Place10: ‘It’s not you, it’s us’
By 2007 I had entered my tenth year in property and my seventh running Landmark, so classed myself as experienced despite being 26, writes Mark Hawthorn, chief executive of Landmark Investments. I was often asked by friends and family: “What would you do if the market crashed?” to which I would tell them that I hoped it did, as I’m a buyer and we had been in a seller’s market for quite some time.
Throughout the early 2000s we had built up our portfolio, but by 2007 had been selling for some time, such were the tempting prices on offer. Towards the back end of 2007 we hit a fantastic ‘purple patch’, where we were flooded with enquiries to buy properties, which I put down to our marketing efforts and standing. We were buying at keen prices and simply putting the properties back onto the open market and reselling them at very healthy margins
As we entered 2008 profits were really flowing, so stereotypically I went and bought a big house, increasing my mortgage five-fold and on a 90% loan-to-value self-certification. Around this time Bear Sterns and Northern Rock were bailed out. I remained unfazed, paying just a passing interest to events, as our purple patch rolled on.
There was a period of relative silence over the summer months, until September 2008 when the cat burst out of the bag, and bailouts or bankruptcies of lenders and borrowers were a daily occurrence. Suddenly… What was something worth? Who would buy or rent it? How would you finance it? What’s going to happen next? The whole market, myself included, was paralysed by indecision waiting for the next wave of bad news. Everything had changed and fear reigned.
I’d never seen a falling market, never mind a global meltdown, so was a little shell-shocked at how rapidly things had and were continuing to deteriorate. Whilst we had been enjoying the party as much as the next person we had always kept our core costs down and used simple investment logic I’d learned from reading Warren Buffett in the main. The juicy trading profits had gone, perhaps never to be seen again, but we had our underlying rental income to keep the lights on and feed ourselves. Our bank told us there was no more money available using the immortal line: “It’s not you, it’s us.” We were also aggressively stress tested and I was told off record by our bank, “we would go bust long before you”, so were left alone. This was not the case for many of our contacts who were absolutely hounded, either out of business or into somehow repaying.
We turned our full attention to the ground rent sector, where we had been quietly active for some time, which was still alive with opportunity if a little sleepy, which we soon changed.
The fact we survived the worst of it meant that we were well positioned as things started to improve, and had a beneficial head-start which has allowed us to thrive in most recent years. However, we remain vigilant.
- To take part in the Place10 series reflecting on the decade since Place North West was first published in August 2007, send your stories and memories to email@example.com headed ‘10’