As part of the Barclays Private Bank monthly podcast, I discuss the latest and fast-changing trends in the property market also featuring the thoughts from Head of Savills research, Financial Times property journalist and Barclays Private Bank.
Full transcript below:
Whether you’re buying, selling, or investing in prime property, is now the right time? Are we headed for a downturn in prices? And which markets will remain the most resilient? Tune into Real Estate Realities, the new podcast series from Barclays Private Bank, where we give you the inside track on prime and super prime residential markets. We uncover the trends and the opportunities. As global events evolve, we analyse the data and ask the experts for their opinions and insights into what’s next for prime property.
Zoe Dare Hall (ZDH): Hello, and welcome to Real Estate Realities from Barclays Private Bank, the podcast series that gives the inside track on prime residential property through the lens of the COVID-19 pandemic. I’m your host, property journalist Zoe Dare Hall and in this episode I’ll be asking the experts for their views on the UK prime markets beyond London. Joining me in our virtual studio are Lucian Cook, Director of Residential Research at Savills.
Lucian Cook (LC): Hi, Zoe, really nice to be here. I’m coming to you from our Winchester office, from the board room of our Winchester office today.
ZDH: Excellent, and joining us from his office in Harrogate is Independent Property Consultant, Alex Goldstein.
Alex Goldstein (AG): Great to be here, thank you, Zoe.
ZDH: And from Barclays Private Bank, we have Product and Proposition Director, Stephen Moroukian.
Stephen Moroukian (SM): Hi, Zoe, good to be here again.
ZDH: Hello, everyone, and thank you for joining us in what I’m sure will be an interesting discussion in very strange times. As far as I’m concerned, the past five months have passed by in a bit of blur of homeschooling, battles over that, and totally failing to secure any kind of holiday. But it feels like things are busy property-wise all around me, people are moving, moving home, lots them are leaving London for homes on the coast or in the countryside. Lucian, what has your experience been of things in recent weeks and months?
LC: Yes, well, I just started venturing back up to London a couple of days a week and I think that is, you know, that’s probably the most interesting thing to get your head around, doing the commute again, and, and I have to say, like I think like a lot of other people, we’ve all slightly reassessed our work-life balance over the last few months and that commute to London has, sort of, entrenched those views for me. It’s, it’s all about getting back into the swing of it.
ZDH: And Alex, what about you? How, how has it been in Harrogate?
AG: I think the Harrogate and indeed the Yorkshire market has almost gone into overdrive at the moment. It has been an incredibly, incredibly busy patch at the moment and let’s see how it all pans out.
ZDH: Stephen, what’s your experience of these recent weeks of semi-lockdown?
SM: Yes, I think living in the London suburbs as I do, I’ve got a foot in both camps and so taking advantage of some of the local recreational opportunities that perhaps I didn’t get time to because I was so busy commuting has been a really interesting experience. So, I think similar to Lucian that this particular period of time that we’re in gives a real opportunity for reflection on some of the ways that we live and work.
ZDH: Yes, definitely. That’s right. Well, before we dive in, there are a couple of themes that have been emerging in the UK property press since the real estate markets effectively unlocked, which was mid-May in England and then mid- through to late-June in Northern Ireland, Wales and Scotland.
It seems across all markets, mainstream as well as prime sales and lettings, agents have been reporting record numbers of enquiries as homeowners realise their need for more inside space, more outside space, and also lots of home working space. And it also seems that city dwellers are looking for their slice of the good life as a direct result of the change in circumstances during lockdown.
So, what’s the outlook for the UK as we navigate the short- and longer-term effects of the pandemic? Are people really looking for a good life in the country and if so, where are they hoping to find it? So, let’s begin by talking about what’s happening in the market generally. Lucian Cook, you must have some good numbers that can paint the picture for us. What’s the Savills research telling you in terms of transaction numbers and property prices?
LC: Yes, well certainly the resurgence in deals which are being agreed has taken us all by surprise. We got a hint of it back in April. We did a survey of a number of our clients and we were quite surprised at that point, just as we’d gone into lockdown and were experiencing it, that the experience of lockdown had made people marginally more committed to move than they were prior to the pandemic.
By the time we got to June, that balance of opinion was strongly positive, so really I think the experience of lockdown, trying to work from home, being on top of other family members over that period and probably that reassessment of work-life balance that we just talked about has been a major driver for moving and in that respect, I think that’s slightly overridden a fairly sobering economic backdrop.
So, whilst we saw during lockdown, unsurprisingly, a very significant fall in transaction levels, pretty much unprecedented, that’s reflected in both sales that were agreed in that period and the transaction figures from HMRC, the rebound has been quite staggering.
HMRC is always a bit lagged, so we had some figures for July, they showed that month on month transaction levels across the UK were up 20% but they were about three quarters of July for the previous year, but those are a bit lagged. They are completed sales that have gone right through to completion and a stamp duty return has been made for.
If you look at sales actually agreed, then the figures are incredibly strong. In reality, in the first two weeks of August, those sales agreed were 76% higher than the same period last year across the country as a whole and the market which has performed most strongly has been the top end of the market where I think people have got pretty stable incomes.
They’ve got quite strong financial security and a lot of equity behind them, and the levels of deals being agreed in those markets are double, are more than double, there have been 113% first two weeks of August than we saw in the same period last year.
Pricing is a bit different, actually. I think just that economic backdrop has made people fairly cautious around pricing. So, whilst demand has come back into the market pretty quickly, I don’t think, and certainly there isn’t the evidence to date, that we’ve had the sort of same upward pressure on prices.
Indeed, if you look at the number of price adjustments which are being made relative to the number of sales, that’s pretty much in line where it’s been in the period since 2016 when we started talking about Brexit, something we’ve almost put to the back of our minds of late.
ZDH: Well, it’s clearly a positive story in terms of activity and a kind of dramatic rise in transaction numbers there but not such a significant upward trend in prices then, and I imagine the backdrop of the UK’s now declared status of recession is another filter we’ll need to apply to any property outlook. Stephen Moroukian, how does this picture align with what we’re seeing in terms of lending activity?
SM: Yes, thanks Zoe. Look, banks always have to be balancing in environments like the one that we’re in at the moment and that can be very difficult. Clearly, looking at what has happened and trying to understand what will happen is something we’re all trying to do in a very dynamic market. I think if you look at the period between April and May, that was really peak concern, peak uncertainty as we went through the true effects of COVID in the market.
What Lucian referred to in terms of those transaction levels I think is really encouraging and it’s really great to hear. We don’t know what that looks like for the next six, 12 and 24 months but clearly there’s a pattern of a trend emerging, potentially. We had the effects of the government schemes such as furlough and the mortgage holidays. Those are beginning to come to an end and what will occur after them remains unclear but the backdrop of the macro economic environment that you’ve alluded to is bound to have an impact.
ZDH: Yes. I mean it seems that there is something of a honeymoon period right now and the data seems to suggest that. What about buyer behaviour, what are serious prime or super prime buyers looking for right now and Alex Goldstein, are you seeing increased interest in the North from London-based buyers?
AG: Very much so, Zoe. I think if we go back well before lockdown to 2009, say, there were already gentle rumblings that 1% of Londoners and those in the home counties were looking to leave and head northbound. We then had the BBC jobs, they all moved to Salford in Manchester in 2011 and 2012. Channel4 more recently, they’ve got a footing in Leeds.
Harrogate is another example, consistently voted as one of the happiest places to live and you jump forward ten years to 2019 and that figure of people leaving London and home counties has crept upwards to 13%. So, the impetus was already there.
Also, pre-lockdown, what was quite interesting is that employees were lobbying their employers for more flexible working and better lifestyle-work balance and I think companies have now realised that there is a significant cost saving and lifestyle benefit to their workforce and I think all of these were significant catalysts, really, in propelling and rebalancing the property market and as I see it, the North-South property divide has been rapidly shrinking.
ZDH: That really is quite a striking rise in the number of Londoners moving North in the last ten years. It certainly seems that people are less wedded to London living at the moment if they can make it work elsewhere. So, Alex, what are your clients looking for? Is it the acres of green space, the sense of village life as a lot of recent surveys seem to indicate?
AG: I think it’s very much all the things that you would expect. Yes, of course, it’s bigger properties and greater amount of outside space. Self-contained offices ideally that are away from the house and set in the garden, again for obvious reasons, is a very high priority nowadays as indeed is having children’s play and study spaces and it’s almost going to this multi-functional space and the options, more importantly, to provide that flexibility, as is to having the easy connections back to the major cities, London, Leeds, York, Manchester and Sheffield.
