A Question of Property – Ep 8 – Paul Mahoney, Stefano Lucatello & John Howard - Nova

A Question of Property – Ep 8 – Paul Mahoney, Stefano Lucatello & John Howard

Lucia France:

Good morning everybody and welcome to A Question Of Property. My name is Lucia France, this is [crosstalk 00:00:16], and I’m joined here today by our amazing panel of experts and everything that’s got them through their lockdown so far. So, let’s start with Paul. Paul Mahoney. He is head of Nova Financial Group, bestselling author and speaker on property. Paul who have you got with you there today?

Paul Mahoney:

Got my little ambassador with me. Say hello, say hello.

Lucia France:

Hello Frankie.

Paul Mahoney:

She wants to get down. Okay darling, go back to mummy.

Lucia France:

I’m glad we got that in there before we started. We’ve got John Howard as well, our property expert of more than 40 years, he’s written four books on the topic and he’s there with his canine friend. Who’s this John.

John Howard:

Yes, this is Ivy and Ivy’s my stress Buster. She’s in the team. She’s a paid recruit.

Lucia France:

[crosstalk 00:01:03] And what sort of dog is Ivy?

John Howard:

She’s very well trained, just like you want them. Lovely. Labradoodle, very nice indeed.

Lucia France:

I like her collar, very cute.

John Howard:

Blue for Conservatives.

Paul Mahoney:

Oh god.

John Howard:

During the election campaign, she was out canvassing with me.

Lucia France:

Was she? Oh, bless her.

John Howard:

She got more likes than I did.

Lucia France:

Dogs always do, don’t they. And Stefano Lucatello, who is our international property lawyer and senior partner at Cobalt Law International Property Lawyers, Stefano. You haven’t got a dog [crosstalk 00:01:39]-

Stefano Lucatello:

I don’t have a child to bring on and I don’t have an animal to bring on. But I do-

John Howard:

That says it all, [crosstalk 00:01:46].

Stefano Lucatello:

But I do have a key lime pie that’s left. This is what’s kept me going, is cooking through the shutdown period-

Lucia France:

Oh wow.

John Howard:

Funnily enough we noticed.

Stefano Lucatello:

Every night I’ve been putting recipes on my Facebook. I’m a member of a group, which is based in Tunisia of all places, but we all exchange recipes. So, I’ve been doing recipes. And if you look at my Facebook, you’ll see my recipes that I put on and I’m happy to give the recipes out. The idea is that I’m going to actually produce a lockdown recipe book after all this. Because I’m collecting the recipes. I’m photographing it every night, photographing them every night. And then this will form part of a recipe book, which I will then publish. [crosstalk 00:02:28]

Lucia France:

Fantastic. I didn’t know that was homemade. I didn’t realize that. Even better.

Stefano Lucatello:

Yes. It’s homemade, it’s got three limes and three lemons in it, yeah, the zests, biscuits as a base. And it’s got mascarpone cheese in it and it’s got low-fat [crosstalk 00:02:43] Philadelphia cheese. Yeah, well, you get a better consistency with it. Half of it has gone to one of partners, my business partners who loves it. So, he’s had the other half and the other half’s been left for me to eat.

Paul Mahoney:

Are you going on the Bake Off, Stefano?

Stefano Lucatello:

No, I don’t Bake Off. I prefer savories, Paul.

John Howard:

You’ve been on a show, you’ve been on the TV cook show haven’t you, before, haven’t you?

Stefano Lucatello:

I did a pilot for a TV cook show, which hopefully will continue in Italy a year and a half ago. Where I did it with one of the other property TV presenters. And we went down to Puglia and we cooked in an amazing cookery school, a chef school, and I was fortunate enough to be awarded a chef’s jacket at the end of it. It was almost like a trial. And it went really well and it was great fun to do. So, I want to do the other regions of Italy, like Florence, the Tuscany region, the Umbria region, where my father was from and closer to Naples where my mum was from, just South of Naples. So, particular areas of Italy with particular cookery, different things of cookery. So the North is totally different from the South, that’s what I want to do.

John Howard:

Very good.

Stefano Lucatello:

Come on let’s get on with the property.

