Property Forecast Q3 - Tony Gimple, John Howard, Nicholas Wallwork, Paul Mahoney and Richard Bush - Nova

Property Forecast Q3 – Tony Gimple, John Howard, Nicholas Wallwork, Paul Mahoney and Richard Bush

Kate Faulkner:

… Today. So first one we had live down in London, which was nice. We could actually see people, hug them, et cetera. Second one we did in April, and there’s so much happened since then, you wouldn’t believe.

Kate Faulkner:

So today’s our third one and the main aim really today is to try and kind of catch up with what’s changed, and some kind of key topics. So forgive me, I am reading these out. So latest permitted development changes, biggest opportunity for residential developers now, because that’s what you need to know. We’ve all heard about the stamp duties, that’s ruled my life for the last week or so. We’ll talk about that. Future of commercial investors, really, really interesting what was going to happen in that sector. What to do when funding offers are withdrawal, and I know that a lot of people suffered with that, and how will the stamp duties changes affect the markets.

Kate Faulkner:

So we’ve got tons to talk about, but I do have to say, I’m going to introduce the guys in a minute, for the most, most important thing is wherever you’re watching from, all we’re really here for today is to answer your questions. So however you would put forward questions, if you’re on YouTube PropertyTribes, et cetera, Facebook, ask your questions, they’ll come through to me on WhatsApp, and I’ll then be able to make sure that we get your questions answered today. Because that’s all we’re really interested in, is helping you out during this massively tricky time.

Kate Faulkner:

So now that we’ve kind of got on and explained that a little bit more, we’re going to go through… If I can actually find out, I’ve got so many screens on here, it’s mania in this household. So just introduce everybody.

Kate Faulkner:

So our first person, and everybody knows the oldest in the group, one of the most accomplished property deal-makers cause he’s been around longer than everybody else, who has… You are all going to be jealous. You can’t be jealous of this comment, over 3,500 properties bought or sold in the UK have gone through this man, 3,500. And one of the latest acquisitions of John’s portfolio was a 26 million pound deal, which was funded by [inaudible 00:02:14] England. So you’re in safe hands here with a guy that is trusted by all sorts. You can’t always say that when you’re talking about property investment stuff. Not making digs at anybody in particular.

Kate Faulkner:

But next we have Paul Mahoney. Paul Mahoney is the founder and managing director at Nova financial group. While he does have a bit of a strange accent, comes up with strange phrases every now and again, so [inaudible 00:02:39] for the likes of an Aussie on our hands. But he is an industry leading property investment, financial advisor. And what I would say is, we got chatting earlier and Paul knows mortgages inside out and backwards, but more important for you, is also an investment specialist. So he’s very unusual because he links the investment side, getting return on the money that you have, but then delivers that through properties and mortgages. So pretty different to most people that you would deal with.

Kate Faulkner:

And we have the most gorgeous fella on the list, Tony Gimple. Sorry, I shouldn’t be smiling at this point. Put your hands up, if you don’t like paying tax. So let’s have a few hands up here. Yeah. Tony loves paying tax because he didn’t put his hands up. So Tony is your man basically. He’s a private rented sector commentator, speaker, but most importantly advise you on taxes, succession planning. And for anybody that read the press this morning and the possibility of a capital gains tax grab, if you have not got a specialist tax advisor by your side, please, if there’s one thing you do after this call, go find one. Hopefully that will be Tony, but if it’s somebody else, “You won’t mind, will you Tony?” So really, really important.

Kate Faulkner:

And then we have Richard Bush a CEO of Crowdlords that provides finance help, offer landlords much healthier returns and investors, rather than necessarily going out and doing it all yourself, you’ve got a professional organization [inaudible 00:04:17] site.

Kate Faulkner:

So that’s kind of everything we’re up to. That’s everybody that you’ve got hopefully, a good idea in front of you is to what we can maybe do to help. But as I said earlier, we’re here to answer your questions. So what we’re doing at the moment is just giving you a little bit of information. Just to warm you up a little bit.

Kate Faulkner:

So the first thing that I’m going to do, and this might be a little funky so bear with us, is I’m just going to give you an update on… Sorry, I’ve got [inaudible 00:04:50].

Kate Faulkner:

Right, so once you press the button… I can’t get to the button because something else has [inaudible 00:04:59]. So what I’m going to do is talk to you about where we are economically, because this is definitely, definitely going to impact on what happens in [inaudible 00:05:09]. So hopefully, by some miracle of technology, we’re a little slow, I’m going to be sharing my screen with you. So I can’t see anybody else now, so can somebody shout to tell me you can all see that.

Speaker 1:

I believe we can see that.

Paul Mahoney:

Yes, we can see that Kate.

Paul Mahoney:

Yep, all up.

Speaker 2:

Go for it.

Kate Faulkner:

Marvelous. My biggest fear of the next two hours is now over. So what is the latest on the property market for July 2020? A huge amount has changed. So when I presented this before back in April, then everybody was fairly confident this was going to be what we call a V shaped recovery and you can kind of see that from the scenarios. I’ll explain the slides in a minute. They were thinking this was going to be over in a year, six months and we’d all be back to normal and everything will be fine.

Kate Faulkner:

The kind of realization has sunk in that that is not going to happen, and what you have in front of you here, is the orange line shows… This is basically GDP, and if you think of it just as GDP is a measurement of how the economy’s doing, they were expecting it to grow to by about 8% over the next five years, and that might still happen on the upside scenario. This all comes from the office of budget responsibility. So it’s what the government and various other people use.

Kate Faulkner:

So we might get that, but we’re not going to get anywhere near there until, or heading back to that line until kind of 2022. All we were looking at a year, now we’re looking at two to five years recovery. The central scenario, so that’s sort of, hedge your bets a little bit, we won’t have an upside, there won’t be a horrendous downside and we’ll be growing at around 5%. And again, that’s going to take a little longer. So you’re talk about two or three years being in a pretty sizeable session and the real downside is if things go absolutely pear shaped, it could be another five years. And if it is five years that’s kind of where we were and you’ll be living through what we had to live through during the last recession, just so you end up with an idea of what might come up.

Kate Faulkner:

So I’ve given you these stats and figures here. So basically what you’ve just seen is a personal GDP, the bit that’s important to you is inflation. So that’s the second line, and what they’re really suggesting is that inflation is not going to be a huge factor over the next few years, despite the money that’s been pulled in, they’re expecting inflation to be pretty low. The reason that’s good is because if wages can’t keep pace with this kind of growth, then that means a [inaudible 00:07:49] real estate saying, so you won’t lose money. Where inflation goes higher than people’s wage growth, that’s when you get [inaudible 00:07:56].

Kate Faulkner:

The other thing that’s incredibly important is that unemployment rate. So the top bit you’ve got is the central scenarios, that was the middle one. What’s really spooking everybody at the moment is the real fear of massive unemployment starting from October, when the furlough scheme ends. You can see on the central scenario that they’re expecting that to double this year. They’re expecting, and this is the bit that’s a different why, they’re expecting us not to recover as fast as possible, that it will rise even further throughout 2021 and then it will take a lot longer to come back. So implications of unemployment.

Kate Faulkner:

How many of your private tenants for example, are going to be made unemployed and have you got insurance that will cover it? Important to check that and important if the insurance company will pay out some of the rent guarantee ones I don’t believe have at the moment. You’ve got to think that if your tenant goes bust effectively, what have you got in your armory to protect your funding? Because you still aren’t going to be able to make money very fast, and don’t know what support the government’s going to give.

Kate Faulkner:

So those are kind of things to look at, but we are expecting to be in [inaudible 00:09:11] for a good few years. You’ve got to basically make sure that you’re protected throughout that time. I put the other chart in on the unemployment, just to show you how absolutely scary that is expected to be. Often what you find with forecasters is they, they kind of underrated or under suggested how bad this was going to be to start off with.

Kate Faulkner:

I think they may have gone too far trying kind of to protect themselves and go too worried. So somehow that’s sort of somewhere between the upside and central scenario. I am quite an optimist. So I will point that out at the moment, is likely to be where we could get to. From a property forecast eye, Savills have kind of come out with the boldest of forecasts on what’s going to happen in the property market. Might look at that and say, right, so this year there expecting all prices for all properties in every single region to fall by 7.5%. That is quite blanket to me. I’m a big fan of Savills forecasts, but I’m not sure that this is going to be right. The central one for 7.5% maybe correct. London may fall less. The Northeast is actually the most interesting, in that it might not fall that much because it’s already 9% lower than it was 12 years ago.

Kate Faulkner:

So you’ve got to kind of look at these. But the interesting one, bearing in mind most of you will be in this for the long term, is that if you look at the end of this chart, you’ve got in yellow five year forecast, and in orange the five year forecast. Basically what Savills have done over the next sort of four or five years is said, that based on their forecasts last year, they’re not expecting the five year growth in fact to be that different over a five year period. And that’s probably about right. That’s about as best guessed as we could make at this moment.

Kate Faulkner:

But you can see in London that that’s actually looking over a five year period at a 4% growth rate. My view on this is totally ignore [inaudible 00:11:17] moving forward. It’s all about individual property prices. I think from [inaudible 00:11:23] fall and I think others will fall by about 20%. You’ve got to work out which [inaudible 00:11:28]category. Currently, whilst there’s been some really damaging stats going on in the news and I think that’s partly because they want to say [inaudible 00:11:39]. But it’s not. It is buzzing out there and it’s buzzing even more now that we’ve had the stamp duty cut. On that, just bear in mind, and Tony just picked me up on this if I’m wrong when you have your chat, but Wales doesn’t look like they’re going to allow any concessions at all for investments and the like [inaudible 00:11:59].

Kate Faulkner:

But here’s where it gets really interesting. HomeTrak another organization I rate, they’re actually looking at house price growth up two and a half percent year on year. Sales agreed and this is really interesting, four percent higher than pre COVID, and that’s despite having Scotland, Wales and Northern Ireland closed. We’re expecting a rebound, obviously in that activity and on the back of this, despite the fact that we all know we’re going into a massive recession, and we all know that prices have to fall on some properties. [inaudible 00:12:31] price drop. Which is why, if you thought you were going to get a ton of deals and you were going in through agents, they were probably not that interested. Nationwide and Halifax, they’ve just been used to publish. I just can’t see how that could be accurate, with the little data that they have. So really my message is focused on your local agents. They are the only ones that able to help.

John Howard:

Okay, well, I’ve got estate agencies in Norfolk, Fine & Country, which is a great, good brand, great brand, and it’s more of an upmarket brand. We’re super busy at the moment and what we’re seeing is people who were thinking of moving in five years time perhaps, up to Norfolk, Suffolk, Norfolk are now doing it immediately and I think they’re doing it before the next lockdown. They want to get on with it because they feel there could be another lockdown. Who knows? They realize they don’t need to work all the time from the office. They’re going to be working one or two days from the office maybe, maybe not at all, all work working from home. And I think what this will do Kate, and it may upset a few people that live in Romford and all around these areas.

John Howard:

But I think this is going to balance up the property market because if you don’t need to live, with all due respect, in Romford, Hornchurch, all these types of places, just on the edge of London to get into London, then you can live in beautiful Suffolk, beautiful Norfolk. Lincolnshire, Wales, wherever you want. And of course the prices are half price. Half price. Now they’re going to go up obviously and we’re super busy and we’re already seeing gazumping going on and all sorts of things in Norfolk. So now this might be only short term at the moment, I accept that, but I think people are looking at a quality of life. They want a better quality of life. They realize that they don’t need to be in London. Of course, young people want to be in London and with the vibe and everything else. And people will want to still go to the office one or maybe two days a week maybe. But I mean, I’ve got a lot of people of my age, you know, 38 39, that sort of age who are-

Kate Faulkner:

Your nose is growing John.

