A Question of Property - Ep 10 - Paul Mahoney, Stefano Lucatello & John Howard - Nova

A Question of Property – Ep 10 – Paul Mahoney, Stefano Lucatello & John Howard

Lucia France:

Hello, and welcome to A Question of Property. My name is Lucia France and I’m your host of our usual panel of ever-ready experts. So we have John Howard, property expert of more than 40 years experience and author of three books on the subject. We also have Stefano Lucatello, international property lawyer at Kobalt Law International Property Lawyers and senior partner there as well. And Paul Mahoney, best-selling author, award-winning property speaker and head of Nova Financial Group. So welcome to you all this morning, guys.

Stefano Lucatello:

Morning.

Paul Mahoney:

Morning.

Lucia France:

Okay. So we’ve got one question to kick us off. This is to all of you, but we’ll get John to answer first. “What advice would you give yourself 10 years ago?”

John Howard:

Oh, crikey. Give up horses.

Lucia France:

Give up horses, why? You’re always saying how much you love them.

John Howard:

Because they’re so damn expensive. That’s why I’m still working, because they’re so expensive to look after. They say about horses, “How to make a small fortune out of horses. Start off with a big one.” That’s what they say, because they’re so expensive. They’ve got to be looked after 365 days of the year. And they reckon for every three hours of work, you get one hour of pleasure. In other words, when you’re riding a horse, it’s three hours work for one hour of pleasure. That’s what they say.

Lucia France:

Ah, but it’s so nice to ride a horse though. It’s lovely.

John Howard:

Yeah, it’s lovely, and I’ve met some fantastic people. I met my wife and I’ve got showjumpers and we go abroad and watch the showjumpers. I think it’s great. It’s great, but it’s expensive. Yeah.

Stefano Lucatello:

A lot of money in and a lot of something else out the other end.

John Howard:

Absolutely. Yeah, absolutely. Quite right.

Lucia France:

They’re good for the flowers and the plants.

John Howard:

Great for the flowers. Yeah. Great for the flowers.

Lucia France:

Stefano. Question to you.

Paul Mahoney:

Yes, if I had to give myself some advice, I would never have become a solicitor. I would have gone into property investment.

Lucia France:

Right. Okay. We’re in the right place then. And to you Paul, there. Paul, you were just 22 then 10 years ago.

Paul Mahoney:

There’s an old Chinese proverb that we use sometimes in our marketing, that the best time to invest in property was 20 years ago and the second best time is now. So I think if you’re going to invest more in the past, you would.

Lucia France:

Exactly.

John Howard:

Good point.

Lucia France:

You can’t look back. You’re not going that way.

Stefano Lucatello:

The property market is cyclical, isn’t it? So you can almost catch up again when it comes back around again.

John Howard:

Absolutely. I agree with that. Absolutely. Yeah, you’re right.

Lucia France:

I like this. We started everything on a really positive note. This is amazing. Episode 10 as well guys, so we’re into double figures now. So we’ll go to Paul for the first question here today. “Do you think that post-COVID, there will be as many finance options in terms of lending as they were pre-COVID?”

Paul Mahoney:

So there’s been a bit of media around this, some sort of sensationalized media, which has raised a lot of questions. There was an article in the times a few weeks ago that said that some lenders were pulling higher loan-to-value mortgages, but they were referring to Barclays and Lloyds who are the two most high street lenders in the market. And what I mean by most high street is, they’re the strictest lenders. They’re the most conservative lenders in the market. They’re certainly not buy-to-let specialists for example.

Paul Mahoney:

So getting a lot of questions around this. In talking with lenders, we’re certainly not being told that they are withdrawing from the market or that they’re pulling products. It’s more so that they are firstly under-resourced at the moment, due to COVID-19. Secondly, that they’re overworked on the basis that they’re receiving a lot of mortgage holiday requests, so that’s taking up a lot of their resources.

Paul Mahoney:

And lastly, because valuations aren’t able to happen at the moment, which I think is a bit silly and I know John thinks it’s a bit silly, but I spoke to the BDM yesterday about, “Why can’t valuations happen at the moment? Give the guy the key, he can social distance, he can go and do his valuation.” And the response was that RICS isn’t allowing valuers to do it. So it’s the RICS guidance that apparently is telling valuers not to do valuations at the moment.

