Proper Wealth - S2 Episode 1: Leeds Property Market - Ben & Rayna Hunter (LH1) - Nova

Proper Wealth – S2 Episode 1: Leeds Property Market – Ben & Rayna Hunter (LH1)

Paul Mahoney: Hi, I’m Paul Mahoney, and this is Proper Wealth. The show we discuss all things wealth creation with a focus on property. Joining me today is Ben and Rayna Hunter from LH1 property, investors and global master agents to residential developers. Thanks for joining us guys.

Ben Hunter: Thank you for asking us.

Rayna Hunter: Yeah.

Paul Mahoney: As property investors yourselves, and with a lot of experience in sourcing the right sites and right locations, today we’re talking about the Leeds property market as the next buy to, at hotspot. Perhaps we can start with passing it over to you on, “Why Leeds?”
Ben Hunter: I think Northern Powerhouse is obviously a big focus for part of their investors. You’re looking at capital growth prospects, lower costs of entry, lower capital value units and high yielding. Manchester, Liverpool… They’ve been talked about for the last couple of years, and Leeds is very much a bit an untapped area and focus for investment. I think it’s an opportunity to get in ahead of the curve where others are possibly topping there a little bit in terms of values.

Paul Mahoney: Yeah, okay. I tend to agree. If you look back probably three, four years or so, London was the focus. When you look to the… Even Birmingham, Manchester, people weren’t really quite comfortable with those areas yet so far as all the things you just mentioned. That’s now proved itself, hasn’t it?

Ben Hunter: Absolutely.

Paul Mahoney: We’ve seen the capital growth. We’ve seen everything that’s happening in those cities, whereas Leeds is probably a couple of years behind and perhaps the next Manchester if you like.

Ben Hunter: Agreed. I think the other thing when trying to identify a target location for investment is what is happening in that city over the next couple of years. The very interesting thing about Leeds is of course the South Bank regeneration scheme, which is the largest city center regeneration scheme in Europe, about 350 million pound worth of investment. It’s actually going to double the size of the city over the coming years. Again, that’s a really interesting pointer to take into account.

Paul Mahoney: Okay, great. Obviously, we’ve got the fact that Leeds is now picking up in you power so as those other cities. We’ve got the infrastructure spending being that the mixed use between residential, commercial, retail, creating new jobs, expanding the city. I suppose all the ingredients for what creates a strong property market-

Ben Hunter: Absolutely.

Paul Mahoney: … moving in the right direction.

Rayna Hunter: Yeah. Leeds, obviously, has a really good story, and whenever we as investors are looking at an area, we obviously do our thorough due diligence. We look at what that city has got to offer. It has to have great transport links. Leeds has got a European international airport. Always we like it when they’ve got universities. In Leeds, there are actually three-year universities with about 39,000 students coming out of those. What’s good about Leeds is the fact that the students often stay, and start working there. There’s a great demand for properties for tenants because, obviously, sometimes they can’t afford to buy straight off, so they’re looking to rent. The buy-to-let market is strong in Leeds.

Paul Mahoney: Yeah. Okay. All right. I suppose the thing with students is students are tenants at some point themselves also, some people like targeting students as tenants. Once they finish university, as you say, and the postgraduate retention being quite high in Leeds, given the jobs that are now available, they become almost the perfect target market, don’t they, being young professionals on decent incomes that want to live centrally. There’s definitely a strong trend toward inner city living, and these are the types of people that want that, aren’t they?

Rayna Hunter: Yeah… Sorry.

Ben Hunter: No, you’re doing great.

Rayna Hunter: Talking too much. What I love about Leeds is the fact that it’s got a really good story. The fact that there’s voting it the second economic city in the whole of UK, outside of London. The financial market is strong there. The tech market is strong there. Channel 4 has relocated to Leeds. When you get big companies relocating to an area where they see the vision for the future, the regeneration is so strong. It’s an ideal area for people to live and work.

Paul Mahoney: Yeah. Okay. I suppose that’s more likeness to Manchester, isn’t it?

Rayna Hunter: Yeah.

Paul Mahoney: As we’ve already covered. We’ve had a BBC and ITV move to Media City or Salford Quays in Manchester, channel 4 to Leeds. An interesting thing that I heard somebody raise the other day is that in itself. Just seeing people on TV with a Leeds accent raises the profile of Leeds, because I think in a way that’s what’s happened in Manchester. The world almost was very London central and now all of a sudden half of the tele they have Manchester accents, and that’s now going to happen with Leeds, and that raises the profile in itself.

