Rob Moore Mark Homer. “The unsheathed truth behind UK property economics and why supercharged...
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Transcript of Rob Moore Mark Homer. “The unsheathed truth behind UK property economics and why supercharged...
![Page 1: Rob Moore Mark Homer. “The unsheathed truth behind UK property economics and why supercharged returns are inevitable”](https://reader035.fdocuments.net/reader035/viewer/2022062519/5697bfaa1a28abf838c9a4e3/html5/thumbnails/1.jpg)
Rob MooreMark Homer
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“The unsheathed truth behind UK property economics and why
supercharged returns are inevitable”
![Page 3: Rob Moore Mark Homer. “The unsheathed truth behind UK property economics and why supercharged returns are inevitable”](https://reader035.fdocuments.net/reader035/viewer/2022062519/5697bfaa1a28abf838c9a4e3/html5/thumbnails/3.jpg)
1. The New Paradigm 2. The Investors secret weapon 3. Green and Pleasant returns4. Grow up, get lower rates on Pick and Mix
finance
“The 4 sure fire strategies to supercruise your profits in the new world”
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• Section 1: The New Paradigm
-Great crash of ’08 – 2 main segments
-Finance Led, so high LTV worst affected
-Different from late 80s – people want to buy!
-Bottom end Rents rising strongly
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
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• Section 1: The New Paradigm
-Low end residential outpacing commercial
-7% this year, 6.5% next, 5.5% in 2012 (Savills)-Low end of cycle where prices don’t rise as quickly (for now!)
-Yield explosion
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
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• Section 1: The New Paradigm
-UK private rented sector growth: Europe
-Size, imbalance of returns, attractiveness brings
-Institutional investors: Banks lending on rent
-Commercial Properties valued on rent
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
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• Section 1: The New Paradigm
-Surveyors instructed this way
-What can you do?:
- Pick areas with high LTV
-Pick the highest yielding properties
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
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• Section 2: The Investors Secret weapon
- Inflation now CPI: 4.0%, RPI 5.1% In January
- Believable?
-Govt using backdoor strategy! 70s?
- Helps rental growth
- Devalues debt + Drives capital value
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
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• Section 2: The Investors Secret weapon
- Less Sellers with equity
- Yields will reduce as market grows, pre crunch
3% lower!
- Eventually yields will be so high and people
Wake up – yield compression
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
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• Section 2: The Investors Secret weapon
- Solution: Lease Options/Long stop
- No Deposit, can take old cheap mortgages
- Agents full of people who cant/wont sell
- Incentivise them with fee over time
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
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•Section 3: Green and Pleasant returns
- Low rate, normally easily accessible system
-High borrowing by world standards
- Just behind US
- UK Property Market very focussed on finance
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
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• Section 3: Green and Pleasant returns
- London recognised as the most attractive
European City for Investment (LaSalle Inv
Mang), ask Lord Sugar!
-Growth post 70s, 80s and 2008 crashes
- Credit Crunch particularly severe here
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
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•Section 3: Green and Pleasant returns
- Population from 60M to 71M by 2031
- Doomsday book – 1086
- Land was worth around £75k - £1 Trillion today
-over 10% annually! AFTER Inflation
-Planning – not in my back yard
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
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•Section 3: Green and Pleasant returns
- US/Australia too much building land
- Europe rents
-Build costs rising – wiring quote! Ged materials
-Upswing will be greatest in UK
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
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Land value?
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•Section 3: Green and Pleasant returns
- Weak Sterling drives building costs on imports + Local materials pushed abroad
- Developers build less houses if no profit
-Barker report ‘03 around 230k new homes needed
-Avg 3 bed 1000 sq ft house £80k plus to build!
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
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•Section 3: Green and Pleasant returns
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
-Yr to June 2010 around 100k completions (CLG)
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•Section 4: Grow up and get lower rates on Pick and Mix finance
- Relationship based
- Little by little – rent stress eases/interest only
-Remortgage straight away
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
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•Section 4: Grow up and get lower rates on Pick and Mix finance
- Lloyds – 70% LTV, around 3% over base.
Who?
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
- 2.5%-3% over base!
- No CML
- Short Leases, Title defects, owned for short period
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•Section 4: Grow up and get lower rates on Pick and Mix finance
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
- Not RBS!
- Santander, Butterworths, Adam Bank, Aldermore great for HMO (value on rent)
- Unlikely CO-OP!
- Barclays – Interest only lower rent stress
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The credit committee
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•Section 4: Grow up and get lower rates on Pick and Mix finance
- Need a business Plan – credit committee
- Demonstrate knowledge (bus manager likely to know less than you about residential property!)
- Wet their appetite – lots to refinance
- HOW?
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
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•Section 4: Grow up and get lower rates on Pick and Mix finance
“The unsheathed truth behind UK property economics and why supercharged returns are inevitable”
- Credit history not important to some
- Show some income