John Howard:

It doesn’t take much pull for them not to want to do something, does it? Let’s be honest.

Paul Mahoney:

Hopefully that will change as of next week. As you know, I’m the principal of our brokerage and we’re certainly not being given the impression that lenders are withdrawing from the market altogether or even products from the market. It’s mainly because of those three points that I mentioned. And they’re very much telling us that they’ll be back to business as usual once the lockdown is lifted in some way, shape or form.

Paul Mahoney:

So I suppose to answer the question, yes, it does seem like finance options will come back to normal after COVID-19. Now obviously that might be impacted by the direction of the market. We haven’t seen any real impact on the property market of COVID-19 yet, but it might impact. And a lot of people are saying it will, which could influence the decisions of lenders, especially the high loan-to-value ranges. But I don’t have a crystal ball. I can’t speculate on something that hasn’t happened yet, but at this point in time, it looks like, well lenders are certainly confident that things will go back to normal relatively soon.

Stefano Lucatello:

What about stress test, Paul? Will they change the 5.5 stress test? Is that right?

Paul Mahoney:

No, they won’t. The stress test was put in place by the Bank of England about 18 months ago. And there are ways around it, but what you’re referring to is… So buy-to-let lenders now need to stress test mortgages at five and a half percent. And that rate needs to be covered at least 125% of the time. So the way you work that out is you take the yearly rent divided by 0.055, divided by 1.25, and that will give you the maximum borrowings. The ways around it is it doesn’t apply to five year fixed products, so if you’ve got a lower yielding property, you can go for a five year fixed product and get around that stress test.

Paul Mahoney:

I wouldn’t have thought they’ll change that Stefano, because that’s not something lenders put in place themselves. It was forced upon them, which I think is a relatively good thing, because it means that rather than having to stress test your mortgages yourself, it’s done for you.

Stefano Lucatello:

Yeah. And the other thing Paul that I heard is that the stress test is different if you buy as an individual than if you buy as a limited company?

Paul Mahoney:

It can be. Not in general. What you might be referring to is some lenders will say that you need to cover 5.5 percent 145% of the time, rather than 125% of the time, but that can apply whether you’re an individual or a limited company. So it’s not a general rule that one is more stringent than the other, but it can, depending on the lender.

Lucia France:

Okay. That’s great. Thank you very much, Paul. Anything else to add there, guys?

John Howard:

All I would say is that going forward, most banks, they’re relatively cautious. So if there’s any turbulence in the market, clearly we hope there won’t be but there probably will be, I would always err on the side of not going for the maximum amount. Because a maximum loan to bank may not be there. So if you wanted 75%, try and make sure it’s 65, and then if it does come down to 65 from 75, you’re still okay.

Lucia France:

Okay. John, we’ll move over to your first question for this episode then. “Buying vacant commercial property sounds like it’s very risky right now. Is there any way of buying commercial property where some of that risk is taken away?”

John Howard:

Okay. Well, it’s a great question. And obviously the answer to the first part of the question is yes. So that’s the end of that.

Lucia France:

It’s risky.

John Howard:

Well if it’s commercial and it’s empty, then clearly you’ve got empty rates. Don’t think you haven’t. There’s still empty rates for vacant properties if it’s owned by a property company or an individual. They’re not going to open up the business there. So you’ve got empty rates, which can be very expensive.

John Howard:

You’ve also got a problem where it’s very hard to borrow money on empty commercial property. It’s almost impossible I’d say for a lot of people to buy-to-let, to get mortgages on it or get some sort of loan on it. If you’re experienced, you’ve got other assets, yes, of course you can. If it’s your first time, you’ve got no chance at all.

John Howard:

If you’re looking at a commercial property that’s vacant, you need to look at alternative uses for it. So for instance, can the upstairs be put into flats? Can you convert the ground floor from shops into houses for instance? The problem with doing shops into houses on the ground floor I’ve always found in the past, is that they still look like shops, because you’ve got a shop window, which you can try and alter. They may let you, they may not, the planners. You’ve then probably got no back garden. You’ve got no front garden quite often. So it’s not easy.

John Howard:

People say, “Oh, I’ll just convert whole thing.” You can do sometimes and I have done in the past, but most of them haven’t come out that well. So be wary of that. Just because you can do something planning wise, it doesn’t mean you should. Because especially, don’t forget going forward, people can have more choice. So why are they going to buy a converted shop into a house, which still looks a little bit like a shop, if they can go and buy a very nice terrace house or three bedroom semi. So be careful going forward because people have more choices.