John Howard:

Yeah, thank you.

John Howard:

… Who are now saying that, “You know what? I don’t need to go to the office at all John.” So that’s all changing. Now I think personally we’ll have a good run till about November. I don’t agree with Savills. We know, and Paul’s always saying this to me, and if there’s one thing I’ve learnt off Paul Mahoney, is of two things, well two things. One, he’s got two degrees, which is unbelievable as born Australia and the second thing is that it’s a micro market and he’s absolutely right. So in Norfolk we are seeing prices go up, but we’re not seeing prices go down at all. And this Savills, 5, 7% drop or whatever this year, I’ve not seen that, I see a bigger drop next year, in certain areas, but I don’t see that at the moment.

Kate Faulkner:

Yeah, no, that makes sense. Have you seen, just over the last few days with the impact of stamp duty, have you seen much with that?

John Howard:

Yes I think, I think that’s given people more confidence. I mean, at the end of the day, stamp duty is a tax on mobility. It stops people moving around the country and I don’t think this tax is going to come back in the same form again under 500,000. And as for Rishi saying, “Oh, it’s only till March.” He’s having a laugh, isn’t he? It’s going to be for two, two and a half years. There’s no way it’s just going to be till March. We’re going to be in the mire next year and the year after, and they’re going to need all the support they can get, property people are, to get the country going. Because as we all know, whoever, when you buy a property, on average people spend 5% of the value of that property refurbishing it, improving it, you know, carpets, curtains, kitchens, all those things. At least this government have realized, but they’re not always that bright, but they’ve actually realized that it’s so in… The property market is essential to the UK economy. Absolutely essential, and they’ve realized that.

Kate Faulkner:

I also think it’s confidence, it’s the confidence of consumers. If they’re confident enough to move, they’re confidence, like you say, to spend money and that is half of it. So I agree with that. So that kind of looks at the resi side, but there may well be others very nervous at the moment sitting on commercial. Where do you-

John Howard:

Oh my, oh my goodness. I’ve got three shops in Colchester, in a row. And not one of them has paid me, not one of them. My bigger tenants are now paying again. So that’s great. But my smaller tenants, forget it. I mean, luckily my pockets are relatively deep and we can live with it, but we’ve got no commercial rents coming in at all hardly. And I don’t see that situation changing anytime soon. I was disappointed, Kate, that you haven’t mentioned about my haircut I had this morning, because I went to Ipswich first thing, 8:15 my appointment was at the hairdressers, and I drove into Ipswich and no one is about, I mean, no one is about, and that’s typical of most towns.

John Howard:

I think market towns or smaller ones are going to survive relatively okay. They get support from local people, you can drive in, you can park easy. The bigger towns, the cities, we are in for… I believe what’s happened in the last four months has moved us on 10 years, 10 years, people working from home, as we’ve said already, not wanting to go to the offices on a regular basis. I mean, you’ve got a coffee shop at the middle of… I was in Norwich the other day. Sorry, I was in Norwich the other day. And if you’ve got a coffee shop in Norwich, there is literally no one about, people aren’t shopping. They’re just not going into these city centers because they rely on all the office workers and the office workers aren’t there. And I think it’s very, very serious. And anybody who thinks they’re not affected, anybody who thinks is they’re not affected, probably is being naive. And the reason I say that is because if you’ve got a pension of any sort at all, guess what these pension, these pension companies, these insurance companies have done.

John Howard:

They’ve invested it in office commercial property offices, and they’ve invested it in A1 prime commercial. And both those are going to go down at least 50% in rents. And to give you an idea of that, just to put it on a more sensible level, if you bought a property for 500,000 and it’s vacant, a vacant office say, 500,000. You got a tenant for 100,000 pounds a year, you’ll be thinking, you would have thought you’re super clever. And you would’ve refinanced that and borrowed probably 750,000 on the basis that it’s worth a million because you’ve, you’ve doubled the value of it. That tenant’s going bankrupt. You now can’t rent it for 100,000 a year. You can’t even probably rent it for 50,000 a year. If you’re borrowed 750,000 it’s now back worth 500, or worse still 350,000. You’re what’s called underwater and that is a very serious situation for a lot of property investors, very serious.

John Howard:

Insurance companies, I haven’t got so much sympathy for, because they’re large and they’ll survive. But of course, I feel very sorry for all those people who’ve invested into those pensions because they will be seriously affected by this. Anyone who’s got a pension, on the whole will be seriously affected by the commercial property market.

Kate Faulkner:

Well we are going to talk about that a little bit as well later on. Because there are still some options that might not be quite so doom and gloom if you could just kind of rush off and think the worlds going to go to [inaudible 00:20:07]. So there are still some opportunities. And do you think, I know you’re kind of quite close on the government side of things, the plans that they’ve got so far, have they got them right? Should we have confidence in those? What else would you like to see them do?

John Howard:

Well, I think obviously everyone loves Rishi, anybody giving money away, everyone loves them. Don’t they? So it’s very easy to go giving the money away. The way they’ve given money away and the speed that they’ve given money away, I think has been very clever and very good. I don’t think anyone can complain. In fact you could say that they’ve been too generous in my opinion. There’s a lot of, I think people taking advantage of the bounce back loans. I know a number of people with bounce back loans who’ve decided that they’re going to buy property with it, paid the school fees with it, and all sorts of things. But that’s up to them.

John Howard:

Of course don’t forget it’s all great at the moment, and I described it the other day like an energy drink, so the government have thrown everything at it. Everyone’s running around on, on this cheap, cheap speed as we call it in the racing industry, it’s called cheap speed, running around and no problems. That is until next March or April when they start paying the loans back. So next year and the year after are going to be very serious. And I think employment, goodness knows what it’s going to go to. Nicholas Wallworks is going to be gutted because Harrods have just got rid of 700 staff. So all those personal shoppers he used to go, when he used to go in, they used to make a fuss of him. They’ve all gone, probably, you know, 700 staff in Harrods alone gone. These are big, big figures. And I know friends who have got businesses who are doing very well, but have still decided to get rid of 20, 30 people because they realize they don’t need them anymore. So it’s not just big companies.

Kate Faulkner:

Yeah, and that always happens in a recession.

John Howard:

Always happens, absolutely. Always happens.

Kate Faulkner:

You always have a bit of a clear out. Brilliant. Well, John, thank you very much. Somehow we’ve actually managed to do that in 10 minutes, which I think is a first between you and I, which is quite cool. So I’m going to head over now to Paul for maybe if I could run a couple of those dying mortgage questions that we all want to ask, and then we’ll talk more about the kind of investment side of things. So current LTVs for loan-to-values for buy-to-let investors and perhaps have a chat at the rates. And I suppose my big question, are rates now at the absolute bottom? In which case, even if you’re paying a little bit more for a house that might not be such a bad idea, if you, if your cost base is quite low. Could you perhaps address those and then we’ll talk about mortgages?

Paul Mahoney:

Yeah, absolutely. Yeah. So the mortgage market sort of post lock down has bounced back really quickly. Surprisingly. Obviously things kind of came to a halt at the start of lockdowns, valuations weren’t able to happen. Most lenders now are kind of back in full swing. Valuations are occurring, I have personally had one done yesterday. Lenders have bounced back with good rates, some at better rates and better loan-to-values than pre lockdown. Which again is surprising. I think it’s a good example actually of how the media can mislead people sometimes, because there was lots of negative media.

Kate Faulkner:

Sometimes?

Paul Mahoney:

Well, a lot of the time, obviously, yeah. There was lots of negative media at the start of lockdown about lenders no longer lending at high loan-to-values. And I think a lot of it was based upon Barclays and Lloyd scaling back.

Paul Mahoney:

But they’re the last people you want to borrow from as a landlord. They’re the strictest lenders, that they, they only want to deal with the A plus borrowers and most landlords don’t fit in that box. Or the properties they’re buying often don’t fit in that box. So that wasn’t the case and I was constantly having to reassure people about that, “Don’t worry, the mortgage market is just on pause at the moment. It hasn’t pulled back from the market.” And that has luckily proven to be the case, because it’s bounced back really quickly.

Paul Mahoney:

Obviously the bank of England rate is the cheapest it’s ever been. However, I don’t necessarily think that rates are the cheapest they can be, because most lenders haven’t been passed on that cut in full. And I suppose potentially part of that is they built in a bit of a risk buffer for themselves. And perhaps that’s why they still do have a very strong appetite for lending because it’s more profitable for them.

Paul Mahoney:

So, yeah. So I think it’s a good thing. Lenders seem positive about the market. They’re lending at the high loan-to-values again, as I say some at higher loan-to-values than they did previously, at quite good rates. So that’s a positive sign because, as you quite rightly say Kate, even if you’re concerned about slight price movements over the next 12 months of let’s say up to 5%. I still think if it’s a good property in a good area, you’re best off buying it now because if you’re buying it for a five to ten year timeframe, that potential saving of 5% could actually end up being a potential loss of 5% as well. Because as everyone has just quite rightly said, the market’s doing really well at the moment. And it’s only speculation as to what’s going to happen over the next 12 to 18 months.

Kate Faulkner:

Yeah. So that kind of leads into another good question then. So in your mind, bearing in mind the economic turbulence we have coming up which was beautifully explained by John, then where do you, how do you assess somewhere that is safe to invest? What’s safe to you?

Paul Mahoney:

Yeah. So again, I agree with what you were saying in your talk, Kate, with regards to the main concern being around job loss, and then how job loss will flow onto property or demand for property I suppose. Now I think most people would agree with me that the areas or the locations that you’d be most concerned about will be locations with thin job markets. Smaller cities and towns in regional areas around the UK, where they’re quite often driven by one industry or even one major company. Now that’s a concern because if that one industry or one company shuts down or scales back or moves away, you’re in trouble. Whereas if you’re investing in a large city with a broad range of industries and employers and much deeper employment markets, then you can have, obviously have more confidence that the gaps will be filled.

Kate Faulkner:

And do you think that still holds true, bearing in mind that John’s comment as well about people maybe moving out of the cities?

Paul Mahoney:

I think it does still hold true. I see where John’s coming from in saying that. And I think perhaps, certainly with John’s generation, they would have that in mind.

John Howard:

Oh, that’s nice.

Paul Mahoney:

This isn’t a jab. This isn’t a jab, this is the truth.

Kate Faulkner:

I wondered how long it would take.

Paul Mahoney:

This is the truth.

Speaker 1:

It always comes up.

Paul Mahoney:

I’m not having a go at you for being old John. Even though you are getting on mate.

Kate Faulkner:

Hold on Paul, what I think, actually though, just listening to what you’re saying and what John was saying and bits that the sarcasm in between, what, what of course we’re talking about is buy-to-let investment and what, where we are, people are moving out. It is those people that are buying homes as opposed to those people that are renting them. So it’s a, if you can kind of, what I think is helpful to people is there’s so much noise coming out of property from the media. It’s trying to, I’m trying to be able to read that information that’s useful and throw the stuff away, then isn’t it stay. I see where you’re coming from. And

Paul Mahoney:

You know, I wasn’t having to go that John there, because I do think it is a generational preference in the older generations. First off probably are a bit more wealthy and therefore haven’t been.

PART 1 OF 4 ENDS [00:28:04]

Paul Mahoney:

… first off, probably are a bit more wealthy and therefore have a bit more attraction to buying a stately home further from the city. But secondly, earlier on in life they were more family focused, they had children early, they got married earlier, the dream was to have the large family home. Now I think probably from my generation down, that’s not so much the case, because the focus is-

Kate Faulkner:

That would make you about 24 based on what…

Paul Mahoney:

Based on what John said.

