How the Dukes of Westminster Preserve Their Wealth For Centuries

Speaking from London's Sloane Square on how the aristocracy and Dukes of Westminster have preserved their wealth over century. Financial education is the key to building and keeping wealth. Never stop learning! Keep watching or listening to my free podcasts on iTunes and subscribe to my YouTube channel for regular financial news and updates. Millionaires and millionaire habits have been studied and documented at academic levels for the last hundred years. Bestselling books, like The Science of Getting Rich and Thinks and Grow Rich, were written almost a century ago. I have also published my own book on how people get wealthy and how some lose it all - Yes Money Can Buy You Happiness. We know exactly what the millionaire and billionaire habits and traits are, as success leaves tracks. All you need to do is follow their tracks to become wealthy and financially free! If you would like to learn more about investing and managing your money, become a professional property investor, or would like to be financially free without working any harder, watch this free on demand training. I will give a special free gift which can help you to immediately transform your finances when you attend the online training. Click on this link to watch the free training now https://bit.ly/3wLWqx2 Book now as spaces fill up fast...

120,000 buy to let investors quit market since government’s anti landlor...

In this week’s episode:

Thousands of buy-to-let investors have sold properties since 2016, when the then Chancellor George Osborne announced punitive taxes on landlords, according to research by Hamptons International.

Find out what a former UK Housing Minister told me when I confronted him directly about the anti-buy-to-let investor measures and suggested how mortgages could be more flexible for first time buyers.

And...

• Should you pull your cash out of Metrobank?
• Are interest-only mortgages set to make a comeback?
• Find out how you can have fun investing in the stock market without taking courses

See also:

Is property still a good investment?

Leasehold flats legal minefield

London £1 million property glut


Money Can Buy You Happiness

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10 Money Tips That Could Save You From Financial Ruin

Welcome to Money Tips Daily this is Money Kelly bringing you money tips to help you save and make more money!

A few days ago, I said that becoming financially aware and astute is not just about making money, it is also about watching your back for potential threats to your bank balance and financial well being.

Tony Robbins used to run a ‘wealth protection’ service for people with large sums of money, and Jim Rohn advised us to build a financial wall around our family so strong that nobody could knock it down.

The wealthy don’t only concentrate on making money, they also focus on keeping it (probably the two most important basic components of being wealthy) and protecting themselves against liabilities and threats, but you don’t have to be rich to protect yourself too. After all, the less money you have, the more a loss will hurt you.

Businesses do regular S.W. O.T. (Strengths, Weaknesses, Opportunities and Threats) analysis exercises and risk assessments as a matter of policy, and so should you.

You are your greatest asset, so look after you! Act as if you are the CEO of your own corporation and start thinking of yourself as if you are a business.

   

More than at any time in history, we are surrounded by potential threats to our wealth and liabilities which could bankrupt us or worse still, send us to prison.

I’m not scaremongering or exaggerating the threats to your wealth so do not ignore this message – ignorance of the rules of the game will not offer you any defence.

Some threats are relatively small, like the increased likelihood of receiving a fine for speeding, parking or unwittingly drifting into a bus lane whenever you drive into a major city.

Others are far more serious, for instance:

• keeping all your money in one bank (this would particularly apply to those holding more than £85,000/£170,000 for joint accounts amount protected by the government Deposit Guarantee Scheme) 
• having your money devalued by a government (Greece, Cyprus, Latin America) 
• currency swings or economic downturns
• changes in legislation, which could hit your business or that of your employer
• changes in the business environment or technology 
• changes to your agreements by financial or utility providers
• an unscrupulous freeholder landlord gaining control of the freehold and management of your leasehold property
• For some, Brexit is a threat, although for others it may be an opportunity.

If you have assets and investments you should carry out regular reviews with an independent financial adviser who is not dependent on the commission from selling you insurance-linked products.

Forgetting to pay any small bill these days can quickly lead to a CCJ (County Court Judgement), bailiffs banging on your door at enormous cost or a default, which will completely ruin your credit history for up to six years.

I have discussed this earlier in relation to credit cards, as people often pay their bills a few days later than the due date (which is not the date you think) and find that the trigger happy banks have been reporting you as a late payer or in arrears.

This equally applies to utility bills, mortgage payments and especially parking fines, which can quickly escalate into thousands of pounds once courts and bailiffs can their sticky hands on you.

Liabilities include being sued by an increasingly litigious society and ‘no win no fee’ ambulance chasing lawyers. In a recent case, a mother is being sued by the mother of a boy who was accidentally hit in the eye when standing behind another child swinging golf club at a mini-golf kids party.