Recently I helped a younger client, it was a daughter of a longstanding client of mine and the daughter was based in Shoreditch with her new husband and they were looking to start a family. They were toying with the idea of moving to the home counties and were considering heading to Hertfordshire but as they had a family link back in Harrogate in Yorkshire, they decided that they could get far greater value for money as first time buyers by heading northbound and that’s what they decided to do.
ZDH: Plus the free babysitting that often comes with moving near your family, I suppose. So, it seems that the country lifestyle is very alluring but people don’t want to cut their ties totally with city life or the need to be near cities. Lucian, is it a similar story from Savills?
LC: Yes, I think so. I mean, I think you’ve got various types of buyers, actually. I think you’ve got those who remain quite committed to London and what they’re tending to do is to move along the wealth corridors, the established wealth corridors of London. So, the most obvious of those is the one that probably starts in Fulham, runs down through to Wimbledon and ends somewhere just the other side of, of Guildford.
In addition to that, you have those who are thinking about working from home more often but still working in a London office two, three days a week, perhaps. Some of those have moved out to the commuter zone. I think the term probably best that describes where they’re looking is accessible countryside – so, they want a reasonable commute on the days that they do commute, but they also want some of the benefits of the additional space, garden space and just sort of outdoor living that comes with countryside living.
I think community for those people is also incredibly important and the feel of the community, and the amenities that are available, particularly if they’re looking towards village locations.
ZDH: I’m interested in the idea of accessible countryside locations – what do you mean by that?
LC: So, when we talk about accessible countryside, one of the things that’s really important there is the commute into London and that is not just about the straight travel time, it’s about the reliability of the trains, the frequency of the trains and the number of people who are commuting on those lines.
ZDH: Stephen, on the subject of trains, HS2 obviously springs to mind… let’s touch for a moment on how these types of big infrastructure projects might impact the commercial property market.
SM: Yes that’s right Zoe, big infrastructure projects have always been used as an effective lever by central governments to drive investment and confidence and therefore ultimately jobs, and that’s happened all over the world. Now, we’ve already seen form the 2020 budget a signpost of unprecedented billions to big infrastructure, whether that’s’ roads, railways, new homes, schools, and so forth. But I think the dynamic will be different this time, there’ll be much more local and regional government influence expected.
I think if we look at the commercial real estate assets for a moment, let’s specifically look at retail, we’ve got large shopping centres all over the country and we’ve got our beloved high streets. Those assets will have to find their price in the market, that’s natural. At this point there’s a lot of uncertainty in terms of what that will actually look like, and it will really only be over the next months and years that we’ll see what the true impact of the Covid overlay will have been.
ZDH: Yes, it definitely sounds like there are a lot of question marks around what’s going to happen in the market in the coming months and years. But let’s focus on what’s been happening recently. Alex – tell me about some of the deals you’ve been seeing since the market opened up again.
AG: Well, I think, overall, Zoe, the Yorkshire market has performed very strongly.
Just recently, in the last few days actually, I’ve just exchanged and completed on a sizeable family home and this was about 5,000 square foot, detached, you went up a drive and it was essentially set in about an acre of land.
Interestingly, the husband, he worked in central Leeds, he’s got a secure financial job but it was the family wanting the lifestyle and the outside space but in particular, this property there was a small annex and a small range of out buildings and that gave them a lot of flexible usage.
So, when it was friends of family, or indeed the grandparents coming up to stay and indeed plays into the whole work from home theme as well, very much in a superstar village. It had a couple of amenities with it, so there was a village shop and a very good pub.
Quite importantly as well there were easy connections over to York, Harrogate, Leeds, and indeed sometimes down to London just for the husband as well and again, that was secured off-market.
Another very interesting property that I’m involved with at the moment is actually a converted historic chapel right here in central Harrogate and that’s got six bedrooms and five bathrooms and an orangery, and really is perfect for home, flexi-living.
Very unusually, it’s actually got a passive income stream because it sort of partly operates as a guest house, could easily become a wedding venue, but has also been fairly prolific on the creative side and it’s being used regularly by high end magazines for photo shoots and indeed some filming as well and again, because of these points, the property has got, I feel, London and indeed international appeal. You’ve got the whole life-work balance and indeed the income generating option as well.
In addition, there’s been some interesting ones in central Harrogate in the duchy and this is a very prestigious area right in the centre of Harrogate and again, I’ve been involved with a few sizeable deals and transactions on family homes ranging from between one and a half million up to three million.
ZDH: So, definitely some good value for money deals for the right buyers there and I have to say, I love the idea of superstar villages, that sounds like a theme in its own right. Lucian, what other kinds of deals are on the table and what else are you seeing demand for?
LC: Yes. Well, I think some of it’s location and some of it is about the property. When it comes to property, it’s a lot of the things that we’ve already talked about. So, it’s garden space, separate space to work from home. I think the other one that people have realised has become critically important not least of which is apparent as we were preparing for this recording, is the importance of good Wi-Fi and I think increasingly people will be paying attention to that when they look to buy their new home.
But, when it comes to the areas that we’re looking at, just backing up some of the stuff that Alex has said, if you go to Yorkshire and the Humber and you look at where the demand has been strongest, we’ve taken some data from a data provider called 20CI and they look at all of the properties marked as sold subject to contract each week across the country and the three local authorities that have performed strongest in that area of Yorkshire and the Humber have been Rydale, Harrogate and Hambleton.
So, very much the more affluent markets which give you all of those lifestyle benefits.
In reality, though, the markets that have even out-performed those have tended to be those within the commuter zone of London. So, very strong demand for the likes of Guildford, Saint Albans and Winchester.
I suppose what’s interesting about those areas is in the period, essentially, since the credit crunch, what we saw was the prime urban living in those areas became slightly more popular than buying your village or country property and I suspect the experience that we’ve had of the recent past means that that reverses slightly. Because we saw that trend since the credit crunch, actually, we saw the performance of those prime urban properties outside of London in the uber-towns out-perform the neighbouring villages in the countryside.
That created a bit of a value gap, so this slight rural renaissance that we’re seeing at the moment actually comes at a time when those village properties are looking pretty good value.
So, particularly that country house market has been something of a sleeping giant for quite some time now and it does mean in terms of what you can get for £1 million, £2 million, whatever the figure might be then you’re getting a lot more for your money in those locations. So, a bit of the reversal of the trends that we’ve seen, I would say over the past, over the past decade or so.
ZDH: Yes, and I suppose prime and super prime buyers will always want to have a foot in around London still. Does that interest and that investment stretch into the regions, though? Alex Goldstein, what are you seeing?
AG: Very much so, Zoe, at the moment. In the north, all the talk is currently about the football, of course, and Leeds United are back in the Premiership and it does and it has made a major different to the market and again, you look historically at the difference that that made when they were back up.
This is now driving international investors and they’d always historically focused on Manchester, obviously you’ve got the two major clubs there but you’ve now got that connection, you’ve got this whole band stretching across the Pennines from Manchester heading over to Leeds and arguably slightly beyond, and that entire area still has very good access back to London.
So, for example, and it’s the journey that I do if I go to London, York, direct down to London, you can do that in under two hours quite happily. Leeds down to Kings Cross, that’s just over two hours and you can even now go direct from Harrogate to London Kings Cross and that takes about two hours and 55 minutes.
ZDH: So, still looking at lifestyle trends, I imagine many of our listeners will also think about how we live in the future and lockdown has certainly emphasised the need for those who can to be close to family. Alex, you mentioned earlier the demand for annexes and outbuildings, can we extrapolate from that that people are looking more at multigenerational living?
AG: Very much so. I feel that there is a, a cultural shift that’s coming full circle precisely because of the pandemic. A, a couple of recent examples I’ve had where, where families are actually combining, they’re coming together with grandparents who are living on-site but they’re in a separate cottage and they can be there now for childcare, sometimes sort of school work and equally, they can be looked after and feel secure themselves. And, again, it plays into this demand for larger family homes with outbuildings that are very attractive.
Generations are combining their funds and reducing their risk and another trend that seems to be emerging is just this sort of gentle move away from urban living and this want and need for having everything on one’s doorstep. I think let’s be clear, in a post-COVID environment, I think it’s very clear we all want the good life at the end of the day, we want to be self-sufficient in our own little bubble and happy.
Now, to drive the twenty minutes or so to the nearest urban centre, I think it’s very much the driver of wanting and having that space and the openness, the views and having that key, flexible lifestyle at home both in terms of how your rooms are actually utilised within the house but also how that combines with your work lifestyle as well Again, it’s having that need to quickly get back over to wherever the major city is that the employer is in.