Lucia France:

Yeah. I’d just like to say as well, one of my friends, Thomas Frake, has just won Masterchef. So, congratulations to Thomas [crosstalk 00:03:55] and yeah-

Stefano Lucatello:

Nothing like name dropping, eh?

Lucia France:

Yeah, very proud of him. Very proud. Right. But back to property. Of course. Thank you very much though guys for bringing on our families and our passions there. So, let’s move over to, I’ve leave Stefano, because he’s just got a mouth full of food. Paul, okay. Let’s see. I’ve got my first buy to let and the lender has withdrawn my loan, but he’s saying they will re-offer it again shortly. What does this mean? And do you think I will still be able to proceed with the purchase?

Paul Mahoney:

Okay. So, it seems odd the lender would withdraw, I assume they must have been right at the start of the process, because so far as I understand, no lenders have been pulling applications in process or offers made. As far as I understand.

Lucia France:

Sorry, let me just clarify that. They said they’re in the middle of the first buy to let and the lender’s withdrawn. Sorry.

Paul Mahoney:

Fair enough. Okay. So, they might be in the middle of buying it, but that doesn’t necessarily say where they are in the mortgage process. I wouldn’t say, if what they’re saying is right, they have actually pulled the product or they’re not currently willing to offer them a mortgage, I would speak with a specialist buy to let broker and find another lender. There’s no, they say there’s no honor among thieves. Lenders, it’s all centralized now. There’s no difference between a lender to a lender really. You know, you shouldn’t really be staying loyal to one particular, lender unless there’s real strong reason to do so in my view. And there’s about 140 lenders in the buy to let market now, and there’s over a thousand products available.

Paul Mahoney:

So there likely is a lender and a product that’s suitable for this person to help them progress through that process. So, I wouldn’t be waiting on that particular lender if they decided to withdraw their offer or their product.

Lucia France:

So, basically shop around.

John Howard:

Paul, sorry. Sorry, Paul. I mean, people have had their offers withdrawn, haven’t they certainly with their normal house purchase, people have had their offers withdrawn and re-offered at a lower percentage. You know, that’s definitely happened.

Paul Mahoney:

Perhaps, we do mostly buy to let mortgages and that hasn’t happened to any of our clients.

John Howard:

Interesting.

Paul Mahoney:

Generally. We’re finding that lenders are pausing mortgage progression. So for example, I’m buying a place in Liverpool at the moment that is at valuation stage. And obviously the valuation can’t happen at the moment. So [crosstalk 00:06:46]-

John Howard:

And can I just say how pathetic that is? With these bloody valuers, you know, it’s pathetic Paul. The property presumably is empty you’re buying, so why [crosstalk 00:06:53]-

Paul Mahoney:

Yeah, it’s a new build, yeah.

John Howard:

So the government’s advice is if you can’t work from home, you can go to work. So, why on earth can’t they go and view a property that’s empty to do a valuation is beyond me. Totally beyond me. It’s absolutely crazy.

Lucia France:

This isn’t the first time this topic has come up though, is it John? We talk about this [crosstalk 00:07:19].

John Howard:

It hasn’t got any better has it? It hasn’t got any better. It’s madness.

Paul Mahoney:

You are right, John. But I suppose one thing to keep in mind also is that even if the valuer did the valuation lenders, a lot of lenders aren’t progressing applications. So, they wouldn’t even review it to progression it to offer stage.

John Howard:

But Paul, all they’re doing is causing a rod for their own back. Because when we are back, they’re going to have such a backlog. Everybody just panicked. I mean, even the building suppliers and they’re all coming back to work now, by the way, they all shut down. If you are a paint manufacturer … I’ve got a tenant who’s a large paint distributor, they closed down. The one thing people want at the moment is to paint their houses, the right time of year, they’ve got bags of time on their hands to do it. And they’ve gone and closed. No wonder they can’t pay my rent. Madness.

Paul Mahoney:

In saying that though, I saw an article yesterday and then they were debating about about reopening garden centers. I thought [crosstalk 00:08:20].

Lucia France:

Well, I have to say that in Jersey where I’m saying at the moment they have had those open for a while.

John Howard:

Have they?

