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MERRY CHRISTMAS AND A HAPPY NEW YEAR FROM INVEST IN THE NORTH WEST

It has been an exciting 3 months since we launched Invest in the North West

It was part of creating an online presence which included our new website

www.propertyinvestorpartners.co.uk and our blog Diary of a Property Investor

At the same time we began to post on facebook and linkedin.

We did not have a specific objective in mind. Our main purpose was to establish links with those who might be interested in what we are doing and how we do it. Those who do not live or operate in the North of England but who might be interested in what is happening here.

Our USP is not just that we create high yielding portfolios of properties. It is that we have developed a unique specialised knowledge of where to invest and how to invest. A knowledge based on practical experience that has seen has go from 1 property just over 3 years ago, to 140 today ( and growing). Properties spread from Carlisle to Liverpool, Manchester to Sunderland. Properties which prove our expertise in picking the right property in the right location for the right price.

There are so many reasons why we believe the North ( and in particular the North West) as an area of great interest. We cannot set them all out here. You will have to follow our Blog, newsletter and social media posts to understand our reasons in detail

But what we are also seeking is the best way to expand on the base we have created. That might mean taking on new major investors. Those who have cash resources that they want to convert into high yielding assets to create substantial portfolios. Or it might mean taking on lots of smaller investors who want to buy one or two properties each. Or it might mean creating a crowd funding site to bring together those not so much interested in property assets but in investing their money and getting a high rate of return with a property based security. Or it might mean another path we have not thought of and which we find by exchanging ideas with you our readers and those who interface with us via our social media presence.

That is why we want to be as open as possible to share our knowledge and experience and to get feedback from you with your ideas and experiences. Do contact us and let us know what you think about what you read

Next Year we will expand on the start we have made and we hope you will join us on what for us has been a very exciting and successful journey.

Whatever that year may bring (our predictions are below) now is the time to stop to eat drink and be merry with your family. To enjoy yourself and then come back in the New Year refreshed and ready for the fray.

So, let us take this opportunity to wish everyone a Merry Christmas and a Happy New Year.

NEW YEAR PREDICTIONS

You read and hear a lot of doom and gloom in the Property Industry at the moment. And for good reason. Monumental changes are taking place. A concerted attack is being made on small buy to let Landlords.  The uncertainty created by Brexit and the possible loss of the millions of Europeans who have come to the UK over the last 8 years may well also have a major downward on the market

Those who purchased properties using the old structures may well suffer. They may have stretched themselves too thin in order to benefit from the massive rise in capital values created in some areas of the Country.

They may have low yields and high mortgage costs and suffer if they lose their tax relief.

That could be compounded if like many of us (including myself) they are also seeing substantial falls in rents for their London Properties. See my posts about this by following the link here

Is the London Rental Market about to crack? One Landlord’s experienceAlthough my main focus of activity today is the…

Posted by Marcus Selmon on Thursday, 29 September 2016

The perfect storm would be created if the net effect of these changes is to cause the London and South East market either to stall or even worse to fall.

That could be disaster because London and the South East only make sense as an investment if capital growth continues to rise.

But the real sting in the tail would be if those who cannot afford to carry on also cannot sell at the right price because the flow of new entrants into the market dries up as they realise London no longer makes sense.

Could that happen?  My view is it could.

I predict that next year for the first time in 20 years we will see prices either stall or fall in London.

I also predict that confirmation will come through that rents have fallen and are falling. I know the consensus is that because Landlords are being forced out of the market and /or having to pay more in tax, rents will rise. However, I think market forces will cause rents not to rise but to fall because the number of people looking for accommodation will fall while at the same time a new stream of properties already in the pipeline will increase supply

However, I do not believe either rents or prices will fall in the North of England. I predict they will either stay the same or rise.  This is because the situation in the North is completely different. Here factors that will impact on rising rents will be the minimum wage and the impact of the substantial sums being invested in new industries and infrastructure in many different areas. This will mean more people will be coming to the North to take up the opportunities available in terms of jobs and a better quality of life. it will also mean wages start to rise.

Remember wages, rents and prices have NOT risen since 2008 In many cases they have fallen so there is an awful lot of ground to make up.

I do accept you might think he would say that wouldn’t he because I am based in the North but then it is because I am experienced in both the London and Northern property markets that I have the knowledge to make these predictions. In any event time, will tell if I am right or wrong and if I am wrong I will be more than happy to admit it next December

ABOUT THE NORTH WEST

When we invest, we like to buy Properties with a high yield and in areas with strong rental demand. However, we do not entirely ignore capital growth and if we can we try to invest in areas where there are things happening that could improve the area and cause prices to rise. Here are two examples of developments in the North West that we think will have that effect.