Rayna Hunter: Yeah. One of the things about Leeds is also that it’s fast becoming a 24 hour European city. It has a great infrastructure for shopping, very key for a female, and they’ve got parks. It’s a great cultural destination. Damien Hirst, the artist is from Leeds. It draws a lot of people coming into the area with the tourists, the residents, the tech and the professional and the financial institutions over and above students looking also for properties to live in.

Ben Hunter: Also, it’s only two hours from London, which is almost commutable really, when you think. You could take a lot longer than that to get in from London commutable towns at the moment.

Paul Mahoney: Yeah, I suppose that’s at the moment. Then obviously we’ve got HS2, which we’re assuming will be going ahead.

Ben Hunter: Yeah.

Rayna Hunter: Yeah, I agree.

Paul Mahoney: There’s been a little bit of speculation around that, but I read yesterday, there was a recommitment from Boris Johnson to the Northern Powerhouse schemes and also giving cities in the North a bit more power. That’s certainly seems to indicate that these infrastructure projects are likely to continue, and that will very much open up the commutability, why not, to pretty well all of those major cities we’ve just mentioned, which will have a much massive impact.

Rayna Hunter: Well, you then… is the North-South divide becomes less and less, because everywhere is more accessible, and it means that people could live in Leeds. If they hypothetically wanted to work in Manchester or Birmingham or even London, it is accessible. Of course, what we’re seeing now with the Northern Powerhouse, in particular Leeds is like the rising star in that market, that people can afford to live there because it’s not as expensive obviously, as living in London.

Paul Mahoney: Effectively spends the commuter belt, doesn’t it?

Rayna Hunter: Yeah.

Paul Mahoney: We’ve already seen what that’s done to London for example. Cross rail, what that’s done to the outskirt towns that are on that line, and it’s not even done yet. We’ve had 80%, 90% growth in some of those areas predominantly due to this expected utility.
Ben Hunter: Absolutely. I mean, in terms of the growth forecast as well, JLL, about 20% capital growth in cap vows and rent by about 2022. It’s a strong story.

Paul Mahoney: Yeah. Okay. Obviously, a lot happening.

Rayna Hunter: Yes. It’s very exciting time for me.

Paul Mahoney: Rayna, you mentioned before about Leeds being a tourist destination, the galleries and the history, the pen-ions, all those sorts of things that attract tourists. Again, I read a number that said that there’s 10 million people a year that visit Leeds, which is obviously an economy within itself, the tourist economy. Also, as the economy as a whole, you mentioned about financial services and it being a big tech hub. The overall economy in Leeds has grown by 40% over the past decade. That’s a pretty incredible number when you consider that the UK economy is lucky to grow about two and a half or three percent.

A massive stock difference there which I think in a way is also relatable to property. We’re starting in a much lower base, same will go with the Leeds economy. The property and the economy has started at a much lower base, but now everything is starting to move. If we tie that back to your point, Ben, so far as us being ahead of the curve, we spoke about Manchester, Birmingham, Liverpool. They’ve all been in the headlines for a few years now as… and quite rightly, because they’ve been the fastest growing cities in the UK for the past three or four years. That’s great. There’s probably still some good opportunities there, but you need to be a little bit more careful, I think everyone would agree on that. Whereas with Leeds, we’re probably still ahead of the curve. We can start to see things happening. We’re passing a test that I call the “going to test,” is it going to happen? It looks like it’s going to happen in Leeds because we can see things moving now. We’re not just guessing. We can still get ahead of things, which I think is a good position to be.

Ben Hunter: Absolutely, and all the signs showing that there is plenty to come, is the main thing. When I mentioned before about the South Bank regeneration project, I think that is a key area of focus. If you’re going to be picking what part of the city, then that’s a great opportunity to benefit from even further capital growth.

Paul Mahoney: Yeah, absolutely. It’s a perfect example of inward investment, isn’t it? Nobody spends that money to lose money.

Ben Hunter: No.

Rayna Hunter: No.

Paul Mahoney: If you can see smart money investing in locations, you can reasonably assume it’s a smart location, because there’s going to be a lot that’s gone into that amount of money being allocated. Is that fair to say?

Ben Hunter: Yeah, absolutely.

Rayna Hunter: Yeah. Well, you can’t lose money on bricks and mortar. It’s the old adage. That’s the best property or the best investment ever because you can actually see what you’ve bought.

Paul Mahoney: Yeah. It’s tangible.

Rayna Hunter: Yeah. Obviously, when you can see that you can quantify it by investing in an area of growth, which is like Leeds for example, and which is also reflective of the history and the culture, but is also now recognizing the modern way and expanding. It’s a very exciting time.