Kate Faulkner:

On what John said earlier.

Paul Mahoney:

Yeah. I think people are working longer hours, they’re having children later, they’re getting married later. The focus is more on having facilities and amenities on your doorstep and not so much on having the larger family home and traveling an hour to and from work every day. Now I think that there will be a change, due to this work from home situation, which I think will continue on in a much greater form than it did previous to COVID-19. But I think the main way that will impact younger professionals’ preferences will be toward more livable properties, larger floor plans, facing the right direction, dual frontage, all that sort of thing which makes the place nicer to be because they’re going to be there more often. And therefore, potentially the cheaper, older, dingy properties that previously rented really well because of their location may not so much anymore.

Kate Faulkner:

Yeah, [crosstalk 00:29:26].

Paul Mahoney:

So I think that’s one of the ways that this will affect things. But I do think there’s been a longterm trend toward inner city living. An example I quite often give of this, and I think it’s a good one, is the Manchester City Center 20 years ago, there was only a thousand people living there. It was all retail and commercial space, and now there’s 30,000. So that’s a huge trend that’s happened over 20 years, I don’t think that’s all of a sudden going to reverse because of the situation we’re in now, I think it will just shift it a little bit.

Kate Faulkner:

Yeah. So if you’re looking at flats it would be flats with a communal gardens, outside space, [crosstalk 00:30:07]-

Paul Mahoney:

Facilities…

Kate Faulkner:

… maybe, that kind of thing, so having the amenities close by.

John Howard:

Kate, sorry, very quick. I did say that younger people will want to work from their offices in London, they will want to work locally in London because they like the bus and everything else. And it’s the older type of person, to be fair, who will be moving out.

Kate Faulkner:

Yeah, and I think what you’re highlighting as well is the importance of really understanding your target market.

John Howard:

Yeah, yeah.

Kate Faulkner:

Who is it you are going to grab? And really you’ve got to get that right, if you get your proposition and your target market mixed up, you’re not going to ride the market over the next 12 months, you’re going to fall off.

Paul Mahoney:

Yeah. And I think that ties back into your question quite well, Kate, is the way ensuring you’re absolutely safe is by buying and owning very rentable properties regardless of the state of the economy or the climate, the political climate, all that sort of thing. If your property is rented, you’re safe. And in my opinion, the easiest properties to rent are centrally located, desirable properties, close to lots of employment, facilities, and amenities, they’ll rent every day of the year even in a major recession.

Kate Faulkner:

And what [inaudible 00:31:23] amenities. We have amenities here, amenities.

Paul Mahoney:

I’ll learn your language one day.

John Howard:

Let’s hope so.

Kate Faulkner:

Okay. So we’ve not just got COVID, there’s a little thing that we haven’t spoken about for a little while and everybody’s going to groan when I mention it…

John Howard:

Brexit?

Kate Faulkner:

… but it’s starting to come over. Which is, as John has kindly interrupted me for, Brexit. So Brexit, COVID, how on earth are those two going to collide and a landlord still be successful moving forward?

Paul Mahoney:

Yeah. Look, I think it’s a good progression of what we’ve just been talking about because the concerns around Brexit are somewhat similar to the concerns around COVID-19 in that, you know, economic instability, it’s all kind of the same thing. And how they collide is anyone’s guess. Whether Brexit is a short term bad and longterm good or vice versa or it’s all good or it’s all bad, no one really knows, but it’s happening so we have to deal with it. And I suppose again, my view on that doesn’t change too much from what I’ve just said, is if we’re investing for the mid to long term in what John referred to before as micro-climates.

Kate Faulkner:

Yeah.

Paul Mahoney:

Okay. What John referred to before as micro-climates with strong individual driving factors that are somewhat external to the overall property market, because we looked at the prediction before of the UK property market, I think that’s almost irrelevant to an individual landlord.

Kate Faulkner:

Or almost misleading, isn’t it?

Paul Mahoney:

Yeah, I think so because none of us, regardless of how wealthy we are, we can’t buy the UK property market. We can only buy individual properties in individual areas, which are driven by individual driving factors. So I can give some examples but I don’t think it’s all that relevant, focusing on areas that have strong infrastructure spending, strong job growth, really strong reasons people would want or need to live there based… And that, moving in the right direction, creating new things and positive growth and challenge, all of those things give more confidence in performance regardless of the overall market and the types of things that we look for.

Kate Faulkner:

Yeah. And I have to say, Paul and I have worked quite closely on a couple of projects and the bit that I think is missing in the property sector is the link to finance. So people are very good at training, your doing deals or making money or all this, that, and the other, but there’s no point doing that unless it meets your financial objectives. At the end of the day you’ve gut a pot of money, 50 grand, 100 grand, 150 grand. The biggest mistake, and you cannot afford to make this over the next couple of years, is investors and landlords that don’t say, “I’ve got 50 grand and this is what I want to deliver with it by when.” And the lovely thing about working with somebody like Paul is that he will help you from that early stage and help you then understand how to deliver it. And then you’ve got people like John, Nicholas, and Richard who can help you look at different ways of doing it as well as other ways other than buy to let. So it is really crucial.

Kate Faulkner:

And the other thing, just to build on Paul’s point, is when you’re looking and thinking, “Well, how do I find these safe places?” The best way to do it is start off in your own area. And if you go look on the sole property price data, which is freely available or Rightmove, Zoopla, and Land Registry, one of the things that I always look at is if I’m looking buying a property or selling a property, is you’ve got individual house price data by road going back to 99 that’s over 20 years. And what you can see is if you haven a look between 2007 and 2013, have a looked to see how well that property performed. Because some crash by 50%, and some haven’t recovered still, and some only crashed by five or 6%. And what Paul’s referring to is, go find those five or 6% falls because they’re the safe houses on good roads. And that’s not going to change, is that? I think that’s what you’re saying, Paul.

Paul Mahoney:

I agree with everything you’ve said there, Kate. I think the only caveat I’d put to that is places like Birmingham and Manchester didn’t fair that well in the last recession but they are substantially better locations than they were then now, if that makes sense.

Kate Faulkner:

Yeah, [crosstalk 00:36:00]

Paul Mahoney:

They’re more robust cities now than they were 10 years ago. So I think that’s worth considering too.

Kate Faulkner:

Yeah, yeah, that’s true. Thank you very much. Right, we’re going over to the… Hold your excitement here because we’re going over to Tony now to talk about… And I know the others will agree that all our presentations are important, but guys if not get your tax sorted out in the next few weeks or months you are going to get raided. You’ve heard it here. I started talking about this back in 2005-6, people thought I was a bit of a nutter. But I was right then and I’m absolutely right now and I’m only telling you because I’m trying to protect you. So Tony, I guess the first question is we’ve got a bit of a tax break, which hasn’t happened for about 10 years, and that’s with the stamp duty thing. So is that really great for investors or where do you sit on that and what do you think will happen? Will they extend it on March 2021? Because that’s the first question.

Tony Gimple:

I think they will extend it beyond March 2021. To have the stamp duty threshold, whether you’re residential buyer, whether you’re running a [inaudible 00:37:09] landlord new business, whether you’re investing in resi property, then not having to pay stamp duty until you get to that half a million barrier can only have highly positive outcomes. People will move, money will move round society. As John rightly said, they’ll be spending 5% of the property value on all the refurb, all of the other taxes. The big issue, I think, is to stop treating landlords as barely one step removed from living off immoral earnings. I’ve probably, over the last five years, must have [inaudible 00:37:57] 5,000 different types of landlord, you can probably count on the fingers of one hand how many of those were a little dodgy, maybe.

Kate Faulkner:

Yeah. Well, I mean, I say to people and I must admit I get actually slam dunk for it, but I’ve met people who are nurses, doctors are always big landlords, people in the armed forces tend to go into being a landlord, priests because they live in properties and they have nowhere to… That basically come as part of the part of the church or whatever they’re looking after. And I get so slammed dunk for saying anything like that, but it is true. And I’ve tried very hard to get people away from this anti-landlord thing but I have to say that it is still an agenda that everybody wants. And I think a lot of the time it’s so that the government isn’t taking flack for its policies.

Tony Gimple:

Well, the next election is four years away, something like that?

John Howard:

Yeah.

Tony Gimple:

All right. And whatever happens, government will take flack. You got some real structural issues here, in that we haven’t had enough house building since the war, demand exceeds supply. So things like stamp duty, treating the market more fairly, getting the population back to social mobility has to be the priority of the day. With Brexit for Pete’s sake, we’re a maritime trading nation, people are still going to come here regardless of whether we’re in Europe or not. We’re at the crossroads of the world.

Kate Faulkner:

I think that’s been quite proved because we’ve got people like [Nissan 00:39:47] staying and lots of other organizations that… And what was the other one at my old place? Unilever, they’re looking at taking the Dutch, bringing it over to England. So there’s a lot of positive stories but, again, they’re not being reported that widely I think.

Tony Gimple:

Well, I suppose we could go on about the way that the press has become the opposition or that it’s drifted somewhat left of center, but that’s not the point of today’s webinar.

Kate Faulkner:

So talking about what the state’s up to, obviously it’s put all of this kind of money in and that’s going to have to be clawed back. We’ve seen the headlines this morning that they’re reviewing capital gains tax. And that’s why I’m saying you’ve got to talk to a tax expert now because that’s pretty potentially scary. Do you want to highlight what was being proposed at the last election when they were matching capital gains tax rates to income tax rates?

Tony Gimple:

Well, is a capital gain an income? I don’t think it is, it’s a gain based on either active or passive speculation. The one change there should be is when it comes to HMRC treat dividends, dividends are income. So to have a lower rate of tax for dividends when you’re working in that business as opposed to just being a passive investor, it’s crazy, it is outdated. And you’ve got a situation where it’s blowing back in that if you’re running a company, you’re taking dividends, you’re doing so to minimize personal taxation, you’re finding it harder to get a mortgage, you can’t get government support, you’re afraid you’ll never be able to furlough yourself. So there are all sorts of inequities just within paying less tax on dividends. CGT, you’ve made a profit through something outside of your control and it’s just another way that the government can help balance the books. We’re hearing some chatter on what government might do about the inheritance tax.

Kate Faulkner:

Yes, that’s quite a critical one, isn’t it?

Tony Gimple:

That is a critical one. And to suddenly levy inheritance tax on trading businesses will be turning the clock back a hundred years. Why on earth, on wealth taxes generally, why on earth would you take all of the risk of building a business only to see it pass out of your hands or during your lifetime to be taxed? Because again, you’ve been good at what you do, created employment, helped others pay tax, and suddenly you’re getting stuffed on a wealth tax.

Kate Faulkner:

Okay. So let’s bring it sort of as a practical note to those on the call at the moment, in terms of what’s the minimum sort of tax and planning stuff that… What are the three things that they should have in place and if they haven’t got in place now get in place straight away?

Tony Gimple:

One, they need to have in place, if they’re in property, which is I guess why they’re listening to this webinar, is to have a specialist property accountant who can look forward and not backwards. That is the number one thing. Number two, look at areas that are going to give you good yield on your property, rental yields, not speculation, real yields. Do the job properly and then talk to the accountant about how best to structure it going forward. And then make prudent provisions for what your tax bill is going to be.

Kate Faulkner:

Yeah. And what about things like wills and trusts?

