guaranteed rent schemes | Wimbledon v Henley: where’s the best place to buy a property?
British summers are defined by tennis and regattas, but where makes a better home, asks Caroline McGhie.
We know summer is in full swing when we hear the roar of the crowd on Centre Court, the plop of oars as rowing eights pull up the Thames, or women speak of hats and garden parties. These time-honoured rituals give potency to privileged pockets of the property market in ways we may not have imagined.
Wimbledon, already well-heeled, with house prices on a level with Parson’s Green or Fulham, steps up to the table for extra helpings. As thousands pour in with their sun hats and umbrellas, some locals prepare for bumper weeks of rental income. The most ordinary houses and flats can command fantastic prices as long as they are within a 10-minute walk of the All England Tennis Club.
“There are people who let at his time of year but not at any other time,” says Alison Purdue, the lettings manager at Hamptons International. “You can usually get three times the rental value of a long let. This is more than the value of a holiday let. Tennis players, the media and people involved in running the tournament need places to stay.”
In Somerset Road, right by the courts’ entrance, families routinely pack their bags, clear their cupboards and drawers, and move out for the duration. Geti and Kamran Mahmood, with their teenage children Azhar and Zainab, are used to the annual exodus. They go off to stay with Geti’s mother in Kensington, leaving the house to earn as much as £5,750 a week.
“It is quite a lot of work to get it ready, but we have a garage we can put stuff in,” says Geti. This year is a little different as they have permanently moved out to a flat nearby and hope to find a long let through Hamptons International at £5,500 a month once the tennis is over. “It is a nightmare during the tournament as the road is closed,” says Geti. “But we all get passes so we can go in and watch, which is wonderful.”
The whole area gets a shot in the arm from the tournament. “It makes it a global destination,” says Clive Moon of Savills. “These days around 20-25 per cent of our buyers are from abroad.” A week before the tournament, the area shows off its village credentials with a huge summer fair on the Common.
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“You always have one foot in the country here because the Common comes right up to the High Street,” says Clive. “Yet you can see the London skyline because we are that close. Families love it. There are coffee shops, restaurants, all the specialist shops.”
At Henley-on-Thames in Oxfordshire, residents benefit from living in one of the prettiest riverside towns which also hosts the best-known rowing regatta in the world. The parade of glamorous hats entering the Royal Enclosure, the chink of Pimm’s and the thrill of watching the boats cross the finishing line, makes it one of the great English summer spectacles.
“Families move out every year to let their houses for the regatta,” says Suzy Garrett of Knight Frank. “The rowing is followed by the Henley Festival, so people rent for three weeks or a month and pay three times the value of a long let. It is also the prettiest time of the year when the river banks are draped with willows.”
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People rent here for other reasons too. “There are those who have sold in London and rent to buy the right house when it comes up,” says Suzy.
The town is full of Victorian houses. “They sell at £600,000 to £1 million and are good for families,” says search agent Mark Parkinson of Middleton Advisors. “Outside town you find some of the top houses in the country, which sell at £15 million to £20 million. The countryside is beautiful, protected, pure chocolate box.” The most expensive sale was in 2011 when Park Place sold for £140 million.
In the heart of Henley, close to the picturesque five-arched bridge, Barry and Karen MacKay are selling Thamesfield Cottage with 45ft of river frontage, so they know this will be the last year they find themselves spectators at the regatta.
“We can walk along the Thames and watch everyone in their boaters and blazers without having to enter the enclosure,” says Barry. “I think a lot of people go for the fun rather than to watch the rowing. Then when the Music Festival arrives it is black tie and tails.”
This is the Home Counties at its velvet-lined best, and it doesn’t blink at fame in its midst. Beatle George Harrison lived at the Victorian Gothic mansion Friar Park for years until he died. These days you might spot Liam Gallagher, Orlando Bloom or screenwriter Richard Curtis popping into town to do their shopping.
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Guaranteed rent insurance | Is property investing just a prime London bet?
As investors continue their return to property, are there opportunities to be found outside London’s prime assets, or even away from bricks and mortar altogether?
April saw property funds regain further ground, with the IMA Property sector ranked the 10th most popular sector for the month after it recorded £98m in net retail sales, compared with £33m for March 2013.
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Ignis property director Gary Hutcheson says the return to property comes as the asset has began once again to fulfill its traditional function as a diversifier.
He says: “In the current environment we are left in a position where equity markets are very volatile and gilt markets provide negative real returns.
“Property is sitting amidst this with an income of 6 per cent plus, and providing inflation protection with this income too. It looks like property is going back to being a good diversifier and providing investors with a good income return.”
However as demand for property increases, some managers argue that prime locations and assets are becoming expensive and look instead to a range of alternative property investments.