I’ve had an interesting recent example, one client of mine he runs a fairly major IT firm, he’s the managing director and he’s currently got offices in Edinburgh, Leeds and London and one over in the United States and it’s only really just dawned on him in the IT business that he can run his business remotely and very efficiently indeed.
Now, he was going to buy a second property, a bolt hole in London to be close to the office for whenever he was down there but he’s now put a complete hold on that and he’s actually investing back in Yorkshire.
ZDH: Interesting that it’s taken lockdown for that mindset shift. Stephen, from a lender’s perspective, if interest rates are going to stay lower for longer, do you think this could potentially have a positive effect on transaction numbers and the knock-on effects on the wider property economy?
SM: Interest rate reductions have been off the back of two shocks in the market – the global financial crisis of 10 years ago, and this current crisis we’re in. Rates in general show no sign of increasing, and therefore the cost of borrowing remains incredibly low compared to the 30 years that preceded the global financial crisis.
The opportunity for some borrowers, of course, is to then buy that bigger property in the cycle, or making an existing asset work a lot harder for them. I think in terms of the wider economy, that question remains one that’s related to what happens after the government schemes transition.
ZDH: I think a lot of people would agree with that cautious outlook. But what are some of the other factors that are likely to have an effect on the market in the coming months? Like stamp duty. Lucian?
LC: Of course, we have a stamp duty holiday coming to an end in March of next year, I think that will support the market in the first quarter of next year, as is always the case when people can see an increase in stamp duty on the horizon, they will do pretty much anything in their power to avoid paying that, even if that means paying a little bit more for the property that they’re buying.
I think thereafter, the recovery in prices from 2021 onwards, I think it’s more likely to have sort of sustained upward traction from in 2022, interest rates remaining low, economy back on its feet.
Again throughout that period, I think what you’ll see is some of the lifestyle changes that we’ve talked about playing out in which properties in which locations are in the most demand. And so, when we talk about some of those lifestyle drivers, it’s also important to remember that’s not just about people who are upsizing and looking for more space.
One of the things that we’ve found is that, increasingly, that older population who have been quite reluctant, historically, to downsize, the experience of the pandemic has made them much more open to that and that is supporting some of the prime urban markets, particularly some of the new-build property in some of those areas and areas such as the likes of Clifton and some of the markets in, similarly, somewhere like Bath.
ZDH: A lovely part of the country, and Alex, I hear you’ve been involved in a deal recently in another very pretty spa town, Ilkley in West Yorkshire.
AG: I have indeed and it was a property for a client actually relocating from Los Angeles over in the States and they needed access down to London and Manchester as they were in the media. And Ilkley just seemed a very obvious choice with all its amenities and equally, very well connected on the train so it’s pretty easy to get down to London, across to Leeds and Manchester as well and there’s some very good, outstanding even, schools locally.
What was interesting as well on this one, this was conducted again off-market but we also had to go over guide price in order to secure it.
ZDH: I suppose I can’t really ask you how much your client’s paying, Alex, but I wonder if there are some relative bargains outside of London. Lucian, can you share any examples?
LC: Yes, I think perversely, actually, you almost need to look to the very top end of the market to see where some of the bargains are. So, we’ve suggested that that top-end country house market has been something of a sleeping giant for a number of years and we’ve also talked about the prime central London market where values have been off somewhere like 20%.
Because the profile of buyers in, say, the likes of Saint George’s Hill, Saint George’s Hill in Wentworth, sorry, it often is a bit more reflective of that prime central London market than some of the other prime country house markets. That market also is looking relatively good value, particularly in terms of the square footage which you’re getting comparable to some of the other locations they might look at such as sup-, such as central London.
So, we’ve seen a real resurgence in demand in some of those markets, and then really that I suppose is also representative of a number of micro-markets. Another good example then would be the market, say, down at Sandbanks, down in the Bournemouth Pool conurbation, a market where location is of course absolutely paramount and all important but which commands some very high values, but nonetheless is looking relatively good value as things stand.
ZDH: Well, we’ve covered a lot of ground there. Final question to all our guests, if you could move to the country tomorrow, where would it be? Alex, if we could pry you away from Harrogate.
AG: That’s an easy one, I’m going to see you on the East Coast over at Whitby for some proper fish and chips.
ZDH: Great, okay, and Lucian, where’s your dream country property?
LC: Well, I already live in the countryside. I am very much a rural boy, I grew up in deepest, darkest Somerset, but I’ve managed to migrate to Hampshire. Both of those I have affinity for. If I was having to move, though, I think I would probably go back to that area of North Somerset, access to Bristol and Bath, access to some exceptional apple-based cider and equally, not a million miles from the Mecca for me, which is Taunton and the county grounds where I can go and watch my beloved Somerset county cricket club.
ZDH: I love it, Taunton as the Mecca, and Stephen, your escape to the country, where would that be to?
SM: Yes, well I probably should say Windsor because that’s where my in-laws live but of course, I’m a fan of the sea, as is my family so I think we’d have to be on the coast somewhere and that really probably looks like the South Devon coastline.
ZDH: Yes, I’m with you there, Stephen, it would have to be coastal for me, too. I think I’d like to do the impossible and transplant my leafy London village of Blackheath and put it somewhere lovely on the South Coast and then obviously hope there are some fast trains to get me back to London if I need to. So, thank you to all our guests for your expert insights. Just say goodbye to all of you, Lucian Cook, Director of Residential Research at Savills.
LC: Thanks, Zoe, it’s been my pleasure.
ZDH: Alex Goldstein from Alex Goldstein Property Consultants.
AG: Thank you, Zoe. Great to take part.
ZDH: And Stephen Moroukian, Product and Proposition Director at Barclays Private Bank.
SM: Thank you very much, Zoe, see you next time.
ZDH: I hope you’ve enjoyed this episode of Real Estate Realities. Join us next time when we’re going to be taking a virtual trip to the sunny south of France to check in on the prime property market in the French Riviera. Thank you for listening.
Richard Christian of BluSkills is a former Royal Marine Commando and now runs his own security services business. Pulling on his years at the top of the military, Richard discusses personal and home security and what to be aware of. Equally how estate agents, vendors and purchasers all merge together and if you are security conscious, how to go about securing your home and ensure your family are safe.
Full Transcript below:
Alex: So welcome to the Alex Goldstein Property show and this time we are talking with a very high-profile security expert Richard Christian from BluSkills who is a former Royal Marine Commando and now has his own security business, which helps private individuals and indeed companies and those in the public eye. Richard, great to have you on board today.
Richard: Hi Alex thanks very much for having me. I’m not sure about high profile maybe not yet but working on it.
Alex: I’m glad to hear, I’m glad to hear it but it’s very much a hot topic at the moment and I think there is an increasing mindfulness out there in the in the public domain of personal security and certainly when it comes to banking and finances and it just seems to be in the media more and more and certainly when you integrate that into the property sector. I certainly from what I see in my role I dare say. Will be very interesting to hear your thoughts when we overlay it from your perspective that I think there are a number of shortcomings or areas that people just don’t think about when it comes to property. I mean what’s quite interesting at the moment given the lockdown and the way that technologies come about is the whole sort of virtual tour and you can now look in online and have a viewing round of property but I think there are risks involved with that but what’s your take on it all.
Richard: Well that’s right Alex it’s why it’s so good to speak to you as I think you’re a very security-minded individual. What we’re seeing is tech moving at a very fast pace that’s allowing people to use fantastic new features but often the implications of those features and services are overlooked the ease of them is appealing to people but the security considerations and the security implications may be coming a little bit behind that so in terms of virtual tours is a fantastic selling tool for estate agents but for the person selling the home there’s probably no real security implication perceived. However, if the home doesn’t sell they should be aware that that video could still remain in the public domain if it isn’t removed and for someone buying I think they should be looking at ensuring that if there was a video tour done then it’s a timely removal by the by the agents. And they should be mindful that people may have recorded that video and people have used it for electronic surveillance if they were interested in the property. And they’ve done the kind of electronic surveillance of the property. They may have recorded that video. They may have it stored. They may have been able to work out plans of the layouts of the building and observe any security measures that are in place. So there’s a lot of information given there, and you have to be mindful of that.
Alex: Yeah hugely so. I think from my perspective on the property side of things virtual tours are, almost you could argue, a bit of a gimmick at the moment and of course you’ve got a sort of camera drone footage going through your property. Obviously, it’s a security risk because if there’s any sort of valuables. Or it’s notification where the main alarm panel is or any alarm sensors for example are as well. But equally, and this is the one of the big things I always say is, as soon as information goes online, whether it’s a virtual tour or it’s imagery. It’s stored, it’s archived and it’s the whole spider’s web effect that you have no control of that information. It very quickly gets dispersed and if you’ve got a virtual tour of a property circulating around. I say websites generally again you can run into issues down the line if someone does an historic search for example.
