That was the week in property, by Mike Hoffa
27th February 2012I’m depressed at the moment, very depressed.

We’ve just been beaten by the Welsh in the six nations rugby and I have to say that hurts. Okay, so I know the England team hasn’t exactly been setting the world alight recently but it’s the nature of the loss that annoys me. As a team, England have done quite well at ‘sneaking the win’ recently, most notably against Scotland.

What I mean by that is their ability to spot an opportunity and jump on it, despite their lack of international experience as a team. In particular, I’m talking about Charlie Hodgson and his uncanny ability to know when there is a small chance of stealing the ball and scoring a try. Sadly, it was Wales’ Scott Williams that turned the tables on us this time, demonstrating that exact same ability.

“…they have just announced they are pulling out of the London, selling around £500m of commercial property…”

It’s something that all good sportsmen and women seem to have. That skill at knowing where to be to take an opportunity seemingly before anyone does – almost like they can sneak a look a few minutes into the future and act on it.
You also see it in business and I cannot help but wonder if Hammerson, the FTSE100 commercial property company, has it in abundance. You see they have just announced they are pulling out of the London, selling around £500m of commercial property over the ‘medium term’, according to the Telegraph.

So does this mean they can see the London market is about to plunge?

I very much doubt it. London has remained very healthy throughout the recession and will no doubt continue to stay strong, so I wouldn’t start selling your city portfolio just yet. Therefore, for a company of Hammerson’s size and experience to pull out they must see even better growth opportunities outside London, and to be more specific they are looking very closely at the ex-London retail market.

“It’s another indicator to me that this terribly miserable period of recession and stagnation is about to disappear.”

This is good news for all of us. If they think now is a good time to invest in retail property then it also means they think we’re pretty much at the bottom and things are only going to go one way – up.

It’s another indicator to me that this terribly miserable period of recession and stagnation is about to disappear. You heard it here first – the boom times might just be on the way back.

For sure, if retail property starts to go up in value it will be down to simple supply and demand kicking in. If there’s more demand than supply it also means we’re all spending more and things are looking a bit brighter.

Of course, it all depends on what they mean by medium term, but commercial companies don’t tend to think in terms of decades these days when they’re looking for a financial return.

So my money’s on Hammerson. Fortune favours the brave and I think they might have just stolen a march on the opposition. For all of us, let’s hope so.

About the author:
Mike Hoffa has been working in the property sector for more years than he cares to remember, as a tenant, first time buyer, second time buyer, landlord, adviser and general trouble maker. He keeps his real identity fiercely secret, but some say he can often be found at the back of property auctions howling, but only when a full moon is out. He’s also rumoured to be of average height, weight, ethnicity and class, which he claims accounts for his inability to be politically correct or wear pastel coloured cardigans.

Mike’s question of the week: Do Hammerson see the light at the end of the tunnel?

That was the week in property, by Mike Hoffa
20th February 2012
There’s a very liberal type of outrage being expressed in many households at the moment.

Shock, horror, the price of diesel has hit a record high at 143.05 pence per litre, meaning it’s risen at twice the Consumer Price Index rate and it now costs you £114 to fill up the 80 litre tank on your commercial van, according to the BBC.

It’s apparently due to a perfect storm of rising crude oil prices, restricted supply and some refineries closing, although I have to say the term ‘perfect storm’ is overused these days and it seems to be rolled out as an excuse for just about everything. Struggling to lose weight? Ah – that’ll be the perfect storm of the gym being too far away, the corner shop having a special offer on crisps and that dodgy knee flaring up again.

“Nor are all the doomsayers who maintain that the UK property market has yet to crash even further and that you’re better off renting…”

However, the point is that those diesel-loving ecowarriors in their cardigans are finding it’s now quite pricey to fill up their people carrier and are not feeling quite so smug anymore (Ed – have you been speaking to Jeremy Clarkson again Mike?).

Nor are all the doomsayers who maintain that the UK property market has yet to crash even further and that you’re better off renting, because rents continue to go the same way as diesel. In fact, the Guardian reports that rents saw a rise in January for the first time since LSL Property Services started compiling its survey back in 2008. That’s not saying they haven’t risen for four years, but more specifically that they have never gone up in January before.