Preston: Ikea to be flagship store in major new retail park in Preston

A major new retail park / office and new homes development is to be built near Preston

The flagship store will be a new Ikea in a project known as the Cuerden Strategic site which is a partnership between the local County Council and two Developers. The project will include a 120-bedroom hotel, 860,000 sq. ft. of industrial space, 280,000 sq. ft. of office space and 210 new homes.

There would also be space for five national retailers, leisure/gym facilities, car showrooms, family pub and restaurants

Interesting that this store is opening even though their original store in Warrington is not that far away and also not that far away is their store in Ashton under Lyne. The fact they would want to open a third store in the North West is surely a sign that they can see the growing potential of the area to provide them with business as affluence begins to improve in this area.

Preston is not a town where we have purchased properties to date for a variety of reasons but we will be definitely looking again.

We will also be looking at another area where we have not invested namely Rochdale because of the Development planned there.

Rochdale shopping centre to be known as Rochdale Riverside

Rochdale is a town in the Greater Manchester area which is one of those towns well known as a name but which has been going nowhere over the last 30 or 40 years and longer. Famous as a mill town, it was a boom town in the 19th Century. The home of Gracie Fields she was the straight forward no nonsense type of person who represents many people’s idea of the North. It was also the birthplace of the Co-Operative movement again a movement symbolic of what the North stood for.

Now there are plans afoot to regenerate it so it can both benefit from and contribute to the developments going on in Manchester. The announcement of a major new shopping centre and new transport links to go with it will give this development a massive boost

The plans are for around 200,000 square feet of mixed shopping and leisure uses. The Rochdale Riverside development scheme extends the existing centre down to meet the new Metrolink and bus interchange. This will create a pedestrian friendly gateway into the Town Centre.

This is the type of Development that can transform an area and bring in new investment and new people to live in the Town

We will be watching events carefully and again considering if we should be buying here.

Autumn Statement Our Thoughts

Everyone has had their say about the Autumn Statement so we are going to have ours from the perspective of Investment in the North West as we see it. The views expressed here are our own.

The Chancellor has done nothing to ease the pressure on small Landlords. Actually, he has ramped up the pressure by saying he is looking for ways to tax companies who might own buy to lets much more harshly possibly treating them as if privately owned. That would be a serious blow

Banning tenant’s fees by letting agents is also seen as a hostile move for the Buy to Let Sector although its impact I think is less of a problem in practice. But it shows how the Government is thinking.

The hopes that the Government might abandon the 3% stamp duty surcharge or the restriction of relief on interest payments has been well and truly dashed. No one now I think sees this as a likely prospect.

This means the Buy to Let landlords under most pressure i.e. in London and the South face a very tough time and I suspect far fewer will want to join their ranks so putting more pressure on them if prices fall. Maybe it will help rents go up but maybe not if they are slowing anyway

To us however this makes the case for investing in the North-West look much more attractive for those who want to invest in Property. The cost of entry is so much lower, the yields so much higher and the possibility of future growth from where we start today more likely because there has been no such growth for years. Anyone buying into London is buying at the top in our view. In the North West you are still buying in at the bottom.

That possibility significantly increases if London is no longer attractive. Because we believe the money for Investment is still there and we do not think that Brexit or the economic prospects are going to diminish the amount of money searching for a home. It must go somewhere. If even a small % is diverted from the massive market in London to the much smaller market up here it will really have an impact.

The Chancellor has also affirmed his commitment to the Northern Powerhouse. That is excellent news for us.  If the economy is to be rebalanced, then surely the disparity between two houses (which are essentially the same property in terms of their build but only differ by virtue of their location) one costing £80,000 in Liverpool and one £800,000 in London will also be rebalanced. Is it completely inconceivable that the London property could fall to £600,000 and the Liverpool one rise to £200,000?   We are NOT saying this will happen but who knows?  If it did it would not happen overnight but over 5 to 10 years? That would certainly be an added bonus for properties purchased with a great yield today.

So overall not a good budget for most Buy to Let Investors but actually not bad one for us so we cannot complain.

Is the London Rental Market about to crack? The final outcome

 

HAVE EUROPEANS STOPPED COMING TO THE UK IN THE SAME NUMBERS AS PRE=BREXIT AND IF SO COULD THIS TRIGGER A COLLAPSE IN THE LONDON MARKET?

