Category: Property

December is notoriously quiet in the property industry and, once again, the local lettings market has seen reduced stock levels during the latter part of November and the month of December.

One of the reasons we are quiet on the lettings front is because of our seasonal lock-outs. For many years our tenancy agreements have included a lock-out period precluding landlords and tenants from serving notice during this timeframe. This protects landlords from void periods or being forced to accept reduced rates, both possible consequences when marketing a rental property at this time of year. Equally there is a lack of availability for tenants and the quality of the product tends not to be as good.

At Paramount we use this opportunity to gain new business by taking the time to nurture our existing database. This year the winter months have also allowed us to get our lettings team out and about visiting tenants, to make sure they are happy and settled before the festive period. Consequently we have been made aware of a few lingering maintenance issues that we can now fix quickly to ensure product control.

We have also been providing guidance to our tenants about keeping their property safe and warm over the winter months, which is good advice for all:

Going away this winter?

• Leave your heating on for at least an hour a day while you are away to stop the pipes freezing
• Leave your heating on all day and night at your usual temperature setting in severe weather conditions
• Ask a friend or neighbour to check in at your property whilst you are away so any emergencies, like burst pipes, are detected as quickly as possible
• Secure ladders and any garden furniture to prevent any damage if there are high winds

Keep your home warm

• 16°C is the ideal minimum temperature and your main living room should be between 18-21°C
• Draw your curtains at dusk to help keep the heat generated inside your rooms
• Use thermal curtain lining on the inside of your curtains
• Keep radiators free of obstructions to allow heat to pass around the room
• Prevent cold air moving around the house by closing internal doors

Reduce energy costs

• Turn off radiators in rooms you don’t use often
• Use energy efficient light bulbs when possible
• Wash clothes at 30 degrees and air dry them when possible

For low income and vulnerable households there is support available through the Warm Home Discount, which can provide a discount on your energy bill of £140 in 2014/15. Phone your energy suppliers to see if you are eligible. Another easy way to get your energy bills down is to switch to the lowest possible tariff. To do this contact your energy supplier and competitors and ask to be put on the best tariff.

Insurance
It always surprises me how many tenants have never had any kind of contents insurance. There seems to be a strong misconception that while living in a rented property, a landlords building insurance will cover a tenant’s possessions. Unfortunately this is not the case. Should your house or flat be burgled or flooded, your landlords insurance will only cover the building and their furniture and fixtures.

Unfortunately we witnessed an instance like this earlier in the year, when a basement flat had been flooded in the freak rain we had in September. While the landlord was able to claim on their own buildings insurance for repairs to the flat, the tenants’ possessions, including a computer and phone, had been so damaged they were unable to be repaired.

It might not sparkle, but if you buy yourself one Christmas gift this year invest in tenants’ contents insurance. It may be your best investment of the year.

Spencer Lawrence
Lettings Director
Paramount Properties
150 West End Lane
West Hampstead
020 7644 2314

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At this time over the last couple of years I have had a go at predicting what’s in store for the local sales market in the next 12 months. On both occasions, with a bit of good fortune and hopefully not too much smugness, I have got it mostly right; so here are my thoughts on this year and predictions for 2015.

Like any great football match, this year has been a tale of two halves. Although I forecast the majority of the growth in prices would come in the first half of the year I did not envisage the slow-down in demand from August onwards. The spectre of an interest rate rise was always on the horizon, which at some point would have slowed the market, but it was the MMR changes to mortgage borrowing requirements and the surprise resurrection of the Mansion Tax that really put the brakes on.

The change in mortgage criteria has meant that lenders are now lending 3 to 4 times salary as opposed to 5 or 6. It also means that all outgoing expenses, including school fees, dry cleaning etc.. are now considered when assessing someone’s ability to repay their mortgage. We have also seen the end to interest-only mortgages. This has all taken the froth off prices by simply reducing the amount buyers are able to offer.

The Mansion Tax proposal by the Labour party has created an uncertainty about future affordability too. The London market needs sales of £2 million-plus properties to keep the wheels turning and the temporary withdrawal of some of these buyers has affected demand across all price ranges.
So, the factors in the mix for 2015 are interest rates, the election, the economy and, as ever, supply and demand.

Financial markets are now predicting small interest rate rises for the middle of 2015 and that they will then rise gradually to 3% over the next few years. Although the UK economy is growing there is still some cautious sentiment amongst investors and businesses about the sustainability of this due to the weakened European economies. However, UK employment is on the up and the outlook seems set to fair. Recent low inflation of 1.2% means that interest rate rises are more likely to be after the general election.

Yes, the election. It seems to be the subject on most buyers’ and sellers’ minds at the moment and I suspect a lot of people are waiting for the outcome before making a decision about their property-owning future. I have just sensed recently that a consensus is growing that Labour will not get in this time around.