Richard: That’s right and I’d say it’s important to think about anything that you’re putting onto the internet into the electronic ether is to think that you’ve put that out there and then that’s permanently going to stay out there. Now there are things that you can do to reduce how easily it is how easy it is to find that information and data a later date and third parties play a big part in that but I would say approaching the mindset that that information is out there for good and are you happy with that.
Alex: No, indeed. I mean when it comes to actually buying a property how should one and how do you actually evaluate the security of a property and what should people actually look out for at the end of the day?
Richard: So from my perspective and probably because I’m kind of security minded and because we provide these services, I would I would advise people, certainly your type of client Alex, to be looking at conducting a pre-purchase security assessment and I would say that much as you would do a home buying survey or a detailed survey to find out the state of the physical property, the foundations, the windows, etc. and what the associated costs might be, I’d say it’s probably wise to do that pre-purchase regarding security as well. You may be buying a property where you’re going to have to spend a great deal of money investing in security measures post-purchase and it’s good to bear that in mind when you when you come to purchase the property. I would say for an individual who doesn’t want to go down that route and wants to do it themselves, there’s a number of things that they can do. I would say firstly, look at the electronic footprint for the property. So as you’ve mentioned virtual tours and what images are available for the property. What links are there to the property? So companies house, what businesses are linked to it? So that’s the electronic side of life and then we look to the kind of the physical side of life. So we work from the outside in when we look at properties. Is there a boundary in place or is access to the site open? Are the gates to the property to restrict vehicle access? So access control is one of the key phases. Then we work through towards the outside of the property looking at any other measures there. So a layered security approach. Are there other gates? Is there planting which screens from view or planting which obstructs? So you know your real thorn bushes and things like that. Yeah what kind of vulnerable points are there. And then we’re looking at the outside of the property and cameras, CCTV. You know does that give a good view of the of the property? Does it cover vulnerable points? And then through to basics kind of the real basics which is do we have good solid locks on doors? Locks on windows? Have we got door contact sensors? And then inside which are the impassive infrared motion detectors linked to your armed systems. And then finally we’ll be looking at things like creating different zones within the house and detecting movement throughout the house so should someone get into your home, they’ve bypassed all your security measures, can you trace their movements around the home and slow them down until the police can get there? And when you trace them, they may have had to go through at break windows and therefore to bypass the locks. But we’re introducing other elements, so we’ll have internal locks on doors and that just slows them down. So certainly doors to key areas, people coming through windows we can we keep them in rooms rather than allowing them access to stairwells. So we’re restricting them going up through the property. So let’s say you’re in the property that buys you time, you can lock yourself in your room ring the police and hopefully they’re going to get there way before the burglar can get access to your valuables or worst case scenario to you.
Alex: Right and when you look to a point if you’re doing this yourself and you’re looking to select a security company, whether it’s alarms or CCTV what sort of things, should one look for?
Richard: I think this is probably one of the biggest areas people don’t necessarily pay enough attention to, this area when you think a security company is going to come to your home they’re going to know your home and your security intimately. Whether you engage with them or whether you decide not to, so I think one of the first things that we’re going to look at is reputation have you have come about that company, what’s their online reputation? But then also who can we speak to? How can we verify the level of service that they’ve given? How long have they been established? All those kind of background things. We should be looking for them to be accredited so what that’ll mean is that they’re working to a quality management standard so they’re going to give high levels of service and they’re also going to have good processes and procedures in place as recommended. Through things like British standards and also that they’re working to those kinds of British standards. We’re then looking for things like good measures to have in place so engage with them and see the staff and the installers and the people that they’re employing. Have they done background checks on those people which they should have done working in the security industry? And then finally we can look at things like the financials of the business. So go to sites like Companies House. Check the directors. Who are they? Are they entitled to be directors? They’re not struck off? And check the financials.
Alex: Interesting point as well I know you’ve mentioned companies house and especially if it applies to if you’ve got your own business as well and again, I think a lot of people sort of forget that you can register the company at your accountants and I think a lot of people sort of inadvertently fall into the trap of registering their business at their home and again it just forms another layer of information whereby those looking for phishing, scamming or indeed worse, can use that information to their advantage.
Richard: That’s right. Yes, the thing with online data is in isolation it probably doesn’t give too much away. It’s the compounding effect of lots of different sources of information that can be pulled together. So as you rightly allude to, people do register businesses to their home address. I think that’s a decision that that needs to be made based on levels of risk. Kind of what type of business is it. Is it customer facing or is it just something that you might use for your property for example. But yes, a Company’s House very searchable feature is very high on Google so if you’re looking for a Director, it’ll it will link you to your home address very very quickly. We’ve also seen that with electoral roles as well they provide exactly the same information. The public ones are searchable with a little bit of information given up but unfortunately removing yourself from things like the electoral role causes other implications around things like finance where they use the electoral information to confirm your identity. But yes it may be wise to disassociate your business from your home. The last thing you want is a disgruntled customer turning up at your gate or your home and challenging you face to face.
Alex: No, no I quite agree. I mean I think the other hot area is there I say social media because again I think a lot of people are unaware of the implications of anything that they put onto social media, photos for example and videos, and that those have all got sort of metadata behind the scenes which again provides another avenue to source information.
Richard: A very good point. Social media is a fantastic platform. I think when you look at higher profile figures, they’ve got a kind of love-hate relationship with it. It’s a maybe a necessary evil. A lot of images and videos contain metadata as you’ve rightly pointed out, which can include things like location. So you may innocently snap a photo of, I don’t know, a new watch or present or some part of your home and that will contain location data depending on the settings that you’ve got on your on your mobile phone and I’d say occupants of homes are probably more likely to be conscious about what they’re posting but what I am seeing a lot of is photos posted on social media by contractors so people who visited your home doing work there and they take pictures pictures of work they’ve done for their portfolio without permission. Which could subsequently compromise you. I think if you are using social media and you are posting images just, I’d urge you to consider what’s captured in the image. What’s in the background? What might be present that you haven’t noticed immediately? Are you taking a picture of a room that shows that you do or do not have security there? Does it show that your windows are insecure? Does it give a criminal motivation? That seems to be a strong amount of high-profile people putting pictures of high-value items on and that just that just creates motivation. You’re just telling people you’ve got things that they could steal and that they could make money.
Alex: Well now indeed and I know the obvious one because they’re so easy and accessible is of course mobile phones but I have to say a lot of the modern digital cameras as well also store the location metadata and other information behind the scenes, such as your name and other items for that image and people take that and then they also put that online unwittingly. And equally I have seen like you, contractors. those in the property sector again just taking what they feel is something low-key. An image or a feature of a property and put it out to say well look what we’ve seen today but again as you say, they’ve unwittingly released additional information into the ether of the Internet and again that’s all searchable. And it just provides another level of information. I think again people need to be aware and mindful of that. So I mean when you start, when you first move into a property, there are the basics that one should do regarding security. Just talk everyone through that and what the next steps thereafter as well should be.
Richard: I mean it can vary. It depends if you’ve had a security survey done prior to moving in. Then you’ll have a list of tasks that you need to undertake. And what I would suggest that there’s various things you can do, and I would look to quickly establish a baseline which is the pattern of life in your area. What does normal look like? You’re new to that area so you don’t really understand what’s going on. By tuning into the environment you’ll be able to quickly establish what normal looks like so anything suspicious or out of place will be flagged to you. People often forget that crime isn’t just the action happening. Someone doesn’t just break into a house, usually there’s a period before that the target selection and then also the the surveillance phase. Where people will, no matter how short, will spend a period of time surveilling your home prior to breaking to make sure you’re not there. To see what security’s in place and to see how they how they’re going to undertake the the crime. So establishing that baseline will give you a chance of spotting suspicious things early. I would say one that people often don’t do is changing the locks to your home. Very very simple, not high cost but when you buy a home how do you know that you have all the keys to that house? It’s not necessarily like a car where there’s a finite number of keys and you can track them. Neighbours may have keys; estate agents may still retain some keys. It’s hard to know where those keys are so simply changing your locks gives you control. And putting very good locks on is a great start. Changing alarm codes or gate access codes and things like that. People, contractors, you don’t know who’s got access to those. So that’s a great place to start. And then I’d say ensuring the basics are in place. So have you got locks on your windows? Have you got restrictors for downside downstairs windows to limit how much the windows can open? Are your door locks to the highest standard? Do you have access control to the site? So that’s a big one. Just controlling who can come onto your premise when you’re not there. And high value items. Simple things like making sure that high value items aren’t in sight. So cars is a big one at the moment people are targeting. People simply based on the vehicles that they’re driving. If you leave those on your driveway, you leave yourself open to being targeted.