John Howard:

So the answer to the question is if it’s got an alternative use, great, because you’re mitigating your risk. Doesn’t mean you can’t still rent it per shop. You can get someone to take it, but there’s always another use for it as well.

Lucia France:

I suppose it depends very much again where it is. And some people might like the idea of living in something that looks like a shop, if it’s kind of cute and quaint and it looks beautiful. But if it looks a bit strange, then I guess, that would put people off.

John Howard:

Very few look like that.

Lucia France:

Yeah.

Stefano Lucatello:

John, what about using pubs? More and more pubs are shutting. More and more pubs have been [crosstalk 00:11:02].

John Howard:

Okay. That’s a good point. I’ve converted a number of pubs into houses. It’s very difficult to convert a pub into a house. If it’s the last pub in the village, you’ve got no chance. It’s an absolute nightmare. A lot of them are listed, which makes it more of a challenge. And if you’ve got a pub and you think, “Oh, well what I can do, I can hide the land off and build on the land, the carpark, but keep the pub, for the locals and all the rest of it.” That is a deal. There’s a deal to be done there, but there is a mathematical calculation on the square footage of the pub as to how many car spaces you need. And first of all, you need to check that, because that’s a lot of car spaces for a small pub and you might find that you’ve got no land left to build on.

Lucia France:

All right. Okay. Thank you very much there John. Okay, we’re going to move over to Stefano for your first question for today. “I’m a builder and I’m looking to sell, retire and purchase a property in France. I’m happy to do all the building work myself. However, are the building regulations in France as tough to comply with as they are in the UK?”

Stefano Lucatello:

Yes is the answer.

John Howard:

Oh. That’s bad news.

Stefano Lucatello:

Even more stringent, John. The first thing I’d say, and I say this in my book, is that whether you are an expert in renovations or redevelopment or just DIY, you should never do anything abroad without taking on board the proper experts in the area. This is because of two reasons. If you bring your brother-in-law, who’s a chippy or whatever across and does the work, two things, one, you won’t engender yourself to the local population because you’re using foreign workers. And secondly, that foreign worker will not know what the electrical compliance is, all the other bits and pieces, whether it’s plumbing or electrical usually. They may be experts, and they may be CORGI registered here for gas and all the rest of it. But abroad, the regulations are different. The requirements are different.

Stefano Lucatello:

The starting point is that in France, the building regulations are very, very severe. So you’ve got the same sort of thing as you have here, you’ve got preplanning where you can go for outline planning permission, and you should always do that when you’re buying a property that needs renovation or a project or whatever it is you’re doing. And the second thing is full planning permission. They are very rigid. If you start things before getting the full planning permission, they will penalize you financially. Sanctions. And they will also come down with an inspector and shut you down and all the rest of it.

Stefano Lucatello:

Bearing in mind, especially in small villages, that all this is regulated by the local mayor who has nothing better else to do but wind you up if you get things wrong. The first thing you should be doing in any locality is going to see the mayor to see whether you can do the redevelopment of the changes or whatever. He or she will then be on your side because you’ve told him or her what you are going to do. And they will give you the heads up as to what to do and what not to do, what will be allowed and what won’t be allowed.

Stefano Lucatello:

But as regards to the actual workers that do the job, any worker in France, any professional who is an electrician or whatever, has to have a series of registrations. He must be registered with the local chamber of commerce. He must have his own what’s called SIREN if he’s a company, or SIRET, S-I-R-E-T, which is a tax number and it puts him on the registration sheet for the government, and that means that you are a reliable worker, reliable professional. He must also have an indemnity insurance because you want a joiner or a chippy or a plumber or whatever who does his job right. And if there’s something goes wrong, you want him to have an indemnity insurance. I don’t know, for example he puts a nail through a pipe and a wall. You want to know that he’s got insurance to cover putting it back, the remedial works on that. And you need to be able to have all those things.

Stefano Lucatello:

The other thing you need is something called a K.BIS, a K dot B-I-S, which is another qualification. So yes, there are a lot of hoops you need to jump through. But the best thing to do is to ask the mayor, ask the people in the locality who the experts are in particular crafts and trades, and then go and see them. Always get two or three quotes and see what you get and what you’re getting for your money.

