Its 05:25am as I write and I am glued to the TV screen. Our good friend, Olly Bryant has just finished another session in the Aston Martin Vantage in the 24hr Le Mans. Last year was his first drive in the endurance race and even though I follow Formula One, I never thought that I would be as interested in other car racing as I found myself watching the race for a very unhealthy proportion of the 24 hours. But it was great entertainment and in the end, the whole family were watching. We had one screen with the live coverage and another screen with the live statistics for all the teams. We were totally addicted. So when Olly asked me if Henley Finance would like to get involved this year and sponsor him, we jumped at the chance.
The Beechdean Aston Martin Racing team are doing really well at the moment, an incredible 3rd in LMGTE-Am class, with two other drivers, the team owner, Andrew Howard and Aston Martin youngster, Ross Gunn. As I write, Andrew Howard has just put in the fastest lap time in the class of 3:53.797 which if they keep this up, could translate to 2nd place. This would be fantastic as during the test, the team completed a portion of the 8,469 mile circuit and came sixth. We are long time followers of Olly’s achievements, so wherever they finish we will be raising a glass to him.
My regret is that I am not in the pit lane with them, still, I will have plenty of opportunity to wander around Henley with my Beechdean AMR/ Henley Finance team jacket, sporting the logos as I don’t think the novelty will wear off for a while.
This is the first sponsorship of its kind that Henley Finance has become involved in and it is a privilege to be associated with Olly Bryant, the Beechdean AMR team and Le Mans 24 Hour and we wish them every success.
Richard Butler-Creagh has been in the bridging lending business for many years. He became involved with this sector through his experiences in buying and selling his own properties. He soon realized that the most important part of this process was to be able to have the availability of good financing.
“This was always the most difficult part of the process. After being frustrated by the high street banks who found it difficult to turn things around quickly, I soon ended up using bridging lenders myself.”
Richard Butler-Creagh, 2017
He came to the conclusion that this was a business that he understood and that from a successful few years in buying and renovating buildings with his own team – to building up a rental portfolio of properties in London, he found that, not only could he value the properties very easily, he could also estimate any building works that needed to be carried out. After a lot of consideration, he set out to form his own bridging company.
Nowadays this is in the form of Henley Finance Ltd. It provides fast lending facilities and has a proven track record for efficiency in carrying out the due diligence process which is the most important factor from a legal point of view. Once the potential Borrower’s identity is established, not only does Butler-Creagh and his team look over the proposal but have their own experts including, planning consultants, solicitors, surveyors etc. available to ensure that the project that is being financed, runs smoothly. This is monitored throughout the duration of the project.
One of the key features that Richard Butler-Creagh has built the company on is the repeat business. At Henley Finance Ltd costs are kept as low as possible in the belief that if their borrowers make money, they return with more projects to fund. As a result, they have never advertised and all business is from word of mouth.
Interest rates are always in the news. Whether they are static as they have been now for years or whether quarter of a per cent rises are hinted at by Mark Carney, Governor of the Bank of England that might spell economic collapse. Other than homeowners whose mortgage repayments are on the edge of affordability or first time buyers, there are less obvious casualties who are, rather pointedly being made to move over.
The buy to let investor: at best, helping others while helping themselves; at worst ‘a house of multiply occupancy slum landlord’, will start to feel more challenged by the owner/occupier market with George Osbourne’s decision to phase out buy to let tax relief at the higher income tax rate on interest payments by 2020, as well as restricting the “wear and tear” allowance to costs that are actually incurred as opposed to the current blanket 10% write-off. This will affect the projected yield. Despite a higher than average interest rate of 4% for buy to let compared with 3% for the first time buyer, the first time buyer has effectively to pay 5.7% on their repayment mortgage. On top of that, the buy to let investor can currently claim tax relief on the interest of up to 45%, lowering the effective interest rate paid from 4% to 2.2%. That makes the playing field skewed in the investors’ favour.
