As the UK heads towards Brexit and residential tax changes continue to reverberate through the property market, there has never been a more pertinent time to seek expert property investment advice. Sophisticated investor or not, market knowledge and sound financial analysis from a seasoned industry player is always the key to success.
Naomi Heaton, CEO of London Central Portfolio, set up one of the first buying agencies in the UK in 1990. Offering a one stop asset management service, it specialises in maximising investors’ returns in central London’s most prestigious boroughs, The Royal Borough of Kensington and Chelsea and The City of Westminster.
As the name suggests, a buying agent looks after the buyer. The focus is to identify and acquire the best properties or buildings to meet each client’s brief. Whether the client is flying in from a different continent or is based closer to home, Naomi Heaton and her team have their ears so firmly pressed to the central London pavement, they will hear about the most sought-after properties before that wooden sign is remotely near being hammered into the ground.
It will be of no surprise to anyone that prime central London property is highly sought after, forming its own investment microclimate. There are fewer and fewer sales each year and, in these iconic areas, new builds are virtually non-existent. 2016 saw only 4,000 sales transact. The pool of quality property is shrinking as owners opt to hold onto their highly prized assets. This makes finding great opportunities that both appreciate in value and rent well, an ever-changing and complex task.
“We look at where the deals are coming,” says Heaton. “We spread the net out and are very good at seeing price mismatches, discounts, properties which are coming up and are exceptionally interesting. We have around 500 or 600 different contacts that we are speaking to day-in and day-out. It’s our job to hear about properties when they are off-market or pre-market, so we can be in there first. For every property we look at, we go in, we financially model it and determine whether the yields that we are going to achieve will fit the market parameters”.
Heaton continues: “When I set up LCP in 1990, it was a concept that was really unheard of, but absolutely vital, because selling agents don’t represent the buyer and the investor needs representation. They need to make the right purchasing choices, they need to be able to renovate their property and rent it to good quality tenants – and how do you do that when you are probably sitting a long way away or in a really high-powered job. So, the role of the buying agent is to make sure that the investors are represented every inch of the way”.
The appeal of buying agents for overseas investors is clear. You’re unlikely to want to spend hours trawling websites like Zoopla or flying over to meet teams of agents. Naomi and her team have developed LCP into an incredibly streamlined service, guiding their investors through the intricacies of the London market. With 90% of their clients overseas, this kind of service can produce far more attractive returns than speculative investments through property exhibitions held abroad.
“New builds are marketed off-plan at glamorous property exhibitions as investments,” she explains. “Investors have historically seen them as a hassle-free option, negating the need for searching and travel. However, as investment choices, they need to be entered into with care”.
“Investors tend to pay a premium for new units but these suffer limited resale potential once they are no longer new and buyers have moved on to the next marketing phenomenon. The initial high rents, often guaranteed by developers, are usually unrepeatable as the glut of identical properties coming back onto the market at the same time almost inevitably forces the rents down.”
“Savvy buyers are instead recognising the attractions of unique older properties and the added value potential of refurbishment in the current unsettled economic climate.”
As you would expect from a full-service agency, LCP not only find the ideal property, but design it, do it up, and let it out for you. The crux of this is that the company’s clients have seen the growth of their investment exceed the market average by over 36% on sale and their rental portfolios run at almost 100% occupancy.
According to Heaton, British investors can also benefit from the service. “The buy-to-let sector in central London is very much a ’commercial’ investment market,” she says. “For those in the know, a property’s weekly rent can be estimated to within a few pounds. If you know what that is, you can calculate exactly what a property is worth. Get it wrong and pay the price. Overestimating your rent by just £25 per week would mean over-paying for your property by about £35,000. This is where we aid our clients, helping them put emotional factors aside so they can make the most prudent business and financial judgements.”
With LCP’s knowledge of everything that ‘moves’ in prime central London, they assist homebuyers too. Heaton says that this year has seen an influx of opportunistic international buyers taking advantage of beneficial exchange rates and low finance costs to buy the home of their dreams.
“As international homebuyers identify attractive discounts on top-end properties, particularly as sterling remains weak, they have actively re-entered the market, snapping up deals in London’s best addresses. This year, LCP has been purchasing properties for clients from Regent’s Park’s Nash terraces to Knightsbridge’s premier postcodes. For homebuyers we not only offer our traditional one-stop-service, but provide a full menu of concierge services and manage their properties when they are not in London. Meaning one less stress for the global citizen”