Stefano Lucatello:

The other thing to say is that later on in life, once you have all these works done and you come to sell the property and there may be a capital gain that arises, you will not be able to deduct the costs and the expenses for all these works that have been done, including the time that this guy has charged you for, unless it’s properly documented. So unless you use a properly documented invoice, a [foreign language 00:15:41], then you will not be able to deduct these expenses from any capital gain, thus reducing the capital gain that you either have to pay in France if you’re a resident there, or in the United Kingdom if you’re a tax resident here.

Stefano Lucatello:

So it is of the utmost importance that you take proper advice. You don’t do anything first. You get the advice. Yeah. By all means, bring yourself over and learn from the experts, but I wouldn’t put yourself in the primary position of being the expert. I would actually, if you’re a builder, I would go across and actually say, “Right, I’m going to get another builder from France. He knows all the rules. I’ll learn from him.” The next time you do something, you’ll have acquired the knowledge or some knowledge to do it better. But I would never do it on your own because it brings all sorts of problems, both on the relationship side if your intention is to live in a small village, and also on the professional side and indemnity insurance side and all that sort of thing.

Lucia France:

Yeah. So essentially it’s definitely just as tough [crosstalk 00:16:32].

John Howard:

That’s good news then isn’t it, for the builder.

Stefano Lucatello:

Well, yeah. I mean John, I would just ask him to act as a guvvy, basically as a number two and learn from the locals.

John Howard:

Like most builders, he wanted to get his hands dirty and keep the cost down in doing it.

Stefano Lucatello:

I suppose to that extent he will be able to, if he helps the guy, because the other guy won’t need to get anyone else in.

John Howard:

Yeah. True.

Stefano Lucatello:

But don’t do it as a primary actor. I would never do it for all sorts of reasons.

Lucia France:

As ever, do your research. So thank you Stefano. Right, we’ll move back to Paul now. Back to interest rates. So this question is for Paul, “Why are interest rates on commercial property so much higher than the buy-to-let residential ones?”

Paul Mahoney:

So John might disagree with me on this, but in my view, it’s probably because commercial is a higher risk.

John Howard:

I agree entirely with you.

Paul Mahoney:

Vacancy rates are much higher. The ability to find a tenant is much more difficult. A good commercial property in a good area is usually expensive. So therefore in my view, commercial property only really works for people that are wealthier than the average investor and can afford to take on those sort of risks. And I suppose lenders recognize that and charge a premium for it.

Paul Mahoney:

So yeah, the rates are higher, the lend values are lower, so you’re putting in more cash to what is probably a more expensive asset. And if you’ve got a tenant locked in for the long term, great. But if that lease runs out, finding another tenant can be difficult. It’s not uncommon for a commercial property to be empty for 6 to 12 months. Whereas with residential property, that’s far less common.

John Howard:

Yep. Well, thanks Paul, you’ve really cheered me up. What he says is absolutely right. And what used to be the old trick in the old days that we all did as property developers, investors all did, was you’d buy a vacant property, a vacant shop if you could, you’d get it let, you’d then remortgage it on the back of the fact that it’s let and it’s worth more money now.

John Howard:

That trick has obviously slightly stopped, for two reasons. One, because it’s hard to get new tenants at the moment. But secondly, the building societies and banks now normally only lend you the money for the term of the lease of the tenant. In the old days they’d lend it over 20, 25 years. But of course, to be fair to them, in the old days a lot of commercial leases used to be 20, 21 years. Nine, 18 years, 21 years, 15 years…

John Howard:

Now, most of them are three to five years. Even some of my bigger tenants in my commercial stuff, the ones with well known names if you like, who by the way decided not to pay at the moment although they can. And they’re the ones you relied on because you thought they’d always pay because they’re big and they’ve got national covenant and so on. But of course even those tenants only want to sign for three to five years.

John Howard:

So the commercial investment market has changed completely. And on the high street… And I tell this story I think last year where I bought a block, quite a large commercial site on the high street with five shops. One big shop let to one of the national companies. The lease was about to run out and I estimated that I’d get half the rent on renewal from them. And I did, I got half the rent, literally half the rent they were paying. That’s how it’s changed. And I’d got flats upstairs, playing with flats upstairs. I sold the whole thing on quite well. And that company now who bought it, I’ve got a problem because that tenant has now gone into [recession 00:20:24]. So it’s a risky game at the moment commercially.

