Yes, you can have a ‘glam room’ like Melania

By Ruth Bloomfield

A dedicated space for doing hair, nails and make-up is becoming a must-have in high-end homes

Donald and Melania Trump have been handed the keys to the White House. This means that, in keeping with tradition, the Trumps are allowed to make changes to the property to meet their family’s needs.

While Michelle Obama spent her early days as first lady focusing on cultivating the vegetable garden so her family could eat fresh vegetables, this week we discovered that Melania’s priority is to add a “glam room”.

“There will absolutely be a room designated for hair, make-up and wardrobe,” says her make-up artist, Nicole Bryl, reassuring those who were worried there wasn’t going to be.

It is in this room that Bryl will toil for the 75 minutes of “uninterrupted focus” it takes to do the first lady’s make-up each time. “Melania wants a room with the perfect lighting scenario, which will make our jobs as a creative team that much more efficient,” Bryl adds.

Yet Mrs Trump is not the only woman who takes her beauty routine so seriously that it warrants its own room. Glam rooms are a feature in the most expensive homes in this country — and may become more popular among women who hope to copy Melania’s über-groomed approach to life.

So what is a glam room? It’s a glorified dressing room — a room with good lighting and space for a hairdresser and make-up artist to work their magic, possibly with a hair-washing station. Above all, it is somewhere with eye-wateringly expensive shelving, with compartments for belts, rings, watches and handbags. One central London glam room even features a cosmetics fridge designed to keep the owner’s make-up at the optimum temperature.

Camilla Dell, a buying agent, reports that she has viewed homes with not only glam rooms, but glam suites, where a separate lounge area containing a minibar and TV is located off a dressing room, so “all the girls can discuss and debate outfits”, Dell says.

Carrie Bradshaw would approve; Emmeline Pankhurst, not so much. Penny Mosgrove, the chief executive of Quintessentially Estates, a company that sells houses starting at £3 million and rising to £20 million, says that among her clients glam rooms are a must-have. If one doesn’t exist, some wealthy buyers will sacrifice a bedroom to create one.

The estate agent Charlie Gibson, who works in the Mayfair office of Carter Jonas, reports that he has also seen properties with a male equivalent, called grooming rooms. “I have seen a barber shop set-up within a very expensive property, where the Mayfair barber Geo F Trumper visits for a grooming appointment,” Gibson says.

It is common for the incoming president and the first lady to redecorate parts of the 132-room political mansion. The Obamas filled the property with contemporary art and replaced a bust of Churchill with that of Martin Luther King; Laura Bush faithfully restored the Green Room, used for small receptions and teas.

As with the presidential campaign, the Trumps may do things differently. Based on the interiors in the family’s New York home, the glam room — possibly like the rest of the house — will feature a 1980s aesthetic, with lots of gold, ostentatious chandeliers and pictures of Donald Trump in manly poses.

The interior designer Mhairi Coyle says: “It is like the interior design you see in casinos: the more detail, the more pattern, the more colour you can put in the place, the better. With a personality like Donald Trump’s, he’d want everything over the top.

Ten places where house prices are set to rise

Ten places where house prices are set to rise

By Ruth Bloomfield

Ten places where house prices are set to riseSome locations are defying a downbeat Brexit market — with revived urban areas leading the way even at the best of times there are no sure things in property — and with political and economic uncertainty as a backdrop, coupled with tax changes that have hit many buyers hard, this is far from the best of times. Nonetheless, there are silver linings amid the dark pall that has hung over the market since last spring.

Some areas set to benefit from transport improvements, some are the focus of multimillion-pound regeneration projects, while others are simply benefiting from a strong ripple of buyers moving from more expensive areas, pushing up prices.

You may not have heard of them all — yet — but if the experts are to be believed, these are the locations that will lead the market in 2017 and beyond.

Southern Gateway, Manchester

Close to Manchester Metropolitan University and the University of Manchester, the Southern Gateway is set to follow the city’s Northern Quarter success story of regeneration and price growth.

The Gateway, to the south of the city centre, has an impressive development pipeline of 7,500 homes to be built in the next few years. Nick Whitten, an associate director in JLL’s residential research department, says that this emerging neighbourhood is not going to be a sea of flats; it already includes the £25 million HOME arts complex, and there are plans for enough shops and restaurants to turn it into a “destination”. With tram and rail links already in place, the Southern Gateway has great connectivity, and Whitten forecasts that prices will grow 7 per cent in 2017 and 28 per cent by 2021. Today you can pick up a one-bedroom flat for £145,000.

Bishopthorpe, York

The redevelopment of the old Terry’s chocolate factory close to York Racecourse into luxury flats, and a smart restaurant and shop, is focusing buyer interest along Bishopthorpe Road.

Ed Stoyle, a partner at Carter Jonas, believes that the development — The Residence — will help to push local prices up 5 per cent this year.

“We’re advising buyers, from first-timers to investors, to act because, once the amenities are in place towards the end of 2017, a premium will be added to asking prices in the area,” he says.

Michael Redmond, the managing director of Redmove estate agency, says that York is set to benefit from the HS2 rail link and agrees that “Bishy Road” will be the focus of growth next year. A two-bedroom terraced house costs about £300,000.

Carmarthenshire

Historically overlooked in favour of neighbouring Pembrokeshire, Carmarthenshire has appealingly low prices. In Carmarthen town, things have been looking up since the £74 million St Catherine’s Walk shopping centre opened in 2010, and in 2018 electrification of the Great Western Main Line will cut journey times to London Paddington by half an hour.

“It is also within a few minutes’ drive of the glorious coastline, beaches and rolling open countryside,” says Carol Peett, the managing director of West Wales Property Finders. “With excellent schools, a hospital and the University of Wales Trinity St David, S4C television studios, as well as theatres, restaurants, cinemas and shops, Carmarthen town is a vibrant place to live.”