Paul Mahoney: Okay. Excellent. I think that was very informative. We just need to take a pause here and go to a break. Join us after the break for more on the Leeds Property market.

Speaker 4: Property is a great investment option, but it’s one of the largest purchases that you’ll ever make. As individuals, we’re all limited by our resources. Regardless of our experience, knowledge, or time, we can achieve much more with the help of a qualified team and extra resources being available. Nova financial specialize in assisting clients to achieve financial freedom through property investment. With over a hundred years of experience, we shape your family’s future. To invest in property with absolute confidence, call us on 0203 8000 600, or visit nova.financial.

Speaker 5: LH1 London offers a great exit strategy when acting for developers as their international sales and marketing consultant. Our global reach helps you sell your prime located high density residential development, and in turn brings excellent value to the discerning property investor. As investors ourselves, we fully understand the key fundamentals that are required when targeting the next investment hotspot. LH1 London are arguably the UK’s most acquisitive buyers of city center apartment blocks. If you’re a developer, then we need to talk.

John Howard: Hi. I’m John Howard, and I’m known as the property expert. The reason for this is over the last 40 odd years, I’ve bought and sold over three and a half thousand properties, and I’m still going. I’m delighted to pass on my vast experience and knowledge to you through my property seminars that are taking place across the UK this year. To know more please go to johnhowardpropertyexpert.co.uk.

Speaker 7: Meet the author is a brand new miniseries involving leading experts in the property industry, including mentors, developers, property lawyers and other industry experts who share insightful stories about their journey and their books. Each book is compiled by authors with years of valuable experience, tips and observations providing you with new knowledge about the property industry. To find out more, visit the website, property-tv.co.uk/library.

Paul Mahoney: Welcome back to Proper Wealth. I’m with Ben and Rayna Hunter from LH1 and we’re talking about the Leeds property market. I think we pretty well established, before the break, that Leeds is a good place to be investing. Obviously, Leeds is a relatively big place, and there are lots of different types of properties that people could buy in Leeds. I think it’s worth talking about where we feel as though the best buys are and where people should be focusing. Let’s talk a little bit on that.

Ben Hunter: One nice thing about Leeds, of course, is the character. You get a lot of mill conversions, for example, which is also appealing. It’s not all about just the new build. From a character perspective, there’s a lot of interesting buildings that have been converted into residential. In terms of the different areas where you get the character properties, Hunslet is an area of Leeds that has been identified for pretty strong capital growth in the relativity short term. It’s at riverside location, which is also nice, and it’s literally walking distance into the town center. From an investor’s perspective, when we’re looking at sites or empty property, it’s got to be somewhere where you’d want to live yourself and Hunslet offers that character. It’s not just a boring area. It’s got a bit of culture and character to it. Yeah, walking distance to the shops and everything you need really, transport links.

Paul Mahoney: Yeah.

Rayna Hunter: It’s also very close to the South Bank regeneration area, which we mentioned earlier, which is going to be a key and in fact new area of Leeds. The city center will expand and grow. Therefore, you could argue, “Where is the right place to buy actually in Leeds?” I think when you’re looking for property, whether it be as an own occupier or as an investor, the key is, as Ben said, the transport links, the accessibility. How close am I to a shop? How close am I to walking to a bus stop or the stations? That’s key, and of course, it’s got to be a place where you want to live and you think that if you’re buying it as an investor, where a tenant would want to live. It’s about the quality of the living as well as the location.

Paul Mahoney: Yeah, I agree. I think it’s about ticking as many of the boxes so far as what that target market might want. Generally, you find the most of those boxes ticked, the more central location, but then you also need to balance that out with price. That’s what I quite like about that particular location you mentioned in that… It’s not the center of the city, because quite often the center of the city’s a little bit more expensive. Maybe Leeds, you could be buying in the center of the city as well, because it’s probably a bit cheaper. Still, quite often what you’ll find is that the city doesn’t experience quite as much growth as places on the fringe of the city that experience what’s often referred to as the ripple effect.

You mentioned about South Bank for example, and again if we relate that back to the likes of Manchester, you’ve only got to look at the areas between Salford Quays and the city center, and what’s happened to those areas. They’ve gone from being very undesirable to very desirable pretty quickly because they’ve been squeezed by that new MediaCity area and the city center expanding. It seems like something quite similar is happening in Leeds. You’ve got the city expanding itself, already a substantial economic and employment hub. You’ve got the fringes where it’s a bit better value but still walking distance, and then you’ve got this whole new almost second city, which expands on that.
When it comes time to selecting the right properties in the right locations, it makes sense to keep those things in mind. You’re balancing out the desirability with the price, ticking as many of the boxes you can, but also making sure there’s some room for movement, from a growth perspective as well.

