April Sees Rents Soar
May 20th, 2011
April saw average property rentals payments rise in England and Wales to a record breaking £692 per month. LSL property services have reported a rental increase of almost 1% on March’s figures and an increase of around 4.5% on the same time last year. In monetary terms this means landlords are charging almost £30 each month more than they were last year.
As the availability of local social housing is contracting due to government spending cuts in the social housing budgets, the market for good quality private rental accommodation is expanding to fill the gap. This expansion is fantastic news for the first time landlord looking to get into the rental market, with interest rates and property prices at an all time low there has never been a better time to utilise your savings or equity in an existing property to boost your income. With up to a 15% return on your investment Happy Homes Investments can help you get your savings working for you again.
Call us today for a free consultation.
Can investors still get into buy-to-let?
April 10th, 2011
The outlook seems bright for those considering looking to dip a toe in the property investment market as the continued shortage of good rental properties available and high tenant demand due to first-time buyers struggling to find the larger deposits required by many mortgage lenders, has meant that the current buoyant state of the rental market is likely to persist for some time.
Historically Buy-to-let mortgages have always come at a premium so for many balancing the income from the property against the expense of the mortgage has given them cause to steer clear of property investment, but with a growing rental demand come higher rents and rental income.
‘The good news is that, although buy-to-let lenders have tightened their criteria with higher deposits and rental cover calculations, rising rents make it is easier for landlords to meet these demands,’ says Melanie Bien, director at broker, Private Finance.
Steering clear of high street lenders and going through a specialist broker with access to ‘limited distribution’ mortgage deals, can uncover some gems. Mortgages for Business for example, is currently offering a 3.99% two-year discounted tracker in return for a 25% deposit, for all types of landlord.
Bear in mind however that, while fixed rate buy-to-let deals are available, they tend to be disproportionately expensive – and interest rate rises are looming large on the horizon. Credit Scoring requirements for the most competitive buy-to-let deals are also pegged high so it’s worth applying for a copy of your credit file through one of the credit reference agencies if you are in any doubt.
Good News for first time investors
March 15th, 2011
There has been a very interesting change of attitude by lenders in the buy-to-let market. Historically lenders have always favoured the established landlords, those with a history of buy-to-let borrowing and have build up a good sized portfolio.
Since the beginning of the year lenders have begun to change their lending patterns and started to look more favourably at the first time landlord rather than the professional landlord. Not surprisingly these new buy-to-let customers are borrowers who have large credit balances earning very little interest who have become very disillusioned with standard bank accounts and are now looking for alternative ways of getting a decent return on their investment.
With the lenders easing many of the restrictions around buy-to-let mortgages such as deposits, interest rates and other criteria thus making them more affordable and readily available, coupled with the demands on the rental market increasing month on month and rental income providing a better return on investment than your standard bank accounts there has never been a better time to become a property investor.
With up to a 15% return on your investment Happy Homes Investments can help you get your savings working for you again. Call us today for a free consultation.
Working out your Return On Investment
January 14th, 2011
This is an extremely important calculation to make, only by doing this you will avoid the trap that many investors fall into that of purchasing a liability rather than an investment.
Robert Kiyosaki (motivational speaker and author of the “Rich Dad, Poor Dad” series of books sums up the definition of an investment perfectly “To be an asset it must pay you cash every month, AND appreciate in value”
Far too many “investors” concentrate on the later part of this quote and forget about the income, many are enticed by the promise of a huge growth in the value of their property and are left with a cash flow negative property (outgoings and commitments higher than rental income) that they cannot sell, there is no longer the guarantee that a property will immediately increase in value as soon as you have done any alterations or repairs, Many investors are then left with a liability which they have to pay out cash for month on month. The results of which are:-
Reduction in your standard of living, an investment is supposed to enhance your lifestyle not restrict it.
Problems should your other income streams fail through unemployment, dividend payments; this may force you to sell your property at a loss causing more financial problems.