For those looking for a quieter life, Carmarthen has tranquil outlying villages such as Laugharne and Llansteffan. A modest three-bedroom house in Carmarthen or a nearby village costs between £110,000 and £115,000. For £500,000 you can buy a family house with generous outside space.

West Kilburn, north London

Look beyond the resolutely tatty Kilburn High Road, and Kilburn has plenty going for it — period houses, leafy streets and posher areas all around.

Jo Eccles, a buying agent and managing director of Sourcing Property, believes that homes in West Kilburn are particularly good value, at about 20 per cent below those in neighbouring Queen’s Park and Maida Vale. “Four years ago, when we started buying there for clients, that price gap was closer to 40,” she says. “We expect the price gap to completely close over the next three to five years.” Today a two-bedroom flat costs about £550,000.

Woking, Surrey

It’s far from the most posh of commuter towns in Surrey, but the £550 million being thrown at Woking in the form of new homes, town centre upgrades and road improvements will boost its profile. Commuters can be at London Waterloo in less than half an hour. Woking’s average prices — about £375,000 for a two-bedroom flat and £475,000 for a three-bedroom house — are fantastic value compared with the capital.

Sudbury, Suffolk

The impact that buyers leaving London can have on prices in the commuter belt is well known, but Alan Williams, the managing partner of Fenn Wright, is putting his faith in the “double ripple” — buyers moving on from well-known commuter towns, farther out into the sticks. “These movers will compromise on travel if that means they can reside in a town that retains its traditional feel and charm amid beautiful surroundings,” says Williams.

Commuting from Sudbury isn’t horrendous; trains to Liverpool Street take 71 minutes. “Buyers get more house for their money and a lifestyle that many wouldn’t exchange for one of the busy commuter towns,” says Williams. It won’t only be London workers eyeing Sudbury; Bury St Edmunds and Cambridge are within commuting distance.

East Leeds

Rather like east London, the suburbs of east Leeds are finally blossoming, with areas such as Cross Gates, Colton and Rothwell experiencing price growth of 4.2 per cent in 2016. “They are traditionally affordable locations, yet all have good retail offerings within their centres,” says Andrew Hunt, a partner at the Allsop estate agency. He believes that price growth will continue in 2017, thanks to good city centre transport links and development of the nearby Thorpe Park business centre, with its offices, shops and homes. “We would expect in the next year house prices to rise in each of these suburbs by a further 4 to 5 per cent,” says Hunt. The average house price is £182,000 in Rothwell, £186,000 in Cross Gates, and £229,000 in Colton.

Edinburgh city centre

A lack of supply is driving up prices in beautiful Edinburgh, and for this reason Nick Whitten, of JLL, believes that they are likely to grow by 5 per cent in 2017 and by 23 per cent by 2021. Prices start at about £160,000 for a one-bedroom flat. Although there are several significant regeneration schemes on the cards that will deliver necessary new homes in the city, Whitten says that most will not be ready until 2020. “However, the seven-and-a-half-acre New Waverley and 1.7 million square foot Edinburgh St James regeneration schemes are transforming a large area of the city centre,” he adds.

Cambridge

The city has enjoyed extraordinary price growth of 61 per cent in the past five years, but there is still plenty in Cambridge’s tank, according to Martin Walshe, the director of the estate agency Cheffins. He describes the market as “incredibly healthy”, and expects price growth of about 5 per cent next year. “If we have a strong Brexit deal, I forecast a return to the days of price growth at astronomical levels,” he says. “If Europe drives a harder bargain, Cambridge prices will grow, but probably in a more sustainable manner.” All eyes are on the north of the city thanks to Cambridge North station near the Science Park, which is scheduled to open in May.

Garston, Liverpool

Already close to the Jaguar Land Rover factory, Garston will benefit from jobs created by the expansion of Liverpool airport. It has a station, with services to the city centre taking about ten minutes. Stuart Law, the chairman of Assetz Property, expects price rises of 10 per cent over the next three to four years. “A two-bedroom flat costs about £90,000 and Assetz expects that to be £100,000 by the end of 2019,” he says. He expects that three-bedroom homes, which are averaging £150,000, will increase to £170,000 in the same period.

Other areas on the way up

Preston, Lancashire

Electrification of the train line to Manchester by December 2017 will make this junior partner in the Northern Powerhouse a more commuter-friendly option.

North and South Moreton, Oxfordshire

These are two desperately pretty villages three miles from Didcot Parkway station. Electrification of the Great Western train line will reach Didcot by the end of 2017, making the London commute faster.

Tottenham Hale, north London

With 10,000 new homes, 5,000 more on the cards and the possibility of a Crossrail 2 station, this is the London suburb du jour, says Camilla Dell, the managing partner at Black Brick.

Bracknell, Berkshire

This commuter town is getting a shot in the arm in the shape of a £240 million regeneration. The Lexicon shopping and leisure centre opens in September.

Canterbury, Kent

Planning consent has been granted for 4,000 homes in this growing cathedral city. Humberts forecasts that prices could increase by £35,000 a year in the short and medium term.

Old Oak Common, west London

Plans for 25,000 new homes, two new stations and a railway hub make this industrial wasteland the capital’s biggest regeneration project since Stratford. The knock-on benefits should be felt in the surrounding areas of Park Royal, North Acton and Willesden Junction, where pretty railway cottages cost between £500,000 and £600,000.

Southampton waterfront

Work on the £450 million Royal Pier Waterfront development, featuring homes, shops, restaurants, a casino and hotel, will start in 2017.

Off-street parking, plus an annexe

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London’s South Kensington is primed for buyers seeking a bargain

The Chinese are leaving London but Iranians are on their way

Keep it neutral even if you are not selling

No second chances?

Ten things you need to know about £1million homes

A million pounds may not seem to go very far in the property market these days, but if you look in the right places you can make it stretch to a lovely family home- particularly if you are happy to leave the capital in your wake.

