Researching Properties
Sarah: Alex, what’s your question?
Alex: Quite a practical question this one, but my dad’s a lot better at this than me, but what kinds of things would you say in general we should really be looking out for when you’re kind of getting guided round a property for the first time?
Sarah: George?
George: Obviously the condition of the building, it’s a very obvious answer really but when you’re walking round the property, quite clearly even though a surveyor is going to do a non-intrusive survey as well, to go round with someone experienced like your dad is going to be brilliant. A lot of people I know take their builder friends around with them as well. Anyone with any half decent DIY experience is going to be able to spot problems, quicker than someone who doesn’t do DIY. The main things to look out for things like structural movement, which is a biggie.
Any kind of cracks in the outside walls, blatantly obviously, is going to be a howling problem. Things like any visual areas of damp, coming through walls and walls surfaces. Pulling away of the internal walls with external walls happens quite a lot if you’ve got an area with a little bit of movement, when you look at the internal walls, wherever the junctions are, you know between wall, floor and ceilings, that’s generally where you are going to get some structural movement in a property. It’s really difficult when it comes to electrics and plumbing, really tricky.
When you’re walking around a house, you’re thinking – is it in the right area, is it near the right schools, how far away is it from work, where’s the nearest bus stop and the last thing you are thinking about is whether the wiring needs to be redone or not, to be honest with you and that’s why it’s worth having someone alongside you like that will say , do you know what, it’s an old properly, the wiring’s a bit shot, it probably hasn’t be touched for 30 years, we going to have to budget a couple of grand to do that.
I’ve mentioned it before but things like you’re boiler system, we never MOT or test our boilers. We get them fixed when they break, but we don’t do any general maintenance on them ever, landlords do for rental properties because they’ve got to get them certified every year. If you’re a homeowner, people just generally don’t do that and if it’s ten year old, honestly the components in that boiler are probably so knackered and tired. Someone will come round and say ‘its fine, it still works, its fine’. But actually the heat output from something like that might be 50% efficiency from what a new boiler might be, so it is that general stuff, damp, structural movement and getting a service for electrics. Really it’s about the general condition of the building. So if the kitchen is tired obviously, from a personal taste point of view, you might want to change it. If the bathroom’s looking a bit shabby, kitchens and bathrooms are the biggie. There are the big things that people spend most money on in their houses. You come into a new house, you want a nice new bathroom and you want a nice new kitchen, even if the condition of the one that’s there’s not bad, you’re probably going to end up changing it. So I would just list all of those things out as much as you can. Sometimes it is worth getting your hands on a previous surveyors report and taking it with you. You can find them online, if a surveyor has done a report for another house, at least it’s got all the headlines that they’re going to be looking for and it’s worth you just looking for the same things when you go round it yourself. You’ll end up having to pay for a survey anyway but it’s worth knowing, that you’ve got it in your head what those additional costs might be, before you make an offer. Because obviously you’ll put in an offer on something and it will get accepted, then you get the survey done and then you have to go back to them and say well actually can I knock five grand off because the surveyors said all of this, and then it becomes a real debate then. Because they say, ‘forget it, I’ll go to the next person who’s going to offer me the same amount as you’. So, it’s worth having some of that knowledge before you even put your offer in.
Miles; And from a negotiation point of view. Obviously being armed with that knowledge, particularly if you’ve taken out a professional with you, whether it be an electrician, plumber. Then it really does help you negotiate from a stand point of fact rather than just saying, ‘I want to offer you three or four thousand pounds less’. It does obviously depend how hot the market is because you can do all those clever negotiation tactics but if there is a queue of other people willing to pay the price then its wasted effort. One of the other things to think about, obviously get very focused on property and defects – but you’re going to be living there as well, so visiting the property at different times of day, looking at the traffic noise at different times of day, looking which way the garden faces, the rooms face…
George: Where the sun is!
Miles: Absolutely.
George: I know people that have brought properties and they’ve gone ‘the garden doesn’t get any sun, it’s north facing and we just get this massive shadow cast from the back’ and you think god you just spent two hundred and fifty grand on a property and you didn’t realise that.
Miles: You can put defects right, but if the neighbours aren’t right, that is harder and we done surveys at Rightmove and the importance of your neighbour – absolutely critical. We ask people ‘how many of you actually did meet your neighbours before you agreed to buy’, and a very, very small percentage.
