Property expert reveals how to get the best deal post-Covid

Like many other areas of life, the property market finds itself in extraordinary circumstances in the aftermath of the coronavirus pandemic. 

Whether you’re a first-time buyer or a landlord renting out property to tenants, the landscape looks a little different to how it did at March’s end, when pause was firmly pressed on a post-Brexit recovery. 

FEMAIL asked property entrepreneur, Ben Wilson, who runs the Knight James group of companies, and has bought, renovated and then sold on a series of multi-million pound homes, to cast a careful eye over the key areas of the property market and how it might affect everyone from tenants to up-sizers. 

Ben, who lives in Maida Vale, shares his top tips on how to make strong financial decisions whatever your position.  

He explains: ‘The market has for years been dogged by a lack of stock and associated transactions, as buyers and sellers waited to see what happened with Brexit. There was still pent-up demand, helped by incredibly low rates.

‘Prior to COVID-19 I saw that prices, in London in particular, were rising, possibly by as much as 5-7 per cent in the immediate aftermath of the election and I think we would have seen these rises continue this year across much of the UK, were it not for the pandemic taking hold.

‘Although no property professional knows exactly what the market is going to do, we can make informed predictions – although they should always be treated with caution. 

‘The guide below is designed to give you some tips and insider information on how best to survive the property market in a post-Covid Britain.’ 

FIRST TIME BUYERS

Buying your first home is always a nerve-racking experience and the truth is there never really feels like a right time to push the button. Like any time of uncertainty though, one thing it does bring about is opportunity, assuming you buy smart:

• Money is cheap! Mortgages are the cheapest they have ever been with 2 year fixed rates starting at just over 1% for 60% loan to value deals, rising to closer to 2% for people looking to borrow 90%.

• Personally I think it is unlikely rates will drop much lower (but always take a broker’s advice!), so I like to lock into the cheapest fixed rate mortgage I can find, so I know exactly how much my repayments will be over a certain length of time.

• Generally the risk of property prices falls decreases with time: buying and owning for 6 months in this sort of market is likely to be far riskier than holding onto a flat for 5 years. There are currently some great 5 year fixed rates mortgages on the market, but be sure you are planning to stay for the long term if you take one.

• If you long term fixed rate mortgage be sure to check for hefty early repayment charges. These normally drop year on year, but each lender is different. If you cant avoid them look for a portable portable, so you have the option to move the mortgage to your next property if you unexpectedly move early.

• There is still a huge amount of government help to get on the ladder: the help to buy scheme, shared ownership options and investing in a lifetime ISA to save a bigger deposit. Explore them all.

• First-time buyers also benefit from paying no stamp duty on the first £300k of purchases up to £500k, assuming they have no other property.

• When offering on flats the discount you are likely to get will vary in this sort of market. The best properties on the best streets will still sell for strong values, whereas properties that require a lot of work or are tired will see bigger price drops.

• The general feedback I am getting from agents is that the market is currently better than expected. Prior to the pandemic there was a lot of pent-up demand in the market after the Tory landslide election win. Many of these buyers are now coming back to the market.

• Work closely with local agents to seek out the best properties. They may have 50-100 buyers they are dealing with at any one time, so making yourself known and treating them well goes a long way.

• If you can find a property that offers the chance to add value, then all the better.

• Don’t shy away from buying leasehold properties. A well run block of flats can make a great place to live, just ensure the lease is long enough and that you get a reduction on the price if it is below 80-90 years in length. Speak to a leasehold specialist about this before exchanging.

• Outside space has always been an important factor in any purchase, but now more than ever I expect buyers to seek out flats which offer external amenity space.

• Solicitors….always employ the best solicitor you can afford, a poor solicitor can wreck a purchase. When I was a young agent I would spend hours chasing difficult solicitors who didn’t want to speak to us and had no incentive to move a deal along quickly. A commercially-minded, pro-active solicitor is worth their weight in gold!