Lucia France:

Yeah. There’s all the social distancing thing in place. But I think there’s some kind of loophole that’s to do with the fact that they can, people can source certain things. Like, if you’ve got pets or horses or things like that, they provide those. [crosstalk 00:08:44] Yeah. So, okay. Thank you very much for that Paul. Let’s move then to John for the first question today for this-

John Howard:

I’ll try not to be so angry.

Lucia France:

Okay. We’d like to make you smile. My plan was to sell my residential portfolio this year. Do you think I should continue with that policy in order to retire, or perhaps wait till next year?

John Howard:

That’s a great question from someone. And it’s a lot of responsibility on me, isn’t it, for the answer? Because it’s such an important thing for them because they want to get the cash presumably and go and listen to what our foreign solicitor, investor has to say on this program or whatever.

Lucia France:

Stefano.

John Howard:

Stefano, exactly. And spend some of the money abroad. Okay. So, it’s all, if the portfolio has got rental income, ultimately they’ve got no worries have they really? Because they’ve got the income coming in. So, if in doubt you could argue do nowt, as the old saying goes. However, if you think that it’s going to get worse over the next couple of years, in terms of valuation wise, [inaudible 00:09:57] the property’s going down in value. Then you might decide to cut and run now. You might even be able to buy back the portfolio in two or three years time for less money if you wanted to. So, it’s a very tricky one.

John Howard:

You could do half and half. You could sell half of your portfolio now, so get the cash in to go and retire, keep the other half. If you’re going to keep it, I think you have to assume you’re going to keep it five years. Because I think it might take that long to come back to where it was. It might be longer, it could be 10 years. I mean, Paul and I were talking yesterday on Property Summits. I work a lot with Paul and I don’t quite know why, but I do, anyway. And he was rightly saying that actually in the north-east, some property prices haven’t come back yet since 2009. So, depending where this portfolio is, I think I would be tempted if you’re really committed to retiring, look to sell half now and maybe keep half for the five years.

Lucia France:

Okay. That’s sounds like balanced advice.

Stefano Lucatello:

Lucia, one point. The tax element of that, selling part of your portfolio, capital gains and all the other bits and pieces come into it. And remember that if you sell the whole of your portfolio and it was your main or business activity, you get business relief when you sell and retirement relief as well. But if you’re selling part of your portfolio, then you’d have to have a valuation. And it’s a very complicated exercise to do, even though the rules are there, it’s never clear cut. Had a client last year who sold all of his portfolio, and he was lucky because he was able to claim retirement relief because he sold it all. I’ve had another one sold part of his portfolio a few years back, [crosstalk 00:11:39] four years to wrangle with the Inland Revenue, what tax to pay and what tax not to pay because they were taking a different valuation on the [crosstalk 00:11:46]-

Lucia France:

Right, that’s something to consider.

John Howard:

The one thing we always say on all these programs, isn’t it, is always take professional advice when it comes to tax, legal, obviously we’ve got a legal beaver with us today, so it’s great. But I mean always take advice from accountants in terms of your tax situation, don’t ever take a flyer. And make sure it suits you. And we all know we’re going to have to pay tax one way or the other.

Stefano Lucatello:

But do it before you actually sell the portfolio. [crosstalk 00:12:16].

John Howard:

Absolutely, beforehand. Yeah.

Lucia France:

Go ahead, Paul.

Paul Mahoney:

With regards to selling the portfolio into retirement. Something that might be slightly against conventional wisdom, but can work depending on their situation, is looking at remortgaging the portfolio into retirement. So depending on the level of mortgage that they’ve got at the moment, especially if it’s no mortgage or low levels of mortgage, perhaps taking a 50% loan to value mortgage, pulling 50% of the equity out of the properties and using that for whatever you want to do. You had mentioned there moving overseas or something.

Lucia France:

They want to retire, so yeah.

Paul Mahoney:

That’s a tax free way of accessing that money.

John Howard:

I was going to say you’re right, Paul, that’s another option, which I didn’t mention. And perhaps I should have done. But that is tax free. You know, that’s … And of course you can then give some of that property away, the bits that aren’t mortgaged or whatever, perhaps to your family to avoid inheritance tax as well, maybe. But of course if it’s trading, if it’s a trading, if you’re trading those properties or prove you can [inaudible 00:13:21] those properties, then it doesn’t come under inheritance tax anyway. So there’s lots. That’s why you need advice. And actually the guy we work with a lot, Property Summits, Tony Gimple, would be perfect to answer this question, to be fair, less tax for landlords. Wouldn’t he Paul? He’d be perfect for that.