So what’s behind it all? Well, the Guardian puts it down to a number of factors, which can be succinctly described as a perfect storm of too many tenants looking over the Christmas period, not enough houses to go around and landlords needing more beer money. Okay, so I made that last one up but we all know you need three things for a perfect storm, otherwise it’s just a difficult breeze.

“…a perfect storm of too many tenants looking over the Christmas period, not enough houses to go around and landlords needing more beer money.”

But don’t expect it to change anytime soon. Supply and demand means rents are not going to drop in a hurry and the general consensus on the economy is that growth is going to be “sluggish”, suggesting low interest rates for some time to come and little sign of another big drop in house prices.

So if you’re sat there waiting for the price of houses and diesel to come down, I really wouldn’t hold your breath. If you don’t take action now you might be hit by a perfect storm of not being able to fill up your tractor, never owning a home and having to put up with me saying I told you so – and I wouldn’t wish that on anyone.

About the author:
Mike Hoffa has been working in the property sector for more years than he cares to remember, as a tenant, first time buyer, second time buyer, landlord, adviser and general trouble maker. He keeps his real identity fiercely secret, but some say he can often be found at the back of property auctions howling, but only when a full moon is out. He’s also rumoured to be of average height, weight, ethnicity and class, which he claims accounts for his inability to be politically correct or wear pastel coloured cardigans.

Mike’s question of the week: Time to call it a day on waiting for another crash?

That was the week in property, by Mike Hoffa

13^th February 2012

We’ve definitely hit the winter blues as everyone seems to be a bit grumpy at the moment.

Just look at the news. We’ve got Syria slowly but surely massacring its own people, Iran about to stick two fingers up at the Western world by announcing they’ve got some shiny new nukes and the Greeks are kicking off again about the fact that no-one there has any money.

It’s not much more fun over here either, what with the bankers having to become charitable workers for fear of the angry mob with pitchforks (otherwise known as the government), Suarez and Evra doing their level best to kick off a race war in Britain and just about everyone with anything to do with the NHS wanting to lynch the Health Secretary, Andrew Lansley.

“I may not be able to don a UN blue helmet and sort out the Middle East, but I can bring some rays of light onto the property market.”

And to top it all off, the original and best supervoice diva Whitney Houston found the whole situation so untenable she’s decided to slip off the mortal coil completely, may she rest in peace.

So it’s about time for a bit of the old Hoffa antidote to these winter blues. I may not be able to don a UN blue helmet and sort out the Middle East, negotiate a truce between two footballers or sort out the NHS – and I certainly can’t do anything for poor old Whitney – but I can bring some rays of light onto the property market.

How you ask? Well, let me tell you that the first time buyers are on their way back!

Yes, that’s right folks, figures for January suggest the base of the property market may be getting slightly more solid. To be specific, the Telegraph reports that mortgage approvals rose 30% on the figures for January 2011 (according to chartered surveyors E. serv), with around a quarter of these approvals, just over 15,000 in total, being given against homes worth less than £125,000 – prime first time buyer territory.

And whilst I’d be the first to admit that one swallow doesn’t make a summer (or perhaps more apt to say one snowfall doesn’t turn Britain into a ski resort), this does seem to tally with a general trend towards people moving money towards property. After all, where else are you going to stick it right  now?

“If the base of the pyramid formed by the first time buyers starts to look a bit more solid then the rest of the market will follow, hopefully with the economy in tow.”

Repossessions were also at their lowest level in 2011 since 2007, according to the Council of Mortgage Lenders. Whilst some cynics suggest this is short term trend that is unsustainable and that first time buyers are rushing to beat the end of the 1% stamp duty holiday (which kicks back in come March), I think it tallies with my recent observations that people are just getting on with their lives. Let’s not forget, with rents at record levels, home buying is looking more attractive too.

The good news for all of us is that if the base of the pyramid formed by the first time buyers starts to look a bit more solid then the rest of the market will follow, hopefully with the economy in tow.

So put away that snow shovel and dust off the barbecue ready for a happy summer, I say. Just don’t ask the Iranians if they’ve got anything to help light it.

About the author:

Mike Hoffa has been working in the property sector for more years than he cares to remember, as a tenant, first time buyer, second time buyer, landlord, adviser and general trouble maker. He keeps his real identity fiercely secret, but some say he can often be found at the back of property auctions howling, but only when a full moon is out. He’s also rumoured to be of average height, weight, ethnicity and class, which he claims accounts for his inability to be politically correct or wear pastel coloured cardigans.

