country does. Without us there would be far more homeless families. So give us a break. We aren't the villans in this country. We provide a much needed service. Yes, we make some money out of it. We also lose a lot of money from tenants non payment of rent and greedy lenders. We take the risks and we live with the consequences but doesn't that apply to anyone in business?
In comparison, my own BTL portfolio is quite small at around 60 properties. Before the recession I experienced very little rent arrears with only one or two of my tenants being in arrears. That changed during the recession to 95% of my tenants having rent arrears. So I can empathise with the Wilsons. Was it my fault that the recession hit so many of my tenants causing the defaults? That certainly isn't bad business practice on my part it came down to bad practices from banks causing the worst recession since the 1930's. The Wilson's didn't create the recession. They didn't cause their tenants to default on rent payments. They didn't cause their tenants to lose jobs. They are the victims of the current financial situation caused not by them but by greedy bankers and governments who failed to take action when it was needed. Yes, they benefited from the Bank of England reducing rates but I'm sure that like me they have many lenders who haven't reduced rates but instead continued to put rates up blaming the economy for increases.
In my town the local council advise they have a shortfall of 6000 properties. My 60 properties are a pittance compared to the actual number of properties needed for homeless families in this area. I like to think I am providing a service and helping families have a decent home to live in which the local council can't provide. Across the country it is a similar situation. Governments and Councils just don't provide sufficient housing to meet demand.
Who needs Landlords? The whole country does. Without us there would be far more homeless families. So give us a break. We aren't the villans in this country. We provide a much needed service. Yes, we make some money out of it. We also lose a lot of money from tenants non payment of rent and greedy lenders. We take the risks and we live with the consequences but doesn't that apply to anyone in business?
Wednesday 27 January 2010
Lenders Greed
As a buy-to-let property investor I have enjoyed relatively low interest rates during the past year by the majority of my lenders with the exception of GMAC loans. Despite record low Bank of England mortgage rates, low Libor Rates and generally low money rates the GMAC loans have continued to increase.
Loans managed through the Skipton Office or on sold to Building Societies have repeatedly increased during the last 12 months. Just this week I have had loans managed by Derbyshire Building Society and Amber Home Loans increase by more that £100 per month. Each letter states that 'e are experiencing exceptional circumstances'making the cost of borrowing more expensive. Certainly I agree that we are experiencing exceptional circumstancesof greed by lenders who have over exerted themselves and have no idea of managing budgets.
Imagine what would happen if tomorrow I turned around to my tenants and told them I had to increase their rents by £100 a month effective immediately? I've no doubt I would lose most of my tenants.
With it still difficult to get BTL lending in the UK it would be nice to see some sort of restriction on these unscrupulous lenders who are just out to line their pockets.
Loans managed through the Skipton Office or on sold to Building Societies have repeatedly increased during the last 12 months. Just this week I have had loans managed by Derbyshire Building Society and Amber Home Loans increase by more that £100 per month. Each letter states that 'e are experiencing exceptional circumstances'making the cost of borrowing more expensive. Certainly I agree that we are experiencing exceptional circumstancesof greed by lenders who have over exerted themselves and have no idea of managing budgets.
Imagine what would happen if tomorrow I turned around to my tenants and told them I had to increase their rents by £100 a month effective immediately? I've no doubt I would lose most of my tenants.
With it still difficult to get BTL lending in the UK it would be nice to see some sort of restriction on these unscrupulous lenders who are just out to line their pockets.
What Green Shoots?
Yesterday's official figures indicated that the UK economy was finally out of recession. Growth was at 0.1% but could be revised down once the final are released by the National Statistics Office next month. If the 'normal' revision takes place then we will find ourselves at zero growth or back into the negative.
Am I the only one who sees the so called growth as a normal increase in spending due to the lead up to Christmas and Post Christmas sales? The CBI have been saying businesses had a bumper Christmas compared to last year not because sales we up but because there was less competition due to the number of high profile business such as Woolworths which had ceased trading.
Unemployment figures last week showed a decrease by seven thousand people. Again it is normal for businesses to take on temporary staff to cope with Christmas demand. Are we likely to see unemployment go up again when the next set of figures are released?
I hesitate to say we are out of recession and I expect worse to come as I see no evidence of green shoots just a lot of politicians wearing green coloured glasses.
Am I the only one who sees the so called growth as a normal increase in spending due to the lead up to Christmas and Post Christmas sales? The CBI have been saying businesses had a bumper Christmas compared to last year not because sales we up but because there was less competition due to the number of high profile business such as Woolworths which had ceased trading.
Unemployment figures last week showed a decrease by seven thousand people. Again it is normal for businesses to take on temporary staff to cope with Christmas demand. Are we likely to see unemployment go up again when the next set of figures are released?
