In the latest edition of MRM’s ‘Two minutes with…’ slot, Lahrie Mohamed, Chief Executive of LMSL, talks about how he built his business from scratch, where he sees value in London’s soaring property market, and the background to his latest project, the East London Property Bond.
Can you give us a bit of background on LMSL and how it all started?
I arrived in Britain back in 1991, with nothing more than some ambition and £20 in my back pocket.
Initially training as an accountant, I soon realised that property was my passion and I put this enthusiasm into good use in the buy-to-let market that was beginning to emerge in London at that time.
From day one I was eager to get on and build up a property portfolio – not only for financial reasons, but because I found the whole enterprise interesting, exciting and, above all, fun.
With an annual rental income of £3m expected for this year it’s been a successful venture for us, and I look forward to taking forward the opportunities that are sure to arise over the next few years.
London’s property market has experienced substantial growth over recent years. How have you responded to it, and what are your commercial priorities for the future?
In short we have three priorities – we want to maintain steady growth, expand our portfolio and continue to be known as a leading provider of lets for tenants.
While LMSL has successfully built up a sizeable presence in Walthamstow, we are now searching for the next London district which can reward investors.
Having looked across London, we feel Barking possesses many of the attributes that Walthamstow had a decade ago: it’s up-and-coming, has the advantage of good transport links and caters to the kind of tenants who we want to attract.
You’ve recently launched the East London Property Bond on the crowdfunding platform
CrowdBnk. Can you tell us a bit more about it?
As a way of encouraging investment in the East London property market, we’ve launched a mini-bond which will pay interest to bondholders of 10% per annum. The mini-bonds are fixed for a five-year term and secured against one of LMSL Group’s properties, the Barking Magistrates Court residential development*.
We’ve launched it via CrowdBnk because we believe in the concept of crowdfunding as a major source of alternative finance for the property market. In our view, raising finance on these platforms enables investors to take a greater share of the overall return on their investment, and it helps bring investors and companies together in a way traditional lending models cannot.
When you also take into account CrowdBnk’s commitment to providing the best in due diligence, partnering with them felt like the natural choice.
What are your views on the overall state of the UK’s property market?
Speaking from the experience of someone who has nearly two decades of experience when it comes to London’s property market, the issue that keeps coming up is an undersupply of housing.
This situation will only improve once more homes are built and the problem of insufficient supply is addressed.
It appears that the Government is aware of the scale of the problem, but I’m sceptical that the will is there to address this crisis and give the private sector the conditions it needs to build more homes.
What are your views on the Chancellor’s recent decision to scrap tax relief for buy-to-let mortgages?
In my view, the Treasury’s changes will make it far more difficult to generate a profit on buy-to-let investments.
As with any change of this kind, turnover rather than profit is now taxed, producing a major disincentive for prospective buy-to-let landlords.
Preparing for the arrival of these changes will be essential if entrepreneurs are to be able to protect their portfolios come April 2017.
If you could turn the clock back to the start of your career, what advice would you give your younger self?
Stay focused, keep up your passion for property and work hard – all three of these values will stand you in good stead!
Finally, what would you say to someone considering whether to become a buy-to-let investor?
Only do it if you have a passion for it because, in our experience, that passion is the key to commercial success – it certainly has been in our case.
*Attention: You may lose some or all your capital should you invest as the assets on which the bond is secured may not be sufficient to pay back your investment in all circumstances. Please read the specific risk factors for The East London Property Bond. East London Property Bonds are not protected from loss by the Financial Services Compensation Scheme. CrowdBnk Limited is an appointed representative of Resolution Compliance Limited, which is authorised and regulated by the Financial Conduct Authority (No. 574048).