Sarah: Are there other things that will always be undesirable in a property that people should be careful of, very tiny bedrooms, or nowhere near public transport, or are there key things that you might not think of if were buying for the first time, but that might make it harder to resale?
Holly: From a resale point of view, I think that’s really crucial because you can get so caught up with the emotion of buying your first home, and it’s exciting and ‘oh I can hang this picture there’ and it’s great. But resale is quite a good thing to have in your head, because if there is something that you think ‘I kind of don’t like that but whatever I am just too excited’, it is really worth it. Quirky things, like in some old properties you might get, if you’re in a purpose built maisonette for example, a first floor flat if you have a private garden there can be a staircase to go back down to the garden, doesn’t matter for you but somebody who might want to buy it with children – that’s a no no. So a tiny bedroom, you know, it can work but not if you want to rent it out or sell it out as a sharer, you know it’s fine if you are in a couple. If you’ve got one double bedroom and a tiny bedroom, it’s never going to work for sharers. So, resale I think is always good to have in your mind. If there is something you’re unsure about, that can’t be put right, I think even interior design wise…
George: There will be certain things that are out of your control though, but make sure your conveyance lawyer checks it. You don’t want to buy a house where they are building like HS2, or something, some major infrastructure project, that you weren’t aware of when you put your offer in (I mean that’s quite extreme). But I do genuinely know of people who have bought a property and not really, really gone through the searches properly and then all of a sudden a massive housing development has been built next door. Which is a good thing because it is providing the housing that the industry needs, but when you’ve got a building site next to you for three years when they are building a sky scraper (bit of an exaggeration) it might not be what you want.
Sarah: Assuming you can avoid all of those pitfalls, are there any rules of thumb about whether it’s better to buy a smaller property in a really good location, or a bigger property in perhaps an area that’s not quite so up and coming?
George: That’s an interesting one. I mean location is obviously a huge part of that, so as soon as you talk about a ‘good location’, you’re going to pay a premium for it, it’s as simple as that because most people want to live there. That’s giving you some security and stability and you’re not really playing the market, you’re not predicting what’s the next place that’s going to shoot through the roof. In places like London, there are always conversations about the next area and its mind boggling how that can distort prices. There are some area’s that I go to, and I think hang on when you talk about this turning around I’m thinking this will take twenty years for this area to turn around. But some will turn quite quickly in three or four years, so locations everything. The size of the house you buy is a personal issue because buying something small means that if it needs doing up it’s not going to cost you an awful lot of money to do it, because there’s not a lot of work to be done. If you buy a bigger property, it’s going to cost you a lot of money to do it. So either of them can give you the same percentage added value, so the added value on something really depends on where it is and what it is your building. Generally if I was going to put an extension on a house, for example in W1 in London, the build cost is probably going to be relative to one in W3, to be honest, roughly it’s not going to cost you a lot more money unless there’s access issues and things like that. So the build costs can generally be the same but it’s about the resale value per square foot. People ask me a lot about basements, should I build a basement under my house and the build cost generally is…
Miles: Massive.
George: Yes it is huge, but also it can be if you’re building a basement in one area of London and another area of London, it can generally be the same per square foot but the resale figure is massively different. So you’ve really got to think about the added value on what it is you’re trying to do.
Sarah: How do you work out where the up and coming areas are?
George: Yes where’s the crystal ball…
Miles: Obviously look for early announcements of transport links, we’ll leave the HS2…but depending on what markets you are in, but generally commute distance is a key factor for people whether you are in London or elsewhere, so it might be road links. Or major investment, so if an area is getting external investment, then you will see people want to live there, it’s more a pleasant place to live, more employment comes in. Employment is absolutely a massive factor and the projections for London are massive growth in employment which is going to underpin house prices there. That’s at a strategic level, on a more tactical level, if you’ve missed the major news, you can look for high streets being done up, trendy shops appearing, cafés, restaurants, bars so people like to live in nice places with nice amenities so you can see an area turning, London yes, they turn more quickly because people have an awful lot of money to invest and try and look for a return. But the adage is best off owning the worst property in the best location, rather than the best property in the worst location.