Investors look north - Nova

Investors look north

Richard Bowser:

Hi, it’s Richard Bowser here from Property Investor News Magazine. I’m here at London’s ExCel Center for the Property Investor Show. I’m here today with Paul Mahoney from Nova Financial. Hi, Paul.

Paul Mahoney:

Hi, Richard. Thanks for having me.

Richard Bowser:

Yeah, no problem. We’re on the second day of the Property Investor Show. It’s a very well-attended show this year. How have you found the show yourselves?

Paul Mahoney:

We’ve found it very good. Yeah. Yesterday was very busy. Spoke with a lot of people that were very much interested in our services, which is great. Had a couple of seminars. Today seems to be a very similar day. Yeah. It’s all going very well.

Richard Bowser:

Yeah, good. Certainly reflected in some of the comments from other exhibitors at the event, and we’ve seen ourselves. It’s good to see that the sector is thriving, given the tensions at the show. Despite George Osborne and Coe’s attempts to derail Vitalette.

On that point, really, you provide financial products for Vitalette and for property investors. Just give a little bit more explanation about the company and what you do.

Paul Mahoney:

Yeah. Financial products is part of what we do. We are mortgage brokers. That’s one of our core services. The other core service is actually advising on property investment. We meet with clients, put together a criteria for them, and we source properties from the market and do all the research and due diligence on their behalf. Essentially help guide clients through the whole process and enable them to make a more confident and educated investment.

Richard Bowser:

Okay, so it’s a bit of a one stop shop?

Paul Mahoney:

Yeah, and end-to-end advisory service.

Richard Bowser:

Okay. Is it London southeast, or you operate all over the UK?

Paul Mahoney:

We cover the whole country. Most of our clients are London-based, but in fact, most of them have been investing in places like Manchester, Liverpool, lately the northwest. Going back to what you mentioned about the changes, we’ve noticed a big shift.

Richard Bowser:

Yes.

Paul Mahoney:

Away from high value, low yield assets-

Richard Bowser:

Yes.

Paul Mahoney:

Toward low value, high yield assets.

Richard Bowser:

Yes. Yes. In terms of the northwest, you mentioned specifically Manchester. You’ve got HS2 going up there in the years to come. Airport city, 11,000 jobs being created. There’s a lot happening in some of the regions now.

Paul Mahoney:

There is.

Richard Bowser:

Which are obviously impacting on property values and on the investment opportunities.

Paul Mahoney:

Yeah, exactly right. It’s hard to ignore billions of pounds of infrastructure spending and massive job growth, massive economic growth that’s happening in both Manchester and Liverpool at the moment.

Richard Bowser:

You’ve been doing some talks here today at the show.

Paul Mahoney:

Yeah, I did a talk today on how to retire through property investment, focused on the types of properties and the types of returns through different stages of life. I did a talk yesterday on Vitalette fundamentals, mistakes, and changes. Both seem to have been quite well received, which was nice.

Richard Bowser:

Yeah. No, no, good. It’s always good to get good feedback from a room attendance, rather than rotten tomatoes being thrown.

Paul Mahoney:

Exactly.

Richard Bowser:

Not that I’ve had any of those myself over the years … But no, seriously. It’s good to hear that, that you’re getting good feedback. Typically, the type of clients that come to you, are they relatively hands off? They’re wanting a sort of-

Paul Mahoney:

Yeah. I suppose so. We do tend to focus more on passive styles of investment.

Richard Bowser:

Yeah.

Paul Mahoney:

That’s on the property side of things, but we work with a very broad range of people on the finance side of things.

Richard Bowser:

Yes.

Paul Mahoney:

Developers, people looking more hands on. Our client base is quite broad, though. We deal with first time investors through to high net worth, and pretty well everyone in between.

Richard Bowser:

Right.

Paul Mahoney:

I suppose the terminology we use for our clients is mostly mom and dad investors.

Richard Bowser:

Yeah, sure. Sure.

Paul Mahoney:

People looking to provide for retirement.

Richard Bowser:

Yep.

Paul Mahoney:

They’re looking for some guidance or some clarity on what they should do. All these changes that are coming into the market, I think really accentuate the need for advice.

Richard Bowser:

Absolutely, yes.

Paul Mahoney:

In what was previously a very DIY industry.

Richard Bowser:

Yep.

Paul Mahoney:

It’s good that we’re able to provide that confidence and that clarity to our clients.

Richard Bowser:

Well, there’s no doubt that some of the regulatory changes, licensing, it’s a more complex market. Therefore, professional service providers like yourself, to be able to add that value, to give out the knowledge based on your own experiences, obviously that’s a positive.

You mentioned earlier about the financial side. As a broker, what sort of changes have you seen in the last year or so, in terms of Vitalette and people’s approach towards you, and how lenders themselves are reacting?

Paul Mahoney:

Yeah. Well, obviously the big change was in January, when the Bank of England mandated the serviceability requirement. Again, it goes back to what I mentioned before about the need for yield.

Richard Bowser:

Yes.

Paul Mahoney:

It’s hitting places like London, the southeast, quite hard.

Richard Bowser:

Yes.

Paul Mahoney:

Because people that follow the old strategy of buying solely for growth and just breaking even are finding that often, they can’t borrow what they owe.

Richard Bowser:

Yes.

Paul Mahoney:

Given these new changes.

Richard Bowser:

Yeah.

Paul Mahoney:

I think over the next couple of years as people go to remortgage, a few people are going to be shocked by that.

Richard Bowser:

Yeah, no. Quite.

Paul Mahoney:

I think that’s a bit of a risk, actually, for London and the southeast.

Richard Bowser:

Hm.

Paul Mahoney:

That potentially, people are going to have to make the choice as to whether to put more cash in or sell. Again, places that are high yielding, doesn’t that have that much an effect on because serviceability requirements, even the new rules, you can still borrow more than enough.

Richard Bowser:

Indeed. Yeah, and this is our thing. I completely concur with what you’re saying, that yield is now the determining factor. Also, again, you’ve underlined what other people have said to me, that there are people with stock in London and southeast, where perhaps maybe they over-geared. Then getting a low yield, it hasn’t been doing much more than washing its face. They’ve not been repaying down debt and therefore, consequently, when they look to try and do a remortgage, because they’ve got increased equity, perhaps, they’re in a more difficult situation.

Paul Mahoney:

Yeah, exactly. I think you add to that the compounding factor of the changes to the way mortgages are being treated from a tax perspective.

Richard Bowser:

Yes.

Paul Mahoney:

I’d even go so far as to say the vast majority of the people probably don’t know how that’s going to effect them, but when they will notice is when they do their tax returns.

Richard Bowser:

Yes.

Paul Mahoney:

You put those two things together and there’s potentially a bit of risk in the market in those low yielding assets.

Richard Bowser:

Well, I think it’s just all the more reason for people to be educated and understand what’s going on. Coming along to events like the Property Investor Show, reading my magazine, Property Investors News, talking with service providers like yourself keeps you informed and educated about the marketplace and gives you, perhaps, a better understanding of the choices that you’ve got to make.

Paul Mahoney:

Exactly right.

Richard Bowser:

Yeah. Great.

Paul Mahoney:

Great.

Richard Bowser:

Well, Paul. Listen. Really interesting to chat to you today at ExCel, at the Property Investor Show.

It’s Richard Bowser, Property Investor News, and I’m here with Paul Mahoney of Nova Financial. Thank you, Paul.

Paul Mahoney:

Thanks, Richard.

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