Paul Mahoney:

Yeah.

Stefano Lucatello:

It just proves, guys, that you have got to do your wealth management and your tax planning and your inheritance tax planning-

John Howard:

Very much so, I agree Stefano.

Stefano Lucatello:

[crosstalk 00:13:47] Well in advance and you’ve got to think of it. And I would say to clients who are rich enough to do it, give assets away during your lifetime, whether it’s to your wife or, because of spouse relief of course, or to your children. And then make sure that it’s not a potentially exempt transfer, which is that you’ve got to survive seven years for it and then [crosstalk 00:14:06] fall out of your estate.

Lucia France:

Right. Okay. Sound advice there. Thank you very much guys. Right. Let’s go to Stefano then for your first question today. So, this person has written and said that their mother lived in a flat in Spain, but has sadly recently died. Is selling an apartment there going to be similar to selling one in the UK? So that’s in Spain.

Stefano Lucatello:

Well, the first thing to decide upon, we get quite a few of these to do every year in whichever country, many in Spain, is to decide upon is where the lady was tax resident. Did she just die in Spain because she happened to be there in a holiday season, let’s say, but she was still tax resident in the United Kingdom? But the first thing that will happen is whether she’s tax resident in the United Kingdom or Spain because she might have moved there for a lifestyle change, is that the probate or the succession in Spain, as it’s called, has to be carried out. And that means winding up the estate of a deceased person basically, and counting everything he or she has, valuing it. Under Spanish law, the first thing that has to be done is that two valuations minimum have to be taken for the property if it’s to be sold.

Stefano Lucatello:

And if it’s to be brought into account in the succession. And the notario over there, the representative of the state will open what’s called a succession file. He’ll do the administration of the estate, and if she died resident, although she died in Spain, if she died tax resident in the United Kingdom, what happens is that a grant of probate, if she left a will, a grant of probate will be taken out either by her family or executives or by a solicitor of the family. But if she died in [inaudible 00:15:46] state, that means without leaving a will, then a grant of letters of administration will be taken out by a member of the family, usually. And the estate will be wound up in that part. The estate will include everything that’s your worldwide assets, it will include the asset in Spain. And if she was married, at the time she was married, then as it stands at the moment, 650,000 pounds worth of tax free assets can be passed across.

Stefano Lucatello:

If she wasn’t, then it’s 325,000. So, you’ll need to see where she comes. So, if she was single and she leaves over 325,000 pounds worth of assets, then that amount over the 325,000 nil rate band is taxed at 40%. And if it’s 650,000, because her husband’s died as well, and she’s the last of two survivors, then anything above 650 grand is taxable at 40%.

Stefano Lucatello:

But what happens is that for the property in Spain to move on, as it were, out of her name into whoever’s name it is, whether it’s a member of the family, because there’s a will, or because it’s sold, then there will have to be the equivalent of a grant of probate in Spain. So, what will happen is that the English solicitor will send over to a Spanish notario the English grant of probate. That will be translated, notarized, apostilled with a foreign and Commonwealth office apostille, which is a recognition certificate that the probate has been done in the United Kingdom.

Stefano Lucatello:

Then the equivalent procedure can be done in Spain. Inheritance tax won’t be payable to in Spain, one because it doesn’t exist it up to a million euros, you don’t pay anything usually in Spain. And, but you can’t pay a higher sum, so you need proper tax advice and take you from there. But there is an equivalent procedure. You have to go through it and you can’t just sell the property without going through that procedure. And selling the property is quite easy, just give it into the hands of an estate agent once that’s done and they can sell it.