Mike’s question of the week: At last, some real green shoots coming through?

The national brand sold 1,830 lots last year from 2,232 offered – achieving an impressive 82% success rate and raising over £170 million (£170,587,000) in the process.

Auction House Founding Director Roger Lake said: “This is another set of superb statistics for Auction House. 2011 marked an impressive year of growth for regional auctions – achieved on the back of increased repossession instructions and a growing local appetite for the quick-sale solution that auction presents.

“Certainly more national instructions are now being sent to regional auctioneers and achieving higher prices as a result. Purchaser-demand has been high too – with full auction rooms and spirited bidding.”

The end of the year saw further success for Auction House, when the brand won gold and silver awards at the Estate Agent of The Year Awards in London – widely recognised as the benchmark for excellence throughout the estate agency industry.
Roger Lake added: “Our local auction room service now covers the majority of the country and we also offer the back-up and support of a central London auction room. This powerful combination of ‘local-plus-London’ is unique to Auction House, and has proved to be an outstanding success.

“The strides made in 2011 give us a strong platform for even further growth. 150 auctions have been scheduled for 2012 comprising around 3,000 lots and we will be opening more auction rooms in new territories across the UK later this year.

In this on line report, they examine the level of distressed stock in the residential auction market since the start of first signs of recession. They interpret these against the background of activity in the banking sector and endeavour to predict patterns of sale and demand in the year ahead. They look at the performance of assured shorthold and ground rent investments and examine how this may change in the context of movements in capital and rental markets. The analysis draws on statistical data from within four geographical areas of the UK.

Click here to download RAPID

He tells us:

 ” Another strong set of results in December epitomizes the trends witnessed throughout 2011. Increases were seen in both the number of lots offered and lots sold (up 3.7% and 8.1% respectively), and the sale rate of over 72% is only marginally below the annual rate of 74%. Overall total raised in December was down 13% (mainly due to a sizeable fall in commercial property receipts), however the longer term outlook seen in the quarterly and yearly figures remains encouraging.

Once again the residential sector showed growth in the majority of metrics measured, with notable increases seen in the volume of lots sold and the percent sold. December’s figures for commercial property were down against December 2010, but as noted before the quarterly and yearly figures fared much better with rises seen in every metric save for amounts raised.”

The judges commented on the excellent achievement and success which Auction House has enjoyed across both the auction and franchise sectors. As the fastest growing auctioneer in the country, it has not substituted quality for growth and its franchise offering is excellent. The aim of the directors is to build a strong and widespread brand through their franchise operation across the country and there is much evidence that this aim is being met through their actions. The infrastructure is robust and franchisees will see their financial investment met within 12-18 months, so can be satisfied that their cash flow will be positively impacted. Marketing is undertaken nationally which has increased brand awareness. Both franchisees and customers can be confident when using this business, due to the high standards designed and adhered to by all.

That was the week in property, by Mike Hoffa

30^th January 2012

There’s a popular saying in the showbiz world, which is the title of this week’s piece. You’ve no doubt used the phrase “the show must go on” yourself at various times, given its ubiquity.

People use it in all kinds of circumstances outside of showbiz, but in essence it means exactly what it says – that despite whatever problems are going on around you, things need to carry on. It’s exemplified in all kinds of situations and is often seen collectively in populations during times of crisis. Just hark back to the Second World War – for a moment in 1939 everyone stopped, wondering what on earth was going to happen. But then, despite the chaos going on around the world and the threat of bombs landing for anyone in big cities, people just got on with things because work still needed to be done and food put on the table for the family.

“…realisation dawns that 2012 isn’t going to see a bumper recovery, but is instead going to be a hard slog.”

It’s a spirit I think we’re starting to see with the economy (I won’t use the word recession because we’re officially still out of that and I’ve been told not to by David Cameron), as the realisation dawns that 2012 isn’t going to see a bumper recovery, but is instead going to be a hard slog. So we might as well buckle up and get on with our lives.

The good news for first time buyers is that there are hints that the banks are starting to take this view with mortgage lending too. A number of news channels, including the Guardian, reported this weekend about how new figures from mortgage lender Halifax show that in most areas of the country buying is now cheaper on a monthly basis than renting. For the average three bed home, it now typically costs £600 per month in mortgage payments as an owner, or £716 per month in rental payments as a tenant – a significant 16% higher for renting. And it’s not just based on misleading overall averages either – this differential is reflected across the UK.

