Some of the big names in house building and property development are thought to be assembling land banks using a mixture of private and bank financing. Many insiders in the property sector believe that although house prices may be fairly volatile throughout 2010 with prices bouncing along the bottom they will remain relatively constant on a year on year basis. So when the market turns those brave souls in the industry who have had the for thought to buy while the heard are selling, will be very well placed to ramp up the build phase and get the maximum profits when the upturns comes.
March 9, 2010
March 8, 2010
High yielding investment funds?
Has the commercial property boom of recent years been fueled by fund managers? This is the question being asked, has the demand for higher yielding investment funds driven property fund investment managers to pay too much for secondary locations and shorter leases? Now that the bubble has burst and the heard have turned, are there opportunities for investors to make the higher returns that inflated this asset bubble?
Questions like these are causing investors to question the motives of some I.F.A’s and fund managers who profit from the cash going into a fund more than the performance of the funds they recommend or manage.
March 7, 2010
March 6, 2010
Buying my first home
The most coveted of prizes for all estate agents, property developers, and house builders is the “first time buyer”. It looks like this increasing rare breed has been almost hunted to extinction, the use of a devastating weapon is the main reason for the high numbers culled in their infancy. This most effective weapon is of course “tighter lending criteria”, when in the hands of a well trained banker this weapon can devastate a huge number of first time buyers before they even make it to the estate agents window.
This is probably why we now have the lowest level of home ownership in the UK since 1991, so where have all the houses gone? Don’t worry they are still there but many have changed hands, the fall in the owner occupier market has been compensated by an increase in the private rented sector. Private landlords are now providing accommodation for those first time buyers who have been unable to obtain the mortgage funding they desperately need to obtain their first home.
Renovating ex-local authority houses
What can be done by way of improvements / modernisation / upgrading to the latest property regulations, and decor, progressed by private investors to ex-local authority properties was outlined in an article in a national newspaper last weekend (Sunday 28th February). The national Sunday newspaper article concerned highlighted what had been achieved in the Midlands.
Ex-local authority houses usually have a lot going for them in that more often than not they are located in an area which has easy access to local amenities :- shops, doctors, dentists, buses, and schools.
Such ex-local authority properties are also usually well built, have reasonably large sized rooms, have been maintained well by the local authority concerned. They also often have a good sized garden with space to have a shed or other outbuildings. Some of these properties can be adapted so that off road parking can be provided, if not already provided.
After the builder has done the necessary work it can be hard to imagine what the house looked like originally, but builders can make such properties into lovely modern homes.
March 5, 2010
Ten things you need to know before you start a property renovation
1. Before you buy get a member of the Royal Institute of chartered surveyors to give you a full written report. They are the most experienced and best placed individuals to give you all the facts in an unbiased report. They have the skills and experience to then produce a schedule of works, once you have a schedule of works you can look for experienced contractors to undertake the renovation.
2. Choosing the right contractor : You should choose a contractor that has experience with the type of renovation that you are undertaking. They will be able to provide you with a fixed price quotation for all the items on your schedule of works. Your surveyor will be able to look at your contractor’s quotation and advise you on savings and specifications.
3. Start with the end in mind: Get a firm idea on paper of exactly what you want form your renovation project, take the time to think about finishes, floor heights, security systems, phone points, TV and audio points, the position of sockets, furniture, and how you will use the space.
4. Lead times: Certain items and renovation processes have lead times, drying times, importing times, and installation times, if your require new services you may not need them until the end of the project but they are some of the first things that need to be taken care of.
5. Budgets, funding and contingency: Winging it is NOT an option! One of the worst things that can happen during any renovation or conversion is running out of money. Money is the oxygen that a project needs to run efficiently, if funding gets too tight it often forces very poor decisions that can affect the end result and value of a renovation project.
6. Project phasing and works schedules: If you have your dream property but you do not quite have enough funds to safely carry out the renovation or development, it is a good idea to produce a schedule of works or phase the works. If you do this do not be tempted to do the nice bits first, do not fit the new kitchen and bathroom until the leaky roof has been repaired.