Lucia France:

[crosstalk 00:17:40] And talking about the 325 or the 650, I think you said tax free, is that something that has to have been sort of agreed prior to somebody’s death? Or is that something that-

Stefano Lucatello:

No, no. It’s the nil rate band. It’s what’s called the nil rate band, and each one of us has. So, you Lucia, you’re married. So, if you have assets and you die and you make a will and you leave those assets to your husband, then there’s no tax. There’s no inheritance tax between spouses in the United Kingdom. It’s the incidence of inheritance tax applies only on the death of the second of the spouses. So, what happens is the two nil rate bands of 325, as it stands at the moment, are aggregated to leave 650. So, if you were the second to die of the two spouses, if your estate was a million pounds, then only the 350,000 pounds above the 650 will be taxable [crosstalk 00:18:33].

John Howard:

Stefano, Stefano very quickly. So, do the two countries agree on the tax? So if there was … If the whole estate, if the flat was five and a thousand euros or million euros in Spain, would they have to pay tax on that in Spain?

Stefano Lucatello:

No. What happens is-

John Howard:

[crosstalk 00:18:55] tax all in the UK.

Stefano Lucatello:

Right, okay. So, if you die tax resident in the United Kingdom with an asset abroad, then you will not have to pay the succession. It’s called succession tax abroad, as opposed to inheritance tax. You will not have to pay succession tax abroad. Why? Because there’s a double taxation treaty between the United Kingdom, and 157 other countries, which means that if you have an asset abroad, which attracts taxation of some type, but you are resident in another country and that country will tax you, you won’t pay it twice. The only incidence of taxation that you might pay in another country is if the rate of taxation for that particular tax is higher. Let’s say that the taxation rate for succession tax in Spain was 50% and in England it’s 40. You would pay a difference possibly of 10%. So, you will never pay it twice.

John Howard:

Right, got you. Yeah. Thank you.

Lucia France:

Okay, great. And that’s not going to be affected by Brexit or anything like that?

Stefano Lucatello:

No, no, no. No. It’s got nothing to do with Brexit, no.

Lucia France:

Great. Thank you. Okay. Let’s move on then. John, it is your first question. No, I’m sorry. We’ve gone back to John, haven’t we already sorry. Another question for John. First of all, I’d like to thank you guys for starting this show online.

John Howard:

That’s nice, isn’t it?

Lucia France:

Very nice, isn’t it? Thank you very much.

John Howard:

Makes it all worthwhile.

Lucia France:

It does, it does. So, my question is a very simple one. Where will the property market be in two years time?

John Howard:

Oh God.

Paul Mahoney:

Extremely simple.

Lucia France:

[crosstalk 00:20:23].

John Howard:

Funnily enough, after Property Summits yesterday, I feel a little bit clearer. A little bit clearer. And the reason I feel a little bit clearer is because there’s three reports have come out from the three major, major agents in the UK. One says they think there’ll be a drop of 13% in the next 12 months, another said five to 10%, and another said 3%. This is on the domestic market. Okay. So the domestic market, I think there’s two markets, there’s the domestic market and there’s the, what I call the dealing, investment, trading market, if you like. So, on the domestic market, I think in certain areas where there hasn’t been much unemployment, where there’s not going to be much unemployment. I don’t see the market moving very much at all. In other areas where a town is decimated by unemployment, clearly that would have a much bigger effect. And as my good friend, Paul, says and notice I said good friend, this time, Paul, we’re improving.

John Howard:

It is a micro market, the UK market. So, say in Manchester where there’s an awful lot of different employers and so on, that may not be effected at all. In 2008, 2009 I had quite a large block in Brighton. I’ve still got it fortunately. And in Brighton where everywhere else dropped between 15 and 30% Brighton didn’t drop at all. So, you know, it really just depend where you are in the country. And so I think that’s the domestic market.

John Howard:

Now, that’s one thing. Now what you’ve got to remember is that the trading market, the investment market, the dealing market, if you like, is a totally different animal, because it’s all about risk and reward. It’s all about borrowing money on the whole, leveraging your assets. [inaudible 00:22:15] companies are certainly not going to say you can have your interest free period or this, that, and the other.

John Howard:

It isn’t going to happen. It’s dog eat dog out there. And anyone who thinks it’s not needs to wise up, because it is. So unless, if you got a buy to let mortgage, you don’t need to worry for 20, 25 years probably. If you haven’t, if you haven’t and you’re on a short term loan with a bank and everything’s taking longer, good luck because they’re not going to be too sympathetic to you. I can tell you now. Some are, but most aren’t, if you are on a bridging, your crowdfunding, all these types of different investments, you can borrow money from now they’re going to be tough on you. So, anticipate that problem and try and deal with it now, get extensions now rather than wait till they’re due and so on. Be wise, be smart.