Rayna Hunter: Absolutely. What’s really good about this Hunslet area that Ben mentioned, because it’s obviously close to the South Bank regeneration, but what I really like about it is the character of the area, because there’s a lot of, as Ben mentioned, mill conversions, but there’s also new build properties as well coming. I like the fact that it’s also close to the River Aire, and with the South Bank regeneration, they’re muting the idea of the possibility of a water taxi, which would make it all so more accessible and interesting.
You can see what’s happening with a lot of these Northern cities, that they are following suit from London, like Shoreditch years ago, where it was deemed a depressed area. These areas have a lot of financial investment, then they regenerate and they suddenly become young, cool, trendy, great spaces to live and work.

Paul Mahoney: Yeah. We’ve seen it time and time again. Have we Shore, it’s perfect example. Hackney, that’s the fastest growing town over the past 30 years in the UK. It’s grown by 850% because 30 years ago, no one wanted to live in Hackney. It’s obviously, only a few miles from central London as the accessibility lines opened up. Now everyone wants to live in Hackney and quite often it’s those Bohemian areas, which Hackney was one, Shoreditch was another, that you have a bit of a… What do they call it, a hipster Renaissance.

Rayna Hunter: Yeah.

Ben Hunter: Yeah. We were talking recently about Digbeth in Birmingham, which is another similar type of offering. I think it’s very similar to this one.

Paul Mahoney: Yeah.

Rayna Hunter: I think it’s important that if you’re an investor, that you are a bit of a visionary. You have the vision for the future. You don’t judge the book by the cover. Don’t look at the here and now, look at the future, and Leeds in particular, the future is strong. Investment, whether you’re buying a brand new apartment… Obviously, the best deals that you’re going to get at the moment, as an investor, is to buy an off-plan apartment. Because that way you can put down a small amount now, and then as you know that you would recognize the capital growth during the build cycle. By the time that you’ve actually completed your purchase, your property would have escalated in value. You’ve got that as well as the rental opportunities thereafter.

Paul Mahoney: Yeah, of course. I’d need to probably clarify that slightly, and I wouldn’t go out buying any off-plan property because in my opinion, there’s a scale. There’s the risky scale where quite often developers want you paying very high deposits, and they may not have all that much experience, and your money might be used for the build. Therefore, you’re taking a lot of risk. At the other end, you’ve got deposits protected, experienced developers, all those boxes, plenty that we mentioned, and that can be a great deal. I’ve seen lots of people do really, really well from that.

I do tend to agree that when investing in sort of city center or city fringe properties, new build or off-plan properties, especially for the passive investor are the best purchases because they’re very passive. You’ve got all the warranties, so two-year builder’s defect period, 10 year structural warranty, all of your fixes and fittings under warranty. It means you can be a lot more certain about what you’re getting and also what the numbers are going to be for the first five to 10 years. Even just little defects that arise that would usually cost you money are fully covered for the first couple of years.

That’s obviously a big benefit to an investor, especially if they don’t live in Leeds, which I assume probably most of the people watching don’t. You want to make sure if you’re investing far away from home, that it’s relatively passive, unless you’re a property developer or full time renovator or whatever that might be, but I don’t think that’s the majority of people. Most people are just looking to kind of-

Rayna Hunter: Well, it’s quite interesting because we invest ourselves into the off-plan structure, and we’re very careful about what we bind to… And I’ll totally endorse everything that you’ve just said. It’s very interesting and refreshing to hear someone establish quite the groundbreaking rules that can be implemented by the right developers.

Ben Hunter: I think from our perspective, we wouldn’t ever entertain an off-plan purchase that wasn’t fully protected on the deposit. That was a very good point that you made there, so to see about mitigating risk, isn’t it?

Paul Mahoney: Yeah.

Ben Hunter: That’s important. We’ve all seen a few horror stories over the last few years about the stage payments being unprotected and so forth.

Paul Mahoney: I think that negatively affects a lot of people’s mindset when they’re thinking about off-plan. They just think it’s the one thing, and that’s why I spoke about the scale because you’re right. You read those stories and therefore some people say, “Oh no. Off-plan’s too risky for me.” Actually, in all the cases, it can be very, very low risk-

Ben Hunter: Absolutely, right.

Paul Mahoney: … and especially if you’re investing for growth, as you quite rightly mentioned, Rayna. If you’re investing for growth and the property is going to take 18 months or 24 months to be done, actually you’re slightly better off before it’s completed because you’re in the market for the full property price without having to have a mortgage. There’s no risk of servicing that mortgage and therefore if the price goes up, the return on deposit can be substantial.