Alex: Yeah, it’s a very valid point and that’s partly where I suppose garages are making a bit of a comeback because you can hide it all and keep it out of sight. A garage is a very useful tool. Exactly though when you talked about external people coming on site. I mean when you say for example, have contractors in, whether it’s for security means or it’s the builders or whoever, it’s going to be what most measures should you think about or put in place.
Richard: I think it’s very interesting when you think of your home. It’s quite a secure environment simply because people don’t really know a great deal about it. It’s hard to get a lot of information. A lot of the stuff we’re talking about is just building up that information picture and anytime you have contractors into your home, you expose more information. More than would be openly available. So it’s very important when you get contractors in to consider who is doing the work. Are they reputable? Do they could have good policy and procedure in place? Are they vetting and screening the people who are working for them? How are you controlling access? Are you giving them a key to your home when you’re not there, which is obviously high risk. Are you giving them access codes? Are you supervising them while they’re there? And we would strongly recommend that you restrict access in your home. Allow them to only work in the areas that’s necessary and that you that you supervise them. You monitor what they’re up to. High-value items make sure that they’re not on display. Just temptation can get the better of people and also things like recording who’s attended the site so you get the company in, you just have to do a simple sign-in with their names and their dates so that you can trace back should an event happen and supply to the police names and addresses of people who’ve been to your property so they can eliminate them.
Alex: Yeah I think it’s a certainly a very valid point that last one and certainly I suppose when estate agents show people around property, there’s various measures you can, I suppose, put in place up to a point but at the end of the day from an estate agent’s perspective it’s just a few phone calls sometimes with an individual but I suppose it’s thereafter with regard as we previously talked about. The images and the rights to those and the virtual tours and where those have gone and it’s this sort of legacy, if you will. What should one consider or/and indeed estate agents consider with that data and how to also vet people?
Estate agents play a huge part in safety and security and I guess when people are selling a home, they’re probably less concerned. It’s probably people buying a home that are inheriting any potential problems or information control. From there I’d say with when you’re engaging with an estate agent, you should be looking for someone who’s aware. So when you when you speak to them and you speak about how they’re going to promote the property, you should also ask how they’re going to control that information. What’s their process for removing that information? So when we do security assessments and surveys, we’re doing an online trawl and regularly we’ll find legacy images on third-party websites, so not the estate agents directly necessarily but the third-party websites are still left on there and on our clients behalf we’ll speak with them and we’ll get them to remove those images and that legacy data. From an estate agent point of view, as I mentioned, they’ve got a big part to play and I think there’s a lot that they can do and you should be asking them what their policy and procedures are and I know you’re very swept up with this Alex but that qualifying leads is a huge one for me. Especially when you move to the higher end stuff and there was a great piece of research done by a company called Perpetuity Research and one of the offenders that was interviewed in there a convicted burglar was quite candid about how he would visit high-end properties that were for sale on the market, pretend to be interested in purchasing and then go back months later and burgle them. So qualifying those leads, confirming the identity of the people who are going to visit the property, credit checks. I mean it’s in their interests as well. Why waste time with people who can’t and won’t buy the property as well as put your clients or the new purchaser at risk.
Alex: Indeed and it’s a very very fine balance because sometimes, certainly with the higher end properties, people, as you’ve just said, should be private and restricting what information you give. You fall into GDPR which most of the agents fully comply with as well and again it’s just getting that. It’s just striking that balance but I think it’s very much an evolving frontier and a lot of agents say, indeed myself, can sign up to all the various governing bodies and there’s ways and means to go about these things but I have to say I always play on this, it comes back to its experience. At the end of the day, you know there’s a sort of a sixth sense as an agent when you’re speaking with someone and just how they’re answering or not answering sometimes relevant questions or are they forthcoming with information, you can instantly tell and I have to say it’s becoming more and more at the front of agents minds that if you’re not quite getting the right answer or not quite that right feel, then you put a stop on proceedings and you don’t allow people around. Equally just going back momentarily to the virtual tour side of things, agents are now, not necessarily putting those on the website. They’re using that as a tool so that if a buyer is mindful of the virus situation or they’re at the other end of the country or abroad, they can view it online via a shared computer screen if you will with the estate agent. And again that helps retain that element of control which I think more and more agents are aware of.
Richard: That’s right and I know from speaking to you as well you’re seeing a great increase in people wanting to sell homes off the market out of the public eye completely. I thoroughly understand why people would want to do that especially when you get to the higher levels I know it’s not necessarily pertinent to the general market, but I know with bigger, more expensive homes I can understand that people really want to maintain privacy of that that home.
Alex: I know. very much so. And in some circumstances because it’s a rare or a more unusual property, you can apply a bit more of a premium for that and it’s offering the exclusive. So it’s almost a win-win situation by trying to sell something off market. You can get a higher value but equally as you said not everyone wants their property and their name all emblazoned in lights and again it’s just having that insight and a sensible judgment call on it all.
Alex: Richard it’s been really useful to talk everything through with you and if people want to get in touch and talk through their security measures and go through things in a bit more detail, what’s the best way to get in touch with you?
Richard: I’ll say the simple way is to visit our website and get in touch with the website. So it’s www.bluskills.co.uk or you can drop us a line on 0333 3056615.
Alex: That is super Richard. Really appreciate your time and insight and look forward to speaking with you soon.
Richard: Thanks Alex. Great to speak to you.
Knowing the inside track on the property market and how to differentiate between estate agents will be critical to selling your home in a post-Covid market. Listen to my live talk on how to choose an estate agent now!
Full transcript below:
So thank you for joining me and this is very much a talk on how to choose an estate agent in what is a tougher market, potentially what will be a different market and very much in conjunction with agents here to help. So really appreciate their support as always. So as everyone knows yeah sure we’re in uncharted times but there are a lot of reasons I have to say to still stay positive. It was predicted in the property industry that we would see a surge in market activity following the general election and the Brexit result and sure enough, in February, this was just prior to lockdown, the UK had the highest number of mortgage approvals since January 2014. It was shy of about 74, 000, so a proven surge then and i predicted, along with a lot of other commentators that the same was going to happen again in a post-Covid market and when it was slightly more behind us. Now this was proven on Wednesday when the property sector was more released and the right move reported, again, these figures are incredible right? We’ve reported a 45% increase in website activity. 70% increase in inquiries and over 2 000 properties were newly launched within five hours of trading. So that is quite some staggering figures and some real positive news out there. But look, don’t get me wrong, the market is of course going to be different. It’s likely to be tougher and there’s going to be a bit of turbulence along the way, however, as I sit here, there are some key areas that you’ve got to get right. If your sale is going to go with a bang. We’ve had a tougher market now for a while it’s likely to continue and this afternoon in a pretty short, sharp and to the point discussion I just wanted to outline what I feel are the key criteria to look at when deciding to choose an agent to sell your home. How to differentiate between them what the vendor needs to know and how to ensure that you’ve got the best team around you. So prior to this and even more so now, many of the frontline values and estate agency practices were under a huge amount of pressure to perform and I used to be that side of the fence and it means sometimes that you’re incentivized to list a property rather than to necessarily sell it. The agents are motivated rightly or wrongly by targets, KPIs and spreadsheets and this can sometimes cause a conflict between giving what is the right advice and getting the instruction, and it’s a very, very fine line. And I’m not saying for a moment that this is a bad thing I’m merely saying that it’s something to be mindful of. So, look, who am I? Very briefly. A why do I feel that I can make these points?
So, as I’ve alluded to, I am a former estate agent myself, but I used to be with some of the biggest names in the country and other consultancy practices for about 18 years. I’ve now got my own business and I give them the inside track on the estate agency and property sector when it comes to buying and selling their homes. Bit more unusual, I’ve actually got a footing in London and the London home county markets and the current consensus I feel is that the vast majority of buyers and indeed sellers just want to get on with it. Lives have been put on hold and yeah sure the market is a bit mixed. We’ve seen a huge surge at the moment but there are some key agency cornerstones that you need to master to ensure that your sale is going to go with a bang and then make sure you’re ready for these, so as I see it, the key points. The first one and the moment is experience because as with any business sector out there, yeah of course there are always the rogues out there but you need to ensure that your agent has earned their time working at the agency, coalface if you will, for a good number of years selling property. It’s bizarre speaking with the clients first thing this morning it’s just not the same as insurance and it’s one if not the only emotional purchase we ever make. And rarely is it with more money or more associated emotion. So, look if you haven’t been there before as an agent, you’re never going to be able to gauge a situation and more importantly, actually nip situations in the bud before they actually occur. The best thing is to check out your agent on LinkedIn to get a true feel for their experience. If they’ve hopped across numerous sectors, over the week, over the years. They’re just not going to have the battle-hardened skills to deal with a given situation nor get the best figure from a would-be purchaser. And I do mean battle hardened. We’ve been through a lot in property in recent times, recession, Brexit and all of that you need to have been there and done it and got the t-shirt in order to give the best possible advice and get the very best out of any given situation. So that’s the first point.