I hesitate to say we are out of recession and I expect worse to come as I see no evidence of green shoots just a lot of politicians wearing green coloured glasses.
Monday 25 January 2010
Mercedes F1 Launch
This morning in Stuttgard Mercedes GP F1 launched their new car or rather I should say relaunched last years Brawn GP in the new silver arrows livery. But for me the highlight is the return of Michael Schumacher to Formula 1.
As a fan of Michael Schumacher's from his first drive in an F1 car with Jordan I was saddened when he retired in 2006. For me Formula 1 has never been the same and his talent has been sorely missed. To say I am excited at his return is an understatement. For the first time since 2006 the F1 season can't start soon enough.
As a fan of Michael Schumacher's from his first drive in an F1 car with Jordan I was saddened when he retired in 2006. For me Formula 1 has never been the same and his talent has been sorely missed. To say I am excited at his return is an understatement. For the first time since 2006 the F1 season can't start soon enough.
Sunday 24 January 2010
Saturday 23rd January 2010 - Karting at Llandow
This was a trip that had been planned for a long time but cancelled numerous times due to the heavy snowfalls we had seen over the past six weeks. So it was with relief that we opened the bedroom curtains on Saturday morning and saw bright blue skies and snow free gardens. Karting was on.
Its ten years since my husband quit karting and I haven't missed the weekly grind of nights spent building engines, weekends of travelling around the country practicing and racing or the continual hunt for sponsorship. It has been so pleasant to relax with friends and family over late night dinners, go to the cinema or just enjoy other activities together as a family. So my major concern was will my husband get the bug and want to start racing again.
Saturday's trip had been planned with some friends, Rhys and his two boys, who have just discovered karting. It is also an opportunity for our ten year old daughter to have a try at karting and see if she has the motor racing bug or not.
The day doesn't start too well with our daughter waking up with some viral infection. Her temperature is up and she is vomiting. 'Do you want to stay home?' I ask.
'No way' is the reply, 'I want to go and even if I don't drive I want to support the others'.
Llandow is an old air base and the runways have been modified for racing. It offers owner/driver racing and corporate karting. The routine is simple kids go out for one session, corporate have a session and then adult owner/drivers get their chance to shine. Very informal, everyone is friendly and helpful.
We arrive at lunchtime. I was up very early Saturday morning baking bread and cakes and making a picnic but it's not appreciated and everyone is more concerned with karting than eating. So much so that there is no time for eating during the day and the picnic is saved for our evening meal which we finally eat at home in the warmth of our kitchen.
As for the karting, Ron, Rhys and the two boys have a fantastic time. Debbie & I spend the day freezing cold trying to smile and be as encouraging as possible. Our daughter spends the day in the club rooms being sick. A great family day out!
Did my husband Ron get the karting bug again? Don't know he's full of aches and pains this morning and very non commital.
Does our daughter have the racing bug? Don't know she didn't get a run in a kart too busy being ill
Will we do karting again? Probably
Its ten years since my husband quit karting and I haven't missed the weekly grind of nights spent building engines, weekends of travelling around the country practicing and racing or the continual hunt for sponsorship. It has been so pleasant to relax with friends and family over late night dinners, go to the cinema or just enjoy other activities together as a family. So my major concern was will my husband get the bug and want to start racing again.
Saturday's trip had been planned with some friends, Rhys and his two boys, who have just discovered karting. It is also an opportunity for our ten year old daughter to have a try at karting and see if she has the motor racing bug or not.
The day doesn't start too well with our daughter waking up with some viral infection. Her temperature is up and she is vomiting. 'Do you want to stay home?' I ask.
'No way' is the reply, 'I want to go and even if I don't drive I want to support the others'.
Llandow is an old air base and the runways have been modified for racing. It offers owner/driver racing and corporate karting. The routine is simple kids go out for one session, corporate have a session and then adult owner/drivers get their chance to shine. Very informal, everyone is friendly and helpful.
We arrive at lunchtime. I was up very early Saturday morning baking bread and cakes and making a picnic but it's not appreciated and everyone is more concerned with karting than eating. So much so that there is no time for eating during the day and the picnic is saved for our evening meal which we finally eat at home in the warmth of our kitchen.
As for the karting, Ron, Rhys and the two boys have a fantastic time. Debbie & I spend the day freezing cold trying to smile and be as encouraging as possible. Our daughter spends the day in the club rooms being sick. A great family day out!
Did my husband Ron get the karting bug again? Don't know he's full of aches and pains this morning and very non commital.
Does our daughter have the racing bug? Don't know she didn't get a run in a kart too busy being ill
Will we do karting again? Probably
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