10 Tips that could save you from financial ruin

1. Pay recurring bills by Direct Debit, or standing order, so you do not overlook the due date.

2. Pay bills on time, especially tax, or inform your creditors that you need more time. 

3. Never ignore a legal letter, especially one concerning a debt or tax liability, and don’t bury your head in the sand hoping it will all go away like a bad dream.

4. Pay and keep your taxes up-to-date and fully compliant! In my book, Yes, Money Can Buy You Happiness, I have written about “The Stars Who Lost It All”, and one of the biggest reasons big stars who have earned millions went bankrupt was their failure to pay their taxes.

5. Check your credit rating and file at least once a year for errors registered against you. This is really easy to do online and I have written about tips to improve your credit rating in an earlier episode.

6. Never sign Personal Guarantees or be a guarantor for a friend or relative without taking legal advice, and never sign anything you have not read and understood – even those boring terms we all agree to online.

7. Avoid litigation and suing people, which are still the preserve of the rich and famous. Wherever possible, try to mediate and sort things out without going to court and use legal action as a last resort. Be a mediator, not a litigator!

8. Insure yourself against liabilities, for instance by adding public liability to your home insurance. You can also take out very inexpensive liability insurance to cover yourself when you run an event or children’s party. In my experience as a financial adviser, smart people insure themselves, their property and cover themselves against potential public or employer liability claims.

9. Take legal advice and be very wary of leasehold properties and signing any leases for business premises or shops. Leasehold properties are a legal minefield and are covered in more detail in an earlier episode. In business, I use a limited liability company, rather than acting as a 'sole trader'.

10. Review your financial circumstances regularly with an adviser or with your family, partner or spouse. The importance of this tip cannot be overstated. You must review at least once a year.  

Finally, watch your back! Keep your eyes and ears open and be alert to any potential threats. Carry out a regular S.W.O.T. and annual risk assessment as part of your financial review - this risk isn't always external, it could come from something you are doing.

Check out my Podcast, Money Tips Daily by Charles Kelly, former IFA and author of Yes, Money Can Buy You Happiness., on Anchor! https://anchor.fm/charles-kelly

See also:

How to Check your Credit Rating

Litigation Can Bankrupt You So Be A Mediator Not A Litigator

Leasehold properties are a legal minefield

How To Avoid Unnecessary Mobile Internet Data Roaming Charges And A Shock On Your Next Iphone Bill Due To A Little Known Feature Called Wifi Assist

Leasehold Flats Are A Legal Minefield, Read This Before You Buy

Are Leasehold Flats A Ripoff Or A Good Investment?

Welcome to Money Tips Daily this is Money Kelly bringing you money tips to help you save and make more money!

Leaseholds properties are a legal landmine for the hundreds of thousands of uninitiated buyers purchasing leasehold flats every year.

Leasehold flats can be a legal minefield for the unwary buyer

Like me, the majority of first time buyers, as well as buy-to-let landlords, will buy a leasehold flat under rules which exist in very few countries outside the UK.

When you buy most flats in the UK, you are a tenant under a long lease which usually runs for more than 99 years, but diminishes in value as the lease gets shorter.

You pay ‘rent’, known as ground rent, to the ‘landlord’ or freeholder, which used to be a peppercorn rent but on new developments is increasingly running into several hundred pounds with sharp increases in the future.

You will also pay a service charge for insurance and upkeep of common areas. In blocks which have lifts, pools and concierge desks, expect to pay from £2,000 pa upwards.

In my experience of smaller blocks, the charge starts at a minimum of £100 per month for doing almost nothing apart from maybe a bit of cleaning or grass cutting, with larger maintenance being charged on top.

Management companies choose their own contractors to carry out works, which always cost about 5 times what you could get the job done for! 

Have you actually read your lease and if so, do you understand it?

The answer to both questions is invariably “no” because most of us give up after the first few pages because the ancient legal language is virtually impossible to understand unless you’re in the legal profession.

Who writes the laws? Lawyers of course! Of course we need Solicitors when buying a property, but ask them to explain everything and don’t be embarrassed to ask ‘silly’ questions!

Following the Grenfell fire, thousands of leaseholders are facing huge costs to remove unsafe cladding from their blocks of flats following a recent court judgement in Croydon.

Tenants will have to pay thousands of pounds to replace cladding on a recently built Barratt Homes development, despite buying their properties in good faith and presumably being reassured by a survey and NHBC 10 year guarantee against defects.

