England Property

A

AnthonyH

Hi there,

Are there any fellow UK property investors about. I have a number of properties in the north of England around Leeds and Hull. These have been very profitable for me and I would like to meet like minded individuals.

For those not privy to the joys of UK investment, properties can be secured for around AU $75k with yields greater than 12%. I have personally done much better than this, but then the market is moving fast as those pesky Londoners realise what has been sitting in their back yard all these years.

Incidentally, I have no UK connection, and for those interested in investing in England, it really isn't any different to investing locally. Sure you can't drive by them when you want to, but then again I don't drive past any of my Melbourne properties either. That's what good estate agents are for.

Anthony
 
nic,

As part of the commonwealth there are no restrictions on aussies buying in the UK. From a tax point of view, you make all the usual claims as if the property was local and you will find that the tax-pack covers offshore interets. All my loans are in the UK too and there were no problems getting these. Overall it has been very easy and really no different from buying something local.

Incidentally, on the properties I buy there is no stamp duty payable and the tenants pay all outgoigs. Furthermore, interest rates are also lower. So when I mention 12% plus yields in my initial email, there aren't too many outgoings.

Anthony
 
Anthony,
the prospect sounds interesting. How do you source your properties? Do you have friends over there who assist you?
What are the capital growth prospects like I imagine it would be similar to buying in rural Aus.

Cheers
 
Thanks Anthony

Sounds like a dream. My English girlfriend was telling me about the amazing prices and returns. She was going to buy a unit at the seaside couple of hours drive from London, but then she didn't, not sure why. Is there a catch or is it just that the property has been undervalued for so long after the last crash? Also, what do you mean by tenants paying most of the outgoings? Does it include counsil rates and insurance? How do you source your properties? Do you go to England, or just buy sight unseen? Wouldn't the latter be a bit risky, especially not being familiar with the area?

Cheers
Nic
 
Anthony,
the prospect sounds interesting. How do you source your properties? Do you have friends over there who assist you?
What are the capital growth prospects like I imagine it would be similar to buying in rural Aus.

Cheers
 
Hi,

If you are interested in uk then you certainly shouldn't rule out London and Home counties (i.e. the areas surrounding London). Those sort of returns (12%) are harder to find, but the capital growth potential is more interesting with alot less work (i.e. not having to buy a number of cheaper properties to make it worth while). If buying in the North, then be aware that there has been a bit of a 'feeding frenzy' and if you don't pick the right area you end up buying a cheap but overpriced property with an oversupply of investors all trying to rent them out. Rental returns in some areas have dropped dramatically (I don't have direct experience of this but know of some horrors - so as with all PI pick your spot well!)

I do have some experience of London though, and just to demonstrate potential cap gains in my experience

43% in 12 months on 150k pounds (approx A$350) - 2002
20% in 14 months on 180K pounds - 2003
20% so far in 12 months on 150k
200% over 10 years on 60K (and showing 6% return)

The mortgage and most costs always covered by tennants. Some areas have become overheated and settled back, but there are some great opportunities now because of that.
Being thrown of this computer now so have to go! I'm English by the way!
 
nic, waf1, nickshinner.

Thank you all for your comments.

I purchased my first UK property in 1999 and have gone on to purchase 13 more, the last being only a few months ago. I was very nervous on my first purchase because the returns were so good (21%) that I thought I was must be missing something.

In round terms I was paying 18,000 pounds and getting 3,900 in rent. I have done plenty of these. The houses tend to be old, but without any real problems, a new boiler every so often. They are terrace houses in the classic Coronation Street style. Row upon row of terraces.

My tenants are nearly all on social welfare. That may seem risky to some but I haven't had any real problems. Besides the rent gets paid direct by the government

Things are getting tougher and finding deals takes more effort. For instance a property I paid 18k for 2 years ago I just sold to a London investor for 59k. Another I paid 17.5k for I have just had valued at 66k. Don't get me wrong though, there are plenty of deals still to be found. I just need more time on the ground to investigate new areas.

Thanks for info on London nickshinner. I have been wanting to buy in London but due to the prices I have tended to stick with Australian Properties. That said I'd like to touch base with you on this some more.

Anthony
 
AntonyH, Do you know anything about the Wigan area or what do you think of the Wigan area? I have been looking at property at it seems reasonably priced and have been told good rental returns & CG.

My wifes uncle owns two real estate office in the area and is trying to get us to buy over there he will help us look after them. He believes there is still heaps to come in the market. However I suspect it is starting to slow down like here in oz. I have been there once and thought it was very nice.

Still doing some reasearch found you can buy terraced homes for $65,000 pound in good condition, renting at about 450 pound a month about 8% return.

Jarrod
Jarrod Lane Real Estate
 
I can't say I am familar with that area, however I would offer the following advice for your consideration:

You should be able to get a better return than that and spend half that amount. I personally would prefer to own 2 x 30k properties rather than 1 x 60k property.