Once tax relief is restricted to the 20% basic rate, the buy to let investors effective borrowing cost will rise from 2.2% to 3.2%. This is now on the wrong side of many investors’ comfort zone. Although gross yields average 4.2%, net they only come in at 2.9% which is less than the new effective cost of debt will be. If rates start to rise in the meantime, even if its by a relatively small amount, then the buy to let advantage will be eroded. This is brought starkly into focus by capital growth becoming increasingly less dependable therefore buy to let investments less attractive.
Once tax relief is restricted to the 20% basic rate, the buy to let investors effective borrowing cost will rise from 2.2% to 3.2%. This is now on the wrong side of many investors’ comfort zone. Although gross yields average 4.2%, net they only come in at 2.9% which is less than the new effective cost of debt will be. If rates start to rise in the meantime, even if its by a relatively small amount, then the buy to let advantage will be eroded.
Richard Butler-Creagh has been involved in the property business since 1985 when he discovered that he had a talent for finding good value properties in excellent areas but in various states of neglect being sold below market value. He invested in the refurbishment of these properties after purchasing them and started building an impressive portfolio. He became an expert in real estate, locating the right property, financing it, renovating it and reselling it. Financing is a critical element and from this experience it was clear to Richard that there was a gap in the market where credit providers were not meeting market needs. Henley Finance Ltd, based in Henley on Thames is his new venture where he consults on all aspects of lending.
Racing for charity
Richard is a well-established businessman, property developer and property consultant. He is also a passionate sportsman who competes in marathons, cycling and various other sporting events. He recently cycled in tandem with his friend Brian Head in a charity race to raise funds and awareness for the Sue Ryder Hospice situated in Nettlebed. Richard had never ridden a tandem bike before they started training together. Brian, who lost his sight after an emergency operation removing a pituitary gland tumour almost four years ago, is the father of Anthony Head who died at the age of 46 after a year-long battle with oesophageal cancer. Anthony had finally lost his battle at the Sue Ryder Hospice. He had owned his own successful software company employing more than 100 people across the UK. Brian Head together with Richard Butler-Creagh rode in celebration of Anthony’s life.
Richard is also an avid sailor, having sailed his yacht “Carpe Diem” across the Atlantic Ocean to Barbados in 2000. He has also run the London marathon and in 2001 finished in 3 hours and 38 minutes In October 2013 he completed the Dublin Marathon at the age of 50 beating his personal best of 12 years earlier in 3 hours and 25 minutes and 15 seconds. and raised over £1000 for Sue Ryder. He is a member of the Royal Automobile Club and Pall Mall London. Richard lives in Henley on Thames with his wife Charlotte whom he married in 2002, and his two children Ella and Blake.
by Richard Butler-Creagh
With food prices dropping at the quickest rate in eight years in January, combined with further falls in the price of vehicle fuels, consumer price inflation is likely to move to a new record low in January, edging the UK economy closer to deflation, as such it looks increasingly unlikely the Bank of England will raise the base rate in 2015. The Centre for Economics and Business Research said: “The headline rate of inflation, as measured by the Consumer Price Index, fell to just 0.5% in December.” This is welcome news after the last couple of years of steep inflation, as high as 10% when taking into account the steep rise of fuel and food, according to some indicators. Savers have been worse off with the inflation eroding their accounts and making their hard-earned worth less by the low interest rate.
There are other indicators that the slow-down is slowing down. Banks are cautiously making funds more available to borrowers. Barclays have shuffled into the lead enticing buyers wanting to fix for five years, with deals starting at 2.29%, a cut of 0.1% from a week ago. First Direct has also shaved 0.2% off its five-year deal with a 2.59% fix until 2020. As usual these are for lenders with large deposits, normally 30% or more, but it is all suggesting that the market is heading for an increase in activity. When choosing a lender based on these 0.1 or 0.2% differences, remember to blends in the arrangement fees as they can alter the overall rate.
House prices still managed to increase last month with figures from Halifax showing that it jumped an incredible 2% taking the average to £193,130. This could be due to the reform of stamp duty producing a temporary wave, a spokesman said.