Tony Gimple:

Yeah. Well, estate plan is succession planning, everyone’s going to die, fact. Two thirds of the adult population hasn’t bothered to write a will, even a higher percentage doesn’t have a power of attorney for their property and financial affairs let alone their health and welfare. So if nothing else do a simple will leaving everything to each other if you’re married or in a civil partnership. Try and spend it all before you go, nick it if you can’t. Look at it in the round, again, bring the whole thing together, the property portfolio, your personal circumstances, appointing somebody to speak and act on your behalf if you can’t, you know, not quite dead, but not quite alive. Don’t try and do it yourself. Don’t shop around purely on price. It’s not what it costs, it’s what it buys you. Meanwhile, the stamp duty stuff, by whilst you can. Don’t overly rush in rural Sussex, where I’m fortunate enough to live, we’ve seen a lot more properties come on the market, prices are actually rising, not falling. The local agents are as busy as anything. And you’re saying properties that were over the half million bracket now coming down and the ones that were under it actually going up. So it’s very strange, very strange position.

Kate Faulkner:

Okay, that’s great. And as I say, one of my biggest frustrations when I’m on social media is the amount of investors and landlords that post, “Please somebody helped me with have I got my CGT calculation correct? Should I be in a limited company or should I invest personally? Please can you tell me?” Nobody should be posting, yes, no, whatever. Every single post on there should be, “Go seek specialist advice.” And if you don’t, I’m really sorry, but you are going to get caught out because the government is going to have to get somebody to pay for all the money that’s going out and they will come after you first. You’re going to be at one of the top of the list so it’s really…

Nicholas Wallwork:

… Join. Yeah, it looks like everyone is still on, so that’s good.

Kate Faulkner:

Thank you for staying. Thank you very much for staying with us. Apologies for the technological problems. So we’re talking to Richard at the moment from CrowdLords and I’ll say Richard has actually got people’s money in investing projects in today’s kind of Scary Mary world that we live in at the moment. So if you’ve got projects that are lined up, accepted by the vendors for example, and then lenders with withdraw for any reason, what sort of advice and help can you give, Richard? Because you’re dealing with this day to day.

Richard Bush:

Kate, before I answer that, just to address the point you made about it being a scary moment. I think one of the things that everyone agreed with earlier is that there is no market. So whilst on average there is an issue, every single project or every single town or every single property is in a different environment and is facing a different challenge. We’ve had projects recently where after the lockdown they’ve sold quicker than they were selling before the lockdown. Well, we shouldn’t go with the idea of property prices crashing by 700% across the board. So I think we all agreed that there is no market, that there will be challenges, but those challenges are very specific to micro markets, even individual properties in individual towns is not an average. And so I just wanted to make that point.

Kate Faulkner:

Yeah, I know you’re right. You’re very right. I think for me though, it’s still… For somebody like you that’s highly experienced you know how to address these things but for those… This is still scary, whatever they’re doing. But you’re right, the point of… Probably the point of the day, is to help navigate people through, help you out there through what’s going on. So completely take your point but for quite a few of us it’s a little scary if we haven’t got [crosstalk 00:48:13].

Richard Bush:

It is a little scary as well for us, certainly we are responsible for peoples… We’re not responsible but we have enabled people to invest their money into projects that we’ve arranged so we do take it very seriously and we monitor every project very closely as a result. But coming back to your question about people that are in the middle of projects or were about to start a project and they’ve had the offer withdrawn, I can completely understand why some lenders have done that. Like we’ve said, we don’t know what’s going to happen next year or the year after. And they’re just being prudent and they’re being cautious and often not by their own choice. They’re being cautious because their funders are no longer allowing them to lend their money, every lender gets the money from somewhere. And so across the board, there’s uncertainty and so people are a bit more cautious.

Richard Bush:

Especially [inaudible 00:49:02] if you’re a landlord about to buy a property or you’re a developer about to buy a project and you’ve had your funding withdrawn or lessened to what it was. It might’ve been they were offering 75% of land value and they’re now only offering 60%, so what do you do? And I think the first thing that people should do is to reassess the project. It is an opportunity, given the purchase hasn’t yet happened, to reassess the project under the new environment, under the current environment and what’s predicted for the next year or two. And it might be better to walk away, developers and landlords don’t like walking away from project [inaudible 00:49:40] trying to make it work, something that doesn’t work, trying to make it work. So it could be an opportunity in that respect.

Richard Bush:

If, having reviewed it, you still think it’s a good project and you still want to go ahead then I guess the challenge is how do you make it work? How do you make it work when you can’t borrow as much as you were looking to borrow? And it could be that you reassess the project, it might’ve been a house that you were converting to HMO. Given that the lower income market is the market that’s going to be hit hardest over the next year or two it might be better to change that HMO [inaudible 00:50:18] and sell them. So you might change your strategy triggered by the lenders changes in heart. And that change in strategy might change the lender’s assessment of the deal as well. So it’s good to understand why the lender has changed their tunes, and it might be that you can still make it work. However you can’t make something… What’s the expression about lipstick on a pig, it’s still a pig, whatever it is. If it’s a bad deal now it’s still a bad deal. And so [inaudible 00:50:52] best to walk away.

Richard Bush:

If it doesn’t work, then you can always find additional financing somewhere. It might be that you go to friends and family and you boost your own capital so you need to borrow less. It could be that you come to a platform like ours and you look to raise some [inaudible 00:51:09] or some equity so that it can go ahead. Or you might simply try new lenders, some lenders are still an offering 75% loans to [inaudible 00:51:17] now are down 55%. So in the end there’s always an alternative that you can find if you look around.

Kate Faulkner:

Good. And I guess moving on from that, in terms of investing in a platform like yours for example rather than going and choosing your own project to invest in, so is this a better time to do that because you’ve got somebody else looking at this project for you? Typically for the first time investors, I think.

Richard Bush:

Yeah, that’s an interesting question, Kate. I think my recommendation to all our investors is do… We’ve done our due diligence, other platforms have done their due diligence, but do your own due diligence. So I would never suggest to people, go onto a platform, trust what they’re saying, take their assessment as being right for you, and make that investment. It is down to you to determine whether it’s a good investment or not, that’s the most important thing.

Richard Bush:

Having said that, one of the advantages of crowdfunding and peer to peer lending, it enables you to diversify. One of the things that we’ve talked about earlier is how there are micro markets and one end of the street might go up and the other end of the street might go down. One advantage of this method of investing is that it allows you to spread your risk across multiple towns, across multiple regions, across different types of investments. And you can do that on your own, if you’ve got 50,000 pounds to invest you’ve got to choose which property to invest it into. On a platform you can spread that across 10 investments and therefore you’ve mitigated the impact of any down turn or up turn. So that’s probably the biggest advantage of using a platform like ours in the current market.

Kate Faulkner:

And what do you think are the top three due diligence tasks that people should be doing when they read a pack?

Richard Bush:

That’s a really good question, I think I’m not a fan-

Kate Faulkner:

Well, I don’t just ask easy questions.

Richard Bush:

No, no, you never ask easy questions, Kate. I wouldn’t like to say top three because it depends on what it is you’re investing in. But I think what you need to look at is the local market because as we’ve always said when we’ve talked about where we’re going to buy or what we’re going to invest in, it isn’t a national market or regional market, it’s a local market. So wherever the investment is, look at that market, look at the investment, as Paul talked about. Look at the employment, that we’ve just discussed. If it’s in the middle of Darby and we know Rolls Royce had just laid off seven and a half thousand people, is there an employment locally to make that still a property that you’ll be able to rent? So understand the local market.

Richard Bush:

And then understand, I think, the financial development investment. So some people work on an 18% margin on development, other people 25%, other people 35%. Where you have the greater margin you have more room for things to move and you can still make a good profit. So I think it’s about detail as opposed to taking general comments from people like us that are, that are generic and are not specific. If you do your due diligence it has to be very specific, that that property and that investment in that town at that time.

Kate Faulkner:

Okay. And I guess just with your wider experience in this stuff, when you’re looking at projects, are you changing your kind of criteria from, I suppose, a social change perspective for want of a better phrase in terms of if you’re just building flats and there’s no communal gardens, you ain’t getting anything now? What criteria you starting to change? Putting more value to perhaps would be a good way to put it.

Richard Bush:

Yeah. I’ve read a lot about social change and we’ve talked about people now working from home. Everyone’s moving to Norfolk, apparently, according to John.

John Howard:

They’re the facts, I can’t help the facts.

Nicholas Wallwork:

Or Ipswich, they’re moving to Ipswich as well.

Richard Bush:

Socially change [inaudible 00:55:21] and whilst we all have opinions on what tomorrow will look like I…

Tony Gimple:

They’re coming for you.

Kate Faulkner:

The police are coming. Yeah, absolutely.

Tony Gimple:

Yeah.

Kate Faulkner:

[crosstalk 00:55:35]

Tony Gimple:

Social change takes time. I personally think, and I know Paul often writes about this, is that if you have a strategy that’s a longer term strategy then it should be robust enough for local fluctuations and things that will change. Now, again, social change is something that you can look back on and you can comment on but I think anybody who looks forward and says in the future…

PART 2 OF 4 ENDS [00:56:04]

Richard Bush:

[inaudible 00:56:00] but I think anybody who looks forward and says, “In the future, the high street won’t exist. And in the future, nobody will go to school. They’ll teach children at home, et cetera.” We don’t know what’s going to happen. And this year has been interesting, because changes have happened so quickly and so dramatically, who the hell would have [inaudible 00:56:17]? And so try and predict what’s going to happen in a year’s time, I think is foolhardy. I think it’s better to focus on what you know, and look at the facts, understand what the investment is in the local area, understand what the market is in the local area, and understand what the changes are in the local area. I’m going to go and buy houses in Norfolk, if there’s any left, rather than-

John Howard:

There aren’t many. There aren’t many, but we can still fit you in somehow, Richard, probably. Quality person like you.

Richard Bush:

Yeah. We’d be good neighbors. I can tell. Yeah. So personally, I’m not a great fan of trying to predict the future. But having said that, I think for example we won’t do any commercial or mixed-use developments at the moment, because of the challenge with commercial. Now, there are things that you can do, there are decisions you can make that are in the light of changes [inaudible 00:57:14] things that we’re not sure about. So best to prepare from what you know, as opposed to what you think.

Kate Faulkner:

Yeah. And really, as you say, [00:57:21] reiterate it so fast [inaudible 00:01:23]. It’s all about the clever bit with investing is you understanding that local market better than anyone else. [crosstalk 00:01:29]. Nicholas, you’ve been very patient, sitting there on a green screen. So what do you think… I think that this comes back to the kind of real doom and gloom potentially about commercial at the moment, but there is a little bit of a light at the end of the tunnel for commercial investors, potentially, particularly in really, really tough supply and demand areas for housing and because of the permitted development right changes. Do you want to kind of explain what they are and talk through where maybe you’re not quite as sad as John might have made out earlier?

Nicholas Wallwork:

Well, yeah, absolutely. I mean, what’s interesting with the proposed permitted development rights and a lot of them are yet to be a 100% formalized, but the essence of them is extending on things like the PD rights that have been existence for a few years now like the office to residential conversions and bigger extensions on your home. All these extra PD rights that they’ve kind of afforded homeowners and property developers alike to recycle old properties. It was the sort of run-down… Not always run-down, but often run-down offices that were kind of getting put out of business by these grade A offices being put up in town centers. I operate in the southeast of England, in the Thames Valley areas and places like Reading, where it’s got Crossrail. There’s big, new tower blocks coming up with beautiful serviced accommodation and serviced office accommodation and shared office accommodation. And you can take whole floors. You can take a cubicle.