 

If you have come to this article from Facebook or linked in welcome to our website

 

We are asking whether or not Europeans may not be coming to the UK in the same numbers as pre Brexit. I cannot find any current statistics to confirm what is happening but based on anecdotal evidence a story is emerging that is backed up by my own experience of renting in London and which to me makes sense

 

In the last 8 years or so Europeans have flooded into the UK   Not just from Eastern Europe but also from the rest of Europe. The type of person coming will be young and ambitious and wanting to make a new life in the best country in Europe for young people to thrive (if you think that is wrong spend some time in Countries like Spain with mass youth unemployment and static economies offering few opportunities to get on not least because of very old fashioned ideas about Buggin’s Turn and only hiring local staff)

 

They come here knowing there will be opportunities but also knowing it will take time to establish themselves. But if they can then they have a chance to make a better life.

 

These people are prime candidates to use the Private Rental Sector and so they have been renting in large numbers.

 

Very different from the vast majority of the two million Brits who have gone to Europe who will tend to be older wealthier people looking to retire (and buying rather than renting when they go across) In some places they have fuelled a frenzied building boom. In areas, such as the Costa Del Sol the amount of properties purchased was allowed to run out of control and left an absurd oversupply which any sensible Country would have avoided. But Brits have done very little for the PRS market in those countries

 

However, making a new life in the UK only works for these Europeans if they know that they can take the time needed to establish themselves. Up to Brexit that was not an issue They had the right to live here for ever if they wanted

 

Once they believe there is only a window of two years before they are all asked to leave then despite all the opportunities here it starts to make less sense to go in the first place. Yes, the opportunities are great but to really take advantage of them you need more than two years. And is it worth it if you make a life for yourself and then have to leave? There may be promises that this will not happen (although as yet there have not been) but even those may not be reliable. So, a significant number are saying it is not worth it.

 

Now again I do not have the numbers to confirm this only anecdotal evidence (and if anyone has the figures please do let us have them) but I can see from a common-sense point of view this is likely to be the case

 

One example of anecdotal evidence is an issue of The Bottom Line on Radio 4 where a person from PWC the Accountants said they had noticeably fewer applications for training contracts from Europeans for exactly this reason.

 

And it only needs a relatively small decline in numbers to have an impact in a market in a process of continual expansion in expectation of an ever growing rise in demand. That I believe is what happened to me and is going to be happening increasingly causing rents to move down.

 

At some point the overall effect of all of this combined with the planned tax rises and the large numbers of properties coming on stream to meet expected rising demand could mean a halt to growth in the London market for the first time in 20 years.

 

And if growth does stop then suddenly the whole London Market makes no sense and panic could ensue.

 

Because we have had 20 years of virtually continuous growth since 1996. 20 years in which properties in areas like Leyton have gone from £120,000 to £900,000 and in which almost no one who purchased a property could fail to make a profit.

 

So, you have a whole generation who simply cannot conceive of prices in London stabilising letting alone going down. Yields already make no sense. So, if this happens at a time when rent fall then you really do have a scenario where panic could ensue.

 

And maybe that will not be all bad because suddenly homes will become more affordable for first time buyers.

 

But for those left holding the parcel when the game ends it might not be such good news

 

Let me be clear I could be wrong. This is only a point of view and no one reading this should take any actions based on what i have said alone. You need to think it through and take your own advice and then decide what to do.

 

Who knows may be 5 years’ time we will look back on this and see London prices have continued to soar and the £900,000 property in Leyton is worth £1.2 million, that we did a deal with Europe that allowed Europeans to continue to come in the same numbers as before and rents have continued to rise.

 

However common sense says you need to consider all possibilities and it has to at least be    possible that my scenario will play out. That Europeans will stop coming or not be allowed to come in the same numbers. That rents will fall. That the combination of falling rents and increased costs of operating as a Buy to Let Landlord will mean fewer people want to invest so there is less demand and so price growth stops or even falls slightly and then those who have properties with very low yields panic and want to get out of a market that makes no sense without substantial growth. That is before one considers what might happen if we get inflation due to Brexit and interest rates have to get up.

 

So I make no apologies for putting this out there to give people a chance to consider all their options and to take this into account when deciding how to plan for their own future.

 

If you want to hear more about what we think and what we are doing, then why not subscribe to our newsletter and our Blog. This shows you the strategy we have adopted to create long term wealth using Property as our investment Vehicle.

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