Lucia France:

Yeah. I guess not going to get any less risky post COVID-19.

John Howard:

No. It’s going to get worse.

Paul Mahoney:

Wouldn’t have thought so. It will only get worse.

Lucia France:

That’s cheery.

Paul Mahoney:

We get asked a lot of questions around mixed use, you know, shop on the ground with more residency above. That’s become more popular, partly because of Section 24. Because in my understanding Section 24 doesn’t apply to a mixed use unit. And my response to that is always, “Well, rather than starting out saying, ‘Let’s find a mixed use unit,’ let’s find a really good place to invest and allow that to determine the right property to invest in.”

John Howard:

Yeah, I think that’s good advice Paul.

Paul Mahoney:

Starting out with the asset in mind, because in my experience it’s very difficult to find a good, well located mixed use property.

John Howard:

I agree. There aren’t many about. Yeah.

Stefano Lucatello:

John, explain Section 24 to those of us who are not property global [crosstalk 00:00:21:30].

John Howard:

I’d rather let Paul explain it because he’s more intelligent than me.

Paul Mahoney:

The Section 24 is the tax changes with regards to the tax deductibility or buy-to-let mortgage interest. They announced it in, I think it was mid-2015, and they phased it in through to the current tax year. It’s quite misleading. And then it says that buy-to-let mortgages will no longer be tax deductible at all, but actually you receive a tax credit at 20%, which also just happens to be the basic rate of tax, which means if you’re a basic rate tax payer, you’re not impacted. But if you’re a higher rate tax payer, you’re earning more than 50 grand a year, then effectively your buy-to-let mortgages becomes half as tax deductible as it was before.

Paul Mahoney:

That’s resulted in much more people buying through limited companies. To give you some stats on that, before Section 24, only 5% of new buy-to-let mortgages were for limited companies. And in the final quarter of last year, over 70% were.

Lucia France:

Wow. Massive.

John Howard:

I’m glad Paul explained all that. And of course the reason the government wants to do this is because so many of these, what they call amateur landlords, which I think is not the right term really, but a lot of them haven’t been paying their tax on their rental income or anything else. And even when they’ve sold the property, they’ve managed to avoid capital gains. So by putting a lid as a company on having to have annual returns, the government know exactly what’s going on. And I think it’s only right and professional. And most of us have been in the business professionally, have had limited companies from the very start.

Stefano Lucatello:

One last thing. Sorry Lucia, I’m taking over here somewhat.

John Howard:

[crosstalk 00:23:17].

Stefano Lucatello:

John, do you set up one limited company per property? Or do you have just one that deals with all of them?

John Howard:

Well, certainly for most of our investment properties and stuff like that we have a couple of vehicles, property and companies, but what we do do on the big projects, we normally do a separate company for each big project. One, because if it went wrong, God forbid, the whole thing wouldn’t collapse, the collapse of cards wouldn’t happen. And the second thing is, once that company has finished and completed the project, we then normally dissolve that company officially and professionally having paid the tax on that and so on, and move on. Yeah.

Paul Mahoney:

And just to add to that, so John is obviously talking there about property developments, which is standard practice for an SPV per development. Whereas if you’re a buy-to-let landlord, generally you would just have one limited company. My advice on that is go through a limited company, and just one.

Stefano Lucatello:

Right. Thank you.

Lucia France:

Okay. Thank you very much guys. It brought up obviously a lot of extra questions there. Back to John then. “I’ve read on the news that people will be working much more from home going forwards post-COVID-19. How do you think this would affect an area like Canary Wharf, for example, both residentially and commercially?” So that one’s for John.

John Howard:

Well, I really love that question. And a friend of all of us, Stephen Galpin, who lives there, who helps run now Property TV and that’s where we film sometimes as you know. We’ve all been there and filmed there, and he’s a great fan of Canary Wharf. I’m not delighted to tell him that his penthouse flat might be worth a bit less shortly, but I will definitely tell him that.