Lucia France:

Great. Thank you. Straight talking advice there from John. Anything to add to that guys?

Paul Mahoney:

Yeah. Look, I agree with a lot of what John said there. I think the only real honest answer to that question of where the market’s going to be in two years is that we don’t know, because no one knows. And anyone who says they do is being disingenuous.

John Howard:

I agree.

Paul Mahoney:

No one knows, but we can guess based upon various factors.

John Howard:

And experience, and experience.

Paul Mahoney:

And experience, past history and all that sort of thing. And obviously John’s had experience with recessionary periods before. So, he’s coming from a position of knowledge there. My guess would be that if there is any fall in the market, it will have well and truly recovered by two years from now. They talk about [crosstalk 00:23:44] recovery. I think we’ll have a V shaped recovery. If there is any fall at all.

Stefano Lucatello:

I think interest rates will be 15% like we had in the eighties.

Lucia France:

Do you?

John Howard:

Really? [crosstalk 00:24:00].

Paul Mahoney:

So Stefano, I think he would take a lot from Kate Faulkner’s presentation yesterday in Property Summits, because she covered a lot about inflation and whether rates would rise.

John Howard:

She did, yeah.

Paul Mahoney:

And her take was it’s quite unlikely that we will have high inflationary and high interest rate periods.

Stefano Lucatello:

I was being flippant. But I do remember as a young man, I do remember the eighties when interest rates were very, very high, mortgage interest rates were very high and it was incredible.

John Howard:

It was amazing. You were paying 15% on your mortgage, on your house mortgage at one point.

Stefano Lucatello:

That’s right, that’s right.

John Howard:

And then 10% on a house mortgage was fairly average in those days.

Stefano Lucatello:

Yeah, yeah, yeah. Absolutely. Yes.

Lucia France:

I remember my parents talking about that as well.

John Howard:

Oh, very funny. Very funny. Thank you.

Paul Mahoney:

My grandparents were talking about that I think.

Lucia France:

Here we go [crosstalk 00:24:54]. Okay, Paul, next question is for you. So this person lives in Scotland and they are considering to purchase buy to let properties in some different areas of Scotland, because the properties seem really cheap. They’re asking, is this a good idea going forwards?

Paul Mahoney:

Okay. So, another common question, as I said before, people generally will look in the close vicinity of where they live. I don’t necessarily think that’s the right approach. Investing should be unemotional and commercially minded. It should be about making money. And, we have clients all over the world, the Middle East, Australia and yeah, their investments perform just as well as the person who lives down the road from the property. But, if they have to invest in Scotland and I’d say, especially so in Scotland, they want to be investing in major cities and not in cheap properties just because they’re cheap. There are a lot of places in Scotland and the North of England in general where you can get really cheap properties. You know, you can buy a castle in the middle of nowhere for the price of a one bed in London, but that’s because no one wants to live in that castle in the middle of nowhere.

Paul Mahoney:

And everyone wants to live in the one bed in London. So, it’s not about what you can get for your money, it’s not about how many bricks are in the property, it’s about supply and demand and that’s what determines value. So I’d say if I have to invest in Scotland, look at the likes of Edinburgh and Glasgow, as central as possible. Areas where you have a robust tenant pool and tenant demand, employment, and a broad range of industries that drive that employment. Facilities, amenities, infrastructure. If you’re ticking all those boxes and there’s strong reasons for people to want or need to live in your properties, then you can be pretty comfortable and confident that you’ll be able to rent it, which is probably the most important thing when it comes to buy to let is having a tenant. Because then you’re safe.

Lucia France:

Yeah, of course.

Stefano Lucatello:

Paul, Edinburgh is very expensive. I’ve mates of mine that live up in Edinburgh, and they’ve got a big hairdressing salon, and it’s a very expensive [crosstalk 00:27:01] place.