Nicholas Wallwork:

And those kinds of office spaces are making harder for serviced office spaces or smaller offices to kind of compete and get or compete for tenants. So when they get a bit worn down, they weren’t spending the money on them because it needed huge refurbishment costs to bring them up to the standards of these other incredible buildings that are being built around. So recycling of commercial property is key with these permitted developments. just leading on from what John said there completely. Ultimately, there’s going to be a lot of problems in the commercial world, a lot of vacancies and that’s, I guess, very sad to see. And whether it’s the social change that you guys have been discussing, that maybe people are going to be going to offices less, going to high street less. The high street’s been in decline for a number of years in any event. Amazon, I think I read yesterday, has bought eight, new Boeing 747 or whatever it was to be able to deliver their goods because of online shopping.

Nicholas Wallwork:

So all of this is kind of compounding into the government seeing that. And this is a sign that the government is saying, “This is happening, guys.” Backing John up here on the commercial problems that are out there or will be out there. The government’s seen that a long time ago. I wouldn’t say a long time ago. A month or two ago. And they’ve already started rushing through these permitted development rights to allow us to potentially change shops or shops on the edge of town centers without full and rigorous planning permissions. And the same goes for the sort of the office to residential market. That’s being extended by things like extra floors. So I think it’s due to come in on the 1st of August. And again, to watch this space, it’s not set in stone as far as I’m aware, but I think it’s the 1st of August, they’ve indicated.

Nicholas Wallwork:

And buildings over three stories or three stories or more, I should say, will now be allowed under prior notification, which is this permitted development route. It’s a more lax route of planning. They will now be able to add up to two stories extra, provided that the overall height of the building doesn’t exceed 30 meters, I think it is. And also the building has to have been built between 2048 and 2018, I’ve noted down there. So there are some requirements coming out for it, which is good, which means it’s definitely happening. That works brilliantly for me. Incidentally, on our site at Newbury, we’ve got a 42-unit micro-studio scheme that we’ve applied for planning twice and appealed twice and been failed for a single story. Now we can whack in a double story under permitted development. So, what that goes to-

Kate Faulkner:

[crosstalk 01:01:28] coming out. And [inaudible 01:01:29], just on that, Nicholas, one of the things I’ve picked up is that… Do you think they’re going to tighten the building regs a little bit more? There’s a real fear. And for anybody out there that’s maybe thinking of kind of looking at doing an easy conversion, if you like, there is a point about and a worry, and I think it’s fair, about the quality of some of these conversions. I know that some have been done on a window [inaudible 01:01:58] basis. And actually I did a project like that with [inaudible 01:01:59]. They weren’t [inaudible 01:02:02] necessarily thought, but they’ve stopped that now. Do you think they’ll tighten building regs? Because I think permitted development right is all very well, but you still have a lot of building regs and you should still be providing quality for the future. Otherwise, you’re going to increase your maintenance and refurb cost in the future surely.

Nicholas Wallwork:

No, absolutely. And I agree. The quality needs to be there. And I think… Also, can I just ask… Sorry for the earlier cutoff, everyone. Can we ask lots of questions in the chat to everyone? We’re not getting that many-

Kate Faulkner:

Yeah. We do have a huge amount of questions.

Nicholas Wallwork:

Do we have a huge amount coming in?

Kate Faulkner:

Yeah.

Nicholas Wallwork:

Excellent. Okay. Well, keep them coming, guys. We want to keep Kate busy at the Q&A at the end.

Kate Faulkner:

So sooner we finish… We’ve got a lot. You can send us some more, but we’re going to struggle to get through them all already.

Nicholas Wallwork:

Right. Fine. That’s good. I’m glad that they’re coming in. Keep it going, guys. So yeah, to answer the question, Kate, I think building regulations are quite tight, to be honest. I don’t think the issue is necessarily the building regulations themselves. I think it’s maybe the people daring to those building regulations and just not doing building regs for a dodgy conversion. That could be issues. Obviously, that’s extremely bad practice. It’s dangerous. It’s potentially risky and criminal to your tenants to not build to an extremely high quality. So I’m not sure building regulations themself are at fault. They’ve got tighter over the years. With things like Grenfell, there’s much tighter fire regulations. There’s all this stuff in place.

Nicholas Wallwork:

But in terms of the people that are doing these conversions, it’s important to know that they are done to… They should be done to new build standards. And that’s what the building regs generally allow for. So you need to be a bit careful when you’re taking on a project, that it’s done correctly. Things like acoustic flooring and a acoustics between the buildings is a contentious point, as is windows and all the new kind of, I guess, eco-friendly stuff and U-values and EPCs and SAP calculations, all this stuff’s very important, isn’t it?

Kate Faulkner:

And I guess size as well. Kind of, yes, so there’s a place for the micro, but listening to Paul and Richard, it’s also about thinking that people may need that office space at home. So maybe less is more in the future, perhaps.

Nicholas Wallwork:

Yeah. I mean, live-work units are cracking. And when we design our units, which are micro-studios, they’re only just sub the normal studio size and they’re extremely well-designed to have office and desk areas. I believe in good quality space design as well. And if you build to a high standard with good quality space design, you can create something that feels twice as big. And of course, in the right conversions, I think it comes down to picking the conversion. You can have a lot of high ceilings. So you can create this voluminous feel. Some of our units and build sites have had mezzanine areas, for example. So although the overall floor area down below might be only sort of 20, 22 square meters, we’re adding another 10, 15 square meter mezzanine, which creates over and above a normal studio in fact. So there’s lots of opportunity with offices.

Nicholas Wallwork:

I think going back to the sort of PD rights questionnaire, great to have new floors being added to some of these bigger buildings, shops and all this kind of stuff. But the problem with planning has always been at the local authority level and that’s the issue. They still have reason to refuse some of these applications under the current PD and that these new PDs will be the same. And it’s very much under the prior notification route where you have to sort of prove highways, contamination, flooding, noise and noise contamination, acoustics, that kind of stuff. So the council could quite easily say, “We don’t think you’ve got enough parking requirement,” or, “You’ve got too much parking requirement.” They can do what they want and they do do what they want.

Nicholas Wallwork:

Reading Borough Council don’t want any car parking. Newbury Town Council, which is West Berkshire, they want the full new build 0.75 per space for every studio parking. So they make up their own minds. And actually if they want to refuse it because they don’t like it, they’re still going to try and do that. You may well get through an appeal, but they can still make your life difficult. So it’s not a foregone conclusion, PD rights. I just hope the local authorities take the advice from the government and take the message from the government that we need more housing. We need to loosen these things up to create more good quality accommodation of, like you say, reasonable size.

Kate Faulkner:

And I guess last couple of questions, maybe we can bundle them together a little bit because of the time. Best opportunities you think for residential developers. And then to kind of tag on that, where do you think HMO sit in the future as well?

Nicholas Wallwork:

Yeah. We’ve touched on a couple of the good opportunities here, is that relaxed PD rules are a massive, massive, massive opportunity. Office to resi has been a huge opportunity for the last few years. If you’ve got existing buildings, you can get another two floors without any planning. That’s unheard of in planning history. Our building’s 10 and a 1/2 thousand square foot. So what’s that? It’s roughly 3 and a 1/2 thousand square foot per floor. So we’ve got 7,000 square foot potentially of rights to go and build these floors, subject to the prior notification. I think the shops area, recycling shops that aren’t doing well or not in prime high street areas, on the fringes of the high street or the ends of the high street, stuff that has always maybe struggled to let any way, those will become ripe for picking for investors to go and recycle those into good quality residential accommodation.

Nicholas Wallwork:

And I think good stock coming to the market is going to help. I mean, the PD rights really worked the first time round in my opinion. There was some horror stories of badly converted offices and whatnot, but I think, like everything we’ve discussed today, that’s not the majority. Building regs still come in and kick in at new build quality. So, as I said, I don’t think it’s the building regs issue. It’s down to the developers doing it. And PD might attract more of a mainstream market that isn’t quite so professional. So I accept there’s a concern there, but I think that’s for the local authority to deal with. And I don’t think it’s widespread, as much as there might be the odd, bad story out there.

Nicholas Wallwork:

So I think the opportunity is there to help the housing market recycle stock, inject more people into an area. And if the high streets are struggling, you’re better off having 60% the size of the high street with more people that live on it, that are going to use the shops, than a 100% with half of the shops vacant, for example. So, yeah, I think it’s an interesting market and one that I’m looking forward to getting stuck into over the next few months.

Kate Faulkner:

Yeah. And then we have actually got a lot of questions on HMO. So I don’t know who’d like to [crosstalk 01:08:33] next. Do you want to just tell us your view? So are HMOs worth it? There are some questions on how do you deal with self-isolation. So [inaudible 01:08:40] industry guys with the home buying and selling group and Lettings Industry Council. And we have a whole sheet which explains how to deal with the current rules under HMO. So if you go onto property checklist, so you can find that in there. Give me a nudge if you need some help. But we have actually done all the guidance on that, so I [inaudible 01:09:00] cover that question [inaudible 01:09:02]. Good market, bad market for HMOS of the future?

Nicholas Wallwork:

Yeah, definitely. I’d say I’m not going to go into the detail of specifics of running the buildings. The councils also, the individual councils also give good advice and guidance as to what they kind of expect. Go to Kate’s site and download all that info there. That will give you some really good practical guidance on running and managing things in the current climate. But in terms of the general market, I think I’m going to reiterate a little bit what Paul said and what’s been covered so far, is that it’s all about the area. And people when they go into HMOs or consider investing in them, they also look at, “Is this area oversaturated?” That’s a big question that people have. How can you quantify the demand then?

Nicholas Wallwork:

It’s exactly the same process and due diligence that you go through as you will with a single buy-to-let. It’s looking at the infrastructure, looking at the offices and buildings and industry and professionals, or if you’re doing a professional market, that’s in that area. If it’s a student HMO, of course, and HMOs is a broad term, but depending on what you’re using it for, students, obviously, little bit of a concern in the student market. I’m not an expert in student HMOs. I don’t really like that model. I don’t like the cyclical model. I don’t like the dependence on universities and what they decide to build and the way they house. It’s not my kind of investment. I’d rather do the professional market, which is then just driven by basic supply and demand at a different price points of people that may be able to afford a one-bed apartment and all the bills, which could be sort of 1500 quid, in the Thames Valley area. It could be anything from a 1000 to 1500 quid by the time you add in those bills.

Nicholas Wallwork:

The HMO market, and if it’s a good quality professional HMO, which is some of the ones we do, good on suites, really nice, big kitchens and living rooms and communal areas. It’s all about the price point and hitting the right price point with those where people actually in this time, if there are big layoffs, if there are people getting laid off in certain areas, that were renting a two-bed flat or a house or whatever or owned a house, they may consider selling and downsizing. Maybe they split up with a partner during COVID. I’ve heard a few stories there, where people haven’t had the best marital experience.

Kate Faulkner:

Yeah. Okay. But so you mentioned student market there. That was another question. Does anybody got any thoughts on what’s going to happen in the student market now and how to survive it?

Nicholas Wallwork:

[crosstalk 01:11:15], you’ve got most experience there.

Tony Gimple:

It’ll come back like anything else. Whatever we’re looking at now is short-term.

John Howard:

I don’t totally agree with that, Tony.

Nicholas Wallwork:

No. Me neither.

John Howard:

Some of it, I don’t think is short-term. I think for instance, people working from home, and for lots of people, it will be long-term. It’s a better quality of life. It’s better for the environment. And they’re saving five, 6,000 pounds, some of them, not traveling to London. So I understand they need to go to London now and again or wherever their office is now and again to see people. I accept that. With the universities, you would have thought is short-term. I agree, Tony. However-

Kate Faulkner:

Is it, though, John? Because actually I’m hearing that some of them are in financial difficulties.

