Alt Investments

Rich Get a Helping Hand Up the Property Ladder

Alison Steed, 28 August 2007

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Buying property is one of the most stressful activities you can undertake – right up there with getting divorced or finding a new job – but if you are wealthy enough, you can buy the services of companies that have made it their business to take the stress and worry out of buying the house for you.

Buying property is one of the most stressful activities you can undertake – right up there with getting divorced or finding a new job – but if you are wealthy enough, you can buy the services of companies that have made it their business to take the stress and worry out of buying the house for you.

High net worth property firms, whether they both buy and manage rental and investment properties for you or simply find you a new home, are worth their weight in gold to those individuals who would find the task of trailing around properties to find the right one not cost effective. For example, if you are a high flyer who has little time to take out to find a new home, having someone whittle down the options on the basis of criteria you give them is likely to be appealing.

Charles Ellingworth is the founder of Property Vision, a company – now part of HSBC – which was set up specifically to help the wealthy find new properties without so many of the hassles.

Mr Ellingworth said: “We are owned by HSBC, but we still operate very much as a separate company. Most of the people we deal with tend to be the end users of the property, rather than just investors. The number of investors have dropped considerably compared to 10 years ago. We will find the property, report on it to the buyer, and then negotiate the price for them.”

Property Vision has four offices – one in London, Newbury, Ascot and then one in the South of France. Interestingly, around 60 per cent of the company’s clients in London are property buyers from overseas, said Mr Ellingworth, but in the satellite offices, around 90 per cent are from the UK.

Many of the clients passed onto the company through HSBC are from Russia and the Middle East, although often clients have the company recommended to them by other satisfied customers.

To make sure you get the right house for someone, you have to spend time listening to them and understanding them, said Mr Ellingworth, and the first meeting is crucial for that process to work.

He added: “We try to understand what makes them tick, who is making the decisions – especially if it is a husband and wife team – who is going to be the main beneficiary. We are more interested in the subtleties of it. We have really got to understand the sort of people they are and what they want. We pride ourselves on listening to our clients.”

The most bizarre request the company has had is to find a tree that someone could build a tree-house in – although eventually this did not come to fruition. But it is this sort of personal attention that has helped the company thrive, and it has a policy of not allowing its advisors to deal with any more than eight to 10 clients at a time, so that they are not overburdened with the house buying process.

While Property Vision concentrates on buying for the end user, London Central Portfolio is more concerned with buying investment property for the wealthy who have neither the time nor the inclination to deal with the property purchases themselves.

Naomi Heaton, who runs the company, said: “Our clients don’t necessarily know the market, or they realise that if they are going to maximise the investment opportunity, they need to outsource the task.”

LCP will do everything from sourcing the property, to refurbishing it, renting it out and managing it, and finally selling it if you want to abdicate all involvement.

Ms Heaton said: “We would agree how much you want to spend in detail, and I would be looking for maximum capital growth. About half of our clients will not view the properties themselves. If the property needs finishing off, we will make that recommendation. If you are looking to buy a one-bedroom property near Hyde Park, you would be looking to spend about £500-600,000 – that would include buying, refurbishing, stamp duty and fees.

“They are looking at capital growth over time, and by gearing up they maximise their investment. So they are not putting that much cash in themselves.

“You are looking at putting about half the capital in, and if you are doing a buy-to-let, then you are looking at 60-70 per cent loan-to-value. But you are not looking at buying in central London without putting in about £250,000.”

The maximum rental yields are often provided by corporate clients, said Ms Heaton, and they will expect a property to be in mint condition, which often means refurbishing. But rental yields were hit by the 9/11 attacks and the Iraq war, and the market is “in a state of flux” said Ms Heaton.

However, the returns are still considerable, with a £1 million property that is properly refurbished commanding as much as £1,000 a week in rent.

While property price increases are slowing, property cycles can make life uncomfortable if you find that you have to move out of your home, but that is usually less of an issue for investors, said Ms Heaton.

These services, as you would expect, are not cheap. LCP would charge 2 per cent of the property purchase, although this would fall to 1.5 per cent if the property was worth more than £1.5 million. The property management service would cost you 15 per cent of the rental income.

Property Vision would charge an upfront fee of £1,500 – just to be sure that the client is serious about wanting a property, rather than just speculating – and then on the successful completion of the deal, you would pay a further 2.75 per cent of the house value.

Mr Ellingworth added: “Anyone who is honest and sensible you are prepared to work with. But you learn your lessons over the years – and that is the point again about having that crucial first meeting. If they are difficult about fees, they are likely to be difficult and dishonest all the way through the process. Even those who are very rich will not give you £1,500 if they are not serious.”

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