7. Set a sensible period of works: Good quality renovations of small commercial or large residential properties can take years, a complex renovation or conversion of listed buildings or buildings in a conservation area need to be agreed with the local authority conservation department. Liaising with a conservation officer can slow down vital stages in the project so make sure you allow enough time.
8. Follow your plans but follow your guide: Choose a surveyor and main contractor who will follow your plans and choices but be guided by their advice. It is truly the mark of a good contractor if they can lead and advise their client but remain mindful of following their wishes. Choose a contractor who will lead the project and manage the many components of a successful renovation or conversion. They are your one of your biggest assets so listen carefully to their advice and then make an informed decision once you have all the facts.
9. Passion and a commercial rational: Make sure you get what you want, but when spending tens of thousands of pounds always imagine yourself as an investor in the project. Peoples circumstances change, and if you chose to sell or change the use of your property would you realise the investment you have made?
10. Plan and enjoy: plan your project out as much as possible, make well thought out decisions early on and before a contractor is waiting on the phone for a decision. If you really want to enjoy your project and relax. The more you plan and research the more relaxed you will be during the renovation or conversion. Celebrate the milestones, spending that sort of cash always carries some level of stress, don’t wait until the end to celebrate enjoy the milestones along the way. Remember once you have finished a well planned project you will have something unique, something to be proud of, and some good memories!
March 4, 2010
Institutional investors look to fund residential investment developments
Some of the UK’s biggest property companies and investment funds are lobbying the treasury for alterations to the stamp duty regulations. It makes investors purchasing multiple residential property investments and residential investment property portfolios suffer a disadvantage in comparison with property investors who purchase single investment properties.
They are lobbying for a “residential property Reit”, as a special purpose investment vehicle in which to buy and hold residential investment properties. These “residential property Reit’s”, will be far more tax efficient than traditional investment property companies. The government is keen to encourage private investment funding for residential investment property developments. So should it make the efforts to adjust the tax system in favor of instructional property investors which will in turn increase the availability of social housing?
March 2, 2010
New build development for profit
House builders are starting to see the first signs of a recovery in the UK housing market, with the values of land gradually improving and their off plan sales improving they can see the first green shoots of recovery in the house building sector.
One of the remaining challenges for the sector is down valuing, when property surveyors are recommending lower property values than that estimate by the developers. The values of the finished homes on new build developments is the most critical number in a development appraisal these figures make up the GDV, gross development value. Once the land costs, build costs, and overheads are removed the remaining balance is the developer’s profit. If the property developer over estimates the final sales prices the results can be financially devastating for the development project and the property developer. With more land owners looking to complete joint venture as a result of a less fluid market for residential development sites, more and more investment consortiums are pawing through the figures and estate agents comparables to make sure the sums add up.
February 28, 2010
Building plots for sale in the midlands
There are many ways to find building plots in the midlands but many developers do not like to look at site that have been on the market for some time. The reason for this is that they believe that if the site or plot was a great deal one of their competitors would have already snapped up the site. The same applies for many vendors, those who own potential residential or commercial redevelopment sites often prefer to sell “off market”. There are various reasons for this but many spend time and money negotiating with potential purchasers who cannot actually buy the land or they will switch terms at a late stage in the land deal.
Many plot sellers prefer to deal with a broker or joint venture partner who they know is more likely to close the deal and deliver the profits. So many potential residential redevelopment sites are sold “off market”, through a closed network of established developers, main contractors and joint property development partners. Established main contractors have the experience and credibility that is required to obtain the essential property development or bank finance, so they offer an excellent opportunity for site owners who wish to share in the property development profits. They can also provide option agreements where the vendor allows the developer to arrange the planning application. This is often structured so that in exchange for a period of exclusivity in which the developer can purchase the site they arrange for the planning permission and there for secure the planning gain.
February 27, 2010
Property prices show first falls since house price revival
Recent figures have shown that the average UK house price has dropped for the first time in recent months, missing the double digit inflation predicted by many. This falter comes after the end of the stamp duty holiday so there is evidence to suggest that the missing sales and higher offers have all been used up before the stamp duty holiday ended. The bank lending criteria has loosened but with the chance of an increase in interest rates, 2010 looks to be a great year for predictions with one thing for sure some of the pundits will be left with egg on their faces.