Increasing your portfolio becomes impossible if you are already subsidising 1 property at £200 per month do you want to increase this to 10 properties and £2000 per month.
It really is important to do your homework and ensure you purchase a property that gets the balance between income and growth right and the only way this can be done is to follow the steps laid out to you throughout our guide.
1. Find the right property
2. Pay the right price
3. Keep refurbishments within budget and timescales
4. Factor in any hidden costs
5. Ensure you have tenants ready to move in as soon as the property is ready
At Happy Homes Investments we ensure these points are covered every time for every investor, as we want to make sure our Investors buy a good solid investment not a liability.
Beware of the overspend.
November 10th, 2010
Overspends can happen so easily if either you or your builder haven’t put enough thought into the refurbishment budget from the get go. In fact some builders have been known to deliberately over estimate in order to increase their income from a job. Be aware of this possibility and do your sums and research so you are confident you are getting value for money.
Beware of getting emotionally involved; you’re not going to be living there. This is a business not a home. It is so easy to spend £5,000 extra on “creative luxuries” on a job and at the end discover you’ve not added a single penny to the achievable rent. What a waste.
Also think about time overruns. There is nothing that annoys tenants and letting agents more than being told a moving in date, only to find the refurbishments aren’t complete by the date you set. So the tenant is left either homeless or living on a building site.
Beware also of under spend; cheapest isn’t always the best value for money. You want that new kitchen to last 10 years otherwise you’ll have to spend more money replacing it every five years or so. Tenants don’t like living in properties that start to “fall apart” and they are likely to vote with their feet, leaving you with an empty property, no income and the mortgage to be paid. A false economy if ever there was one.
A great way to avoid many of these pitfalls is to use a quality reputable company such as www.buildingservices.com or www.buildingsolutionsmidlandsltd.co.uk
Working well with your solicitor
September 14th, 2010
In June we looked at building a relationship with the Estate Agent but perhaps more important than your relationship with the Estate Agent is your relationship with the Solicitor, don’t get me wrong, when a solicitor is working for you they are Working For YOU, but what you want to ensure is yours is the first file they pick up in the morning AND the last one they look at in the evening. If your relationship is not as strong as it could be this could lead to the following: -
Deals taking longer than they need to.
A solicitor can if they work at it get a deal through to completion within 2 weeks (Happy Homes record is 8 days)
A solicitor can also delay a deal by up to 5 months either by good negotiation for your benefit or dragging their heels to your detriment.
Deals falling through.
If a solicitor is not chasing all the parties involved it is possible for the deal to quickly sour and leave you without the property
Hampering your relationship with your letting agent.
Letting Agents like to have a firm date they can pass on to prospective tenants, if your purchase is delayed this delays everything down the line, you could risk loosing good tenants as the Letting Agent will soon find them another home.
The vendor taking an alternative offer.
If things are taking longer than expected, the Vendor rightly or wrongly could start looking at other offers being put in front of them, again this could result in you loosing the property.
There are a few easy steps to take to help you build a good relationship with your Solicitor: -
Use them as much as possible
Sit down with them at the start and outline what you are expecting from them and what they are expecting from you.
Get all the necessary forms from them in advance; this can be done before you even instruct them to work for you.
Try to get The Vendor to use a solicitor your solicitor deals with on a regular basis, this way each will know what the others requirements are and you may even be able to speak to both solicitors to move the process along (this does need the vendors permission to do this)
Use a recommended solicitor that knows the Buy to Let market, a good one Happy Homes works with and can strongly recommend is www.Fraserbrown.com
Letting Agents, what to look for.
July 1st, 2010
Once you have purchased your Buy to Let Property you need to make the decision “do you get an agent or do you go it alone.” Going it alone can be time consuming and a legal mine field if you have not got all the documents, agreements, do’s and don’ts laid out beforehand. Don’t forget this is your property that someone else has got rights over; this alone is a good enough reason to take on a Letting Agent.
So what should I look for in a good Letting Agent?