8% returns in the UK are a dime a dozen, but given that we are all in it to make money I would look a little harder to achieve at least 12%. If you do that it indicates that you are buying well and that there is room for the property to grow in value.

In the North, the object for me at least is to factor your return into the rent and to consider capital growth as a bonus. Otherwise I may as well stick to investing in Oz where we can be assured of strong capital gains.

Also, only buy close to a city centre so that you have a steady supply of tenants and a better chance at capital gains. There are many deals in smaller towns but it could be a long time between drinks.

That all said and done, having your wifes uncle in the game could work to your advantage but don't be blinded to what he considers a good deal. I have made a lot of money in the UK by sifting through the good advice from the bad and going with my own gut instinct. I think it sometimes takes an outsider with a fresh look at an area to pic the good from the bad.
 
What are the management fees agents are charging in Hull etc? Uk property agents seem evil. Also, where did you specifically get finance for these properties, and how much down did you have to have? I also had a problem with minimum property prices. I could not buy 18k properties, as min loan was 30k. Banks wouldnt acept my suggestion of just buying more properties....
 
Care to fill us in on what you've been doing JL ? Or is that something we don't want to talk about ? :D
 
lawsjs

I have been lucky enoough to find the only good agent in Leeds but have had an easier time in Hull. On the whole though UK agents are bloody hopeless to deal with, but they are worth their weight in gold when you find a good one.

Rental fees are 10% plus VAT which is high. But I have never negotiated this down as I want to be a good client and I live too far away for them not to look after me. On the whole I think they manage properties better than my Australian agents. I get them to do everything.

Finance is hard. I couldn't believe how antiquated they are, but Australia I now know really does have a dynamic banking sector. Small "buy-to-let" loans are hard but HSBC will do them for you on 75-80% LVR. A mate of mine apparently goes for home loans and deals with a range of banks. He doesn't tell them they are for rental. This way he can get small loans on 95% LVR.
 
Timing is important

Hello all,

I just wanted to add another thing that you need to consider when buying in England. As with anywhere, the time of year is important, but nowhere more so than in a country that puts their heads down through the winter, and becomes alive as the daffodils come out in the early Spring. I once read that approx 80% of the growth within one year happens in Spring, so if you are going to buy this year, do it now!

There are more buyers in spring/summer (also more properties on the market) and higher sale prices are achieved due to the "warm and fuzzy" aspects of buying a family home. The sums might be good, but in summer when you are viewing after work you have light in the evenings to see the cute garden and to picture your family out there. It it a well documented fact over there.

Our property in London was estimated at taking approx 30 pounds less a week for a YEARLY contract that was to start in winter, than if it were to start in summer, so it affects the rental market aswell. The tennant only sees a dead backyard to tend through the unuseable months, rather than realising that the summer months will come .... hopefully!

We were quoted anywhere between 10-17% management fees. eugh!

And as mentioned by AnthonyH, outgoings are minimal. For example, rates (Council Tax over there) is paid by the occupant. Nice!

Banking over there is archaic so be prepared to provide more documentation than necessary, for it to take a little longer, and (as with us) you may need a slightly larger deposit to make them more comfortable with the loan.

London is not the best market at the moment as the 3-4 years before last have been exceptional, but I would definitely look to the midlands (Leeds for example) although a lot of those areas have done their thing now also. Leeds has a big UNI there so always a good source of renters. England has a bit of a problem with people leaving small cities to move to the larger economic areas, so do your homework with the rural/town areas. Anything in the South East within commuting distance is going to do well in the long run. There is always a family looking for a nicer lifestyle in the greater London area, with a parent keeping their London based job- they don't seem to mind an hour or more commute.

I think that is enough from me for now!!!! Hope it has helped a little.

Rach
 
I forgot to mention..... Trains.

In the South East area they are planning new train lines heading down towards the coast, so check these areas out. The government has worked out that they can not sustain the population growth in London, so are spreading into the Kent area. I have only been back in the country for 2 months and can't for the life of me remember the town that will now be connected with London!!! The word is out obviously, so prices have already crept up, but there will always be more room for growth until it is up and running. Just don't tie up your funds for 5 years while they build the track if it is not going to be viable.

Rach
 
I am currently in europe and have been reading all the english newspapers. There is a huge boom in england right now, and borrowers have been having to borrow 7 times the amount of their income to get into the market. The situation is similar to the aussie market- in england, now only 27 percent of the market is made up of first homebuyers- a few years ago, it was 50 percent.

You can check out details of the English RE boom in google.com.... but i think it is a bit late to get into the market and expect boom returns or capital growth. And remember the exchange rate´- our aussie buck does not buy many pounds.

Cat
 
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