The low supply of new and existing property in London is well documented and West Hampstead is no different in this regard. Even though there has been a fall in demand, we have not witnessed a huge influx of property on the market, meaning that although price growth has stopped, achieved prices are not yet falling back from those set earlier in the year. If a property comes to the market at a realistic price there will be a healthy demand for it.

Property industry heavyweights Savills and Knight Frank are predicting growth between -0.5% and 3.5% for London in 2015. I believe that by the time of the election a backlog of demand will have built up and we could potentially see a strong market for London and West Hampstead for the rest of the year assuming the Conservatives are elected. Given that interest rate rises are likely to be minimal and that there are some excellent fixed mortgage deals available, together with confidence in the wider economy and continuing poor supply, I can still see enough room in the market for further increases of up to 5% across 2015 in our area, although this will all come after May.

As the next Property News will be in January, may I take this opportunity of wishing you all a happy Christmas and New Year and thank you for taking an interest in my articles to-date.

Darryl Jenkins
Associate Director
Benham & Reeves
West Hampstead
020 7644 9300
Follow @BenhamReeves

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In our last property news article we asked “what influences you when choosing lettings agents”? The results were clear; reputation and recommendations are what matters to you the most.

Reputation and recommendations accounted for half of the answers submitted, whilst membership of a professional scheme (eg ARLA, London Rental Standard) came in at third place. It’s easy to cast aspersions based on the results, but it does strongly suggest to me that potential tenants are often overwhelmed (or should that be underwhelmed?) by high street lettings agencies and turn to friends, family and social media to seek out an agent they can start to trust.

There seems to a consensus that the higher the rent the better the lettings agent will be. This saddens me as there should be no correlation between product price and service in the lettings industry; every potential tenant regardless of budget or location is entitled to a professional, transparent service when renting a home. It’s easy to compete with other agents when they don’t even offer a basic professional service, but I’d much rather there was a minimum standard all had to adhere to in the industry. If this was the case all good lettings agencies would push themselves further, seeking to go above and beyond in order to offer the best possible customer experience.

July to September are traditionally the busiest months in the lettings calendar with new stock coming onto the market from July. This cyclical calendar caters to students and new graduates who typically search for properties ahead of courses and graduate schemes starting in September. This year international students drove the demand, mostly due to the area’s proximity to several excellent universities and business schools. Now we are in October stock is starting to dry up and we don’t have enough properties to cater for the demand.

This month it has been really interesting to see where new business has come from. We’ve seen a significant shift in landlord demographic, with 50% of new instructions coming from first time landlords. These new landlords have often been seconded overseas and are looking to rent their own homes out in order to maintain an investment in London.

Last Property News we used HomeLet rental index data to show that average rental values in North West London were £1,739pcm. One month later and the rental index shows average rents increased to £1,750pcm. This is now similar to the average rents in South West London of £1,785pcm, and 19.5% above the average rental price for Greater London which stands at £1,464pcm.

Although rents are currently strong in West Hampstead, a potential risk to the local rental market is the level of new stock being brought to the market by developers and overseas investors. Until a few years ago West Hampstead was relatively untapped for investments, but now the area has been found by those attracted to strong capital growth rather than rental yield.

The brand new developments being constructed on West End Lane, Maygrove Road and Iverson Road will see rental supply increase dramatically in 2015 and 2016. At this point we expect rents to come under pressure with a potential dampening effect on rental growth across a wider area, despite a broader and deeper pool of tenants.

Demand will continue to be strong and I’m confident that the best of West Hampstead is yet to come. We’ve always had excellent independent shops and the arrival of a greengrocer’s earlier this year and the promise of a butcher in the near future ensures the high street is catering to local’s daily needs.

On the topic of food, we’re lucky to have a great view of the new daily food market from our office and encourage you try it out if you’re yet to do so! We’ve noticed increased footfall between 4pm-8pm and we hope it continues to do well. Friendly vendors, excellent food and communal seating areas all add to the village feel; it might be a cliché but West Hampstead feels more like a community than ever.

Spencer Lawrence
Lettings Director
Paramount Properties
150 West End Lane
West Hampstead
020 7644 2314

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I heard the news like everyone else last week that Foxtons had applied for planning permission for change of use of the old Post Office. Not surprisingly, my immediate thoughts were also like most residents – not ANOTHER estate agent! I then read, more recently, that there had been 20 complaints registered with Camden planning against the opening on the basis of too many estate agents in the high street (staggeringly, there are 29) and that the area does not need ‘the kind of business’ that Foxtons are.

But, can Foxtons really be blamed for all these estate agents? And what can be so bad about a company that is listed on the stock exchange and has made its original owner somewhere in the region of £925m (Sunday Times Rich List) based on the principle of making more money for home owners? It occurred to me that the issues communities like West Hampstead and other high streets face are much greater than stopping the opening of another estate agent will solve.

