Life in London

[House_Keeper]

I used to post on the forum a while back. I have dropped my attention away from the forum since we moved to London at the beginning of this year. Thanks to all the people from the forum who have provided advice about living in London. This has been very helpful.

Recently I got back on the forum and stumble upon the keithj interview which pointed to an excellent post and thread. http://www.somersoft.com/forums/showthread.php?t=32265. Talk about quality discussions on the forum! I certainly missed that. That was enough to bring me back to it.

I briefly considered getting an IP in London. Where I live (around Hammersmith, about 10 km from city centre), rental yields are about 4%. That would be a large negative cash flow that doesn’t seem to be a great idea in the current cycle. Property values have risen for at least 7 years, interest rates are starting to rise again. On the other hand, rental demand is very strong. Rents are rising. There are still plenty of people moving to London.

Cheers,

 

[wylie]

Hi House_Keeper.

As an avid watcher of Property Ladder and those types of show, I would love to hear an example of what you would buy in the area you mentioned, how much it would cost and what it would rent for, rates etc.

I soak up Property Ladder but it is not easy to get an idea of prices because the shows an be more than a year old.

Wylie

 

[bronwynt]

rates etc.

Hi Wylie,

I remember when I was renting a shared house in London it really annoyed me because generally the tenants where the ones that were made to pay the rates instead of the owners.

I had property back in Aus, so I was having to fork out for both lots.

Bronwyn.

 

[Debt Junkie]

I remember when I was renting a shared house in London it really annoyed me because generally the tenants where the ones that were made to pay the rates instead of the owners.

I rented in Australia for six or so years before heading off to London ... as anyone here with a PM knows, there's a letting fee paid by the property owner - not the tenant.

In London, when I rented a flat, I had to pay the Real Estate the letting fee

I reckon I sat there with my mouth open for a good five minutes trying to work out if I was being lied too. (Someone please tell me I wasn't being lied to!!)

DJ

 

[House_Keeper]

Hi House_Keeper.

As an avid watcher of Property Ladder and those types of show, I would love to hear an example of what you would buy in the area you mentioned, how much it would cost and what it would rent for, rates etc.

I soak up Property Ladder but it is not easy to get an idea of prices because the shows an be more than a year old.

Wylie

I can't give you very precise figures. I only looked at it very briefly (and superficially) 6 months ago. However, it is very easy to get an idea of it from a web search. http://www.foxtons.co.uk/search?md5...&inst_ref=ir_nhgt000295774&submit_type=search

There are two main things that are different in London compared to Australia.
1. The tenant pays most outgoings, including rates. great for the landlord.
2. Most rentals are furnished.

Cheers,

 

[Trogdor]

Living in London it seems that the property market is starting to cool - after having shown very significant growth in recent times.

London seems ahead/behind our cycle in Mel/Syd by a few years (when stuff peaked in 2002/3 in the eastern seaboard London was hitting its straps).

A lot of inner city stuff (where I live) and west end top end stuff is carried along by "City" bonuses - which may be down this year.

However - 2 points - firstly London is a big city, and becoming the premier financial capital of the world. Any property investment there (well chosen, etc..) is subject to the usual caveats, sure to perform amazingly well long term.

But - the later statement (about well chosen property doing well long term) is true about {chose your main australian capital} so there is plenty of $$ to be made in Aus - unless you're not planning on coming back for a very very long time or never coming back why not just continue buying in Australia?

 

[alexlee]

Personally, I briefly considered buying property when I was in London, but in the end decided not to do it. Thinking long term, I planned to go back to Sydney, and decided that it would just be too much work to keep an IP overseas for the long term.

While I believe that London has great long term potential, I decided that taking into account the difficulties of managing a property overses long term, Australian cities offered opportunities that are just as good.

From my renting experience, it seems that not many of the property agents offer the 'full service' property management that we take for granted in Oz.
Alex

 

[twhurl]

My wife and I have been living in London for over 6 years and are now moving back to Perth. We bought a house outside of London about 4 years ago and it has done very well for us especially in the last year. I have always been of the mind to either keep this property or sell it and buy another over here better suited for investment(in terms of maintenence etc). However, now I'm wavering a bit due to the cycle here and the value of Sterling. With the bank fiasco and everything Sterling looks vulnerable. It has been touted as being overvalued for awhile along with property values. London just seems like a great place for property though as the yields are better than Australia and as you said the tenant pays for everything.
However I am worried about the economy as I believe Asian economies and resource economies like Canada and Australia will lead the way for the foreseeable future.
I have put our property on the market here. Properties have sold on our road within weeks the last few years but now the market seems to have gone dead since Northern Rock. It will be interesting to see what happens in the next few months but in the last month the market seems to have seized up.