The London Mayor said the ‘government’ should pay, in other words, taxpayers who don’t even own a leasehold flat!

Did you know that forgetting to pay ground rent or service charges, or complying with maintenance orders could result in your lease being forfeited? That’s right, the freeholder can take your property back like some feudal landlord.

Leases are written in favour of the freeholder granting the lease, not the leaseholder paying hundreds of thousands of pounds.

Charity spends £114,000 to defeat a leaseholder over £6,000 disputed charge

Don’t take my word for it, just Google ‘leasehold problems’ and read some of the cases where leaseholders have tried to take on landlords.

In a recent case, a well known charity spent £114,000 to defeat a leaseholder in Onslow Square in Kensington over a £6,000 dispute – which came down from £8,247 originally demanded. The huge legal cost bill means that the woman leaseholder will have to sell her home.

I had a similar problem with a landlord, who I later discovered owned 12,000 freeholds, which I fortunately won thanks to a brilliant barrister and an understanding judge. Had I lost this David vs Goliath case, I would have had to pay out £20,000 in so-called legal costs over a £500 dispute!

I now prefer to buy freehold for obvious reasons, but realise that it is not always possible.

3 Tips when buying a leasehold property

If you must buy a leasehold flat, make sure you:

1. fully understand the lease terms and
2. try to buy flats where you have a share of the freehold and
3. the tenants/leaseholders have control of the management.

Leasehold tenants can take back control of management subject to the ‘right to manage’ rules, but the law still doesn’t go far enough in protecting vulnerable leaseholders and a proper leasehold reform Act is long overdue.

As always, take legal and financial advice before entering into an agreement, and make sure you READ and UNDERSTAND that lease.

Education is key to investment success

If you would like to learn more about property investment and attend a seminar, I have a limited supply of complimentary tickets for an event with a leading training provider - email me charles@charleskelly.net.

Check out my Podcast episode "Leasehold Property Is A Legal Landmine, Read This Before You Buy" on Anchor! https://anchor.fm/charles-kelly/episodes/Leasehold-Property-Is-A-Legal-Landmine-So-Be-Wary-e16oof

Previous articles:

The Reason Why Property Is The Best Investment

UK House Prices Fall Leaving First-Time Buyers And Buy-to-Let Investors Wondering Where The Market Is Heading

New HMO Letting Rules Could Drive Landlords Out Of The Buy-To-Let Property Market

Money Tips Daily - How to SLASH Your Tax Bill Legally

How to Make Money Online Without a Website or Inventing Your Own Product

The Reason Why Property Is The Best Investment

Over the last couple of days, we have talked about property and why falling prices can have an adverse effect on the whole economy.

Despite the recent fall in prices, I still think property is one of the best long term investments an ordinary investor can put his or her money into. Bricks and mortar, as my mum used to say!

Let me tell you why.

Firstly, you can enjoy an income from your residential buy-to-let or commercial property.

Secondly, you can also benefit from capital growth in the value of the property over the longer term, as it has done in the past, although this is by no means guaranteed. You do not capital appreciation in a bank deposit account, other than reinvesting your interest, which means you no longer receive income. 

Lastly, there is another reason why property has proved so popular and why I think it has the edge over the vast majority of investment schemes that a financial advisor or bank will try and sell you.

Leverage

Leverage, or the ability to borrow money not only to help purchase the asset, but also secured against the asset you are buying with no other security required.

Investors often take it for granted that you can buy a property with a mortgage or loan and repay it over 20 or 30 years.

In the case of investment properties (as opposed to a residential mortgage), the tenant pays the mortgage for you and in most cases there will be a residual income over and above the mortgage repayments.

You can also rent out a room in your own home, tax free, which could also pay your mortgage for you.

Okay, you need a deposit, which can range from 25 to 35% of the property value depending on where you are and market conditions.

You can’t blame the banks for wanting you to put some skin in the game. The deposit, or equity in the property, protects the bank’s interests in case you should default on the loan or market conditions take a turn for the worst.

Buy a £100,000 for £25,000

Even if you have to find a deposit of 25%, it is still an amazing deal. As one investor put it to me in simple terms:

“I can buy a £100,000 house for £25,000 and the tenants will pay the rest”.

She and her builder husband bought a string of houses in the 1990's, when you could buy a house for £60,000 in East London, and made a fortune.

Compare property with other forms of investments, such as stocks and shares, unit trusts or mutual funds, which the average financial adviser will usually recommend as "sound investments".