UP-SIZERS  

In the UK people tend to obsess about how much they get for their own property, when really they should focus more on the ‘trading gap’ between their current home and the next one they plan to buy.

• If you are upsizing, you really want to sell at the bottom of the market, as your trading gap will be smaller.

• As an example if you sell at £200k and the market rises 5%, you will lose out on £10k of value in your flat, but probably save £20k on your £400k onward purchase. You are then £10k better off.

• The trading gap theory above only works if you have enough equity from your sale to get the mortgage you want on the onward purchase. If you have little equity in your home currently you may be better to sell when the market is higher, so you have a large enough deposit for your onward purchase.

• Try to find a local agent who you can work procatively. If you offer an agent your flat to put on the market they are more likely to work harder to find you your bigger home: for them is win win. They sell your flat and your onward purchase, meaning double commission!

• When it comes to picking agents, be careful about running with the cheapest fee. Online agents can be great and in certain markets it makes sense to save agency fees. In many others, it really doesn’t!

• Finally, if you are purchasing a dilapidated property that has been empty for more than a couple of years, look into potential VAT reliefs on your refurbishment costs. A good accountant can advise.

DOWN-SIZING 

When selling any property, especially a large family home, it is important to de-clutter, redecorate and have it looking its best – now more than ever. If you have a garden weed it, cut the lawn and tidy away any kids toys. Now is the time to set your home apart from the others:

• Generally when I sell a property of mine I instruct two local estate agents who I see as the best in the area, whittled down from 4 or 5 valuations. Take a look at how much ‘stock’ they have online and ask them for comparables of similar properties they have sold. You will pay slightly more for a joint sole agency contract, but I find it motivates both agents to find you a buyer and often at a better price. Having 3 or more agents on your sale can make you look desperate. Generally this should be avoided.

• Don’t always run with the agent who values the house the highest. If one agent is coming in well above the others and cant back it up with comparables, it may well be too good to be true.

• I also recommend that people get on the property portals and see what else is on the market. If you are selling a 5 bed semi and there are 5 others on the market at £50k less, the chances are you will need to drop your price. Sales prices are determined by more than just past sales. Be realistic about your competition.

• To achieve the maximum value for family houses, it is important the house is in proportion. You may have 5 double bedrooms and 3 bathrooms, but if you only have a small kitchen and reception room the value of the property will be affected.

• Seek out your target market and ensure your house fits that brief. Local agents will be able to guide you on this.

• Again, as with any linked sale and purchase, the ‘trading gap’ comes into play: you really want to downsize before prices fall, as you will get more proportionately for your larger house than the extra you pay for your smaller property.  

• With regard to your onward purchase, if you are buying with cash, as many downsizers do, make sure you use this to your advantage. Get a great solicitor and surveyor on board and move on properties quickly. Sellers are more likely to accept a lower offer if a buyer can exchange contracts in a couple of weeks, rather than the standard 6-8 weeks currently.

• If you are in fact taking a mortgage, you can still move more quickly than most. There really is no reason why you cannot exchange contracts within 3 weeks, with a good broker and solicitor. Send your searches off straightaway and push the agents to chase the sellers, to provide the information your solicitor needs.

DISTRESSED HOMEOWNERS 

The last few months have been tough for many people, with many struggling financially. If you are in financial trouble and at risk of repossession there are still steps you can take to avoid losing your home:

• Most importantly, always take legal advice. If you can’t afford a solicitor speak to the Citizens’ Advice Bureau and see what help they can give you. Shelter also offer advice for those facing repossession.

• Letting out a room(s) in your house can be a great way of bringing in extra cash and is often very tax efficient. Up to £7500 can be earned tax free from letting furnished accommodation in your house. Having a lodger may just solve your money worries.

• If your house has development potential consider selling off land to raise funds. Perhaps a parking space or garage could be sold? Take advice from local agents before doing so and consult your lender, as they would have to agree to any changes in their security.

