Charles Darke

Following on from my earlier comments re buying directly or indirectly this is what I am thinking:

(1) If I buy direct property it is likely to be residential. The issues with this are:

(a) use of agents to find tenants - I am likely to find this leads to a 10-15% (say) leakage in terms of fees

( void periods - I think it is reasonable to assume say 10% ie one month of voids per year

© tax on capital gains - I think a lot of people forget the capital gains tax on non primary residences

(d) competition - lots of people doing buy to let

(e) supply - demand - as highlighted elsewhere there is a lot of build going on and does CrossRail alter the competitive catchment area ie if I buy in Central London I will be in competition with Slough?

(f) refurb costs - lets not be blind that bad tenants can mean the need to refurb a property / or at least put in new furniture

(g) illiquidity - typically I think people miss the costs of transactions ie stamp duty, agent fees and time taken

 

The advantage of direct ownership is that I can be selective on what I buy and control it directly (this assumes of course I will add 'alpha' to the process rather than just be underpricing my time and being rung in the middle of the night after the tenant has broken the shower.

 

 

Any thoughts?

- agent's fees: 8% first year, 4% 2nd year, 3% 3rd year. Nothing after. Say average of 7%.

- void periods - in london, voids should be minimal (say 1 week per year)

- don't sell, or live there before selling etc.

- deposits to cover damage/refurm

What are your thoughts on the HK property market? I was there just last week and the prices and rents seem absolutely insane. While this may persist in the short term, what are your thoughts on where price/rent levels are compared to what might be considered long term sustainable levels?