John Howard:

I mean there’s 22,000 properties in the process of being built in Canary Wharf, flats in Canary Wharf. I cannot for the life of me think those prices won’t go down. There’s thousands of thousands of people who work in Canary Wharf, and going forward you cannot see any reason why any office developer would keep building new offices, because there’s going to be a glut of these offices because people have realized that. Bosses, more importantly, of these companies have realized that they can allow people to work from home, and they can monitor the work that’s being done. Because the big thing in the past has always been, “Oh, well I don’t want you to work from home because I don’t think you’ll do the work.” Well now they can monitor how much work is being done every day. They can even film, probably have a camera on them all day if they wanted to. So that has gone out the window.

John Howard:

And a lot of the guys I know… Give you a quick example, a friend of mine who is a solicitor is based in London and they were paying 90 odd grand rent at the moment on offices. They were going to move to new offices at 300 odd thousand pounds. They have now decided not to do that and not only that, they’ve also decided by Zoom to each partner going in certain days of the week and the rest of them work from home.

John Howard:

So it’s changing in front of our very eyes Lucia. It’s all changing. It won’t be necessary, I mean it’s necessary to go into the office maybe once or twice a week perhaps, but not every day. That’s great for the environment when you think about it.

Lucia France:

Yeah. Well also cuts down on travel costs for a lot of people. Massively.

John Howard:

Absolutely. Yeah.

Stefano Lucatello:

One interesting point guys. I was listening to the news the other day. I think it’s either Sweden or Finland have now brought it into their employment law, that an employee has the right if he or she chooses to, post-COVID-19, to work from home. And it’s now engendered and enshrined in their employment law.

Lucia France:

Right. And that’s for an indefinite period, is it?

Stefano Lucatello:

It’s from now onwards, if you decide for whatever reason, whether you’re a young mom with kids or whatever, that you have the right to do your job from home, the employer cannot say anything about it. It’s now engendered.

John Howard:

Back up. I know it’s true if you say so, because you’re the lawyer, but I have to say, that isn’t right is it? I mean, come on. [crosstalk 00:27:31].

Lucia France:

It must depend on the job, surely?

Stefano Lucatello:

Why not? Why isn’t it right, John?

Paul Mahoney:

That won’t hold [crosstalk 00:27:37] because as a business owner, if I want someone to work in the office, they’re working in the office at the end of the day, regardless whether it’s in law or not.

Paul Mahoney:

But I do agree with what John said, and obviously the logic to what Stefano is saying as well. This is the process we’ve been through as a business. We have a very expensive office in the city, in London. We haven’t been there for six weeks or so. And the only reason that we didn’t have people working at home up till now is exactly what John said, we didn’t know whether they’d be productive. We’ve been forced into it. And we’ve had to make it work. And now we’ve realized that actually they can be productive from home. So I think our business is one of many that is now reassessing whether we do need to have 20 staff in the city of London or whether we can hot desk or partially work from home, which is probably the direction we’ll go in.

Stefano Lucatello:

You can use Zoom all three, six, five teams.

John Howard:

What I would say is, people still like… I mean we would all love to be together today and have a bit of banter and a coffee afterwards and so on. Or coffee beforehand, we might have been rude to each other during the process and just want to go home afterwards and get a strop on, Stefano. So at the end of the day, that is important as well. And I’m not saying everyone is going to work from home every day. I think they will then look forward to going into work, to get the banter and to catch up on the gossip a couple of days a week maybe. So I think there’s a balance to it as well.

Lucia France:

Sorry John, do you think as well this will mean that maybe a lot of offices are simply downsizing, so they just don’t need as much as they’ve been taking up?

John Howard:

Oh my God. I’m in absolute heaven. Even with our small business far in the country where we’ve got 45 staff in Norfolk, we’re now thinking, “Well, we’ve got five offices, do we need five offices all dotted around Norfolk, or could we get away with three bigger ones?” So we’re all looking at different things. Everyone’s sat at home and is looking at their lives and how they do things and can they change, can we save money here and there? So that’s what happens when you sit at home for six, seven, eight weeks, people start to think, “Oh, I could do this or I could do that. I could work from home,” and so on.

Lucia France:

And do you think that in terms of, obviously going back to the original question that the person is asking about the area of Canary Wharf, would now be a good time to think about buying there or buying off plan there? [crosstalk 00:30:09]

John Howard:

No. Wait. Keep your powder dry. Never catch a falling knife. We don’t know what’s going to happen.

