A Premier event for London landlords

London landlords were welcomed to Foxtons Head Office for an exclusive event. Here are a few key points our experts discussed for any business-minded London landlord.

*this is an abridged article for LinkedIn. Click here for the full Foxtons blog article.*

Topics addressed:

• An overview of the London market?
• An update on the ongoing market recovery
• A primer on specialist lending?
• An introduction to consultancy and review of opportunities ?
• A guide on how to find upcoming lettings hot spots

Overview of the London market

Amit Sharma, Area Director at Foxtons, discussed market growth and compared investment opportunities. However, his big topic was renter demand, “At the end of 2021, we had 20 renters registering per every home listed…That trend is still continuing.”

What does this mean for London landlords? Amit said, “A recent report commissioned by the NRLA (the National Residential Landlords Association) suggested that 85,000 new rental properties will be needed per year to satisfy London demand.”

Foxtons deal with many relocation agents, and they’re unbelievably busy. Amit said, “Typically, [corporations] have higher budgets and they’re happy to pay more for the service.” Landlords can harness this potential, “We are dealing with entry level to CEO. They're renting one beds to family houses across London and across the Home Counties.”

To attract corporate rents:

• Set up a spare room or corner as WFH space for hybrid workers.
• “A lot of relocation agencies…will only take professionally managed properties."

Amit also mentioned, “Rent for managed properties is 9.6% higher than non-managed.” Get in touch for more information about professional property management through Foxtons Corporate Services.

Update on the ongoing market recovery

Thomas Davies, Sales Director at Alexander Hall, revealed key takeaways for landlords in the mortgage sector. The biggest news was that interest rates are on the up. However, Thomas noted, “If you go back to 2006…the best products that I could get my hands on…were two to three times costlier…whilst we are in a rising rate climate, rates remain very, very competitive. So for anyone who is considering investing in property further, or refinancing an existing portfolio, now is the time.”

Primer on specialist lending

Peter Corbett, Associate Director of Specialist Lending at Alexander Hall, discussed his understanding of incorporation - the process by which you move the ownership of a portfolio from personal name to a limited company.

In his experience, there are three main reasons landlords are looking to incorporate a portfolio:

• Owning property in personal name has typically become less cost efficient due to income tax changes. However it is still possible to offset the full amount of mortgage interest against rental income if the properties are owned in a corporate structure.
• Corporation tax: this is typically lower than a landlord’s personal tax rate. One of the potential benefits to this is that landlords are able to save deposit funds for further investment over a shorter time frame.
• Long term tax planning: a lot of his clients feel it is far easier and less costly to pass shares of a company on to family members as opposed to passing properties to them, as the latter can often trigger costs such as capital gains tax.

Peter discussed the different ways he had seen landlords incorporate their portfolios, and how Alexander Hall have been able to arrange suitable mortgage products that correspond to their clients’ goals. If this interests you, please contact?Alexander Hall.

*Please note Alexander Hall are not tax advisers and do not provide tax advice. If you’d like to explore these options, you will need to consult a professional tax advisor.

Our consultancy and purchase opportunities

James Wood and Oliver Hopkins, from Investment and Development Consultancy, illustrated what consultancy can do for an enterprising London landlord.

Who: This new, exclusive service for Foxtons Premier Landlords provides sales and rental advice based on expertise, software and data.

What: Residential development opportunities, land sales and acquisitions, investment sales consultancy and trusted advice.

Where: Our team work across our 50+ London offices and beyond.

The Foxtons Land & Investment team showed Premier Landlords in attendance some investment opportunities, get in touch through [email protected] if you’re interested in investing.

How to find upcoming lettings hot spots

John Ennis, Foxtons Managing Director for New Homes & Central London, discussed how to look for upcoming hot spots, “If you pour demand into London…it flows to where the quantum factors affect value.”

A quantum factor influences a property's price over and above what’s expected. When an area benefits from quantum factors, their growth potential will outperform the norm.

• Infrastructure/Transport – like the upcoming Queen Elizabeth line, Crossrail, 24-hour tube stations, branch extensions etc.
• Commercial/Retail – the influx of buildings and commercial infrastructure brings jobs and consumers to the area.
• Leisure & Pleasure – permanent or temporary entertainment that sets an area apart, like BOXPARK in Croydon.
• Green Open Spaces and Water – look for re-investments into nature, which increases the borough’s appeal.
• Regeneration – find where capital investment projects are making big changes in a borough.

John gave an example, “You could have bought in Stockwell at ￡550 a square foot. At the time, people thought ‘I’m not sure, I don’t think like it.’… Buy before you would say, ‘I want it to look better, have better cars, have better shops…’ Would you rather buy something at ￡550 per square foot, or in 3-5 years, at ￡800 per square foot?”

If you’re looking for this kind of insight for your lettings portfolio, please send an email to the Foxtons?Premier Clients?team on [email protected] to get on the invite list for the next event.