1.) There is intense competition for homes priced between £1 million and £2 million in London, according to Camilla Dell, the managing partner of the Black Brick buying agency. She says: “The market is busy with domestic owner-occupiers who have been frustrated at the difficulty in finding, and successfully bidding on, family homes in the capital. Additionally, the uncertainty in global stock markets is encouraging investors to move assets into London property. We are also representing cash buyers and those aiming to ‘future buy’ property for their children.”

2.) Robin Chatwin, of Savills, says that the farther you move from London, the more you can get for £1 million. However, this does not mean that buyers become less fussy when offered a spacious property outside London. Quite the reverse. It seems that people are more likely to shrug their shoulders when told what a property in the capital will cost. Chatwin comments: “The closer you are to London, the more vibrant the market becomes at this level as buyers largely accept the premiums you pay to be in close proximity to the capital.”

3.) The key reason for the demand for homes priced below £2 million is stamp duty. A £1 million home now attracts a stamp duty bill of £43,750. The bill for a £2 million home is £153,750; the reason for the increase is the 12 per cent rate payable on the portion of the value between £1.5 million and £2 million. A rate of 10 per cent applies to the portion between £925,000 and £1.5 million.

4.) There are more than over 4,000 properties on the market around the £1 million mark, according to Rightmove. During the past five years there has been an 80 per cent rise in homes available at this price. In the past 12 months, growth has been recorded at 18 per cent. The largest number of £1 million properties are in London, unsurprisingly.

5.) With ultra-low interest rates, £1 million mortgages have become cheaper for high earners, who still need to meet strict affordability criteria. Wealthier borrowers might also be more likely to get an interest-only mortgage approved. It can help those with, say, hefty school fees to pay which means they need to manage cash flow in the short term, but longer term will have more disposable income with which to clear the mortgage.

6.) Aaron Strutt at Trinity Financial, a mortgage broker, says: “It wasn’t that long ago the high-street lenders pretty much stopped offering £1 million-plus mortgages and if you wanted a larger loan you needed to speak to one of the private banks. But times have changed and the high street lenders are actively competing with the private banks to target wealthier borrowers like bankers, footballers and entrepreneurs. They are tempting them in with some incredibly cheap rates, low arrangement fees and the promise of faster mortgage offers.”

7.) Strutt says that more high street lenders are setting up departments to manage larger mortgage applications and they are giving their underwriters more flexibility to get the deals through. “Lenders are also pushing to supply £1 million-plus mortgages because they think it is easier to provide one larger loan rather than four or five smaller ones,” he says. “The compliance is roughly the same, there is less risk and the lenders spend less time processing applications.” Banks including Barclays, NatWest, Santander, Metro Bank, Coutts and Halifax offer £1 million-plus mortgages.

8.) Brokers report that Barclays has got some of the most competitive rates in the market and its cheapest deals are often available up to £3 million, while NatWest has a specialist large-loan team. However, Virgin Money has a fairly strict policy of lending up to £1 million. If you are looking for a £1 million-plus mortgage, there are cheap loans available. HSBC has a 2.19 per cent five-year fixed rate for mortgages up to £3 million. There is also a three-year tracker rate at 1.65 per cent from Woolwich, but there is a £1,999 arrangement fee and borrowers will need a 35 per cent deposit to qualify. As the mortgage doesn’t have early repayment charges, borrowers can switch to a fixed deal when the base rate finally increases.

9.) The process for taking out a large mortgage is similar to that for a smaller mortgage, with the lender having to assess overall affordability. However, for £1 million-plus mortgages this process can sometimes take longer. Adrian Anderson, director of mortgage broker Anderson Harris, says: “Some of the very high earners may have very high outgoings. For example, higher earners with families may have large private school fees, nannies and housekeepers, as well as extravagant annual family holidays to Saint Tropez in the summer and Verbier in the winter. These all have to be factored into affordability.”

10.) Yet in some scenarios the affordability of a £1 million mortgage can be more straightforward. Harris adds: “One of my City clients borrowed in excess of £1 million. His income multiple was circa two times the mortgage and he worked 12 hours a day, so had no time to spend any of his vast income.” Harris highlights that many people applying for £1 million-plus mortgages have the ability to purchase the property outright but are choosing to borrow to take advantage of low interest rates. He says: “Why use your own money when you can use someone else’s — and at such cheap rates?”

No kerb appeal? So much the better

Estate agents will often wax lyrical about the so-called kerb appeal of a property. They might effusively flag up the elegant steps leading to a generously proportioned portico. Or the buffed front door flanked by symmetrical bay trees. The first impressions of guests or passers-by really are the barometer of the level of style or opulence within. Or are they?

What if a property looks pretty uninviting at the first glance but hides a surprisingly awe-inspiring or capacious interior, a bit like the Tardis in Dr Who or the magical doorway of Alice in Wonderland? Some artistic-minded owners revel in misleading first-time visitors by presenting a home that is not quite what it seems. No, a bland exterior or unobtrusive entrance is not always bad news for owners and agents, especially if the property is well located, and there may be benefits that are not obvious at first glance.

In fact, some buyers prefer an anonymous, unprepossessing entrance, suggests Michelle van Vuuren, of the UK’s arm of Sotheby’s International Realty. “There’s been a real step change away from overt symbols of wealth — like One Hyde Park — to very discreet and private homes,” she says. “It’s not a case of purposeful neglect of kerb appeal but a deliberate choice of nondescript doorways in the style that private members clubs such as Soho House and Blacks Club in Dean Street. The new 300 Vauxhall Bridge Road development has plain black doors with no names — ideal for those individuals who prefer to keep their assets well hidden.”

Another example is a three-bedroom penthouse in a rather utilitarian-style but sought-after block of apartments in St John’s Wood, north London. Accessed by a simple black door, the property is priced at £2.865 million through Hunters Estate Agents.