Second point, again a lot of people overlook this and I’m at a loss as to why but, the front of house team. So, these are the key individuals back in the estate agency office and they should be your primary focus when choosing your agent not the valuer who’s pitching for your business, sat in your sitting room. Those are the salespeople but equally so is the front of house team because they are the first individuals to speak with interested parties, deal with walk-in inquiries, telephone inquiries. They need to be able to talk fluently enthusiastically and knowledgeably about your home. It’s be more likely therefore that you’re going to secure viewings and it gives viewers confidence in the agent as well so that they in turn can get the best out of them. Make sure that you ask those on the front end, the front of house team, to see your home themselves. Even if it’s virtually, of course at the moment, before it goes onto the market because if they’ve seen it, as with everything in sales, if you’ve seen it you can talk about it more confidently and from a position of strength.
Next point on the front of house team is just to also ask how is your sale going to be handled once you go under offer. And to be clear, selling a property is actually the easy bit. You’ve got to keep that window from going under offer to exchange as tight as you possibly can. You need a designated sales progressor as they’re called and again one who’s got the experience. I like to think of these people like little Yorkshire terriers because they go after all the parties, they push them very hard to get the deals over the line and they never give up. They constantly nip away, and they really are amazing people, but they are worth their weight in gold. And again, make sure you’ve got a good one on your side.
The next point is viewings. So of course, we’re in uncharted times. It’s still a moveable face on how best to conduct these and currently agents um they’re not necessarily allowed to accompany unless there’s very strict guidelines in place and the doors need to be all opened up and social distancing in place so again it’s not what it was. However, prior to lockdown and we will eventually come back to this. Is that I’d always say be wary of agents who can ask you to conduct the vast majority of the viewings because as I see it it’s slightly a lazy estate agency and it’s not necessarily again in your best interest as vendor. Showing potential buyers around a property is an art and the most experienced agents know exactly what the viewers are looking for and how to get the best out of them. So one of the little tricks I used to do is that you’re showing someone a property and they make an enthused comment about, I don’t know the breakfast kitchen so what do you do you finish the viewing in the breakfast kitchen. So, the last thing they actually remember is the breakfast kitchen. It’s little things like that you don’t want. Just a simple door opener so it’s a key but important point you as the vendor. Again, it’s different at the moment sure but make sure you’re not in the background. You can’t be in ear shot because you want the genuine feedback and that is so valuable um and important. And yep I agree virtual viewings are in place and I am going to come back to these in a moment. As I mentioned at the start, I’ve had a very good question in advance about this and the virtual viewings. Again, we just need to talk through.
The next point is marketing so look before you choose an agent mystery. Shop them. Always, always investigate their marketing collateral. How well are you treated as a buyer? For example, do the front of house team know their stuff do they ask you the right questions? Because an instant fail for me is when you call them up and the agent says I’ll just get the brochure and check. You’ve already got the brochure so what’s the point. Look through the brochure examples. Check they’re all well designed presented and outstanding photography and I do mean outstanding. Brief descriptions, floor plans and site plans as well where relevant. Game check for typos. Are all the descriptions amazingly similar because if it’s a copy and paste job, you may just want to part ways with them. Take of course a look at their web portal presence, right move and on the market social media activity, videos editorial and PR coverage. It all counts, and it really is not just about online presence. Check and ask your agent how many proceedable cash buyers could they instantly pick up the phone to. It’s a good sort of test as to how straight talking your agent is because as I said, if they say any more than about a dozen. Um yeah, they may be uh wishful thinking.
Perhaps the next point, again guide price. Common tactic as I think we’re all aware, but you don’t necessarily appreciate it when the agent is around your home is a common tactic shown by, I have to say the less scrupulous agents to secure your business is to suggest a guide price where it’s got you planning your next holiday in the Bahamas. Go with your gut feel. If it sounds too good to be true what do you know, it usually is. Buyers are very well researched nowadays, and your guide price needs to be realistic and, on the fence, because if it is, you’re going to get the interest. If you don’t and you over pitch it, you’re going to be one of those properties that languishes in the market too long and you’re going to have to regularly reduce your price and it just sends the whole wrong message to the market and the whole thing becomes stagnant. I think a lot of people don’t fully appreciate this creates a far greater problem because it unnecessarily adds to your digital footprint. Your online history, all these websites record your market activity and you can never delete it and it’s something just to be aware of. You need to critically trust the agent who gives you a realistic guide price but please never ever instruct an agent who just quotes the highest price. It’s much more than that.
The next point on how to choose an estate agent, the last point actually will be slightly taboo, it’s commission. It’s fees. It’s a bit of a false economy to strong-arm the agent into a low fee or just to go with a cheap agent because you might congratulate and high-five yourself for securing a better fee than anyone else but here’s the important thing, ask yourself if the agent is on a low fee, how incentivised are they going to be to put in the effort to sell your home? Not a lot because the small percentage that you might pay in addition for a better agent is a small drop in the ocean compared to the extra thousands. They’re motivated now to secure you at the negotiation stage. You need to remember estate agents are often rewarded by their commission. That is their reward and if you take that and you whip the carpet from under their feet. They’re instantly disincentivized and they’d much rather look after another property that they’re going to get rewarded for it. Makes sense? I’m not saying go drastically overpay for your agent but again it comes to the guide price element. On the fence you know what the standard market rate is that’s what you should be aiming to pay um as well.
So, look, overall, from this talk how to choose an estate agent it’s experience, it’s the front of house team, it’s viewings, marketing guide price and fees but they’ve all got their respective roles to play. It’s how they all merge together with the appointed agent that is critical. In today’s very rapidly changing market and look personally for me my highlights are it’s got to be attention to detail. And experience that’s that word has just cropped up in so many of the points that i’ve gone through. Experience and again the front of house team. Those are the things that are actually going to pay dividends.
So I hope that’s been of use and that’s my take on estate agents. I mentioned at the beginning a very good question about the whole virtual viewing arrangements at the moment. And my take on it um as I see it, and this is new territory. I think for everyone it’s a great tool don’t get me wrong. But I don’t see it as an advantage to have them freely available by putting them on Rightmove and everywhere else because as I see it, have you thought about the security risk they pose? You’ve got potential high value items and you’ve got a very clear guide around your home. So, what I’m saying is by all means, advertise the fact that you’ve got one and it’s available, but it needs to be, as quite a few of the good agents are doing, accompanied online by the agent, i.e. the agent has the video tour on their screen sharing with the interested party who’s been pre-qualified and vetted but it’s the agent that retains that file. The agent holds that video and that way the agent can go and chase up potential interest and again get the best out of them. If you have one of these videos or indeed, your property online, who are these people looking at your video? Who are these people looking at right move? Yes, an agent may say we’ve had 200 hits this week but at the end of the day right move doesn’t know that information. You cannot as an agent go and follow them up and that’s why I always say less is more. Put less information online, have potentially interested parties engage with the agent to say you didn’t tell about x can you tell me more about why? They’ve then rung and engage with the agent. The agent gets all their details. Give them the answer and more importantly go and follow them up. So, as I said, virtual viewings certainly have their place. It’s early days but again to have it freely available on all these websites. I’m not sure that’s necessarily the way forward at the moment because you need to tightly control who’s viewing it and go after them as well.
And look if there’s any other questions, feel free to get hold of me or indeed have a word, the website is alexgoldstein.co.uk and really hope that’s been of use to everyone. No doubt see you soon. Thanks again.
Alex Goldstein is ‘live’ on Talk Radio with Mike Graham, discussing the North-South property price divide and why southern prices have dipped for the first time in 8 years. Why has this happened and what is the driver behind it all?
Full Transcript Below:
Mike: Coming up in this hour we got the Carrier Awards because it’s Good Friday we are going with them a day early. Alex Goldstein, Property Consultant is going to join us because apparently for the first time in eight years, the value of homes in the north has risen while the value of homes in the south has gone down. It’s the north-south divide but upside down. It’s very weird. You’re listening to me Mike Graham. Right hear on Talk Radio.