John Howard:

Well, [crosstalk 01:11:59]. It’s funny you should say that, [inaudible 01:12:03], because my stepdaughter, who’s just got a second degree in law, she’s hardly seen her tutor in two years, in a year. She did it in over a year. Basically, they’re either off because they’re off on strike this year or then it’s COVID. It’s been a disgrace. She’s paid a fortune, loads of money out, and she’s hardly seen the tutor, tutors, for more than probably 20 days in the year. And that’s disgraceful. And I think actually, if people are going to university from home, work from home, open university, of course, is what that is, isn’t it? May be. All these universities, they’ve had a fantastic time with this accommodation and so on they charge a fortune for. Maybe the tables will turn, Tony. Maybe it will be different, Kate. But certainly, if I was investing in university accommodation, I’d be very careful at the moment. Take Sheffield. 80,000. 80,000 university students in Sheffield. It’s a massive. If half of those don’t turn up in September, that’s a massive loss to the city, massive loss economically.

Kate Faulkner:

Yeah. I think my nephew’s going back there. So they’ve got one.

John Howard:

Well that’s something, isn’t it? 79,999 to go.

Kate Faulkner:

Absolutely. So we’re all right. So [inaudible 01:13:33].

Paul Mahoney:

And just a quick comment… Sorry. Sorry. Just a quick comment on that, Kate. It also depends on what type of student accommodation you’re talking about, because there’s a big difference between buying a house next to a uni and renting it to three students and purpose-built student accommodation, which quite often is new build. It comes with a rental guarantee and it’s more commercial property than it is residential property, because obviously somebody can’t buy it to live in it. You can only ever sell it to a landlord. And the value was heavily based upon the yield, almost solely based upon the yield. So that type of thing, you need to be a bit more careful with because quite often the rental guarantee might be five, seven or 10 years. Once it runs out, what do you do with it then? And is there actually a secondary market for it? So… Yeah.

Kate Faulkner:

Yeah. And just leading on from that, we’re actually getting a lot of questions about what’s going to happen in the commercial loan market.

John Howard:

[inaudible 00:18:25].

Kate Faulkner:

Well, there’s your answer. You heard it here first.

John Howard:

To get the answer, ask the question, “What lunatic is going to lend anyone money on a vacant commercial property, unless it’s got an alternative use?” They won’t lend. They won’t lend. Simple as that. Unless you’ve got a lot of other assets and they’re lending on those other assets, not on the commercial property you’re buying.

Nicholas Wallwork:

And that’s going to… John, isn’t it? That’s going to help tee into the PD rights for developers that can convert it.

John Howard:

Yeah. But what you got to remember of PD, Nicholas, and you know this, and you didn’t mention it, but I’ll just remind you, is that not every property that you can do PD on, you should do PD, because it doesn’t suit the area. If it’s very commercial you might be able to develop it, but who’s to say you can refinance it at the end if it’s in a very commercial area? People like Richard will say, “Sorry, but we don’t want our clients to borrow on it because it’s not acceptable lending.” So you’ve got to be super careful and just to say, “Oh, well, yes, you can develop it,” doesn’t always mean you should is really want I’m saying.

Nicholas Wallwork:

No and the PD under B1(c) is the light industrial, isn’t it? That’s been in for a couple of years now, I think. And that’s not really taken off at all, because most light industrial is on a trading estate and it’s not suitable, so it kind of fell a bit flat, didn’t it, that one?

John Howard:

Yeah.

Kate Faulkner:

Yeah. So another quite good… It’s a good question, this one, because it’ll help. I’m trying to pick out questions that mean I get as many answered as possible. So this is from a lady [inaudible 01:16:00] been made redundant, sold property a week later, built up a large amount of equity, which she’s now looking to invest and start a career in property. So if maybe I can have just a couple of minutes from you each, so we can get through as fast as possible. What would you suggest is the best strategy? And she’s got buy-to-let and flipped, but there are lots of other things they could be doing, so… Come on. You each got two minutes. Paul, we’re going to start with you.

Paul Mahoney:

Yeah. Okay. I’m going to be a little bit harsh in a response they probably don’t want. Go and get another job. Don’t quit your job to do property when you’re just starting in property.

Kate Faulkner:

Yeah. She didn’t have much choice on this one. They were made [crosstalk 01:16:39].

Paul Mahoney:

Well, no. I understand that. But I would highly encourage her to go and get a job.

Kate Faulkner:

Okay. Well, and that’s an important point. And you all agree with that-

Paul Mahoney:

[crosstalk 01:16:47] a property portfolio on the side until it is substantial enough to provide the income she needs. We deal with a lot of people who have done exactly what she’s done, and that’s usually our first thing we say. “Look. You don’t want to…” Sorry. I didn’t hear. How much money was it that she has from the property sale?

Kate Faulkner:

We haven’t got that information, but she’s just said a large amount.

Paul Mahoney:

Okay. Well, look. It depends how large is large, because that’s subjective. But yeah, look, we do a lot of people who have inherited 50 grand and quit their job. And that’s just madness in my view. Property’s a slow burn. It’s going to be very difficult, especially as a beginner, to turn over that money quickly enough to make it a full-time job that’s profitable enough to be a full-time job. And I think most people with any experience would agree with me on that.

Kate Faulkner:

Okay. Richard. Well, so I’m going to cut your two minutes there, so that’s good bit of advice. Go try and get another job first. Richard, where are you heading to?

Richard Bush:

Similar to Paul, I would say, “Don’t do anything straight away,” because too many decisions are made quickly and you come to regret that maybe you haven’t done your research. You’re not clear what you want out of it. So it depends what she wants to get out of the investment in the future. There are things that she can do with the money short-term while she’s deciding on her own strategy. So she could invest it in various ways, various platforms, so then it grows and generates additional income while she’s planning her own strategy. But I would say, “Take your time. Do your research. Talk to people like Paul. Get advice on what the options are, but slow down.” Decisions [crosstalk 01:18:23] in haste are rarely good decisions

Kate Faulkner:

Like that money’s burning a hole in somebody’s kind of back pocket, isn’t it really? Albeit a very large one. John, what’s your… Just a quick couple of minutes. That’s two minutes.

John Howard:

I hate agreeing with Richard, although he’s a good friend of mine, [inaudible 01:18:38] all the time-

Nicholas Wallwork:

Other one themself and don’t really have much track record. But I would like to reiterate that good education and the right education is critical. And there’s lots of low-hanging fruit out there. And all of us, including UK, we put out lots of good ebooks and books and property forum. We’ve got Property Tribes, a good friend of ours. We’re all out there giving good information for free to get you to a certain point. And I talk about this in all of my talks about this sort of funnel of education. “Get the low-hanging fruit. That’ll get you so far. But then you’ve got a little bit more knowledge. You can go to the next level of books and maybe some very well-researched courses with good, legitimate people behind them.” You can work with-

Kate Faulkner:

And that’s actually why you guys got together, wasn’t it? Because you were sort of really frustrated at some of the rubbish and [crosstalk 00:23:31]…

Nicholas Wallwork:

Absolutely. We want to-

Kate Faulkner:

Testament to you guys. What I like about this is that you’re actually doing the projects here and now and when you talk a lot to the guys that are up there talking and telling you how to do it. Actually quite a lot of them are… Well, some of them are near bankruptcy or they’ve got a High Court cases going on and [inaudible 01:19:48]. We got another quite specific question actually, which I quite like. “I have a 75% loan to value mortgage. If prices fall by 10%, then the mortgage company could demand 10% from me, which I don’t have. Do you know any lenders that don’t have this drawback?” And I guess, is that actually something that they need to worry about? Or do you think that the rules, if you like, and what the government’s doing will help them through this period of time?

Tony Gimple:

Is that mortgage in a personal name or a [inaudible 01:20:22] limited company?

Kate Faulkner:

I’m going to assume it’s a personal loan, Tony.

Paul Mahoney:

Yeah. And I don’t think it really matters. My understanding, and I am the principal on the mortgage brokerage, is that the vast majority, if not all mainstream buy-to-let products, they cannot ask for a reevaluation. I think a lot of people assume that they can, but most cannot. It’s usually only a commercial arrangement, which is quite often, and that’s not necessarily to say for a limited company, but more so for a larger landlord that might have 20 properties and has one lender across them all. Usually in that case, they can ask for a reevaluation as more of a commercial loan. Whereas with the vast majority, as I say, if not all, and I’m not sure if it’s all, but I know it’s most of them, they can’t ask for that. And that’s what makes it so low risk, because it doesn’t really matter if the value falls by 10 or 20% so long as it’s still renting, [crosstalk 01:21:21] will recover.

Kate Faulkner:

Oh, if you [crosstalk 01:21:20]. But can they do it if it was their own home?

Paul Mahoney:

No. Absolutely not. Even less so.

Kate Faulkner:

Oh, right.

John Howard:

As long as they keep up with the payments. I mean, that’s the one [crosstalk 00:01:21:33].

Paul Mahoney:

As long as they keep up with the payments and the mortgage term is long enough.

John Howard:

And that’s why what Paul does is so good, because to be honest with you, a bit boring, but it’s very good. And the reason it’s so good is because over the next 20 years, the market’s gone up 5% yield on average and we know it’s a micro-market and so on, but at the end of the day, it’s super safe. If you’re not entrepreneur, if you don’t want to be a trader or a dealer or developer, then what Paul offers is so good. It’s so strong because it’s safe, and for that main reason, that even if the market goes down a little bit, no bank’s going to start pulling it off you as long as you keep up the payments on the mortgage, which is the same for any mortgage.

Kate Faulkner:

And we are going into this recession with 20% of people renting. In the last recession, we went in and it was just under 13%. And actually, [crosstalk 01:22:29].

John Howard:

That’s very interesting, that is. I’m going to write that down.

Kate Faulkner:

Private rental market. But another one which is quite good, yeah, which is, “Is it a good idea to buy new builds off-plans in this situation?”

John Howard:

Can I start with that one?

Kate Faulkner:

Yeah, yeah. I kind of sensed you were about to.

John Howard:

No. No. No. Bloody [crosstalk 01:22:49].

Nicholas Wallwork:

Have you got some for sale, John?

John Howard:

Don’t do it. And the reason you don’t want to do it because you don’t know… If it’s not going to be ready, say, for a year, you don’t know where the market’s going to be in a year’s time. If you want to do that, go and put some money on a horse or go and put it on the stock market.

Kate Faulkner:

Okay. [crosstalk 01:23:05].

Paul Mahoney:

Yeah. Look. I disagree with that. I think it all depends on the individual opportunity. If you’re buying a good property at the right price, in a good area, that… For example, I’m currently committed to buying three off-plan properties personally. And because of their locations, I’m very confident they’re going to be worth the right price, if not more, by the time they’re done.

John Howard:

But Paul, with all due… Paul, with all due respect, you are not the average investor. And the average… Nothing is average. I appreciate that. But you’re not a newcomer investor. And to be honest with you, why would you commit to any proxy if you don’t know what it’s going to be worth in a year, a year and a half’s time?

Paul Mahoney:

Again, I think it depends on the individual opportunity.

Kate Faulkner:

But to be fair, Paul does advice people who are maybe new into the market. It’s possible, if you got the right advice. Maybe that would be the other one. Going to move on to another one [crosstalk 01:24:01].

John Howard:

Juts don’t do it.

Kate Faulkner:

Helps with this.