Van Vuuren adds that privacy is one of the biggest demands of wealthy buyers in crowded cities, and sometimes the conversion of non-residential buildings offers the best chances of neither seeing nor hearing your neighbours. A good example of this is a former tram shed in Camden, north London, behind whose ugly industrial metal façade hides a beautifully styled 5,000 sq ft open-plan loft conversion with four bedrooms, for sale for £4.85 million through Sotheby’s.

Camilla Dell, of Black Brick buying agents, also sells to high net worth individuals who prefer to stay under the radar. “I recently found a £12.5 million house in Chelsea for an Egyptian buyer who loved the fact that a tiny grey door opens into 8,000 sq ft of high-spec living space. Nobody passing would know the house exists which is perfect,” she says.

Of course, an unassuming home is also good for security reasons — they don’t attract the interest of opportunist burglars and they conceal what is hidden within.

That said, it might have been difficult to sell that Chelsea home to Italian buyers, however much they love the area. “They tend to be very conscious about what the property looks like from the outside, much more than what it looks like inside,” says Jo Eccles, of the buying agency Sourcing Property. “An unattractive property can certainly put off certain nationalities and minimise your audience if you are selling.”

Ah, so here comes the rub: how easy (or hard) is it to sell a property lacking kerb appeal?

A property with kerb appeal will always attract viewings, so those that don’t have it can certbe a challenge to market. “I would advise the estate agent not to show any external photos of the property so that you don’t put people off actually getting through the [ugly] front door,” says Eccles.

Charles Curran, of Maskells estate agent in Chelsea, agrees that agents have to work far harder to sell such homes. It took more than 50 viewings to sell an ex-local authority flat that was immaculately finished with a bespoke kitchen, wood floors and high-tech lighting. “Even with a wonderful interior, a series of concerns pass through an applicant’s mind about a poor exterior — how much is this going to cost to renovate, if I can’t renovate what will my friends and family think? Will I be too embarrassed entertain? People fundamentally like to have their decisions reinforced by others,” he says.

However, he adds that kerb appeal is also about the location of a property. “A tired wall surrounding a house on a prime site can be remedied by the buyer. But if there is a train behind the house or troublesome and untidy neighbours, this is not in control of the owner — either way, having realistic price expectations is the key to selling the property.”

James Robinson, of agent Lurot Brand, says that he has achieved impressive prices from buyers of unusual properties, such as converted garages, where other agents have failed — and apart from applying lots of enthusiasm, it’s about flagging up the hidden values. This especially applies to mews properties in sought-after areas of west London that were historically utilitarian service entrances to large properties and where coachmen or ostlers used to doss down. One for sale in Queen’s Gate Mews in South Kensington opens out on to a vast three-bedroom house with double-height ceilings.

“My mother taught me always to look at the ugly homes for five reasons,” says Robinson. “They are invariably better in the flesh than they are in pictures on property portals; if the location is good you can always change the house; no one else goes to see them so there is less competition; you also get better space for your money; and, finally, there is that old truism that states, ‘Always buy the worst home in the best location you can afford’.”

The truth about house prices- how to make sense of the property numbers

The property market bounced back with a 3 per cent rise in prices in the past month taking the average house value to £294,351. Alternatively, the market is growing at its slowest for two years with prices in the past month falling by 1.3 per cent to take the average price of a house to £271,000.

Two seemingly contradictory statements about the property market published this week. So which is correct? The first statement is based on Rightmove’s figures, published last Monday, and the second comes from the Office for National Statistics (ONS), published on Tuesday.

Rightmove’s figures for England and Wales are based on the asking — not sale — prices of property listings on its website; these are not seasonally adjusted, but they are up to date. The ONS data is based on UK mortgage data provided by the Council of Mortgage Lenders, so it does not take account of cash buyers. However, the figures are seasonally adjusted, although there is a two-month delay between data compilation and publication — the latest figures are for April while Rightmove’s are for June.

So both are correct althought they measure different things. And each analysis has its merits.

James Butterfill, a global equity strategist at Coutts Bank, says: “The Rightmove data is very up to date but because it is based on asking prices it can be quite volatile. The Halifax house price index has a long history but lacks a detailed regional breakdown, the Nationwide and ONS data has a shorter history but has a more thorough methodology. What is interesting, though, is that if you plot them on a graph they mirror each other — they show the same trends.”

Charlie Wells, the managing director at the Prime Purchase buying agency, says: “The house price indices are well worth reading. I look at all the indices that the various bodies put out. For property with land, I look at the land sales indices by Savills, Knight Frank and Strutt & Parker. For other residential, I look at RICS [the Royal Institution of Chartered Surveyors], because it is a fully regulated body and the advice is measured.”

The indices can provide useful general information on the trends in the property market but they do have limitations, not least because they are not comparing like with like. You also need to bear in mind where the indices originate and what exactly they measure because a slight change in the data measured can have a stark affect on the outcome.

For instance, Butterfill finds that the price to earnings ratio — a measure of the affordability of property — is a good indicator, for his investment clients, of value for money in different areas. However, the standard Halifax ratio is based solely on male earnings, so Butterfill and his colleagues have devised their own based on total household income. By the Halifax measurement, house prices are 5.16 times average earnings but based on Coutts’ calculations that falls to 4.19 times.

It is also important to take note of where the data orginates. Camilla Dell, the managing partner at buying agency Black Brick Property Solutions, says: “Do we look at house price indices when chatting to clients? Yes. Halifax and Land Registry for UK-wide statistics and Knight Frank and Savills for prime London.”

Dell adds: “It’s not like the stock market where all shares are equal. In the property market, no two houses are the same. Trying to come up with the perfect index and judge where prices are going is virtually impossible.”

Wells says: “You have to take each [index] with a degree of sceptism, after all it only takes three facts to make a stat.”

