This weekend’s FT House and Homes front page was headlined “How much will $1m buy?” It claims in Monaco, the world’s most expensive city, this amount will only purchase enough space for a WC. An exaggeration, as this amount will allow you to purchase 17 square metres. I know developers who are building liveable self-contained studios within this space. This is unsurprising as Monaco attracts the uber wealthy, due to there being no income tax, no capital gains tax and no wealth tax.
In London, prices in prime areas have fallen as much as 14% in the last 12 months. When you factor in the collapse in the pound against the dollar, prime London property prices have fallen as much as 36%. It’s no wonder agents are reporting increased activity from foreign buyers. $1m now buys you 30 square metres in the primest parts of London as opposed to 22 square metres last year.
This may prove to be titillating reading, however, the figures and the terrain being described here is outside the reach and comprehension of most readers and indeed most of the population.
The average property price a household in London can afford is £300,000. This assumption is based on the average household income of £50,000 and a deposit built up for the same amount.
An article on the 16th January this year, in the Evening Standard, talks about the death of the £300,000 home in London. This figure is significant because it is within the realms of affordability.
The article mentions the decrease in the number of wards where one can purchase a property for £300k. This has decreased heavily over the last 12 months from 104 right down to 40. This is causing a flight to areas outside of London which are within commuting times to London.
There has been no solution which is viable to really tackle this situation of affordability within London. There are only two solutions, one is to introduce policies which will disincentivise foreign and developer investment into property. This will cool down the market and leave the door open to only end users. This, however, would serve to harm London on many different levels, and reduce its appeal globally. The other is to reduce the square footage of new developments, this would in turn reduce the price to within the realms of affordability.
The latter is a more practical solution, a well-designed and multifunctional property is what is required to again revitalise the bottom end of the market which will then trickle upwards.
This is an area which we are focusing on, and we will be kicking off this concept with our development in St John’s Wood. You can find more on the Code Investing website https://www.codeinvesting.com/investment-opportunity/?cbid=10-Belgrave-Gardens where you can take part in this exciting project for as little as £1,000.
Agony Agent
Each week, we answer a reader’s rental property question, from first-time landlords to experienced owners. Agony Agent, is here to help!
This week’s question was picked because hardly nobody asks it, however, to make life a lot easier on ourselves, and to look after our investment, we should all ask ourselves this question.
Q. Richard, please tell me how to be a good landlord.
A. Why is it important to keep a smile on your tenant’s face? Because replacing tenants costs money and it requires those few things we all hate exerting…time, energy and money. Each time a tenant slips through your fingers, you’re more than likely going to take a financial hit consequently. Who wants that?
It’s a strange idea, but you need to think of your tenant as a customer that is always right (even though they might not be most of the time).
Keep your tenants happy, give them a reason to remain in your property and respect it.
1] DON’T IGNORE YOUR TENANT
If your tenant attempts to make contact, don’t be a typical landlord and ignore the reach. Be responsive, it could be important.
2] MAINTAIN YOUR PROPERTY
If anything needs fixing, FIX IT, and promptly. I guarantee, the one thing that is sure to annoy any tenant is a landlord that is too cheap to maintain their own property. Even if it’s not your legal obligation to make the repair, try to be as accommodating as possible.
3] GIVE YOUR TENANTS SPACE
Tenants don’t want to be hassled by their landlord. You’re not their friend or neighbour, so don’t try and be one. Leave them to enjoy their home in peace.
4] BE COMPROMISING
Don’t automatically dismiss every request your tenant makes, even if it sounds totally strange. Listen to what is being said, take every suggestion on board and take appropriate action. Whenever you choose to decline, make sure you give valid and understanding reasoning behind your decision.
5] DON’T BE TIGHTFISTED
If you’re fortunate enough to land yourself with a great tenant, then treat them like a great tenant. A great tenant is priceless, and you may need them more than they need you. Remember, they pay your mortgage.
Refusing to repaint, re-carpet, or upgrade necessary appliances for a great tenant makes no sense. If you don’t do it for the great tenant you already have, you’ll have to do the work when they leave to attract new tenants anyway.
6] THINK BEFORE INCREASING RENT
Landlords love increasing rent, and for obvious reasons. Trying to increase rent is a dangerous game and shouldn’t be attempted unless you’re certain it’s necessary.
If your tenant refuses to pay the new amount, you’ll either a) look stupid for backing down b) spend more money on trying to find new tenants.
I hope this helps. Please keep your questions coming in at [email protected]
