Welcome to 2020! I was asked recently by one of my investor clients for an update and information on the London market so I thought it may just better to write a blog about what’s going on in the London market right now so I can share it with all of you!
We have potential regulations coming up for Airbnb but don’t worry, so far it’s looking likely that it’s the same type of rental licences that are required for all rental properties in London. The “extra” tax and all details are still up in the air. City Hall discussed this and you can watch the YouTube video of the discussion here.
What does that mean for investors? Hurry up and wait is what it means! I will be sure to update you before most media stories as my good friend Rob McGarry always stays on top of all City Council business in London and is always following up on the agendas.
So, let’s talk about what’s happening here. As I write this article it’s February 27th 2020 so please keep in mind these updates and information tidbits are for what’s true on the market today. We are still seeing a seller’s market in London with investing and buying remaining strong. I often see people “cashing out” in the GTA and moving to London for cheaper home prices as we are still competitive with Toronto, Mississauga and places like Cambridge & Waterloo/Kitchener Region.
In my experience it’s been anything under $500,000 asking price that’s been particularly competitive and prone to getting multiple bids or “bidding wars” as people in the industry live to call them. Anything under $400,000 is seeing more dramatic bidding wars, and the $300’s and $200’s are getting trickier and more competitive seeing as high as 37 offers last week on a listing. That’s not a typo, 37!
We sold a house on Adelaide which is quite a busy street and not the nicest neighbourhood in town for $50,000 over asking (Look under my listings) and it’s common from what I’ve seen for things that are priced for this strategy to sell $75,000 over asking. Don’t fret! There’s still lots of deals to be had out there if you know where to look. One of the things that Justin and I do in order to try and find deals for our buyers is look for anything that’s over-priced but gone stale. In my opinion, and my opinion only, on the list side it’s detrimental to forgoe the bidding war strategy and list the house for “market value price”.
This opinion is controversial and not agreed upon by all agents, but I’ll tell you why I always do an offer night… the buyers in todays market are trained and expecting to bid. Most agents have buyers set up for listing up to $100,000 UNDER their max budget, why? Because buyers expect the houses to go over. I’ve gotten buyers good deals without multiple bids on places because listings have been put out in the higher end of what they might get, and people think it’s over-priced for how they assume they will have to compete. So there’s a free tip for agents and buyers alike. Looking for something that’s over 8 days on the market is a great way to find a deal.
On the buyers side we’ve been searching our network for our qualified buyers and finding leads on private deals for them so they don’t have to compete. This is why having a large network is so great. You can look for our wanted ads here.
*So I’ll get down to some facts so you guys can know about average sold prices in different areas of London in the last 3 months*
Average duplex prices;
East London – $427,250
North London – $612,700 (only 3 sold on LSTAR board last 3 months)
South London – $562,125 (only 4 sold last 4 months)
Average 3-4 unit prices;
East London $710,750
North London (none)
South London (only one in last 3 months & it’s conditional)
Average Single Family Homes Detached
East London $395,554
North London $572,086
South London $523,778
East London $309,197
North London $371,786
South London $355,460
Average Townhouse Condo’s
East London $272,220
North London $406,750
South London $343,211
Average Condos (Apartment style)
East London $323,406
North London $336,273
South London $245,183
The highest way you can make rental income in London is with Airbnb or STA’s (short term rentals) but this is closely followed by student rentals which can be less work than airbnb’s which I’m seeing a bedroom by the university renting for about $650 a month (and you can max out with 5 bedrooms with City of London rental licence).
The next way you can make rental income in London is by buying a multi-family unit. The easiest way is to buy one with good tenants already in them but the cap rates are getting lower as market prices rise with long term tenants. If you buy a vacant unit you can set your own rental prices in updated and renovated unit.
The average one bedroom in London (according to rentals.ca) is $1195 a month… 2 bedroom units are going for $1643 a month which is a huge increase compared to a few years ago. The purchase prices in Kitchener are still on average higher than London and their rental rates are comparable to London so I still say London is a better place to get good bang for your buck! (If you wanted to know, Kitchener is renting 1 bedroom units for $1189 on average and 2 bedroom units are going for $1563 a month which for a 2 bedroom is actually less than what you can get in London).
From an investors stand point the math is making London look pretty good. But what about licensing fees? How is it to work with the City? I don’t wanna sugar coat it, the City of London has a long list of requirements and regulations in order to qualify for their licences and I’ve never heard anyone say much positive about dealing with them… but getting something that has been previously licensed is a great way to avoid head aches and make issues less likely. The licences are not transferable from an old owner to the next but fingers crossed if it’s passed the city inspections before it should, logically, pass again.
If you aren’t working with Justin and I, then have your agent go into more details and do a due diligence for each property as this article is meant for general knowledge and not meant as legal or city regulations advice. It’s only my personal opinion that in general, if a property has been previously licences with the City of London you may have an easier time getting a new licence. I digress.
Some differences between single family and multi-family – personally I see investors a lot less likely to lose their shirt on multi-family and in my personal experience they are less likely to go over asking. If your pre-approval or investment portfolio allows you to get a 2-4 unit place that’s in a better neighbourhood I do suggest that for longer term growth and keeping great tenants in it.
If you find yourself reading this saying “Oh no, I’m approved for $250,000 or $300,000”, don’t fret! There’s lots of hard working agents out there trying to find more listings in this price point for the first-time home-buyers out there. If you lose out on a few offers, it’s totally normal. If you think back to the start of the article sometimes (in extremes) there’s a 1 in 36 chance at a house.. but I’m finding that buyers get more confident to remove conditions and compete more aggressively once they’ve lost a couple. Some of the bidding wars are just 6-10 offers which is much better adds for you finding a place (1/6 isn’t so bad!) If you can be patient and are ready to pounce there’s still lots of great homes and opportunities out there for buyers & investors.
If you’d like to get on our mailing list for more updates and to see homes before they hit the market just send an email to Keelingcandace13@gmail.com and we’ll get you on that list. If you’d like to sit down for a buyer’s consultation and find out if we are the right team for you we can send you our free “Buyer’s Guide” to look over which has FAQ’s and tips and tricks for buyers, plus an entire overview of the buying process and that’s totally free. We have hard copies at 931 Oxford Street East at the Peak Professionals office (call ahead for a copy please) or PDF’s via email.
Justin and I work as a team because sometimes getting into a house within hours means the difference of you getting a place or not and having two people available just ensures that we have someone available to get you through the deals before they slip away. Happy House Hunting Friends!
Questions or Comments for this article? Let us know!
*All stats were obtained from listings sold on LSTAR board only in the last 90 days from 27 February 2020*