Further to the released plans of aesthetically thrilling design of the Phase III of the Battersea Power Station project unveiled by Frank Gehry earlier this year, certain things are clear. Confirmed: it will be a positive addition to London, and contribute more interest to Battersea Power Station by letting it overflow with some of Gehry’s magic. Gehry in collaboration with Foster + Partners has designed the undulating building to the west of The Electric Boulevard called “The Skyline”, which brings together the other half of the planned homes in addition to a medical centre and 160-room hotel. Two floors of retail front on to the western side of the street, while breaks in the façade allow daylight to reach the public spaces below are bound to wow the architectural crowd and the entire top of the building is laid out as one of London’s largest roof gardens, who could ask for more. It even includes 103 units of affordable housing. The question is, how many people can afford £800,000 for the smallest apartment though? What is not so clear is their definition of ‘affordable’ is one that would serve only a small percentage of the population with a one bed apartment starting at £800,000.
Frank Gehry, Founder of Gehry Partners:
“Our goal from the start has been to create a neighbourhood that connects into the historic fabric of the city of London, but one that has its own identity and integrity. We have tried to create humanistic environments that feel good to live in and visit.”
Ed Vaizey, Culture Minister:
“Battersea Power Station is an iconic site and the unveiling of this exciting new design by Frank Gehry and Foster + Partners will ensure the development of this former industrial site will put Battersea on the world stage once again. The plans for a new high street for the capital show that London continues to attract the best in terms of architecture, design and innovation.”
These quotes are from their press release and it is clearthat everyone is in accord that it Phase III is going to be an aspirational environment, but only for a lucky few. Unfortunately this is going to happen more and more as the government has recently allowed developers in new build hot-spots like Milton Keynes to renegotiate the number of affordable housing in one case from 63 to zero in an effort to stop the scheme ‘stalling’ as the previous numbers were ‘economically unrealistic’. Seems like they didn’t have to go to the bother to renegotiate, unless their ‘affordable housing’ was aiming for the people earning more than £200,000 p.a.!
The number of residential units for which planning has been approved across the UK has jumped by 41% over the last two years, according to data prepared for Knight Frank. Data released by the government shows that more than 48,000 homebuyers have used help to buy to get a leg up on the housing ladder. Some 30,000 have the used the help to buy equity loan scheme, aimed solely at those buying new homes, while around 18,500 have used the mortgage guarantee, reports the Henley Standard, in an article entitled ‘Planners rush to fill demand for homes’. Whatever your views on help to buy, and the government’s intervention in the housing market by this scheme, there is no doubt that it is having an impact on development volume. Redrow is the latest housing builder to show that sale via help to buy have accounted for a notable proportion of transactions over the last year, in this case around 35%. The uncorking of latent demand for housing through help to buy has also helped boost confidence around lifting development volumes. The latest planning data, which shows the number of private and social homes for which detailed planning as being approved in schemes of 10 units or more, highlights that developers are undertaking more work. This is reflected in record high construction activity, as reported by markit/ CIPS this week. It shows that around 190,000 units receive detailed planning in the year to July, up from 135,000 in the same period two years ago. The planning rules are no doubt also playing a part in the surge in planning applications, as under the relatively recently introduced national planning policy framework, the developments can be approved where a local authority cannot prove it has five years worth of housing supply This is the case for many local authorities there is still some way to go however Around 250,000 new homes are needed every year in the UK. In the last financial year fewer than 140,000 were completed.
I think this is very encouraging as planning has always been the main stopping points for developments going ahead and hopefully this is the start of a complete overhaul of the system.
Richard Butler Creagh
In Scotland where values are still 22% below their peak, the impending referendum in September is undoubtedly having an impact on the property market.
While the outcome is unlikely to affect dramatically the intentions of existing Scottish residence, the uncertainty has had an impact on the number of buyers moving from London who, until the summer, were keen to take advantage of the value gap. We would expect a decisive ‘no’ vote majority, to boost activity and consumer confidence in the housing market. In the event of a decisive yes vote, we would expect the current uncertainty to continue, with a further delay in the recovery.
