Interest in the UK property market has mushroomed over the last decade leading to a substantial increase in the number of property related TV shows available today. These shows are littered with “experts” who can tell you anything from how to value a home to avoiding “cowboy builders” but it would appear that even the experts are struggling in the current economic climate.
Cowboy Builders has become something of a cult TV show which has opened the eyes of many people across the UK to the problems of cowboy builders and the potential cost to customers. John Russell, 44, is one of the main components of the TV show along with presenter Melinda Messenger. He has been credited with revealing a number of tricks which a number of tradesmen around the UK have been using for many years to obtain money by “deception” and he has saved a lot of people a substantial amount of money.
However, it has recently been revealed that a string of property companies to which John Russell had exposure have gone under leaving debts of more than £6.4 million. The first five of the string of property companies to go into administration occurred in 2006 leaving a significant number of homes unfinished and various building trade companies out of pocket.
Even though the first of the companies in question went into administration in 2006 there are still a great number of angry business people who ended up with substantial losses against contracts with the companies. It has been revealed that between them, Specialist Property Services Ltd, Specialist Property Services “Northern” Ltd and Specialist Property Investment Ltd between them racked up debts of more than £6.1 million.
While John Russell has come in for substantial criticism over the last three years there is no suggestion of any impropriety and the companies were taken under the control of Administration specialist Kroll who even employed Mr Russell during the wind down period for his companies.
Location, Location, Location
On the day that the press have picked up on the various business activities of John Russell it has also been revealed that Channel 4’s leading property guru Phil Spencer is having serious trouble with his Home Finding company. Like any other company in the property sector, Garrington Home Finders has seen a substantial reduction in business in a very short space of time which has impacted upon cash flow and the future prospects of the group.
As a consequence, Phil Spencer has announced a number of job losses at the company although he is in discussions with bankers and corporate advisers about a viable solution which could see the company survive into the longer term and reduce the potential for further redundancies. While he is going through this difficult process his position with the Location, Location, Location TV programme would appear to be as strong as ever.
TV property programmes
As mentioned above, there has been an explosion in the number of TV property programs available in the UK as demand (despite the credit crunch) continues to power ahead. While some had expected this demand to “fall off the edge of a cliff” as the credit crunch hit home and the economic downturn around the world began to grow, this would not seem to be the case.
It would be wrong to say that there is still the same amount of investment capital available for new properties or significant changes to existing homes, but it seems as though there is still great interest in the property market with many now looking towards the bargains on offer and how to “get to the front of the queue”. It would appear that the attractions of TV property programs are still as strong in recessionary times as they were in the boom years but for totally different reasons.
The impact of TV property programs
While initially there were only a small number of TV property programs in the UK, this number continues to increase along with the reputation and impact which advice given to the nation can have on specific sectors and specific areas. A number of TV property programs have been blamed for “property hotspots” as well as for “property cold spots” such is the apparent reputation of the “experts” employed by this growing area of reality TV.
There is no doubt that much work goes into these highly educational programs and information which they present on screen is firmly backed up by market opinions and statistics, but there are always two sides to any market. While none have been brave enough to call the bottom of the current market decline it will be interesting to see as and when investment advice changes and these experts move towards a more positive feel for the UK property sector. This could be as much of a signal as any potential increase in liquidity in the financial markets.
Do your own homework
Those who invest in specific areas of the property market purely because it had been recommended by various property programs are taking a risk if they have not done their own homework. You should never invest in any market, let alone the property market, without knowing exactly what you are buying, the prospects and your potential exit route. Property market bubbles can force prices to artificial highs and if you are unlucky enough to buy at the top of the market you will severely diminish the potential for short to medium term capital growth.
As we have seen in the Dubai property market, many property investors were seen to be chasing prices higher and higher to levels which could not be maintained in the short to medium term. Once the economic slowdown around the world began to kick in many investors left the market and were willing to take distressed prices for their assets. This suddenly turned the property market bubble into a nightmare for many investors who are seeing property values fall on a constant basis but are unable to liquidate their own assets at reasonable prices.
While the vast array of TV property programs obviously have access to more information than the general public you should always do your homework before investing in the property market. Short-term profits are very difficult to come by in any investment market but more so in the property market when you consider that a purchase can take weeks if not months to complete by which time the market may well have turned against you.
While the likes of John Russell and Phil Spencer may be receiving unfair press at the moment, it is worth remembering that nobody is immune from the severe economic downturn which the U.K. is experiencing, not even the experts you see on your TV. Like our sports stars in the UK, we are very keen to build these people up to icon status but when the situation turns against them many in the UK are very quick to criticise.
By all means take on board any advice which you hear with regards to the property market but remember that for every expert who is a buyer there is likely an expert who is a seller which is ultimately what makes a market. Property investment should be considered on a long-term basis and those looking for short-term gains run the risk of having their fingers burnt and their finances damaged!