• If you are struggling to pay your mortgage speak to your lender and other creditors/suppliers about payment holidays. Many will allow you to take 3 months of payment holidays to help get you back on your feet. Just remember: it is a holiday, not free money!

• Above all: maintain dialogue with your lender at all times and try to work out a repayment plan, always paying them what you can. If it goes to a judge’s chambers these things will be looked upon favourably.

• If you come to the conclusion that you must sell to avoid being repossessed, avoid telling the estate agents this. Instead explain you are keen to sell as you have seen a property you like and would like a swift sale. This will make you appear less desperate and hopefully ensure you get some higher offers from end user buyers.

TENANTS 

The Government has offered a lot of help for tenants who have been affected by COVID-19, not least the opportunity to defer their rent payments for five months, with evictions also halted for five months: 

• What many tenants forget is that this is only a rental payment holiday, not the landlord cancelling 3 months’ rent. The money will still be due and many landlords will expect it paid back in full, over time.

• As with anything, maintaining good communication in tough times is essential. If you keep your landlord up to speed with your financial situation they can do their best to help you where possible and also ensure they can react appropriately to plan their own finances.

• Speak to your landlord and try to arrange a repayment plan for any months of owed rent. Most reasonable landlords will work with you to come up with a solution that works for both of you.

• If you have spare space, speak to your landlord to see if they will allow you to take on another flatmate to help you pay the rent and ensure they do not also lose out financially.

• Another option for coming to a better deal with your landlord is by agreeing to sign up to a longer tenancy, assuming of course you are sure you can pay the rent moving forwards. This way the landlord knows they have a tenant for a longer time period and they may look upon a deal more favourably with this in mind, if historic rent is owed.

LANDLORDS 

COVID-19 has also been a tough time for landlords, with many seeing their rental payments reduced or stopped altogether. Contrary to the stereotype of a landlord being this incredibly wealthy figure, who owns multiple slum houses and treats their tenants badly, in reality this is rarely the case: the majority are your average middle class family with one or two buy to let properties, often purchased as a form of ‘pension plan’. If you are struggling as a landlord there are a few solutions which may help:

• If you are able to work with tenants to agree fair repayment plans then fantastic. The only way we will all get through this is by working together.

• If you are a landlord with empty flats that you are looking to let, think about offering the first month rent free when you go to market. This will set your flat part from the competition, without reducing your future monthly rent. Once rents have been dropped it is far harder to get them up, especially if a tenant renews the contract.

• Generally I advise clients to be as flexible as possible when it comes to furbishing a rental property. If you can let furnished and unfurnished you can capture the whole market and hope to achieve a better rental yield.

• I am hearing from lettings agents that there is quite a lot of stock coming to the market. To ensure yours is viewed more positively make sure it is looking its best: have it deep cleaned, re-decorate it where necessary and make sure it has a decent bathroom (a good power shower is a must!) and kitchen: anything that can differentiate your property from the competition!

• The type of tenant you take on matters more now than ever. Pre COVID-19 landlords were often looking for professionals, but now many are looking for those working for the government, as they know their wages will be paid without fail and therefore their rent is more likely to be paid too. COVID-19 is fundamentally changing the way tenants are viewed.

• Now more than ever landlords should be taking adequate deposits, to cover themselves from tenants defaulting on rent. Most decent agents will take 6 weeks’ rent as a deposit, anything less exposes you to more risk. The bigger the deposit, the better.

• Consider offering rent reductions for tenants that will pay 6 or 12 months in advance, giving you financial security over the short term.

• From my experience as a landlord one to one contact with tenants goes a long way. In the past I have always met my tenants, just to introduce myself and put a face to the tenancy. I would also leave a note and bottle of wine for them on the move in day. Small gestures like this go a long way: someone is much less likely to bump you for rent if they have met you and like you!

Find out more about Ben’s London property development business, and property consultancy and design and build practice at knightbydesign.co.uk