Needing very little introduction, Sarah Beeney’s reputation as a genuine expert in all aspects of property ownership is unquestionable. With a number of varied business interests – including a TV series, an award winning property portal and a popular dating website – her dedicated and strong work ethic has made her a household name and a positive figure representing the property industry as a whole. Please see an interview below where we talked about what Sarah has been up to; the future effects of base rate rises on the property market; protection against negative equity; acquisition strategies; buying at the right price in the current climate; buying to sell; lease options; the growth of the Tepilo brand and the online vs. offline estate agency debate…
We last spoke to you about a year ago – can you give us a bit of an update of what you have been up to? It’s been quite a year really. Tepilo.com has gone from strength to strength and we’re delighted at the inroads we’ve made into the property sales and lettings market. Mysinglefriend is still matchmaking thousands of couples and I’m always thrilled at the success stories. Rise Hall is now up and running as a wedding and events venue and my latest series Beeny’s Restoration Nightmare was shown on Channel 4 in November and January. I’ve been filming another couple of series recently, one for the BBC and one for Channel 4 and hope they will air over the summer. The boys have also been keeping me busy, now aged 1, 3, 5 and 6.
In terms of your own strategy – how have things changed since prior to the recession? Looking at Tepilo, we launched the business in the recession, so we’re fairly sure it’s quite recession proof. People will always need to buy, sell and let properties, but saving on all the fees is preferable, especially so when things aren’t going so well for people. The strategy hasn’t changed much, and we’re pleased with the rate of growth and adoption. You do have to be aware in general that disposable incomes are lower and the volume of transactions will in general decrease when times are hard, but things won’t stay like this for ever – so it’s about riding out the storm.
When base rates rise sooner or later – how do you think they will affect the property market? It’s a good question. I think it really depends on when they rise and by how much, but it’s going to have a big impact. It’s sad, but we are a nation with huge debt, and those who have over-borrowed will face some real problems and I suspect repossessions will be rampant. We might count our lucky stars that the banks haven’t continued to lend in the same fashion as they used to, although this has been hard on buyers, it’s saved many of them from borrowing at rates they may not be able to afford – the days of 5x salary are certainly over.
How do you think current property owners (particularly those in negative equity) can protect themselves as best as possible in what could well be turbulent times ahead? I don’t think we will see the huge drops in house prices that some are predicting, so hopefully negative equity won’t be too bad – I think we’re bouncing along the bottom of the market at the moment, and there won’t be much change for some time. It’s obviously preferable to ensure you reduce your borrowing as rates rise, and also look around for the best rates on your mortgage and other loans.
What do you think are the best acquisition strategies at the moment? I don’t think now is a bad time to buy. But I think there is a lot of speculation over interest rates, which will have an impact on your strategy. The cities seem to be holding out best in terms of value, particularly London, but high-end country homes are also in high demand at the moment. With less people making it abroad, the holiday let sector is still very strong too. I suspect with low finance availability and people struggling to get on the property ladder, the buy to let sector may be back with a vengeance for those that can afford to set themselves up there. The rental sector is stronger than ever.
With low levels of sales, how can investors be sure that they are buying at the right price? Have a look at the trends, in most places prices have only fallen by a small amount, and are mainly static. A property is only worth what someone is willing to pay for it, so just make sure you are realistic. Look at the rental income generated from nearby properties and make sure that with a worst-case scenario that would still cover a mortgage at higher rates. I think if you are buying to keep the property for the long term, prices will be back on their way up before too long.
Is buy to sell in the current flat market a particularly risky investment methodology? Yes, I wouldn’t be brave enough to take the gamble at the moment. It depends on the area and so on, but it’s not the best time to be taking on the markets in that way. I would only look to buy as an investment with a view to keeping the properties for at least 5 years. The mass demand for each property we had at the top of the market just isn’t there right now.
Can you provide some tips for investors to follow who are considering buy to sell? You just need to be very sure in what area you look to buy. It’s a real gamble betting on an increase in prices in the next year, but if you can stick to city based or high end country properties, you might just be able to pick up a bargain and make a small gain, but it really is risky right now.
What are your thoughts on placing lease options on property? I think lease options have had quite a rough ride in recent years and don’t have much respect right now. They fall in the same bracket as BMV companies in many peoples eyes and haven’t got the best reputation. However the concept does work, you just need to make a credible option for buyers and regain some trust. I would think demand for this in future years might well increase with the current financial situation.
What are the plans for Tepilo for the short, medium and long term? Now we’ve built a solid start to the site, we’re slowly starting to monetize the site, which so far seems to be going very well. We are looking at international and commercial options, and are also considering enabling advertising for agents – there’s been really high demand for this. We have a service directory launching which enables our users to find property related services as and when they need them.We also have some big marketing initiatives and are excited about the next 12 months.
What are your thoughts on the debate over the diminishing role of the high street estate agent – do you think they still have a role moving forward as more sites such as yours come to the forefront? There will most probably always be high street agents. The traditionalists among us just won’t be comfortable selling online, but we are growing all the time as people hear about the great results and the ease at which people are selling and letting –more and more people are giving us a try. In the US over 40% of properties are sold privately reportedly, so we’ve some way to go, but we don’t see any reason why Tepilo shouldn’t be the way forward.
Thanks to Ruban Selvanayagam & James Durr from PS Investor Services Blog