The Independent Republic of Mike Graham on Talk Radio.
Now we were talking earlier to a guy from Liverpool who said, you know, if you guys think travelling around in the south of England is bad news, you should try getting on a train up here. Because the travel problems they have had in the north of England particularly between the northwest and the northeast have been famous. This has been going on for many, many years where the trains are so bad that nobody can really afford to use them if they have got to get to work because quite frankly, they are not fit for purpose. What they can do though, of course, up in the north of England is to buy homes for a lot less money than you can buy homes for generally speaking in the southeast. However, southeast England property prices have actually fallen for the first time in eight years while the value of homes in the northwest has risen by 4%. Let’s talk to Alex Goldstein who’s a property consultant to find out what is going on. Alex, very good afternoon to you.
Alex: Good Afternoon, Mike. Good to speak to you.
Mike : Thank you for joining us. It’s an interesting one because for a long-time people have said, we can’t afford to buy property. The Millennials are all complaining that the problem of prices for houses in the southeast is prohibitive. But there have always been affordable properties in different parts of the country and maybe now, finally, we are seeing property slightly correcting itself in a sense.
Alex: I think you’re absolutely correct. In fairness, I think the southern and Home Counties market, it was overheated, and something needed to happen to temper it down. But what’s amazing at the moment is there’s a seismic shift, I feel, in how people wish to live at the moment and there is a major movement towards quality of life and the work-life balance. And as more and more London orientated or Home County orientated companies actually have footings up in the northern regions there is again, people can afford to move up and be in the London office two to three days a week not five days a week.
Mike: No quite. And I mean how different is the gap between say the average price in the north. It is a bit of a nebulous concept of north of England. I’m not sure where it begins. For me it begins in Edgeware because I’m a Londoner, I mean where does it technically begin?
Alex: Many would say north of Watford Gap of course. For example if you look at Birmingham and go across the Pennines and you’re looking at Manchester and you’re looking right into Yorkshire. Harrogate, Leeds at the moment is absolutely flying. You got Channel 4 putting in their head office there. You got HMRC. These are significant legal and finance institutions and they are putting big footings down in these areas and I think that’s what’s driving the move on top of, like I said, a bit life-work balance movement.
Mike: Sure and Leeds has always been a place where there has been quite a lot of money, hasn’t it?
Alex: It has. And again you have two hospitals in Leeds as well. Dare I say, the footballers out there, Leeds will hopefully come back into the Premiership. Huddersfield are in the premiership. And it does make a big difference.
Mike: Not for much longer. I don’t think though.
Alex: Wait and see. Anything can happen.
Mike: But it’s interesting as well, possibly, and you can correct me if I’m wrong here, but Cheshire area around Manchester and Liverpool as well, very much boosted by the footballers that are playing for the big clubs up there.
Alex: Absolutely. I think if anywhere is a great example it is in and around Manchester and Cheshire. They do bring a sizable amount of money into the economy. Equally on the other side of the Pennines, the Tour de Yorkshire, the Tour de France. Again we got the UCI Cycling Championships as well. Some would argue that Yorkshire is one of the only counties that’s got a brand out there at the moment. Again all of these, Manchester and heading across the Pennines, it’s constantly in the nation news. And I think a lot of buyers are picking up on that and hence you are getting a lot of families relocating and looking for that lifestyle.
Mike: Well I have to say, trying to get around London at the moment is such a nightmare that if you could provide a reasonable amount of money for a job in the north of England, which wouldn’t necessarily be exactly same amount of money you’d get in London, the lifestyle is a lot better isn’t it?
Alex: Hugely so. I mean you’ve got vast, open, green spaces. Less overcrowding especially when it comes to housing, you’re more spread out. And dare I say, every time I split my time between the north and London. And people always say that people are generally so much more friendly and relaxed. A generalisation albeit. Schools as well. And as I said, you don’t need to be in the office five days a week. You can be flexibly working. Work from home. Go into the office when it’s needed. And that helps both employees and employers in terms of costing. I just see this as a very sizable shift both in terms of how employment is working and indeed the property sector.
Mike: Sure. And was there any sort of boost to Manchester and the northwest when the BBC set up such a big outfit in Salford? Salford is very much a draw for media companies and all that. I went up to Salford a couple of years ago and it was sort of like a ghost town. There wasn’t much going on. Yes, the big BBC place was there. Salford Theatre was there as well but it didn’t feel like a buzzing metropolis.
Alex: As with all these things, it takes time. It will take time for that to pick up speed. I certainly think it has picked up speed and as you said, it’s just the bolt-ons sort of effect it creates. Again the same could be said for Leeds and Channel 4 moving in there. Again these things don’t happen overnight but again such a significant institution coming into both areas, companies and employers gravitate towards them.
Mike: So if you were an investor, property wise coming into these areas, where would you say to people is a good place to buy a home now in England. The place where it’s likely to rise up the most?
Alex: For me, at the moment, it’s the areas we discussed. Across major parts of Yorkshire, Leeds, Harrogate, Ilkley. As you mentioned, Manchester, Cheshire. There is a big push for urban or just outside of town living at the moment. And I think if you are looking to invest as indeed a lot of developers and investors are doing, they’ve long since moved out of London and are looking towards the secondary cities in the UK as that’s where you’re going to see the uplift.
Mike: And I mean 1.8% down in southeast overall, I mean there’s still a long way to go before anyone who doesn’t have an awful lot of money will be able to afford to buy anything.
Alex: It needed correcting. We probably don’t have time on today’s show but first-time buyers and that side of things, we have got a fairly significant range of issues here. I think the stamp duty that was introduced by George Osborne and its reduced prices, but we are a long way from helping those trying to get on the first rungs of the property ladder. The homes being built aren’t particularly good quality across the board if you are looking at the big developers on there. I don’t think the banks lend particularly well and aren’t prepared to take a view. There are just layers and layers of issues. I would be happy to become the Housing Minister and try to sort this all out.
Mike: Fascinating stuff. Alex, thank you very much. Alex Goldstein, Property Consultant, there on the rise of prices in the north of England and the fall of prices in the south of England which is happening for the first time in eight years.
Recording of my Homeowners Under The Hammer presentation at PwC in Leeds in April 2016, outlining my thoughts on the new stamp duty surcharge, effect of Brexit and how to view property investment now in the UK.