 

[Trogdor]

My wife and I have been living in London for over 6 years and are now moving back to Perth. We bought a house outside of London about 4 years ago and it has done very well for us especially in the last year. I have always been of the mind to either keep this property or sell it and buy another over here better suited for investment(in terms of maintenence etc). However, now I'm wavering a bit due to the cycle here and the value of Sterling. With the bank fiasco and everything Sterling looks vulnerable. It has been touted as being overvalued for awhile along with property values. London just seems like a great place for property though as the yields are better than Australia and as you said the tenant pays for everything.
However I am worried about the economy as I believe Asian economies and resource economies like Canada and Australia will lead the way for the foreseeable future.
I have put our property on the market here. Properties have sold on our road within weeks the last few years but now the market seems to have gone dead since Northern Rock. It will be interesting to see what happens in the next few months but in the last month the market seems to have seized up.

I cant see the pound going anywhere drastic as against the dollar. For a variety of factors London has slowly been taking the crown from NY as the premier financial capital of the world - and I cant see this changing anytime soon.

 

[geoffw]

Personally, I briefly considered buying property when I was in London, but in the end decided not to do it. Thinking long term, I planned to go back to Sydney, and decided that it would just be too much work to keep an IP overseas for the long term.

While I believe that London has great long term potential, I decided that taking into account the difficulties of managing a property overses long term, Australian cities offered opportunities that are just as good.

I had a lot of difficulties managing a property in Southampton from Australia. When I returned after 6 years, the property was in far worse condition than what had been reported to be. So I understand where you're coming from.

Though Alex, I'd be interested in knowing about PI in London. Do you have any handle on the sort of yields? And the sort of capital growth- historical and projected?

 

[alexlee]

Though Alex, I'd be interested in knowing about PI in London. Do you have any handle on the sort of yields? And the sort of capital growth- historical and projected?

My undersatnding is that yields are slightly more than Oz, and rates are a little lower. I don't know what the growth rates are like. The main issue, though, seems to be the leasehold thing.
Alex

 

[geoffw]

My undersatnding is that yields are slightly more than Oz, and rates are a little lower.

My understanding is that you meant "understanding" . Are you talking bank rates? I'm guessing that you're not talking like "council rates"- isn't the "poll tax" still active? (ie, the tenant effectively pays for council services). Though an issue I had as a landlord was that I had to pay the "TV tax" (then 100 GBP pa).

The main issue, though, seems to be the leasehold thing.

The leasehold thing? I don't understand.

 

[alexlee]

My understanding is that you meant "understanding" . Are you talking bank rates? I'm guessing that you're not talking like "council rates"- isn't the "poll tax" still active? (ie, the tenant effectively pays for council services). Though an issue I had as a landlord was that I had to pay the "TV tax" (then 100 GBP pa). The leasehold thing? I don't understand.

Yes, the tenant still pays council rates. I paid something like 800 pounds a year when I was renting for about 260 a week. The TV licensing fee is still there, but I don't think anyone pays it. I got a couple of big red notices but I just trashed them. Apparently you don't have to let the inspector into your place, so technically they can't say you're in violation when they can't see your TV. It's totally absurd, really.

Many London properties are leasehold, I believe. i.e. you buy the building but someone else owns the land. Many ads in the agents' windows state '60 years leasehold' or whatever. The leases are for 100 years to start with, so the closer to the end, the less popular because it'll be very expensive to renew. New developments are mostly freehold, but London being London most of the properties are old.
Alex

 

[sue78]

everyone I know of manage their own propeties in UK. some will use an agent to find and screen tenants for a 150 pound fee. PM there is ridiculously expensive like anywhere from 10% to 20%

That's enough to put me off. But if I lived there I would definitely invest.

My friends buy a 3 br property and put some walls in to make it 6 bedrooms and rent each room out for 120 pounds per week. It's positively geared. add a couple more of these properties and you're earning more than your day job.

It's probably illegal though. people even convert their garages into rooms and subdivide it into 2 rooms....especially if they live near a universty.

 

[twhurl]

everyone I know of manage their own propeties in UK. some will use an agent to find and screen tenants for a 150 pound fee. PM there is ridiculously expensive like anywhere from 10% to 20%

That's enough to put me off. But if I lived there I would definitely invest.

My friends buy a 3 br property and put some walls in to make it 6 bedrooms and rent each room out for 120 pounds per week. It's positively geared. add a couple more of these properties and you're earning more than your day job.

It's probably illegal though. people even convert their garages into rooms and subdivide it into 2 rooms....especially if they live near a universty.

There was a program about this on TV a few weeks ago. Everyone in a certain town outside London was doing this. Building a 'garage' but it was really a 2 bedroom maisonette with a family living in it. It is illegal but they caught up with the inspector who had something like a 5 year backlog of homes to inspect. SO the law was generally laughed at.