Firstly, the reason there are so many estate agents on London’s high streets is simple – easy money. When I say easy, I mean that there are very few barriers to entry. Anybody can either start their own agency or start work immediately without any formal qualifications or membership of a governing body. On top of this, most small to medium agencies provide no initial or on-going training meaning that your property could be sold or let by someone who has very little experience or knowledge of the conveyancing and letting process (even in the bigger brands). Since the 1960s house prices have climbed inexorably skyward significantly outstripping real earnings along the way. As estate agents are paid on a percentage of the sale or lettings figure this has meant that the lure of large fees with no barriers to entry has attracted so many agents to our high streets.

Although these large numbers have created some downward pressure on fees, they still remain largely the same as they have for many years, that is between 1% and 2% for sales and 9% to 10% of the first years rent for rentals, meaning that a 3 bedroom maisonette in West Hampstead of say, £750,000 (average for the area) or £600 per week will command fees of £7,500 to £15,000 for sales or between £2,800 and £3,120 for lettings. As of today’s date there were 648 properties listed for sale on Zoopla and 1145 for rent in NW6 so it’s easy to understand the attraction of claiming a piece of this potentially rewarding market without too much up-front investment.

There is an Ombudsman scheme for sales agents but membership of this is not compulsory and the punitive powers are very limited. A better scheme exists for lettings agents called ARLA, which provides guidelines and ethics requiring qualifications to be a member of, but again, is not compulsory.

I would like to see the introduction of a licence system similar to that operated in the US. This requires completion of nearly 100 hours of study of the sales and lettings process along with conveyancing law and ethical conduct guidelines in order to gain a licence to operate. Complaints would be dealt with by the overseeing body which has the power to revoke any licence. I believe this would go a long way to reducing the number of agents on the high street and also provide the consumer with some much needed comfort that the process was being handled by a qualified agent with an independent and impartial point of contact for redress if things do go wrong.

Secondly, the problems of the high street have been well documented recently, especially in the Portas Review conducted for the coalition government. The changes in the way we shop by either going on-line or to out of town shopping areas where access and parking are easy, has meant that fewer businesses are attracted to high street premises, especially when their rivals are not present. High rents, rates and generally outdated buildings requiring expensive repairing lease obligations in high streets where there is only passing footfall on the way to transport links (especially in West Hampstead) and nowhere to park, make these very unattractive to most retailers. Resulting in a high street typical of West Hampstead, with coffee shops, estate agents, charity shops, betting shops and fast food restaurants where convenience and turnover is key, not dwell times or pleasant shopping experiences.

The juxtaposition of this situation is that the coalition government is focussed on a planning policy of ‘Town centre first’ planning as outlined in the NPPF (National Planning Policy Framework). Developers are forced towards town centres by planning policies which involve passing centric and impact tests for any developments which are outside of the town centre. This is making it even harder to redevelop existing sites, which in some cases are empty shops, as developers are reluctant to invest in these sites as things stand.

Isn’t it time to accept that town centres in the traditional mould are no longer viable? Many of those who protest that the protection of our ‘village feel’ is paramount are perhaps missing the point. With residents who are only in transition through the high street shouldn’t we be developing new mixed use sites that incorporate leisure facilities with retail outlets making the town centre a more pleasant destination of choice which would more accurately reflect a village feel? The success of the O2 centre and JW3 go some way to demonstrating the popularity of this mix. The West Hampstead Square development also offers a mix of leisure facilities close to transport which has been incredibly popular and now sold out. Until the focus of change for our high streets is different premises like the Post Office will only be attractive to those businesses that can be profitable in the existing high street. Initiatives to regenerate the high street as a retail destination have so far stalled. In West Hampstead the Farmers market and food stalls although popular, demonstrate the transitory nature of passing trade rather than a shopping destination.

Perhaps the biggest conundrum of Foxtons is that most people I speak to seem to agree that buying, renting or selling through them is a pressured and uncomfortable experience. Phrases like ‘not the type of business West Hampstead needs’ are bandied about, but the reality is that when it comes down to it, people choose to use them. It’s not a ‘Marmite’ company, where you either love them or hate them, but a company which most seem to hate but secretly use. Like a dirty little secret, or an R Whites Lemonade drinker, for those of you who remember. It’s a simple model; win instructions with the promise of higher prices and then generate large numbers of viewings. In other words, more cash for you. The model works because it has enough success to justify its promise to other sellers or renters.

Arguably, Foxtons have made a large contribution to the London price boom over the last 20 years which has benefited many owners and Landlords in the process. Whether this is good or bad is another discussion. Of course, if you would like to achieve the same results with a more accessible and personal service please feel free to get in contact.

The other potentially good news for all naysayers is that industry experts predict the death of the high street agent in the next 20 years with agents moving to the on-line model. I’m not sure what high streets will be looking like then though?

Naturally, I am not looking forward to their arrival, but if we want to reclaim the high street we need to rethink our strategy for the future.

Darryl Jenkins
Associate Director
Benham & Reeves
West Hampstead
020 7644 9300
Follow @BenhamReeves

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