PART 3 OF 4 ENDS [01:24:04]

Kate Faulkner:

What can I make that helps with this? So the yes or no is the answer to that one. If you’re buying with cash, I’m quite interested to your answer on this. Cause I know what mine would be on average, what sort of percentage discount would you expect off the price?

Tony Gimple:

Why are you buying with cash?

Kate Faulkner:

Yeah, that’s a very good answer. We’ll go to that one second. But my understanding is your chances of getting a percentage off at the moment. It doesn’t matter whether he got cash or not the market [crosstalk 01:24:33].

John Howard:

The one thing I always say to people in a market that’s going to get tougher is actually it’s almost not the best price that that should count. It’s the best buyer. So at the moment, okay, everyone seems okay, but going forward, it’s the best, buyer not the best price because you want certainty your deal’s going to happen. If the market starts to slide, you need to make sure you’ve got to have a buyer that will proceed. And obviously if someone has cash much better chance of proceeding than if someone hasn’t. However, if you are a cash buyer, I would [crosstalk 01:25:11].

Kate Faulkner:

But does it necessarily mean you can get a deal at the moment with the market.

John Howard:

No, going forward, we always advise anybody that if it’s two buyers, one has more money than the other one. One’s cash and one isn’t which one do you go for? You go for the cash one.

Kate Faulkner:

And Tony, you made a good point there about why, so I think sometimes it’s good to buy with cash if you can get a discount, but there’s a real thing about holding the cash. Now, as to whether that’s going to pay back with such low property price growth its building in. Do you want to explain that to people, Tony?

Tony Gimple:

Okay, so there’s good debt and there’s bad debt. And with interest rates so low, even if you’re borrowing at 50% loan to value you’re probably going to get a greater turn on your money by you by using half of your cash, as opposed to all of it. Once that cash has gone from a liquid to an illiquid asset, you can’t spend it again. And who knows that you may not be able to mortgage out that property when you want to. And there can be restrictions and if you mortgage it to take the money out and so on and so forth. So once again, it depends on the circumstances, depends on whether you’re looking to grow a wider portfolio, but I’d say don’t buy with cash unless it’s really going to be, your principal, private residence, and you got plenty of other money lying around and you can’t be bothered to take a mortgage.

Kate Faulkner:

Yeah.

Paul Mahoney:

I think it’s almost an impossible question to answer as well, because I think far too many people go into deals with a set criteria of earning X discount to make this good. But it doesn’t apply across the market.

Kate Faulkner:

And Nicholas one for you, which is the best channel to find for commercial property.

Nicholas Wallwork:

The best channel was that?

Kate Faulkner:

Yeah, where do you go to find commercial deals? Basically,

Nicholas Wallwork:

I would say the best tip would be to make good friends with your local commercial agents and surveyors. Now commercial agents, and John I would be interested to hear your opinion on this is they tend to be a lot worse promoting deals than residential agents.

John Howard:

I would personally, call them all lazy. And some of them are my friends, but I still call them lazy.

Nicholas Wallwork:

Extremely lazy.

John Howard:

Compared to the residential agent, They’re not very proactive.

Nicholas Wallwork:

No, they don’t market on major portals, like Rymove or Railey because there’s an extreme, very high cost for that. So they stick it on their own website. They send it to their local database and that’s about it. And they hope to get a deal or they stick it on States gazette or something like that. So, that’s support to look at. Yeah I mean, I would say definitely the biggest tip is drive around the city, see what your target sit in. Again, sourcing should be knowing your strategy, knowing exactly what you’re looking for, being laser focused on that, sending out those requirements to all those local agents that are relevant, meeting them all, becoming their friends. That’s the same for residential as well, by the way. But for commercial it’s even more impactful because they’re just lazy.

Nicholas Wallwork:

If you’ve been in the door that day and they get something in a couple of days that matches your criteria, regardless of who’s on their books, they’ll probably call you, because I know this guy is looking now. So it’s even more important to get on their books, speak to them, make your relationships, look for properties that are, “for let” on a commercial basis. You might well find, that’s a good tip that I use all the time is. It might not even be for sale. It might be for let, or it might be all inquiries. And that’s where you can go and ask. You might have been sat in the market for six months, vacant, even more so in the coming months, you might have a distressed seller. And remember with property sourcing, you’re also looking for the seller, not just the property, it’s a combination of the two to get a good deal. So for lets, can really help you find distressed sellers more easily. Hopefully it’s been vacant. They’re dying for you to take it off their hands.

Kate Faulkner:

Yeah. And I have to say, one has come in and this is a comment really, “fantastic hair cut, John”.

John Howard:

Thank you very much. That was all worth. It makes it all worth it.

Kate Faulkner:

I’ve got another question, which is about the residential development market. How’s that sitting? Richard do you want to comment on that?

John Howard:

Well, it’s very interesting.

Kate Faulkner:

You’re not Richard.

John Howard:

Sorry, sorry I missed you, I missed you, you should carry on, sorry.

Kate Faulkner:

You’ve got a lovely haircut so you can just look at everybody and do side to side, but Richard, do you want to answer that first?

John Howard:

Carry on Richard.

Richard Bush:

Thank you John. Kate, what was the question? Where does the resident…

Kate Faulkner:

Yeah. What about the residential development market? So getting into physically developing properties for resi, is this sort of good time? What are the issues to think about?

Richard Bush:

I think, well, it’s the market that is being affected by what’s happening in the moment in a number of ways. And it depends on where the development is in its stage. If the development hasn’t yet started, then it’s not too bad. If it’s midway through and it’s almost finished, then there’s uncertainty about the exit because of sales and so on. We have, we have a strong feeling about the residential development market in that whenever happens, the country is still going to be short of 300,000 houses or units. And so they need to come from somewhere. Everybody needs somewhere to live, whether they’re going to rent, whether they’re going to buy it. They need somewhere to live. So we believe there’s always opportunities in residential development market.

Richard Bush:

The challenge is choosing the right opportunities. And I think if we refer to all of the things we discussed earlier, they inform how to go about it if you want to get into residential development, choosing the right area, looking for areas of regeneration, targeting your market at a particular audience and so on. And those things will always be true. So I don’t think it’s a bad time. It’s probably not a good time for your first development, but if you know what you’re doing, it’s fine. If you’re about to start doing residential developments, then I would perhaps wait a bit and see how things go, because the more certainty, the more likely you are to succeed, I think that would be my general.

Kate Faulkner:

And back to the lovely John with beautiful hair.

John Howard:

Thank you, I think what Richard said is absolutely right. If you’re three quarters way through a development, get it finished as quick as possible, because then you can get it sold this year hopefully and I don’t think that you’ll have any problems. You probably wouldn’t have any problems the first quarter next year. But after that, if you’re about to start, if you’ve got an out before you have an in and afterwards if you’ve got a second option, which if the small properties it may well be to rent them and then refinance them, I think that’s fine.

John Howard:

But if not, if they’re big and detached ones, I’d just want to see where the market’s going more first and just be cautious. Interestingly, the one thing I was going to say was that, I don’t do a lot of land, but, I got friends of mine who do, and some have offered land and I pass it onto them. And all of them are being very negative on their prices on land. So, if you have agreed on the price three months ago on land, I expect you to go back and renegotiate that. You won’t find that the agent will find another three people who pay more than you will. So I would just be weary.

Kate Faulkner:

Okay. And Nicholas one for you, where do people find out about the PD rules and whether they look for the confirmation of changes?

Nicholas Wallwork:

Well, obviously there’s lots of commentaries out there from the likes of Savills and Knight Frank, all the major agents will be posting information, but ultimately you can go the planning portal websites or planning.gov.uk, something like that. I’ll quickly do this [inaudible 01:33:01]

Kate Faulkner:

There’s the planningportal.co.uk

Nicholas Wallwork:

Planningportal.co.uk, that is almost certainly going to have updated plans once they are available. But, good old Google. It’s not rocket science and all that. Not a hard question to answer I’m afraid, it’s out there and it’ll be out there in the public domain and fairly straightforward, the PD at the moment, it’s fairly straightforward. There’s that say only four criteria, but what I would stress to anyone looking at these PD, it’s not a blanket, go out and do stuff and just crack on.

Nicholas Wallwork:

There is stringent building regs to new build standards required. There are all these four criteria and you still need a good planning consultant to make sure that, before you exchange on something, to make sure that you’ve got these elements in order, and you’ve got good reports for high rates, contamination land acoustics, noise contamination. Before you put in your prior notification, do that work upfront. It’ll save you a hell of a lot of money and time if it goes wrong, if you’re prepared and you give the council reason to not refuse it and you, and you’ve done good quality reports from good quality well-known consultants in the industry for the various fields, the council will find it hard to refuse it.

John Howard:

Kate just very quick points on that. The two things that people get caught out on a cycle, they have to supply cycle storage and if it’s a building with no external space that can be very difficult. And the second thing they get caught out in these big storage, so they’re the two things the council can turn it down on. So be very careful you’ve got both covered.

Kate Faulkner:

And this is a real area where I think some stuff you can, like you were saying earlier on, educate yourself by reading all the free stuff, but this is where it gets into real specialist.

John Howard:

Personally I would never buy an office building without already having PD on it, before I bought it.

Kate Faulkner:

Yeah, okay. And I guess on land, one of the questions is so , when I’d like to have a plot of land, build a few houses, one for me too, are we going to see some really good prices coming in? So this could be a good time over the next 12 months to get some land, sit on it for a little while and then start building as we start coming out? Is that a good strategy or have I crashed and burned myself already, Richard, what do you think?

Richard Bush:

Well, we don’t fund land, so I’m not an expert in buying them. I feel like personally, I’d have to be fairly certain that it will get planning permission in the future and around here in areas where we work, the planning decisions can be pretty unpredictable. So I think if you get good advice from a planning consultant who knows the area, and they have a pretty good feeling about this, the likelihood of you getting planning one day then it’s probably a good time, but planning rules change all the time and planning departments change all the time. Personally, it’s not a risk that I would willing to take. What people do is like John says. [crosstalk 01:35:55]

Kate Faulkner:

Yeah. So my understanding of land is you should always buy when it’s got outline, mostly when you’re looking, it’s got outline or planning permission already?

Richard Bush:

Outline, planning permission ready, I think that’s fine, but if it doesn’t have any planning, which is sort of strategic land purchases, then I think you need to know what you think.

Kate Faulkner:

Do you remember those days in, we were talking about a property investor show early on where people were selling those plots of land, which they just split up back to cultural. I remember that?

Richard Bush:

Yeah.

Kate Faulkner:

That was one of the biggest shock things ever. And I don’t think ever any ever one of those lot deals has ever come to fruition, the scary amounts of money that those guys made. So I’ve got another one, We’ve got somebody saying basically with the home moving model, we have just sort of heard this news on [inaudible 01:36:50] maybe being kicked into touch now, or definitely kicked into touch. Do you have a sense of something like not being able to do 5G and that kind of thing, is that really going to impact that badly. Is Something investors should be worried about? Or is it noise we can ignore?

Tony Gimple:

I think It’s noise we can ignore for the time being, but most people are [crosstalk 01:37:14].

Kate Faulkner:

Tony are you going to expand on that there?

Tony Gimple:

Okay.

Kate Faulkner:

Because I’ve got some more questions, go ahead Tony

Tony Gimple:

I don’t know. 4G works pretty well, to have our own infrastructure is not such a bad idea. No, I shouldn’t worry about it too much.

Kate Faulkner:

Is there anybody else?

John Howard:

I think part of the problem [crosstalk 01:37:33].

Kate Faulkner:

John you’ve always got, yeah Nicholas, you’re sitting there on your big pipe.