Full transcript below:
Alex: The areas we’re going to cover is obviously as I see it on the new stamp duty rules, Brexit is obviously on the horizon 23rd June, we’ve all got that in our diaries I know. The outcome of any and indeed the current intervention, the property investment status now and where you should actually invest and what you should actually now look for and how to become as I call it a preferred purchaser. So very briefly who’s this rogue in front of you this morning, as Gordon very kindly said an ex-convict, used to work in London for these guys and Yorkshire and had the privilege of working through for these guys for the last sort of 13/14 years, I’ve now got my own business on the other side of the fence helping people buy and sell. So, moving straight into it as we’ve already heard, and we’ve discovered the new stamp duty rates look like this, as we’ve said the blue column is the new incremental system and the sort of gold bars is just the overall with the additional 3% surcharge added on. And this is very much a new approach that’s coming from the government. Some would argue that the government has sneaked this in over the Christmas period and what it means in actual genuine real terms is that if you’re now buying a property, a second, third, fourth property, 400,000 normally under stamp duty, you would have paid £10,000 that’s a 2.5% effective rate. Now with this surcharge it actually equates in real terms to £22,000 which is 5.5% so some big big numbers going in there. How I sort of perceive this as the result of this is that there was an absolute panicked buying frenzy from January really up until the deadline at the end of March. What we saw is that there was a price spike in some areas, it’s caused an imbalance and really my advice to a lot of investors at the time was to stop, wait and hold off. As a investor you should never go with the crowd and I hope none of you were with them and they bought into this sort of philosophy of getting and beat the deadline. But it’s obviously it’s early days but I personally see that you will start to see a price drop come off in some of these areas and of course that is now when you should buy. What happened on to the new stamp duty, so this new incremental system is really affected the top end of the market especially in London and we’ve now obviously got the 3% surcharge to contend with as well, so two fairly significant factors in that. The current intervention from the government obviously as we’re all aware we’ve got the 3% stamp duty surcharge. This is a brand-new direction from the government. From speaking with a lot of the legal guys that I know they’ve come in from the start and they’ve literally just closed all the doors, all the loopholes, it doesn’t matter if you are a married couple, whether it’s a company purchase, even say a divorce, divorcing sorry, couple. You will still face this 3% surcharge, albeit you have a 36-month window to sell that main residence and you can then go back and claim the refund. A lot of people felt that for example my side of the fence if you’re divorcing and the husband moves out, that’s fine and you can carry on. That’s not the case under the new rules. As we know and it’s indeed currently already the case you’ve got tougher lending criteria, you’ve got stress testing on interest rates up to 5.5% at the moment. There’s investigations into your wider finances and many would argue this is actually already in place albeit it’s coming more into the public domain. And from next year the rules for landlords to offset all their mortgage interest against their end of year tax bill is going to be phased out and therefore by the end of the decade the higher rate tax payers will get half the relief that they do now. As we’ve also heard on the capital gains side the tax payable on realised gains was 18%, its now under the budget, dropped to 10% for basic rate taxpayers, 28-20% for higher rate, however the sale of residential property is excluded, and the existing rate will continue to apply. So, again many would argue this is an effective 8% increase on any uplift. Now, why are the government doing this? What is their problem so to speak? The government feel that investors have a competitive and indeed an unfair advantage and they are competing with the same types of properties as first time buyers. Their aim is to help more people onto the first rungs of the property ladder, apparently, and they want to see and create stability, and they want to ensure that if the economy happened to get tough again the UK was well insulated from it all, and again we’re faced with the banking crisis once more. And they’re sort of idea is that if they increase the upfront cost, they hope to ease demand and especially protect those, the elderly and retired who have saved and they’ve got their savings tied up in property so again, we’re not going to see sort of the property market fall again so they don’t need to necessarily worry. However, the result of all of this as I see it, they have really put the brakes heavily on buy-to-let investors and especially those internationally based. And again, if you instantly choke the supply of rental properties, your tenants demand is going to go up and if this happens, your rent is going to go up per month and if you are a tenant how are you now meant to save and buy your first property on the ladder. The government obviously saw that one coming and they’ve increased the ISA allowance on the annual allowance and they’ve also bought in the new lifetime ISA. However, if you’re a tenant, if your rent has gone up, again, how do you afford to put money into said ISA. You’re still left with the same problem whereby people are still struggling to get onto the property ladder. The banks are currently and probably will be more unlikely to lend to businesses and individuals and you could argue that the whole economy starts to grind to a halt again. You’ve got the dark clouds possibly looming. Only two days ago quite interestingly the BBC reported that 50% of London’s private tenants cannot afford to pay their rent and this is in tune with one in three apparently falling into debt last year. Where does that leave us for first-time buyers, where does it leave us really as an economy going forward? But it’s not all bad news, he says, what doesn’t change for me is that London, Manchester, Sheffield, Leeds, the whole northern powerhouse ethos, the UK is still seen as one of the safest places in the world to invest in property. And if you want my opinion I think it always be seen that way and it will always be seen as a secure investment. Now, of course Brexit is on the tip of everyone’s tongue. How on earth is this going to affect the market whether we stay in or indeed we go. As I see it and as I’m saying to a lot of people you may have heard this morning, I see is going to be a bit like the general election, and by that, I mean you’ll see a couple of weeks either side of the general election, couple of weeks afterwards you’ll just see a decline in general activity. And what homeowners and investors want is just piece of mind. You only need to look back at the budget that we’ve just had everyone was on the edge of their seat. What’s George going to do this time, he’s going to come in with a low punch surely, funnily enough he didn’t, everyone shrugged their shoulders and thought well we knew that he wasn’t going to do anything, and business is normal and we all move on, that is my prediction. Now, for Brexit I know there are more views on this than I suppose Starbuck’s coffee houses at the moment, but you’ve got to look at the facts. The fact that it’s political and economic stability that is why people are actually investing in the UK. Arguably does the EU, does Brexit, is that going to effect it at all? You go back, you look at some figures released by Knight Frank in 2013, 49% of prime central London property was internationally owned and this was both for investment and occasional use. Again, question mark, did the EU actually have an effect on this? We have the whole argument, businesses are going to relocate if we don’t join the Euro currency, sure enough nothing actually happened. And post-Brexit, could there be arguably pressure on George Osbourne to restrict the number of European investors if we left? Could you say that the new stamp duty surcharge is a pre-cursor to this, and is the Government thinking we may actually leave? Overall, as I said I think the Brexit impact will be low, if we do happen to leave it’s going to take us a minimum of two years to renegotiate our trade deals. Personally, I don’t think that’s going to have a direct effect on the property market as at large. So, how much should one actually view property investment now, as we known as always really being the case, you can’t actually look at short-term flipping, it’s got to be looking at the medium / long-term. Take albeit I know a very extreme example, 3% new surcharge, we have to remember that is a one-off payment. Don’t get me wrong yes, it’s a lot of money, however you compare this with a 22% increase in Newham and which is a specific part of East London which I told various clients to invest in, capital increase last year was 22% in that one year alone. 3% one off, 22% and it will continue for a year. So really what I’m getting at is consider carefully your yields and capital increase and course within that your risk and what you actually want to get out of it. Looking more locally Leeds for example, you’ve got a low initial capital outlay, its affordable to more people, you’ve got some incredibly high yields by comparison, 10% certainly, I hear of people getting even 15 at times which is amazing. You’ve got a modest capital uplift and its arguably fairly low risk and as I’ve mentioned with this northern powerhouse sort of grouping together and gathering a bit of pace that will could change for the better. Compare again, compare it as a extreme, London must be treated as its own country really. You’ve got a very high capital outlay by comparison, you’ve got a significantly lower yield annually at about 3%, more often than not as a generalisation. And you’ve got again, you could have a fairly high capital uplift however that does come with a lot more risk and it’s taking a longer viewpoint. Other thing just to throw in and throw another spanner in is of course Airbnb which some of you may have herd of and for those who don’t know this is an online platform which allows individuals to rent out their spare bedroom to other fellow bnb members. What you’re able to do is offset your maintenance, it’s tax deductible costs you can apply against your end of year tax bill and because you are renting out the room, not the entire flat that is the reason why you can do it. You’ve got as we’ve heard the thousand pound a year digital tax break as the government are calling it. And again, I am advising a lot of clients buy a two-bedroom property. You can offset again the income from this against your mortgage. You’ve got the benefits of the taxation and a lot of the younger clients that I deal with again, it’s useful additional income if they’re not an investor for example. So, moving on is how to buy from a position of strength. If you are an investor what do you actually do, and what are the steps that you need, what do you need to take? As I see it as a preferred purchaser means you are seen by the estate agent and the homeowner as the most reliable and the most secure, despite not necessarily being at the highest offer amount, i.e. you are getting the best deal. So, what are the processes to do and some of these may seem obvious, but I tell you the number of times where people get this completely wrong never ceases to amaze me. Obviously, we are all aware your position is absolutely paramount and now being under offer isn’t good enough, you need to really be knocking on the door of exchange and that ideally you really do be in rented accommodation. There are a lot of people in rented, who’ve got their funds together, you are in competition with these guys. If you are in so much of a chain or under offer, you’re seen as very high risk and you need to just take a view on that. Cash funds, a number of people say well I’ve got the cash, where is it? Oh well it’s all ties up in stocks and shares and I’ve got this fund, it’s a three-month release. Again, if you’re wanting to compete with the mass market on investment terms you need to have this readily available, have your statement have that scanned into your computer and ready to email which I’ll come onto in a second. Mortgage, again always always go through a mortgage broker. And get an agreement in principal without fail, without fail, that will take you two to three weeks to get, then proves to the estate agent and the homeowner that your serious and you’re a good few steps down the line. Conveyancing solicitor as well, make sure they’re appointed, the file is open, they’ve done your client ID, they’re ready to go. Your surveyor, you know they’re ready, they’re on standby and if applicable obviously have your trusted refurb team on standby. Above all it is a people business ensure you got a good personal rapport with the agent and the homeowner. Now, having said all of this, a recent like case study of mine, I was buying for a buying client of mine in North Leeds, we agreed terms on the property and what we were able to do, we supplied without being asked by the agent, upfront proof of our cash funds because it was on email, we had the agreement in principal again on email, we fired that straight through to the agent. Within two hours of us agreeing the deal and that happening the solicitor was chasing the agent for the memorandum of sale, the surveyor was ringing him for access, the mortgage broker was ringing the agent for details. What this did was it actually caught the estate agent completely by surprise because we’ve actually turned the tables on him, and we were now commanding the situation and we were pushing the agent and we were pushing the vendor. What it then meant is that when we potentially came to renegotiate after the survey, which was the case in this instance, we were doing so from a position of strength and we’d proven ourselves from the off. So that is everything. Happily take some questions, I know we’ve run through a lot.
Hello Alex,