Paul Mahoney:

A slight counter argument to that, John, because I agree with your logic so far as maybe people don’t need to be there anymore, but I think perhaps something that hasn’t been considered there is the fact that younger generations want to live in central areas with facilities and amenities on their doorstep.

Stefano Lucatello:

Inner city living.

Paul Mahoney:

So for example, where I’m talking to you from now, Canary Wharf is half a mile in that direction. Regardless of whether your office is next door, there will still be people that want to live there, whether it’s because it’s Canary Wharf or because it’s close to Central London.

John Howard:

I’m not arguing about people not wanting to live in Canary Wharf. Although there isn’t a blade of grass in the whole place, not one blade of grass in the whole place but that’s another story.

Lucia France:

Yes there is.

John Howard:

There isn’t. I never see one when I get on the train. I don’t drive the train a lot, but my driver takes me.

Lucia France:

There’s the… Ah, I forgot what it’s called.

Paul Mahoney:

It’s not on the train, John. They don’t have grass on the train.

John Howard:

On the train, that’s about it. But I’m not saying they won’t, I’m just saying there’ll be turbulence. And I think that a lot of the offices will be converted into residential at some point as well, of course. More will be converted.

Paul Mahoney:

There’s definitely going to be change, without a doubt.

Stefano Lucatello:

Hey guys, I’ve got to answer another question here. We’ve got three minutes left.

Lucia France:

Yes. Let’s go for it Stefano. Your next question is, “I do appreciate Stefano that you’re not a travel agent.”

John Howard:

Oh, good. Is he not?

Lucia France:

I think we’re all aware of that but, “Please, could you guide me as to where I can get all year round sun at reasonable costs in terms of purchasing a property?” So this person wants a suntan year round.

Stefano Lucatello:

Oh, I’d go to Bridlington or Scarborough, somewhere like that. All year round sunshine and lots of fun and cheap profiting.

John Howard:

Torquay.

Stefano Lucatello:

Torquay. Yeah. Right, so the usual culprits are Spain, France, Italy, and their respective islands. Depends of course, whether you want countryside, seaside, what your budget is, what your family groupings like, and whether you want mixed use as it were. Do you want it for pure enjoyment or do you want to make the property work for you and have a rental yield and a return? So there’s all sorts of basic factors that you need to consider before you actually go anywhere.

Stefano Lucatello:

I mean, let’s say… I have a client of mine who has now become a client during the course of this week, came to see me at one of the Place in the Sun exhibitions where I give seminars, and he’s spending 45 grand and he’s decided to buy in the Mar Menor area of Spain. And he wants to just go out there as and when. It’s not a substantial investment, but he’s getting a one bedroom, well, not a studio, but a one bedroom flat for 45,000 euros. Would you believe six months ago, it was on the market at 90,000 euros. And it’s second row in, he’s fourth floor. And you can see the sea from his property. So there are fantastic deals.

Stefano Lucatello:

Give it another month or so, Lucia, and not only the English property market, but the international property market will be full of people offloading properties for all different reasons, whether they’re commercial or residential, whether they’re foreign, whether English. And I think as John says, I think give it another month or so. Keep your powder dry. Keep your money from burning a hole in your pocket and come out again let’s say end of May, beginning of June.

Lucia France:

To see where we’re at.

Stefano Lucatello:

I think the scenery will have changed again and I think we’ll be in a totally different position. When we do this again in a month’s time, we’ll be talking about what’s happened in the last four weeks.

Lucia France:

Great.

Paul Mahoney:

On that point Stefano, you probably know better than I-

Lucia France:

Not got long.

Paul Mahoney:

… but I would have thought that overseas properties would be probably hit worse than UK properties because it’s quite often wealthy UK owners that consider them a luxury and they will offload those luxuries when they no longer can afford them as opposed to being a [crosstalk 00:34:11] for a UK resident.

Stefano Lucatello:

[crosstalk 00:34:13]

Lucia France:

You know what guys, I hate to leave us all on a cliffhanger, but maybe we’ll have to come back to that question next time. So thank you so much to all of our panel, John Howard, Stefano Lucatello and Paul Mahoney for taking part today. And I’m Lucia France. Do send us in your questions. Ask@aquestionofproperty.co.uk is our email address and we’ll see you again next time. Thanks for watching. Bye bye.

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