Nonetheless, such is our national obsession with house prices that — rather like weather forecasts — they become something more than guides to general trends. In our minds, they somehow become solid facts that pertain to us personally.

Rob Weaver, the director of investments at property crowdfunding platform Property Partner and a former property valuer, says: “People can put too much store in them. They are a guide showing the trajectory and velocity of the market, but they are not a lot of use for determining value.”

When Weaver is valuing property for his investors he commissions an initial full valuation, this is revised on a monthly basis against the Land Registry data which is, in turn, regularly backed up by an independent desk-top valuation by a property valuer — in which data is gathered on sales of comparable properties.

One of the problems, explains Weaver, is that indices don’t take account of investments made: you may own a house worth £100,000 and by adding a £20,000 conservatory increase the value when you sell it to £125,000. The indices might record a move from £100,000 to £125,000 but won’t record the £20,000 invested giving a false impression of what is happening in the market.

Jo Eccles, the managing director of the Sourcing Property buying agency, says: “I don’t ever look at indices when bidding on a property. It doesn’t matter what the ONS says, the only thing that is meaningful is what similar houses on that street have sold for.”

Eccles prefers to look at trade statistics such as LonRes for recent comparable sale prices and calls local estate agents to gather data on recent sales. She says that those not using a buying agent should look up similar properties on the market and call the estate agents for properties sold subject to contract to find out the most up-to-date prices and ask for details — for instance, if a similar property has sold for £650 per sq ft and it has a large southwest-facing garden and yours has a small north-facing garden maybe a sale price of £600 per sq ft is reasonable.

Neither do the indices take account of the premiums that people are prepared to pay to secure the house they want, says Wells, maybe because they want to be in a particular school catchment area or because they want to buy the neighbouring house to knock through or it is close to a relative. As Weaver points out, the compilation of indices is purely mathematical while house buying tends to be an emotionally led decision.

Make the most of the buy-to-let loan war

The cost of deals is falling but lenders are the most generous to new landlords with substantial deposits, says Melanie Wright

Falling buy-to-let mortgage rates combined with higher rents mean that if you’re considering becoming a landlord, now could be the time to act.

According to the latest HomeLet Rental Index, released last week, rents rose in 11 out of 12 regions across the UK in the first three months of the year. The average monthly rent in the UK is now £902, or £270 if you exclude the Greater London area, and last month the estate agent Barnard Marcus reported that the average rent in the capital was £1507. While this may be bad news for tenants, it means landlords are benefitting from higher returns.

Martin Totty, chief executive at Barbon  Insurance Group, parent company of HomeLet says: “With average rents for new tenancies across the UK now more than 10 per cent higher than a year ago, what we are seeing is a market that is experiencing sustained demand from increasing numbers of people requiring privately rented properly.”

Research for The Times Money by Moneyfacts.co.uk reveals that the average buy-to-let two year fixed rate is currently 3.36 per cent, compared with 3.94 per cent a year ago. The average buy-to-let five-year fixed rate is 4.26 per cent, down from 4.66 per cent a year ago. Several lenders have reduced their buy-to-let mortgage rates in recent weeks. Natwest for example, has cut some rates by up to 0.55 per cent. It is now offering a two-year fixed deal at 2.25 per cent, although there is a hefty £1,995 arrangement fee. This mortgage is available to first time buyers, second time buyers and those mortgaging with a 40 per cent deposit.

Although low buy-to-let rates might be tempting, the best deals are reserved for those with substantial deposits. For example, Santander offers a two-year fixed buy-to-let rate at 2.35 per cent with a £1,995 fee if you have a 40 per cent deposit, but its two-year rate if you have only a 25 per cent deposit is 2.79 per cent, again with a £1.995 fee.

Simon Tyler, of Tyler Mortgage Management, says: “Lenders can be very fussy about by-to-lets and probably the biggest differentiating factor is the size of deposit you have to put down.”

“If you only have a 20 per cent deposit, hardly anybody will want to lend and the deals that are available are relatively expensive with big fees. For example Aldermore Bank offers an 80 per cent buy-to-let deal with a variable rate of 4.48 per cent and a fee of 3 per cent of the loan amount. So if you are borrowing £20,000, that’s a £6,000 fee.

“Some people may think these sorts of fees are worth paying in order to get on the property ladder but the fact is that it is very difficult to meet other criteria, such as receiving enough rent to cover the mortgage interest by a sufficient margin to qualify, let alone make a profit.”

Another potential pitfall is void periods. While landlords must be prepared for times when their rental property is empty, what kills an investment is lengthy void periods, warns Camilla Dell, managing partner of Black Brick, a property buying agency. “Generally speaking, flats are a better investment because the void periods tend to be smaller. Even if you’ve got a lot of money to invest it’s better to spread it out over lots of units than buy one large one.”

Yields are likely to be greater too. “A really good one or two bed-flat should be getting a yield of at least 3 to 3.5 per cent. With a much larger home that could drop to 2 per cent or under.”

Age matters

Your age is determining whether your application for a buy-to-let mortgage will be accepted. Many lenders impose a maximum age cap of 70 or 75 at the end of the mortgage term although others are less strict.

David Hollingworth of London and Country mortgage brokers, says “For example, Kent Reliance can lend to a maximum age of 85, and lenders such as National Counties Building Society will assess on a case by case basis rather than impose a strict cap.

“The Mortgage Works has changed its approach to a maximum age of 70 at application and a borrower could take out a 35- year mortgage term. This recognises that some investors will be considering buy-to-let as part of their strategy to generate income in retirement, especially given the introduction of more flexible pension rules.”

If you’re a younger borrower, lenders will generally want you to be at least 21 years old and an existing property owner.

Mr Tyler say as: “Lenders are very wary of first-time buyers applying for buy-to-let loans because they are available on an interest-only basis with far fewer affordability checks, but then living in them themselves.”