Just for fun, ask the advisor if you can obtain a loan from the bank in order to purchase these sound investments. Of course they will tell you that this is not possible and if you dig a bit further you discover that these investments are not considered as suitable security (or too risky) for a bank loan or mortgage. The bank would probably consider this to be speculation and would not give you a loan to buy them.

On the other hand, banks are happy sell you these products, many of them managed by their own fund managers, as a medium risk investment to help secure your future. They are happy for you to risk your money, but they would not risk their own money.

Most pension schemes invest in similar funds, the value of which can go up or down depending on the markets. An increasing number of younger people are placing their retirement in the hands of a fund manager and the whim of the markets when they retire.

Unlike property, you have little or no control over these investments, which will also be depleted by management charges and some upfront commissions.

Inflation reduces the real value of your mortgage but increases the value of you house

I have purchased most of my investment properties on interest only loans where I do not pay any capital back on a month-to-month basis.

I allow inflation in property values to take care of the loan, which will be much smaller in real terms by the time I get to the end of the mortgage.

In other words, if you borrow £500,000 today, the value and purchasing power of that amount of money will be much smaller in 25 years time. You may even be able to pay it from your savings or pension.

Over the past few centuries, inflation has increased the value of assets like property, but decreased and eroded the buying power of the money in your pocket.

Think about it. If the Duke of Westminster's great, great, great grandfather had stuck his money in a bank instead of buying and developing most of the freehold land in London's Belgravia (Harrods, Knightsbridge, etc) would they be as wealthy today? Of course not! The family would have nowhere near the £10 billion or so the current Duke has inherited from his late father.

I also have the options of making lump-sum repayments or even selling the property further down the line. If you bought two similar houses bought with same sized interest only mortgages and sold one 10 years later, the chances are you would now one of them outright. In the meantime, you have enjoyed two lots of income and had 'double bubble' in growth.

This is just my preference and you may wish to pay down your loan more quickly by taking a repayment mortgage, which also has advantages. As always, take advice from an independent financial advisor and a solicitor.

Build wealth from nothing

Getting back to leverage, the ability to use other people’s money allows you to build a portfolio or buy far more than you would otherwise be able to do.

When I bought my first residential flat in Ilford, East London many years ago, I could barely scrap together a 10% deposit, or just under £2000 with fees etc, let alone save the entire amount to buy the property outright. The loan from the Nationwide Building Society helped me get my foot on the ladder and out of rented accommodation at the age of 20.

In the six months it took from offer to completion, interest rates jumped from 12.25% to 15.25%, almost doubling my repayments! It was killing me! I had just got married and we had a baby girl, so went down to one income. 

When I sold the property two or three years later during a tough recession we made a tax free gain of £10,000.

I used the money to put down a deposit on a 3 bed terraced house, which also went up in value over the following four or five years.

Later, I released some equity from my property and used the money to buy a second property which was rented out.

To cut a long story short, I have repeated this process throughout my investment journey and by using other people’s money (OPM) I was able to create substantial equity and wealth from none of my own money. Remember, I started with just £2000 used to buy a tiny 2 bed residential flat.

Many other investors I know have done this far more aggressively and built up portfolios of hundreds of properties after starting with almost nothing.

I can hear some of you saying, well that’s alright in rising market, but there are many other strategies you can learn which do not require the property to go up in value so quickly.

Contrary to popular belief, you don't need 'money to make money'. You do need education and a little imagination - if you haven't got imagination, just copy other successful investors!

If you would like to learn more about property investment and attend a seminar, I have a limited supply of complimentary tickets for an event with a leading training provider - email me charles@charleskelly.net.

Check out my Podcast episode, "The Reason Why Property Is The Best Investment" on Anchor! https://anchor.fm/charles-kelly/episodes/The-Reason-Why-Property-Is-The-Best-Investment-e15ubk

Previous:

Does It Matter If Property Prices Fall? Find Out Why You Should Care

UK House Prices Fall Leaving First-Time Buyers And Buy-to-Let Investors Wondering Where The Market Is Heading

New HMO Letting Rules Could Drive Landlords Out Of The Buy-To-Let Property Market

Leasehold Properties Are A Legal Minefield, Read This BEFORE Buy A Flat

Leverage Your Time and Build a Profitable Online Business - Free Book Offer

New HMO Letting Rules Could Drive Landlords Out Of The Buy-To-Let Property Market

Welcome to Money Tips Daily this is Money Kelly bringing you money tips to help you save and make more money!The UK government recently announced tough new minimum space requirements for private lettings in a bid to reduce overcrowding and other problems in the HMO rental sector.

