Mark Homer

Rob MooreMark Homer

“The unsheathed truth behind UK property economics and why

supercharged returns are inevitable”

1. The New Paradigm 2. The Investors secret weapon 3. Green and Pleasant returns4. Grow up, get lower rates on Pick and Mix

finance

“The 4 sure fire strategies to supercruise your profits in the new world”

• Section 1: The New Paradigm

-Great crash of ’08 – 2 main segments

-Finance Led, so high LTV worst affected

-Different from late 80s – people want to buy!

-Bottom end Rents rising strongly

“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”


-Low end residential outpacing commercial

-7% this year, 6.5% next, 5.5% in 2012 (Savills)-Low end of cycle where prices don’t rise as quickly (for now!)

-Yield explosion



-UK private rented sector growth: Europe

-Size, imbalance of returns, attractiveness brings

-Institutional investors: Banks lending on rent

-Commercial Properties valued on rent



-Surveyors instructed this way

-What can you do?:

- Pick areas with high LTV-Pick the highest yielding properties


• Section 2: The Investors Secret weapon

- Inflation now CPI: 4.0%, RPI 5.1% In January

- Believable?

-Govt using backdoor strategy! 70s?

- Helps rental growth

- Devalues debt + Drives capital value



- Less Sellers with equity- Yields will reduce as market grows, pre crunch

3% lower! - Eventually yields will be so high and people

Wake up – yield compression



- Solution: Lease Options/Long stop

- No Deposit, can take old cheap mortgages

- Agents full of people who cant/wont sell

- Incentivise them with fee over time


•Section 3: Green and Pleasant returns

- Low rate, normally easily accessible system

-High borrowing by world standards- Just behind US

- UK Property Market very focussed on finance


• Section 3: Green and Pleasant returns

- London recognised as the most attractive

European City for Investment (LaSalle Inv

Mang), ask Lord Sugar!

-Growth post 70s, 80s and 2008 crashes

- Credit Crunch particularly severe here



- Population from 60M to 71M by 2031

- Doomsday book – 1086

- Land was worth around £75k - £1 Trillion today

-over 10% annually! AFTER Inflation

-Planning – not in my back yard



- US/Australia too much building land

- Europe rents

-Build costs rising – wiring quote! Ged materials

-Upswing will be greatest in UK


Land value?


- Weak Sterling drives building costs on imports + Local materials pushed abroad

- Developers build less houses if no profit

-Barker report ‘03 around 230k new homes needed

-Avg 3 bed 1000 sq ft house £80k plus to build!




-Yr to June 2010 around 100k completions (CLG)

•Section 4: Grow up and get lower rates on Pick and Mix finance

- Relationship based

- Little by little – rent stress eases/interest only

-Remortgage straight away



- Lloyds – 70% LTV, around 3% over base.Who?


- 2.5%-3% over base!

- No CML

- Short Leases, Title defects, owned for short period



- Not RBS!

- Santander, Butterworths, Adam Bank, Aldermore great for HMO (value on rent)

- Unlikely CO-OP!

- Barclays – Interest only lower rent stress

The credit committee


- Need a business Plan – credit committee

- Demonstrate knowledge (bus manager likely to know less than you about residential property!)

- Wet their appetite – lots to refinance

- HOW?




- Credit history not important to some

- Show some income

Documents

Mark Homer