Kames Capital chief investment officer Stephen Jones says: “There is a move away from the very expensive safe haven assets of central London and there is beginning to be some value in sensibly stock picked and assessed second tier, second city properties around the UK.”
Standard Life Investments manager Jason Baggaley adds the long-dated income commonly associated with prime assets is expensive.
The manager of the SLI Property Income Trust is now looking to short-dated leases in areas where there is low supply of good quality accommodation, such as Staines, Edinburgh, Glasgow and Manchester.
He says: “I also like short leases in these areas because I do not think this supply issue will change in the near future – there is very little building going on.”
Schroders head of property research Mark Callender highlights a potential future opportunity to invest in clusters of property occupied by the technology, media and telecoms (TMT) sector across Europe.
Callender gives examples of these “tech-clusters” in fringe office locations in big cities such as London, while others can be found in university cities including Cambridge and Reading.
According to Callender, the TMT sector shows signs of becoming a future leader for economic growth in Europe, whilst already showing visible benefits for property.
He says: “The growth of the TMT sector has been an important driver behind the fall in vacancy and recovery in office rents in certain cities such as Cambridge, Karlsruhe, London’s West End and Munich since 2010.”
However Callender does point out that tech-cluster property may not be suited to investors who favour the security and quality of prime assets.
He sayss: “The real attraction of fringe office locations is that while rental growth may be negligible, investors who have good property management skills and who can keep their buildings fully occupied, are likely to achieve yields which are 100-300 bps higher than in the adjacent central business district.”
Aberdeen Asset Management investment manager Sanjeet Mangat puts forward the alternative argument for investing in property shares, as a way to gain liquid exposure in what is a traditionally illiquid asset.guaranteed rent insurance
She says: “Liquidity is key. Markets have been volatile and people are quite keen to know that they can get their money in and out of the market quickly. Monthly valuations of standing buildings are not as liquid a market compared to a NAV to market each day.”
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The Aberdeen Property Share fund invests in listed property companies as well as companies that derive a significant proportion of their profit for revenues from property.
Mangat says the fund’s 24 holdings, “each with hundreds of buildings in their own portfolios”, create huge diviersity while avoiding the “material single asset risk” that comes with physical property.
She adds: “London and the south-east remain more resilient and show more potential for long-term growth. Our portfolio is concentrated on prime assets here.”
Other fund managers are also continuing to put prime assets first. The Henderson UK Property fund co-manager Marcus Langlands Pearse says his portfolio will “always focus on the south east”, because of the liquidity in that area of the market.
However he acknowledges opportunities are emerging within secondary property. He says: “Fundamentally good properties in the regions or with shorter leases are increasingly being seen as undervalued.”
Langlands Pearse adds he has recently acquired assets outside typical prime locations including a cinema in central Cardiff, a factory in the midlands and is also considering the purchase of property in Scotland.
Murphy Financial associate partner Adrian Murphy argues the case for sticking to bricks and mortar property funds. He says: “As much as property company shares are exposed to property, you are still ultimately driven by the market sentiment rather than income and valuations.
“That is no use for us, it is totally against why we would look to put money into property funds in the first place.”
Cube Financial Planning co-founder Mike Godfrey uses “two core themes” of direct UK commercial and REITs when investing in property. He says: “We have property as a diversifier.
“We believe this combination, with the right proportions, works well as an alternative investment as part of a portfolio.”
3Let allows you to guarantee your rent for a term of 1 to 5 years. Contact Guaranteed Rental today on 020 8694 8098 to find out more.
guaranteed rent london| Fulham house prices up 13%
Fulham’s “ultra-gentrification” has sent house prices in the borough soaring 13% in the past year, property consultant Savills said today.
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The surge means that £1 million invested in a Fulham property would have gained £2500 a week over the past year — three times faster than the £845-a-week growth across central London.
Residential research director Lucian Cook said: “Fulham is classic example of an area which has undergone ultra-gentrification, attracting international and domestic buyers who, despite significant wealth, have been priced out of the central London market.
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“Such migration of wealth is being seen from Chelsea to Fulham, Kensington to Battersea and Wandsworth, and from Notting Hill to Chiswick.” The latest surge defies Savills’ expectations for flat prime property markets this year because of factors such as the stamp duty increase on homes above £2 million.
Annual price growth in South-west London stands at 8.5%, well ahead of the 4.4% seen in central London.
We will regularly inspect your property, to ensure it is well-maintained and that everything is as it should be, ready for when you do get a tenant again. We will also continue to advertise your property, to show it to prospective tenants and to keep you informed every step of the way. And you can relax knowing that all the while this property is empty, you are still guaranteed rent payments and are still receiving a monthly guaranteed rental income.