Partner Article

London,?Build to Let? capital of the world

As less people can afford to buy property in London and the population of the city swells, letting is becoming more and more common, but availability of rental property is in short supply.

With less housing available to rent, and fewer landlords entering the market, there is a new trend sweeping across the capital, “Build to Let”.

“Build to let”, is certainly not “Buy to let”, “Build to let” involves developers acquiring key sites that will appeal to renters, building them out and renting them rather than selling. It is not for the faint hearted and requires substantial amounts of capital to be invested, over longer periods of time.

There seems to be a build to let phenomena in London, Qatari Diar and Delancy have invested in 1000 homes to be owned and managed in the Olympic village creating the first UK private residential fund in a deal worth over £557 million.

The JMH Group, dubbed the fabulous investor boys by the Times, and often referred to as the pioneers of “Build to Let” have a portfolio that extends across London, and is expanding rapidly, their strategy is to buy land with and without planning permission, develop the property and rent it.

The group has recently announced plans to invest over £50 million pounds into the London residential “Build to Let” market over the next few years.

Marin Jakisic, Chairman of the JMH group said “The strategy is simple, we buy, we build, and we let. Not selling means we have a good stream of sustainable income, we are producing returns of up to 20% on equity and are here for the long term, the recent downturn means we have picked up some fantastic deals and they keep coming.”

The JMH Group has recently benefitted from abandoned property developments where the original developers can no longer viably complete their schemes; these schemes tend to go to receivers who dispose of the sites.

Irfan Hussain, Managing Director of the JMH Group said “Receivers often come to us to sell incomplete sites where because of market conditions the schemes are no longer viable. Before the credit crunch many developers relied on the market value of their developments going up, and a pool of buyers to purchase their development when it became complete. Unfortunately for them the downturn has meant their schemes are sometimes worth less now even though partially complete than they were when originally purchased, and even if completed there are few buyers.

Our build to let model works differently, we only buy assets in London which we are comfortable developing, adding value to, letting out and holding for the long term.

We have done many build to let schemes in London, more recently we have been buying partially built abandoned schemes through receivers.

We will not pay over the odds and before buying we rigorously appraise capital and income on values of schemes and often find ourselves telling receivers to “get real” with their pricing, they more than often do.”

The JMH Group is a long term investor and developer in London. As well as being on the forefront of “Build to Let” with a colossal portfolio of properties and serviced apartments, the company has plans to build 10 hotels in London over the next 5 years.

This was posted in Bdaily's Members' News section by JMH Group .