Ben Hunter: Absolutely right. I guess another little safety precaution there is to make sure that that contract is assignable, in case a change of circumstance through that period. Just another way to mitigate risk slightly. Assuming you’ve got protected deposits and assignable contract, I think it’s an excellent way to go.

Rayna Hunter: I think it all comes back down to the fact that if for the savvy street-wise investor, if you invest now in the areas that are actually slightly depressed, where there’s going to be regeneration, then you’ve got a better opportunity to increase the profits on your initial investment.

Paul Mahoney: Yeah absolutely. As that new infrastructure and facilities and amenities come in, obviously prices tend to increase both naturally and unnaturally in a way, because developers tend to increase their prices as stages go on and time goes on. Both can be a very positive thing when the market is moving in the right direction for the buyer that gets in early.

Ben Hunter: Absolutely.

Rayna Hunter: Yeah. I think I would always, from an investment perspective, especially in Leeds, I would be looking at buying into an apartment as opposed to a house. We tend to think that houses are more for the owner occupier market rather than the investor market.
Paul Mahoney: Yeah, I tend to agree. I suppose my focus is usually on identifying the best location, and then letting that determine what the best property is. Now, of course, going back to that approach of central locations and the right young professionals, the tenants, obviously that does tend to lead you toward apartments. I think it’s more about, more the way you think about it rather than having hard and fast rule of saying, “Let’s just invest in apartments. Well, actually, let’s invest in what the target market wants, or what makes the most sense in the area.” As you know, generally in central locations, it’s either very expensive to the point that it doesn’t really make sense as an investment to buy a house, or they just don’t really exist in central areas. It’s generally, mostly apartments, and then of course, people need to understand leases and that’s another thing that people often get scared about.

I think just making sure that people make the right decisions based on the right information.

Rayna Hunter: Yeah, absolutely.

Paul Mahoney: I think this has been a great conversation about Leeds and what makes Leeds a good place to consider. I would say there’s still more information people to know about this particular location before they go and buy there, but a good overview of Leeds and then also the particular locations and types of properties that people can consider. As we say, there’s a good chance that they’re really getting ahead of the curve in a market that’s very much moving in the right direction.

Ben Hunter: Absolutely.

Rayna Hunter: Yeah, absolutely. I think that is a very good summary. I suppose key is research, research, research and location, location, location.

Paul Mahoney: Yeah, excellent. All right. Well, thank you very much for your time guys. That’s all we’ve got time for today. Join us next time on Proper Wealth for a discussion on high net worth private banking.

Speaker 4: Property is a great investment option, but it’s one of the largest purchases that you’ll ever made. As individuals, we’re all limited by our resources. Regardless of our experience, knowledge or time, we can achieve much more with the help of a qualified team and extra resources being available. Nova Financial specialize in assisting clients to achieve financial freedom through property investment. With over a hundred years of experience, we shape your family’s future. To invest in property with absolute confidence, call us on 0203 8000 600 or visit nova.financial .

Speaker 5: LH1 London offers a great exit strategy when acting for developers as the international sales and marketing consultant. Our global reach helps you sell your prime located high density residential development and in turn brings excellent value to the discerning property investor. As investors ourselves, we fully understand the key fundamentals that are required when targeting the next investment hotspot. LH1 London are arguably the UK’s most acquisitive buyers of city center apartment blocks. If you’re a developer, then we need to talk.
John Howard: My name is John Howard, and I’ve been investing and developing properties for over 40 years. In that time, I’ve been a very successful, but of course, I’ve always made the odd mistake as well. In my book, I explain how to be successful and what to do should something go wrong. I’ve survived three property recessions. I can help you to the same. My book is available online. Please go to johnhowardpropertyexpert.co.uk .

Speaker 7: Meet the Author is a brand new miniseries involving leading experts in the property industry, including mentors, developers, property lawyers and other industry experts who share insightful stories about their journey and their books. Each book is compiled by authors with years of valuable experience, tips and observations, providing you with new knowledge about the property industry. To find out more, visit the website, property-tv.co.uk/library.

Stephen G.: Hello and welcome to property TV. I’m Stephen Galpin, host of Property Question Time. We’ve completed the filming of series one over 266 successful episodes. We’re now about to film series two. The difference, well, we’re going to be filming in our new studio adjacent to the Canary Wharf development. Keep those questions coming into us. Keep our panelists, our experts busy, and we hope you enjoy the new series as much as you did the last one.

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