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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.
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.!
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
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.