The rent on the property you plan to buy must cover 125 per cent of the mortgage payment, and many lenders require that you have a minimum annual income. For example, Coventry BS, Santander and Accord require all buy-to-let borrowers have a minimum annual income of £25,000. Mr Hollingworth says “The minimum income requirement can be different depending on whether you’re applying on your own or with someone else. For example, Coventry wants at least £30,000 for joint applicants, although some lenders don’t distinguish between single and joint.”

Location, location, location

Buy-to-let lenders won’t be keen to end on all types of property and in all areas, even if the sums stack up. Mark Harris, the chief executive of SPF Private Clients, a mortgage broker, says “Lenders have restrictions on property types and locations. For example they might only want limited exposure to properties above nightclubs, as smell and noise issues cause concern.”

Mr Tyler says: “It’s all about resaleablity . Sometimes they [lenders] don’t like the centres of provincial towns because they had their fingers burned when the market crashed during the credit crunch. For example, Leicester and Nottingham were particularly hard hit. Many don’t like former local authority properties and won’t lend on flats above the fifth floor of tower blocks.”

How to build a future in buy-to-let

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How can you make your pension pot money work its hardest? Investing in a rental property is a popular option. According to the insurer Direct Line for Business, about a third (32 per cent) of people aged 45 to 64 who have a pension would consider investing some or all of it in a buy-to-let (BTL) property.

Their thinking is that a bricks-and-mortar investment is a third way between the rock-bottom interest rates on the high street and the volatile stock market, and estate agents report a stream of would-be “silver landlords” coming through their doors. But BTL isn’t an easy option. Before you start house-hunting you need to grasp the tax implications and risks involved.

Is BTL a good idea compared with other forms of investment?
A recent study by the finance services group True Potential concluded that, over the past 30 years, shares outperformed property. Cash investments produced the poorest returns. However, fear of stock market volatility has deterred some investors who feel that investing in something they can see is a safer bet, even though capital growth is not guaranteed. “All investments include some risk,” says Alan Ward, chairman of the Residential Landlords Association.

“If you are looking for capital growth, you have to remember that a lot of property has not regained the value it had prior to 2008.”

Am I landlord material?
House-hunting for a BTL property has to be a clinical process — you need a property that will appeal to the market, not one you adore. “There can be a lot of emotion involved,” says David Vawdrey, branch manager of Leaders letting agency, in Chichester, West Sussex. “You have to be slightly divorced from the property; it needs to be something that will let well, not something you want to live in.”

You also need time to spend on the property, even if you have a managing agent. You will need to field regular calls about maintenance issues — and it is your legal responsibility to ensure the property is in a decent, safe condition. However, Vawdrey’s biggest issue is landlords who hope to BTL on a shoestring and have no contingency funds in place. “An agent’s biggest nightmare is when the boiler breaks down and you have tenants screaming and the landlord saying they can’t afford to fix it,” he says.

What sort of property should I buy?
Flats are the traditional choice of BTL landlords. “They are much easier and cost less to maintain,” says Will Clark, director at sellmyhome.co.uk.

“Two-bedroom flats tend to be the most popular with landlords as they appeal to a variety of potential tenants — from couples, singles, young families and downsizers.” A flat close to a train or Tube station, university, or city centre will tend to be the easiest to let. However, buying a house to let might be a smarter option, as more young families are priced off the property ladder and face renting for life, in particular in London and the southeast. Families tend to stay put longer than young renters, meaning less risk of void periods.

Should I look for an income or growth?
According to the Direct Line for Business survey, more retirees want a property that will deliver a regular income (43 per cent), compared with those seeking capital growth (17 per cent). Finding a property that will deliver both will be challenging.

“Areas either give good capital growth or good income. Combining the two is very hard unless you buy a wreck for cash and add value, then remortgage,” says Kate Faulkner, managing director of the property advice site propertychecklists.co.uk.

The golden rule is that if you buy an inexpensive property in a depressed market your yield (see below) will be higher than if you buy in an expensive area where the higher rents will be wiped out by higher entry costs. Tim Hyatt, at Knight Frank, says that investors should look for a minimum 5 per cent yield to break even, once maintenance, service charges, fees and tax are taken into account.

Does it need to be near where I live?
A recent study by Sequre Property Investment reports that 61 per cent of investors buying property in the north of England are based in London or the southeast. These buyers are homing in on good-value locations such as Manchester, Liverpool, Preston and Salford, where entry prices are low, and Sequre suggests they can enjoy yields of up to 7 or 8 per cent — almost twice what they would earn on a property in London. If you do rent far from home, a good local lettings agent will be a must and that will eat into your profits — of which more later.

What is “yield” and how do I calculate it?
Yield is the income you can expect to earn from a BTL compared with the value of the property. So, if you spent £225,000 on a property, rent it out for £950 per month (or £11,400 per year), your yield would be 5.06 per cent (11,400 divided by 225,000 times 100).

However, calculating a precise yield is not quite as simple because there are some wild-card costs to consider. Terry Lovett, managing director of Lovett estate agents in Cambridgeshire, points out that yield does not allow for periods when the property is empty (a “void period” in the trade) and the cost of management and maintenance, although these latter costs are tax deductible. Another issue with yield is that it is hard to predict in advance. Faulkner warns that unregulated estate agents can say whatever they like on returns (unlike financial advisers) so do your research on local rents before you buy.

What is the BTL mortgage market like?
Good, says Brian Murphy, head of lending at the Mortgage Advice Bureau. “We have not had so many products in the market since before the financial crisis,” he says. The minimum deposit you can offer for a BTL mortgage will be about 15 per cent but, of course, the more money you put down the better your interest rate will be. If you have, say, a 40 per cent deposit you could expect to find a tracker mortgage with an interest rate of about 2 per cent. If you opt to fix that mortgage for two years then that will rise to about 2.3 to 2.4 per cent.

