Author Archives: Richard Butler-Creagh
Gone are the days when the Bank of England was just known for setting interest rates in order to control house prices and inflation. Now this is not tenable given the number of home-owning families already battling against an ever increasing cost of living, the Mark Carney, the Governor of the Bank of England is looking elsewhere to control house prices rather than simply tweaking interest rates. Read the rest of this entry
Booming London house prices are likely to be subject to a new levy soon after the general election, should the Liberal Democrats or Labour get into power, says the Chief Secretary to the Treasury, Danny Alexander in a speech to the city yesterday, writes The Times. Read the rest of this entry
The buy to let business is a good long term investment if you are prepared to work at it. First you have to find the right location, this a very important part of the business, get it wrong and you will pay dearly. When I started in this business I use to look in the areas I enjoy going to, it always makes life easier if when you have to go to the property for what ever reason its a place you like to hang out in so its not a chore. The next thing is to make sure its close to pubic transport, in london for instance it can make a lot of difference if it is zone 1 or 2 and so on. This a long term investment so you should look to the future and think what the next up and coming areas are, for instance when I started buying property I bought on the edge of a good area like west hampstead you can go closer to Kilburn which is not quite as good an address as West Hampstead but still popular and when it comes down to buying you get more for your money and as time moves on it becomes more expensive and the difference in rent from a property in the centre of West Hampstead and on the outskirts is not that much so can pay less when buying but get close to the same rent when renting. the next thing is kitting the place out, keep it simple and not cluttered make it so easy so that when the tenants move out it is easy just to freshen up and get ready for the next tenant. Rent, do your home because the tenants will, they will know exactly what the going rate is, if you are to high in price because you paid to much or spent to much on getting the property ready you will be waiting a long time to find a tenant.
One of the largest house-builders in Britain recently dismissed fears of a housing bubble as it reported booming demand for its new homes. The House builders revenues jumped 21% last year after it sold nearly 12,000 homes and that is with sales 30% higher in the second half than the first. One of the rival companies also have record profits for the six months to the end of December so it seems that the industry is starting the new year in a really bullish mood. all this came as figures from the mortgage lender, Halifax, showed house prices had dipped 0.6% in December but are still 7.5% higher than a year ago.
The whole of the housing market has had a remarkable recovery after many years of stagnation boosted by increased mortgage lending and assistance from the state-backed schemes such as Help to Buy. Many people think that the revival has fuelled a housing bubble and this has caused the Bank of England to scale back the funding for lending scheme so it no longer applies to mortgages.
Some of the large house builders say they don’t think there is a bubble, they say they cover the whole of the country and think the pricing is stable across the board.
I think the main thing is that if wages increase inline with house prices there should not be a bubble, but as we know this is not the case so people buying property when interest rates are at record lows, it would not take much of an increase to make things very difficult for a lot of new home owners who are pushing themselves to all time highs in prices. One thing is for sure interest rates can only go one way at the moment, so as I have said in the past it is a good time to fix a good rate with your lender.
How do the recent floods effect the property market? If a property is close to a river that has burst its banks then the chances are that the value of that property will go down, the reason for this is quite obvious, damage caused by the food water and higher insurance premiums. there are certain things that you can do, and that is to have plan for when the floods come, there is a system called a Delta Membrane System this assumes the water will get in, it then directs the water via channels into a sump where it is then pumped out of the building. I have seen photographs of a house where the water is all around the house and the inside of the house is completely dry with the pump constantly pumping the water out, it also has a back up system where an alarm sounds just in case the power fails and it then moves on to its own batteries.
This system is easier to fit when you are building a house or carrying out a major refurbishment project. The system requires a membrane to be attached to all the external walls and the floor, you can then plaster over this and lay your floor so that as the water flows in it hits the membrane and flows into a channel and then into the sump and is then pumped out.
This may not help with insurance premiums to start with but at least you will not have encountered all the damage and therefore no need for a claim.
I have fitted one of these systems and they work really well, during all of the heavy weather we have had the building has remained completely dry, so wouldn’t hesitate to recommend this system and if it is a house you are selling then I am sure if you have this in place, and the other house in the area does not I know what house I would rather purchase. I like to ensure that my properties are properly protected from natural hazzards and also ensuring that your property is insulated and meets high efficiency standards can save you money, in a recent article on the eco scheme I discussed my thoughts on ensuring properties meet high efficiency standards.
I think the property market will be steady this year it seems that Mortgage approvals are up and the government schemes are giving the market a boost, it will be interesting to see how long they keep this up there is only so much they can put into this, and it will be interesting to see what happens when they stop the help to buy.
The other thing that will be good to keep an eye on is average earnings. the average earnings should be about 3 time the cost of the average house, but I have a feeling this has got a bit out of line. in the late eighties and early nineties the average earnings did not go up in line with house prices, and as a result when the average house price got to about 4.5 times earnings, we had a major correction in house prices. this time we are already way past this level, it has not had such a big impact as interest rates are historically low so this makes things more affordable, so what happens if interest rates go up, as there is only one way for them to go.
I hope the people at the Bank of England are keeping a close eye on this as it could end up getting quite expensive to own a house that you have stretched yourself to buy on current interest rates, only to find the only way of slowing the housing market down is by increasing rates. people who can’t afford it will put their property on the market, then you get over supply and then the rush to sell starts and prices start to drop.
I think it is a good time to fix rates with your lender and at least you know that you can maintain the mortgage payments when the time comes when interest rates go back normal.
This is a business I have been involved in for many years, it is essential to understand all aspects of the property business as decisions have to be made quickly. First is valuation I can put a guild price together based on what has sold in the immediate area and the amount of work required to get the property ready for sale, if that is what is intended, then to get a more precise value I instruct a Chartered Surveyor they will value the property and report on the condition of the building this also comes with insurance should they get the value wrong, and if there is a bank involved they will insist on this. Next is the legal side, the Solicitor will carry out the all the checks and give you a complete report on the title, this will let you know what you are buying and all the boundaries. Next I have to work out how much I would be prepared to lend, this is worked on the basis of what we call loan to value(LTV). there is no set rules for this, but generally the better the property and location the higher loan to value would be considered, 75% is the average. This is an expensive way to borrow money so you have to know the borrower has a strategy to repay the loan, this is where a lot of people get it wrong if they don’t have a clear exit strategy there is usually problems down the line. These loans are generally between 3 and 12 months which can soon absorb a lot of the profit for the developer if they have to pay the short term rates instead of moving the loan to a more long term rate. Rates vary so much in this business as no two deals are the same, some have more risk attached so the rate will be higher, and also what the security is whether it is first charge or second charge this has a big impact on the rate.
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 ran the Dublin Marathon and at the age of 50 beat his personal best he achieved 12 years earlier in 3 hours 25 minutes and 15 seconds, raising over £1,000 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.