The widely expected new rules for HMOs (Houses in Multiple Occupation) will bring the national mandatory licensing, currently only applying if properties are three or more storeys, to all flats and one and two-storey properties.

The new rules will allow local councils to force more landlords to register their HMO properties, which should raise standards. My own local authority has around ten times as many unlicensed houses in some form of multiple occupation as those licensed as HMO’s.

The majority of buy-to-let landlords in the UK are law abiding and should have no problems complying with new regulations. However, based on the previous experience of other local authorities, which have brought in blanket licensing for all rental properties, many landlords will be probably fall short of the minimum safety requirements for a rental property.

A housing officer in the London Borough of Brent told me that when they brought in licensing in selected postcodes of the borough, they discovered that hundreds of landlords did not even meet basic minimum standards and many didn’t even have a smoke alarm installed or in working order.

In addition to tightening the HMO rules, the Department of Communities and Local Government has also specified minimum room sizes for HMOs properties.

Single bedrooms will have to be a minimum size of 6.51 square metres, and doubles, or those occupied by two adults, 10.22 square metres. 

Children’s rooms, for aged 10 and below will have to be at least 4.64 square metres in size.

The new HMO licence will have to specify the maximum number of persons occupying any room and the total number across the different rooms must be the same as the number of tenants that the property is deemed suitable to live in.

The requirements are yet to be made law, but are expected to be on the statute books this spring. Despite the heavy snow, today is in fact the first day of spring!

In a statement, the DCLG said:

“The increased demand for HMOs has been exploited by opportunist rogue landlords, who feel the business risks for poorly managing their accommodation are outweighed by the financial rewards. 

“Typical poor practices include: overcrowding, poor management of tenant behaviour, failure to meet the required health and safety standards, housing of illegal migrants and intimidation of tenants when legitimate complaints are made. 

“Tenants are sometimes exploited and local communities blighted through, for example, rubbish not being properly stored, excessive noise or anti-social behaviour. 

“Although only a minority of landlords, the impact of their practices are disproportionate, putting safety and welfare of tenants at risk and adversely affecting local communities.

“They cause much reputational harm to the HMO market and it is often pot luck whether a vulnerable tenant ends up renting from a rogue or a good landlord.” 

Although many of the above concerns are justified, when the government ran a public consultation they received just 395 responses, which is extremely low when you consider that there are millions of tenants and over one million buy-to-let landlords in the UK.

I spoke to several HMO landlords, who did not wish to be named, about the new regime. The mood was mixed, with some favouring tougher rules to drive out the “cowboy landlords”, leaving more tenants chasing fewer rooms and higher rents for them!

Others were more negative and even angry, accusing the government of burdening smaller landlords with more red tape and bureaucracy, which would ultimately make the housing shortage worse as landlords are driven out of the market.

There is no doubt that HMO letting has boomed in the last few years, as the demand for rooms and studios has mushroomed for a variety of reasons including, relationships breakdowns, lack of affordable single let properties and immigration.

AIRBNB has also opened up a market for short term holiday lets and the tax free the rent-a-room scheme has encouraged people to let a room in their own home to earn some extra cash.

We will have to see the exact interpretation of the new rules, which currently varies from one council to another, once they are in force.

Private landlords have already been hit with punitive tax changes being phased in during the next tax year, as well as higher stamp duty, which will reduce their net income and may drive up rents.

Changes to the benefits system (Universal Credit) are apparently making it more difficult for tenants claiming housing benefit to find a landlord willing to rent a property to them.

Homelessness is on the rise according to the BBC and other commentators, although the exact cause is not clear.

In terms of Money Tips, there are still many investment opportunities in the UK housing market, seen by foreign investors as a safe haven for their cash. As always, you should take legal and financial advice and remember that financial education is key.

If you would like to learn more about investing in UK property, I have a limited number of complimentary tickets to a LIVE EVENT  - Beginners Property Course (held in the UK), which will give you the basic knowledge and techniques to get started. If you are interested, email me your full name and telephone number to charles@charleskelly.net.

Want to diversify? If you would like to learn more about investing overseas in one of the fastest growing economies in Asia, email me at charles@charleskelly.net.

See also:

Leasehold Properties Are A Legal Minefield, Read This BEFORE Buy A Flat

UK House Prices Fall Leaving First-Time Buyers And Buy-to-Let Investors Wondering Where The Market Is Heading

How to Monetise Your Knowledge and Skills and Turn Passion into Profits

Leverage Your Time and Build a Profitable Online Business - Free Book Offer