However, Murphy suggests that, before plunging in, you consult a specialist pensions adviser. “One size does not fit all,” he says.

How do I go about finding a good lettings agent?
Word of mouth is the best way. The Association of Residential Letting Agents (arla.co.uk) and the Royal Institution of Chartered Surveyors (rics.org) have databases of members. Find out who your point of contact will be, exactly what they will be doing for you, and how much it will cost — including whether they will charge fees each time a tenancy agreement is renewed, a common ruse.

Speak to several firms before making a decision. Check that they are registered with the property ombudsman, which can arbitrate if you do run into difficulties (tpos.co.uk). You could even go under cover. “Mystery shop them,” advises Karelia Scott-Daniels, of Manse & Garret Property Search. “Sign up as a tenant and see how they treat you. If they just refer you to their website they are not being very proactive. They should be persuading you to go and see things.”

How much will they charge?
The cost of marketing your property initially varies wildly, says Ward, but it is about half a month’s rent. He says it is crucial to grill your agent on matters such as the cost of renewing a tenancy so you don’t get a nasty surprise further down the line. Expect to pay about 10 per cent of your rent for day-to-day management. However, this will be higher in London — Faulkner suggests it could be about 15 per cent.

 

Remember, however, that the cost of management is tax deductible. If you want to cut costs, do it yourself — advertising a property on a website such as Gumtree is probably the most cost-effective method, although you will have to interview tenants yourself and call in their references.

Unless you have experience of BTL, or are unafraid of the learning curve involved and willing to put in several hours each week, Faulkner thinks it is best to leave the job of managing a BTL to an agent. “The management of a property is complex. I use an agent as it’s virtually impossible to keep up with the law,” she says.

Buying agent Camilla Dell, partner of Black Brick, agrees. “It’s never a good idea to manage a property yourself,” she says. “What happens if you are away on holiday and your tenant calls you in the middle of the night complaining of a leaking tap? A good agent acts as a barrier between you and your tenant, so if things get tricky, the emotion is removed and problems can be dealt with in a calm, professional manner.”

What red tape will I face if I do manage it myself?
Before you rent the property you will need to have an Energy Performance Certificate. Gas appliances must be safety-checked annually and it is advisable that the electrics are also checked (this is not mandatory unless you are renting a large shared house). The property should be in a safe and decent state. You also have to sign up to a deposit protection scheme to safeguard the money your tenant pays up front. Checks on the immigration status of tenants are being trialled in the Midlands and could be rolled out nationwide.

How to negotiate a house sale

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A recent survey of homes sold in Greater London showed that 20 per cent achieve the asking price, with 29 per cent selling for more and 51 per cent for less. One lucky buyer negotiated paying just 43 per cent of the asking price while a seller gained 48 per cent over the asking price, according to the analysis of almost 33,000 sales by the estate agency comparison website getagent.co.uk. Here, we outline the tactics you can employ to secure the best deal for you. Poker faces at the ready:


If you are buying

 Know your market: “The most important thing is to research prices and look at plenty of properties to get a feel for the market,” says Stuart Patterson, the director of the Knightsbridge boutique estate agency Patterson Bowe.

Trevor Abrahmsohn, the director of Glentree Estates, agrees: “Take soundings from various local agents who understand the values in the road that you are looking at and preferably make your offer with the sellers themselves at a meeting that you should ask your agents to set up. There is nothing better than direct dialogue between you and them.”

 

 Know your price: “Bear in mind that in a buyers’ market there are usually too many properties to sell and too few buyers; that gives you enormous purchasing power. Always offer at least 20 per cent below the asking price. Often an opportunistic agent will tell you that there are other bids in order to accelerate your interest. Ignore this completely, it is probably hogwash,” Abrahmsohn says.

 

“However in a sellers’ market the vendor has all the power and very often you will have to bid up to the asking price. Then it is absolutely crucial that you agree a lock-out period during which you carry out due diligence of the survey and solicitors. Gazumping is rife in this type of market,” he says.

 

“You have to be a good poker player during these meetings and try to curb your enthusiasm. The last thing that you want is to give the game away since this will cost you dear.”

 

Patterson says: “Don’t insult the seller with a derisory offer. Be reasonable and back up your offer — whether you are a cash buyer, your finance is in place, you are chain-free, etc Make yourself attractive to the seller, you need to appear genuine, prepared to commit. Come across as confident.”

 

Rayhan Rafiq Omar, cofounder of getagent.co.uk, says: “Remember estate agents represent sellers and are there to get the best price for the seller. If an agent comes back saying the owner wants a higher offer, stay firm. You’ll want to eventually meet the seller halfway, but don’t let the agent know you can be pushed around in the negotiation. The people who act desperate are the ones that get gazumped or pushed into a higher price just before exchange.”

 

 Know your seller: Camilla Dell, a managing partner at buying agency Black Brick Property Solutions, says: “Find out about the motivation to sell. Is it a developer who just wants to get it sold and move on, is it a divorcing couple or a probate sale? You need to determine whether the seller is motivated because there are people who will put their property on sale to test out the market and are not sure they really want to sell. You don’t want to end up negotiating with someone who isn’t a committed seller.”

 

 Know your competitors Dell adds: “If you are the only game in town and the asking price is reasonable, I probably wouldn’t go in at the asking price but 5-10 per cent below, depending on the market. If I suspected there were more people interested, I might go in more aggressively, especially if it is a competitive market with rising prices. Then I might go in at the asking price, or even above. Then it is less about saving money and more about securing the property and getting it off the market.”


If you are selling

 Know your buyers: Patterson says: “Play it cool. If they come to you with a serious offer, you can assume they have done their due diligence. Find out everything about the buyer. Build up a rapport, even before negotiating. Keep everything open and chatty.