Paul Mahoney:

It is and I suppose for good reason. So, that’s why I would say don’t go to the cheaper areas just because they’re cheap. Don’t be afraid to pay a bit more for a better investment in a better city.

Lucia France:

Yeah. Or maybe just buy one property rather than lots in the worst area.

Paul Mahoney:

Yeah, exactly. And that’s a really good point to actually, Lucia, is a lot of people really try to spread their money as thin as possible.

Lucia France:

Right.

Paul Mahoney:

You know, they’re trying to buy 10 50 grand properties all over the country [crosstalk 00:27:27].

John Howard:

What I would say Paul, in Scotland you can buy a two bedroom flat for 18, 20 grand. Now, if you could rent that flat out and up North, up there, what they do, they give the tenant a cashback. So, because they’ve got so much property and we’ve got to remember about, and you’ll … Majority of what, everything Paul said is absolutely right. If you’ve got an area where you’ve got to give people a cashback to ren because there’s so many other properties in there. This myth of a housing shortage is only a housing shortage in certain parts of the country.

John Howard:

You go to Scotland, there’s no housing shortage in Scotland. There’s not much in Wales. And some parts of the North. So, you got to be careful because you could buy a property and have it empty for six months if you’re not not careful. People down South can’t understand that. They think we’re crackers when we say that, but it’s genuinely true. So, if you want a safe investment, Paul’s absolutely right. Pick areas where there’s high employment, high amounts of people and so on. If you’re a bit racy on that and some people are, and you’re confident that you can rent a property that you’re buying for 18 grand, a two bedroom flat for 18, 20 grand, then fill your boots. The biggest thing you’ll struggle with its capital growth, because then you might get a good yield when it’s let, but you won’t get a lot of … You’re unlikely to get a lot of capital growth. Because in property [crosstalk 00:28:57]-

Paul Mahoney:

You’re also unlikely to be able to finance those properties.

John Howard:

Absolutely, in property, the first places to go down in value in my experience, are the last ones to go up.

Lucia France:

Right. Okay. Thank you very much there John, I’m really sorry. We’ll move on to Stefano’s question next, because we’ve just got under four minutes left. So, in the past, Stefano, you considered Portugal to be the most expensive place to buy out of the other major European countries, but are some of the smaller islands in Europe cheaper than Portugal.

Stefano Lucatello:

It depends how far you consider Europe. Let’s take them. You’ve got quite a few. You’ve got the Canaries. You’ve got Cape Verdean islands, just both of them off the Western coast of Africa. Closer to home in the Med, you’ve got Ibiza, Mallorca, Menorca and the Balearic islands, Malta, Sicily. Further away you’ve got Madeira, the Azores and Cyprus. So, you’ve got quite a few to be going at and Malta as well of course. So none of them is cheap. None of them is cheap at all. I mean, you’ll know as well as I do Lucia, having lived in Spain, but Mallorca, Menorca, Ibiza are not cheap places to buy in, especially Ibiza because of the young trendy section, the DJs and the discos and whatever else. The Canaries have been traditionally a good place to buy. Fuerteventura is very expensive and Gran Canaria. And you know, there is not a cheap island. But the very point of it, an Island is limited in space and as such is limited in the number of properties, which puts up the value of the properties. And places where you could previously get cheaper properties, like Tenerife, the Canaries, are going up in value substantially.

Stefano Lucatello:

And people are going to the smaller islands, the smaller islands of the Cape Verdean islands. I wouldn’t buy in the Cape Verdean islands because it’s been something that has not matured. It’s still a third world African state. And if you were to go to the islands, I’d try Cyprus. But even then Southern Cypress is very expensive. It’s gone up in value substantially. And there is no real cheap, I think of all cheapest islands, I would go with Sicily. It’s still a lot of territory that’s been undiscovered and you can still get some good value there, but none of the islands in Europe are cheap. Come on, close up because you’ve got a few seconds.

Lucia France:

I was just going to say we’ve got less than a minute Stefano, thank you so much for your concise answer there. Thanks very much to John Howard, Paul Mahoney, Stefano Lucatello, I’ve been Lucia France. Thank you very much for watching. If you’d like to send in your question, ask, A-S-K@aquestionofproperty.co.uk is our email address and we’d love to hear from you. Thanks very much for watching.

 

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