When you purchase a property, especially a flat in Central London, what you are buying in essence is a shoe box, sometimes perhaps a cube in the case of a studio.
The cube itself has very little value; by virtue of its location it acquires value. If it was in the upper end of Scotland there would be perhaps even a zero premium to what it costs to build, as demand to live there would be low.
So, what gives the property value is location. Hence the famous mantra, Location, Location and Location. The three most important factors to property investment; said thrice because it cannot be emphasised enough.
Whether the property is 30 storeys high in the sky, or firmly on the ground, the property occupies a piece of land in a desirable location. Building a property requires two other ingredients namely labour and materials. Within reason, the latter two are not in short supply - they can be procured. The ingredient which limited in supply is land. So, in essence, it is land which is scarce which ultimately causes property to rise in price.
Land is governed by regulation. A piece of land can have one storey or a hundred; what governs this is regulation. This is what restricts supply. For example in Central London it would be unheard of for a chunk of Hyde Park to be sold to a developer and built upon. It is due to regulation that period buildings are listed and cannot be altered.
Land is the intrinsic reason why property prices rise. And what governs the ability of a piece of land to produce property is also regulation.
Converting a piece of land from grazing land to one where property can be built, requires a change in its utility, i.e. its usage.
This is a process which can be likened to alchemy, the changing of lead into gold. It is with this backdrop that Sow & Reap are now heavily focused on land investment, both in London and in the increasingly affluent commuter belts around London.
The greatest gain to be made by investing in ‘property’ is actually to invest in land and in being able to change its function so it acquires economic value.
This requires both planning expertise on a local and national level, along with an ability to lobby to the individuals concerned. It is with good reason we have this focus, the uplift in value of a piece of land which has planning can be three or more times its price without planning.
Recently, we have successfully obtained planning for 92 units in North London, on behalf of our client.
We currently have other opportunities, where we are looking to replicate this success. If this interests you, please get in touch.
Agony Agent is here to help!
Q: I have just purchased my first Buy To Let property, do you have any tips regarding the décor?
A: Whether you have just bought your first investment property or are giving an existing property a face lift, here are some points regarding decorating you should take into account:
Audience & budget
Before you start to plan decorating, or even your budget, have a think about the area your property is in, the rent you’re going to charge, and what kind of tenants you’re looking to attract. This way, you can consider what your prospective or ideal tenants will be looking for in a property and plan accordingly. For example, a family of four may want somewhere comfortable, durable and easy to keep clean. On the other hand, a young professional may just ask for the basics, but would want it to look moderately stylish and be able to put their own stamp on it. When budgeting, think about the rent you hope to be receiving and make sure you don’t overspend, it’s easy to forget about the return on investment.
Durability
The less you need to redecorate between tenancies, the better. Everything you buy for this project should have some aspect of durability. Larger items, such as flooring (including carpet), appliances/white goods and furniture should be bought in a slightly better quality, with warranties where possible. These items will be used time and time again and will show signs of wear faster than anything else. Replacing a carpet every two years may start to become expensive!
Look & feel
A mistake many landlords make is decorating to their own tastes. Keep it neutral, long-lasting and as high quality as your budget allows, and you’ll attract tenants much more easily than if everything were purple and lime green. It’s easy to get carried away with making the place look amazing but, remember, you’re not going to be living there. If it’s neutral enough for your tenants to make it look like home, they’re more likely to stay.
Timescales
Make sure you give yourself enough time to complete the project. Every month it takes is another month where you’re paying the mortgage without rent coming in to offset it. Concentrate on correcting damage, safety issues and structural problems first, as well as getting rid of any mould. This is far more important in the long run than the way your property looks. Prioritise decorating on what will make the biggest differences to the look and feel of the space. It’s amazing what a lick of paint and a new carpet can do.