 

“You will see the most interest in the first fortnight to three weeks, when the property is fresh to the market. If you don’t take an offer then, you might be waiting three to six months. So many deals fall through because sellers just get greedy,” he says.

 

 Know your worth: “You’ve done the hard work of marketing your property, having people traipse through on viewings and now you have an offer. The first thing to do is say ‘no’. It doesn’t matter how good the first offer is, the first offer is never the best one,” Omar says.

 

“If this is the only offer you have received, ask for an increased offer. And wait. You have the property they want to call home. Even if they refuse to increase their offer, be patient. They will come back with a better offer. When the buyer comes back with a higher offer that you are happy with, again don’t be hasty to accept. Behave as if you aren’t desperate,” he adds.

 

“If the buyer is in a rush, use this to get the very best offer for your home. This is where a good agent really steps up. They will have a handle on how many people are in the market for your property, and how long you should wait to get the best price. Whatever you think about estate agents, they see and experience more of your local property market than you do.”

 

Omar adds: “If you received multiple offers: you have achieved the holy grail and will likely achieve above asking price. Many agents use a process called ‘sealed bids’ to make buyers compete. It is a horrible process and you certainly don’t get the best result. While sealed bids are easy for an agent to administer, their true skill is with someone in your home, putting on the pressure to seal the best deal. There’s no reason why they couldn’t run an informal auction in your home.

 

“A good agent will negotiate the best offer with each of the buyers and present them to you, along with how confident they are each buyer will complete.”

 

Buying agents can help get the best price

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A professional property buyer can save you money, but if you can’t afford one, here are some of the tricks they use

How does a discount of 10 per cent on your property purchase sound? The wealthiest property buyers have always known the best way to knock down prices — pay a professional buying agent, someone to represent them directly, rather than the seller who has the estate agent on his or her side. If you are lower down the property chain, however, and want to unearth the best properties before anyone else — preferably at a reduced rate — here are the things you need to know to go about it in the current market, with or without an expert at your side.

Buying agents may cost somewhere between 1.5 and 3 per cent of the purchase price, but they often save their clients much more because of their ability to secure sneak previews of properties not yet on the market and to sniff out a discount where a lone buyer might unwittingly have paid the guide price. They spend years cultivating relationships with local estate agents to ensure that they get the latest information about, and access to, the newest properties and that they are full of insider tips. For example, developers are often more willing to accept a lower offer than sellers who live in a property, because they want the return on their investment as soon as possible.

Previously, buying agents tended to be busiest at the higher end of the market, in prime central London, for example. Recently, however, they have also found themselves busier than ever lower down the chain. Some of the things they do — such as creating long-standing relationships — are difficult to emulate. However, other tips from these industry insiders can be incredibly useful.

It’s the best buyers’ market the UK has seen in a long time, according to housing experts, but only if you’re looking for properties worth more than £2 million, where discounts of between 10 and 15 per cent are becoming increasingly common. Many sellers at this level are keen to sell to avoid being hit by the mansion tax proposed by Labour, which could kick in after the general election in May on properties worth £2 million or more. They are also aware that there may be less interest from buyers worried about the same thing, making a discount more likely for those buyers in a good position.

Those looking for properties below the £2 million mark must be even more astute, because the market is flooded with people who might previously have bought a more expensive property. “It’s definitely a tale of two halves at the moment,” says Camilla Dell, managing partner and co-founder of Black Brick Property Solutions.“The market below £2 million is incredibly active, with lots of buyers chasing relatively few opportunities, and some going to sealed bids.”

That doesn’t mean, however, that there aren’t opportunities out there. “We’ve seen a lot of examples where sellers put over-priced properties on the market for between £1.5 million and £2 million just before Christmas,” says Jo Eccles at Sourcing Property. “Now, because those properties have sat on Rightmove for several months, buyers think there must be something wrong with them and overlook them. But some of these are actually cracking properties that can, in some cases, be purchased for 10 per cent less than the guide price.” For a property worth £1.5 million, 10 per cent of the asking price would mean knocking £150,000 off — a substantial amount by any standards.

A buying agent immediately adds credibility to a bid, says Nathalie Hirst, a London-based agent. “Sellers are interested in more than just the amount that’s bid. The agents I work with know that I’ve always done my due diligence on a buyer and that I can be upfront about their finances, their legal situation and move quickly as a result. Say there is a property on at £5 million. I might quite easily put in a bid at £4.8 million because they know I won’t back out.”

Finding a keen seller should be your top priority, says Guy Meacock of Prime Purchase. “Even when it seems like a buyers’ market, don’t be fooled: you won’t automatically get 20 per cent wiped off the asking price.” A buying agent will be able to do this much more easily because of longstanding relationships with local businesses, but there are still things you can do yourself.

1) Ask agents about the seller’s situation — are they a developer or do they live there? Do they look as though they are living alone because of a divorce or that they are keen to move because they’ve just had another baby and run out of space? Find out how long the property has been owned on sites such as Zoopla.

2) Try to see properties before anyone else. Either find a good buying agent or build up a relationship with local estate agents.

3) Get a good lawyer, who is familiar with the location, doesn’t rely on fax machines and get one who answers the phone quickly. “We tell our clients that having a good lawyer can make or break a deal, depending on how fast and professionally they act,” says Dell.

4) Don’t put all your cards on the table. If you love a property, try not to gush about it right away in front of the estate agent or owner. It’s harder to negotiate if they know it’s the one for you.

5) Have your current property on the market, ideally with a buyer in place. If you can exchange before making your offer, even better.

 

Estate Agency of the Year Awards 2014

We are thrilled to have taken home gold in the “Best Buying Agent” category at the Estate Agency of the Year Awards 2014. The esteemed event, that celebrates the very best in estate agency, took place at The Lancaster Hotel on Friday, 5th December and was sponsored by The Times and The Sunday Times.