So the key question I hear you ask is “but how can would-be buyers see that benefit when they can’t get the whopping deposit required to buy?” Well, here’s the really good news – one of the key drivers of these figures is the re-emergence of 95% mortgages, helping more people get back on the ladder. For sure, the criteria will be pretty stringent, but it shows that banks are getting realistic about how much deposit the average would-be buyer is likely to have.

“…one of the key drivers of these figures is the re-emergence of 95% mortgages, helping more people get back on the ladder.”

Of course, the other factors driving this are continued low interest rates and rising rents. As the pendulum resets and more people move toward home ownership both of these factors could change, so this won’t be the status quo for long.

So why are the banks being so sympathetic, despite the gloomy outlook? Well, it could have something to do with all the billions of taxpayers’ pounds they received as part of quantitative easing and a quiet word about how they should really start lending it out.

After all, that saying in full is actually “the show must go on, otherwise we’ll have to give them their money back.”

About the author:

Mike Hoffa has been working in the property sector for more years than he cares to remember, as a tenant, first time buyer, second time buyer, landlord, adviser and general trouble maker. He keeps his real identity fiercely secret, but some say he can often be found at the back of property auctions howling, but only when a full moon is out. He’s also rumoured to be of average height, weight, ethnicity and class, which he claims accounts for his inability to be politically correct or wear pastel coloured cardigans.

Mike’s question of the week: Time for the banks to start relaxing mortgage lending?

We have reproduced his regional analysis figures for the last quarter of 2011 below. 

Regional Auction Analysis

East Anglia

East Midlands

London

North-East

North-West

North-West Home Counties

Scotland

South-East Home Counties

South-West

Wales

West Midlands

Yorkshire and The Humber

Why pay for creativity and creative thinking time? What does it encompass, and why should I employ an Interior Designer?

Most clients are happy to pay for something tangible- a piece of furniture, wall coverings or a pair of silk curtains they have “fallen in love with”, but paying for creative fees sometimes hits a little resistance.  Then there are those who are used to the process and appreciate the amount of work involved and are therefore happy to pay the creative fees – they are generally the ones who have seen the benefits, having utilised the skills of a good Interior Designer before.

If you thought that employing the services of an Interior Designer was only for the uber rich, then let me explain what I do and how I can (hopefully) change your perception.

 The outline benefits are:

 -        Spatial Design suggestions for a potential change of an existing room layout/shape to enhance how a client uses their home.

-        Provision of a scheme which takes into account other parts of the house and considers the overall ‘flow’.

-        Someone who will challenge the status quo when it comes to new lighting or architectural finishes within the scheme.

-        Provision of bespoke soft furnishing or furniture options to provide unique solutions if required.

-        Shared trade margins. An established Interior Designer will have trade contacts which can either be passed to the client or shared between both parties to save on purchase costs.

 The Process:

-        Starts with provision of a design board showing all the elements that will make up the new scheme. This is a working document which can have some elements “tweaked” and changed prior to ordering. This will ensure all finishes, fabrics, colours and textures are working together and agreed by both parties before anything is ordered.

-        CGI (computer generated images) can also be an additional tool to show the new room(s) as a 3D image – an essential tool for clients who are abroad and need to sign off a scheme. (Additional fee normally applies)

-        Next step, Designer implements schedules and co-ordinates all of the purchasing, delivery logistics and organises made to measure/bespoke items as required.

-        Once everything has come together, the final step is to sign off the scheme with one happy, stress free client.

It is worth noting that if a Designer is used solely for the purchase of items on behalf of the client, they would normally charge the standard RRP as there is no design fee involved. This is to cover Designer time to measure up, generate the purchase orders and organise deliveries to site. The margin between trade price and full retail would cover this level of service.    

That’s it in a nutshell – it’s about taking the headache away from those that find it stressful, or are short on time, helping them make all or some of the decisions that are required, and also about providing fresh and innovative ideas that the client wouldn’t have necessarily arrived at themselves. That level of creativity and decision making involves a lot of time and interaction between Designer and client. If the client understands the level of service they are receiving and also the financial benefits, then the future should be plain sailing and both parties will share a mutually beneficial relationship.

 Rachel Cooper Interiors Ltd:  01753 831838. www.rachelcooper-interiors.co.uk