Nicholas Wallwork:

I think part of the problem Tony is people like Vodafone, have already geared up massively in terms of staffing levels, for 5G and delivering it. I know there’s a Vodafone HQ up in Newbury. So there is an issue there that, there might be layoffs and it might lead into layoffs, a lot of telecommunications companies and everyone down that entire chain, it’s a big industry, could affect jobs. So I think that’s that’s the risk, but who knows, I think you’ve got a [crosstalk 01:38:09].

John Howard:

What I would say I think it definitely affects, and we had a sales for throw in Norfolk the other day, apparently because they tested the gold band and it wasn’t quite good enough for his business. Now, whether that’s an excuse or not, there’s ways of boosting these now I know and Nicholas knows all about it. I haven’t got a clue, but so I do think that more working people working from home, it is important to people. And of course, if you’re moving out and buying a bigger house, you can afford to have some fancy booster, probably, some serious serious stuff put in it ,but certainly that’s the benefit of being in the city, isn’t it ? It’s that a gold band is normally a lot better than it is the country

Kate Faulkner:

Yeah, and I know some surveyors actually take that into consideration. They certainly will record that on their services. Richard did you want in on that?

Richard Bush:

Well, I was just going to say, I probably disagree with Tony unusually. 5G is much more than faster broadband. It will enable all sorts of services and use of technology that we probably can’t even imagine today. And they will be coming in through four or five years time. So in order for the country to be competitive and post-Brexit leaders in certain areas, particularly the related to technology, I think it’s important that we are at least on a par with our competitors, from the 5G point of view. So I think it is serious. And I think it is important. It’s not directly related to property, but it impacts the way our society develops and progresses and how we market.

Tony Gimple:

That I would agree with.

John Howard:

Well said, Richard.

Richard Bush:

Thank you.

Kate Faulkner:

Right? So we’re kind of coming up to the last 10 minutes. The one thing we don’t really do on these calls and still won’t is sales pitches. When you go elsewhere, you get 10 minutes of information and then the rest is just a massive sales pitch. But do you want to each just maybe highlight and say how, just not as a sales pitch, but if people want to help, what’s the help that you can give them? Paul you on a run off first there?

Paul Mahoney:

Yeah, of course. To it’s a tie to what we we’re saying before. There’s a lot of uncertainty in the market at the moment. People want some guidance or at least a sounding board on how best they can go about things confidently. And essentially that’s what we do for property investors. So we help people set goals, put in place a strategy for achieving those goals, do the research and due diligence on sourcing the right properties in the right locations. We finance them, we manage them and then we help people review and reinvest as time goes on. So if anybody has any questions or any uncertainties, they’d like to go about investing in property in a relatively passive way, unlike John and help them with property development, we help people take resources and invest them and not necessarily create a second job. If anybody’s interested in exploring that, then we can help them.

Kate Faulkner:

Okay. And I know you’ll do some bit of help for free as well, won’t you?

Paul Mahoney:

Yeah, absolutely, the whole side of the process is for it.

Kate Faulkner:

Yeah. One of the differences is you’re not just a broker, you’re actually financial advisors. That’s right, isn’t it?

Paul Mahoney:

Yeah.

Kate Faulkner:

That is the critical thing. He’s thinking, linking is that invested spend far too much time looking at a deal as opposed to looking at it, “I’ve got 50 grand, where’s the best place for me to put it?”. If you get the financial advice first, that will help you understand whether a property deal is correct or not.

Paul Mahoney:

And you’ve hit the nail on the head there, I’d say that’s probably our biggest point of difference to most other property companies is we’re much less about the properties and much more about the person’s strategy and their goals.

Kate Faulkner:

And you’re regulated.

Paul Mahoney:

Yeah.

Kate Faulkner:

By the financial conduct authority and have to have qualifications, which others don’t always have. John, do you want to kind of explain the sorts of things that you can help people with?

John Howard:

I’m a bit selfish because I’m busy doing my own stuff, but I do a little bit of mentorship where, acquisition mentorship. So people for 12 months, they can throw as many do poppy deals at me that they’re looking at and I can go through them with them and go through it with them and advise them . Some people look at it a bit like an insurance policy, really not to make silly mistakes.

Kate Faulkner:

Second pair of eyes is always wise.

John Howard:

Yeah, absolutely. And they can bounce things off me. Some contact me every other day. Others contact me once every two months and so on. So I do that. Also, I’ve taught three seminars based on my three books. And hopefully it will go into, go live again in September on those, we’ve got zoom bonds in August. And we’re about to launch our high net worth listed property bond, which is a five year bond. [crosstalk 00:01:43:00].

Kate Faulkner:

Ooh what is that!

John Howard:

So that’s something that I can’t broadcast

Kate Faulkner:

Oh okay.

John Howard:

Because you’re not allowed to comment it for such, [crosstalk 01:43:07] come and talk to me about that.

Kate Faulkner:

Okay, cool. Tony, do you want to just explain why you are Mr.Essential to investors?

Tony Gimple:

Well, whether investors looking at tax, wants to ride the wheels or anything like that? The number one question I’d ask them is, “why?”. There are people with a lot of things about going into property or not going into property. But the one question that nobody ever bothered to ask, “why do you want to do it in the first place?”

Kate Faulkner:

Yeah. Good question.

Tony Gimple:

That’s stuff we’ve had today, we’re giving it a chance, but that person who said that, been very redundant or one with the heritage or substantial amount of money. Why do you want to spend it on property. Once you’ve got that when it’s making sure I understand wherever I are really where they are, really where they want to go and they’ve got the right efficient business structure in place from the outset. Ultimately not just with me, but with all of us, the only thing we really sell is that which we know and they don’t.

Kate Faulkner:

Yeah, and there’s three ways that you can be taxed by HMRC, is it property investor, property trader and I’m trying to remember what the third one is, [crosstalk 01:44:26] isn’t it?

Tony Gimple:

Yep, so…

Kate Faulkner:

And they all attract a different way of taxing you. And I don’t think a lot of people understand that they think you’re really, you’re taxed separately to everything else, just as an individual buy-to-let investor. I think it’s really misunderstood.

Tony Gimple:

It is. If you are checking on properties where the sole purpose is to current rents for 12 months more, whether or not you’re in a company or in your own name, you are effectively treated as running an investment business on a passive basis. You will be taxed accordingly. If you’re a property developer, the other rules apply particularly for land banks. And if you are trading in properties, once again, there are a whole different set of rules applied.

Kate Faulkner:

Yeah. And that’s, if you’re flipping and things like that, but I think it’s probably the biggest eyeopener I have on the tax side. Richard, tell us about your pedals.

Richard Bush:

Well, without going to the full risk warning, I can’t really promote crowd roars, but I would just like to say that within the center as a whole, so within alternative investment platforms, this might be a good time to consider using them because it enables you to diversify your risk and put in less, and therefore not put all your eggs in one basket, that’s true for us as it is for our competitors. So that the reason why I think it’s worth considering right now.

Kate Faulkner:

Okay. So pop over to the site and maybe just understand the model a little better and cause a lot of people don’t and, and I was unsure, I must admit I was quite unsure of it from the start. It frightened the living daylights out of me to be honest. But I have to say, when you meet Richard and you kind of look at the things he’s doing and some others as well, then I felt much more comfortable with the idea.

.

Kate Faulkner:

Sorry, over to you Nicholas before we lose them again.

Nicholas Wallwork:

Thank you, Kate. I mean, just from my perspective, we’re developers, first and foremost, we develop commercial buildings back to residential. We’ve also got a large HMO portfolio. We’re still buying HMO’s, a professional grade, high end, almost studio like good on suite rooms. Ultimately we’re looking to work with private investors that would invest their money on a hands off way in a similar way to Richard’s platform. It’s a way to invest in our development firm into a low note structure. And we essentially then use that money to buy and develop properties. And we secure your money across multiple sites in our groups. So as we grow, you grow with us and the security actually gets stronger as you go. So some really strong returns available there and lots of good UK based security to secure your money on.

Nicholas Wallwork:

So we’re always first and foremost, looking for safety for our investors. We’re investors ourselves first and foremost as well. So we created a product we think is highly investible for very hands off investors. I also mentor people. So if you’re looking to get into office to residential conversions, HMO’s are probably my two strongest areas, micro studios and some general property development, reach out to me at one of my websites, Nicholaswallwork.com and have a look at the mentorship offers there. I do one to one mentorship. So again, it’s kind of people that come off the back of courses, hopefully good courses and not the bad ones, but I can help anyone that’s got a good level of knowledge already and can take it further. I’m looking for people that really need the practical side to help in a bit like John does the acquisition mentorship, I do a similar kind of product, but it’s really helping people, isn’t it John and it’s taking that knowledge and turning analysis paralysis into action.

John Howard:

I think the most genuine thing you can say about what you do and others like us, is that we’re adding value. So whatever they’re spending with this, which isn’t very much actually it’s adding value and people must remember that it’s a big ticket item. You know, buying a property probably is the most expensive thing they ever do, getting it right is brilliant. Getting it wrong can be very expensive and costs a lot more than what our mentorship fee is.

Nicholas Wallwork:

Oh God, yeah.

Kate Faulkner:

Especially over the next couple of years.

John Howard:

Yeah absolutely.

Kate Faulkner:

Cool. Okay, so we are kind of nearing the end. Thank you so much for bearing with us, I know we’ve lost you all a few times, so I do apologize for that. I’m hoping we’ve answered all of your questions. If you do feel a question you haven’t answered, you can contact me @propertychecklist.co.uk. There is a contact there and certainly on the market, that’s the sort of things that I will be able to help you with, but you’ve got Paul on the finance and buy to let side Nicholas help you certainly on the development side, Richard, if you’re looking at alternative investments to maybe hedge your bets over the next three year or so, John very much kind of on the acquisition side and of course Tony on the tax side. So I hope that said, despite losing you a few times, that was really useful and helpful, and we’re going to be doing this again as well. Have you got the dates, the next one, or is that coming up?

Nicholas Wallwork:

Well, I think we have one penciled in, don’t we guys?. Does anyone remember it?

Paul Mahoney:

No you have it penciled in.

John Howard:

We were going to do one in November, but we also got the big one in January, which we hope to have where Tony?

Paul Mahoney:

[inaudible 01:49:45]

Kate Faulkner:

Yeah, bring your cricket bats, bring your pads, we’ll have a little game.

Paul Mahoney:

And a Jaguar.

Kate Faulkner:

So hopefully, so we’ve got a couple more events, so do keep in touch. And as I say, if there’s anything else that you need from the guys, just shout, and I’ll also help. Because that’s the primary aim of being here today for you, free of charge.

Paul Mahoney:

So, sorry guys this one’s probably worth mentioning that I just found the dates. So we will have a Landlord investment show at Olympia pending that show proceeding.

Tony Gimple:

Uh-huh (affirmative).

Paul Mahoney:

Which at the moment it’s planned to. So if it does proceed, that will be the next property summits event in the auditorium. And then potentially another one in October prior to January,

Kate Faulkner:

January, hopefully. Yeah. Hopefully somebody will have found a vaccine and we can all meet up and not worry about this horrendous virus that hit the world, but as ever, opportunities available if you’ve got the right thinking so, thanks very much and look forward to seeing you again, any comments you’ve got things, we can do better, I’m always keen to hear those. So do let us know. I look forward to seeing you again. Thank you.

Property Summits

Property Forecast Q3 – Tony Gimple, John Howard, Nicholas Wallwork, Paul Mahoney and Richard Bush
Property Forecast Q3 – Tony Gimple, John Howard, Nicholas Wallwork, Paul Mahoney and Richard Bush
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