That was a survey carried out by Savills. As a lender, we have stopped lending on Scottish properties until the outcome of the vote, this is just because of the uncertainty of the value of Scottish properties, and the currency that we would be repaid in.
When I am talking to property developers in Scotland I feel their frustration that this referendum is having on their business, they will think it’s going to be a no vote and find it difficult to believe that the independence vote will go through, but as a lender we have to be cautious and the uncertainty around the future of Scotland is just made it impossible to lend there at this moment in time.
Looking at the report carried out by Savills, I hope there is a decisive no vote, and that will give a much needed boost to the Scottish property market. If in the event of a yes vote, it would seem that there will be a long drawn-out process until the currency and the markets settle down and and then we should see the property market recover. There is still a question of how a person from outside what would then be a new independent Scotland, would we be able to buy a property and also who the lenders would be, would the English banks still be allowed to mortgage properties in what would be a foreign country?
Richard Butler Creagh
Savills have just published a well-researched article a bout the new affordability tests introduced by the Bank of England in June. They were designed to ensure financial stability rather than to control the property market and subdue house price growth. However, further to the regulatory changes set up by the mortgage market review, the Bank’s latest set of measures looking increasingly likely to rein in the more bubbly parts of the housing market and curtail the growing number of first-time buyers.
Under the new rules brought in by the Bank’s financial policy committee, lenders are required to assess whether borrowers could still afford their mortgages if, at any point over the first five years of the loan, rates would be three percentage points higher than the rate at origination. Mortgage lenders are also required to limit the proportion of mortgages at 4.5 times income above to no more than 15% of their new mortgages. These latest changes are far more prescriptive than the tighter lending rules introduced by the Mortgage Market Review in April which required a stress test but did not set a rate. Furthermore, the UK banking sector is currently undertaking a particularly stringent collective stress test, which examines the resilience of banks should house prices fall by around 35%. The exercise is to be completed by the end of the year.
I think this is a good article as these factors will and are impacting on the property market as the property market is controlled by the mortgage market: if mortgages are difficult to come by there will be less buyers. This can already be seen in the housing market when mortgages are becoming increasingly difficult to get.
The one sector which is being particularly affected is the market above £2 million, these are the mortgages which are proving difficult to pass the affordability test, as a lot of these people are putting large deposits down and maybe living off investments rather than income and the banks are failing to take this into consideration.
Richard Butler Creagh
The government’s Right to Buy scheme was launched by Margaret Thatcher in 1980 to encourage council tenants to buy their homes. I was researching how it has evolved especially in the light of the rising demand for housing stock. There was an article in the Daily Mail on 27th August and it raises some issues.
The article writes: The number of homes sold through the government’s Right to Buy scheme is up more than a third compared with last year. Figures from the Department for Communities and Local Government show 2845 houses were built through the scheme between April and June this year. That is 31% more than the 2171 bought in the same quarter last year. London was the most popular area, accounting for a third of right to buy purchases. Nationally, councils made a total of £210.8 million from the sales in the past year, with an average £74,000 paid for the property. It is an increase of more than 60% from the amount raised through sales in the same period last year. Since the launch of the Right to Buy, around 2 million properties were sold in the following three decades. In 2012, the scheme was reinvigorated to offer discounts of up to £75,000 on properties to encourage tenants to buy. The discount was increased in March 2013 to £77,000 and to £102,700 for London borough tenants. ‘Council house building starts are now at a 23 year high’, says Brandon Lewis, Housing and Planning Minister.
The thing I find difficult to understand about the Right to Buy scheme is that councils are having difficulty finding homes for new council tenants, and yet then they build new council houses then sell them off. I can see that if tenants are then taking over the responsibility of looking after their houses this then saves the council money as it has less housing stock to maintain. This is a viable solution as long as demand plateaus soon, easing up on the currently escalating demand for new build housing.
Richard Butler Creagh