The first thing to do is take a look at what associations they are members of , the main ones to look for are ARLA (Assoc of Residential Letting Agents), NAEA (National Assoc of Estate Agents), NALS (National approved Letting Scheme), or RICS (Royal Institution of Chartered Surveyors). All these associations are bound by a code of conduct that helps protect you as their client.
What will my Letting Agent do for me?
The services a Letting Agent provides varies from agent to agent, it is always advisable to sit down with your agent and outline exactly what you want them to do, this can be as little as just finding you a tenant to fully managing the property. Having your property fully managed can save you a lot of time and energy in the future as they will carry out all the necessary inspections, report to you any problems and if agreed up front send out trades people to deal with any minor or emergency repairs without you needing to get involved.
How much will all this cost?
Fees, like services vary from agent to agent, the cheapest may not be the most economical and the most expensive may not be the best. In general a Letting Agent will charge a percentage of your monthly rental income usually around 10-15% depending on the level of service they are offering.
Building a relationship with the Estate Agent
June 14th, 2010
Estate Agents have a legal and moral obligation to act in the best interests of the vendor; after all they are the ones paying their fees. No Estate Agent should ever advise a client to accept an offer which could be detrimental to them so whatever your relationship with them do not expect this. Where a good relationship with the Estate Agent can be invaluable is: –
In a rising market.
When house prices are rising and there is a shortage of property on the market, the vendor may have accepted your offer but if you have not exchanged contracts any higher offers that come in the Estate Agent must pass these onto the vendor. A good relationship could see the Estate Agent let you know when if any offers are received, or helping you re-negotiate your offer and making sure your offer is the one the vendor finally accepts also the Estate Agent will be more receptive to progressing the sale at a quicker pace to exchanging contracts by making sure any obstacles in the way are dealt with rather than being left on the desk.
In a declining market
When house prices are falling and there is a glut of properties on the market, you will find Surveyors will start to down value properties, your relationship with the Estate Agent will become invaluable if you find yourself in the position where your purchase has been down valued and you need to re-negotiate your price down, remember the Estate Agent must at all time act in the vendors best interests, so your relationship with the Estate Agent is vital if you want them to convince the vendor that your offer is the best offer they will receive.
Over the years Happy Homes have built up excellent relationships with Estate Agents and this enables them to offer, exchange and complete on the purchase of properties within excellent timescales reducing the amount of worry and hassle for its clients.
The Impact of the end of the Stamp Duty holiday
April 2nd, 2010
The end of the Stamp duty holiday had a dramatic effect on the housing market as the Council of Mortgage Lenders reported 49% fewer house purchase mortgages were granted in January than in December. However the 32,000 loans granted was still an increase on the 23,000 for the same time last year. The biggest drop was in first time buyers where the number of loans dropped by 54% compared to the number of mortgages granted in December.
The end of the Stamp Duty Holiday saw an increase of 49% in mortgages granted in December followed by a 71% drop in January.
The Director General of the CML Michael Coogan said, “When the December and January data are taken together, they show little change in the underlying market conditions compared with recent months, with activity still slow but well up on the lows of a year earlier.”
Happy Investing!
Tenants outnumber properties
February 15th, 2010
According to the Association of Residential Letting Agents (ARLA) the rental market is seeing an upward trend in the number of tenants. A survey conducted by ARLS showed that the previous surplus of rental property is reducing at an unprecedented rate wile the demand growing even quicker.
During the last quarter of 2009 ARLA reported that 41% of its members were reporting more tenants than properties, compared to just 21% in the previous quarter.
Demand for tenanted accommodation is coming from previous homeowners who have been forced to sell their property during the last year due tot either moving jobs, or financial instability and they are now finding it difficult to find the right property or funding according to ARLA Operations Manger Ian Potter. He added the rise in Tenants is a positive sign for the industry as it indicated increased market movement, it also shows more people will learn the benefit of living in rental accommodation.
Happy Investing!