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.
Private landlords turn down young tenants
February 10th, 2011
The National Landlords Association have surveyed a third of its members who let to tenants on housing benefit. Of this group, 31% said they would reduce such tenancies now, while less than 1% said they planned to increase such tenancies during 2011.
Many private landlords had expressed their concerns even before the General Election, about the Government’s plans to pay housing benefit to tenants rather than straight to landlords since this had caused a growing rental arrears problem.
One of the key changes planned for next January will be to encourage younger tenants to live together in shared properties rather than more expensive one-bedroom flats. The Shared Accommodation Rate currently limits the benefit a single person under 25 can receive to the average rent charged for a room in a shared house.
There are also not enough shared properties to accommodate the increased demand the Coalition’s proposed cuts will trigger; Shelter says 87% of local authority housing officers it surveyed already had difficulty finding places for under-25s on the shared accommodation rate. It says this shortage will become acute when the net includes those up to the age of 35.
The Government has defended its proposals on several grounds. One argument is that the cut in benefits might encourage more families to take in lodgers under the rent-a-room scheme, where some of the income is tax-free. Steve Webb, Liberal Democrat Pensions Minister, has said, “As young people start to realise they cannot get benefit for a flat on their own and start to look for lodgings, another family who may have lost income through redundancy might wish to let their spare rooms.”
At Happy Homes Investments we always advise using a fully qualified and reliable letting agent to ensure the reliability of your tenant.
Finding your tenants.
December 14th, 2010
The first question any tenant will ask is “how much is the rent each month”. This is one question you need to give a lot of thought to, charge too much and your property will be stood empty and this is the last thing you need when you have got a mortgage to pay. Charge too little and you are not fulfilling you investment properties potential.
There are various way you can go about setting your rent many of them have pitfalls so don’t just go with the one source. So where can you turn to
Letting Agents.
The Letting Agent will have a vested interest in what rental you charge don’t forget they take a percentage each month
Adverts in the paper.
These can only give you a guide line, and can be between £50-£75 per month out; specifics of decoration and facilities in the property can demand a higher rental
Estate Agents.
Like the Letting Agent they have a vested interest in selling the property and can easily inflate any potential rental income
Personal Viewings.
This is the only sure fire way of putting your rental into the correct bracket. Take time out to go on a few lettings viewings preferably in the same street as your own property, compare the fixtures and fittings along with the decoration against that of your own property and an absolute must is to look at how long this property is taking to be let, if this is over 4 weeks then it is probably overpriced.
Don’t forget to review your rental charges on a regular basis and ensure all rises are suitable for the type, locality and condition of the property
Increase in numbers of new tenants
October 8th, 2010
A recent report issued by Countrywide Integrated Solutions, one of the country’s largest Letting agents, has shown that quarter three of this year saw a 19% rise in the number of new tenants looking for rental property. This means that in the three months leading up to October, over61000 new people have registered with them to enter the rental market. During 2010, the demand for residential rental properties has increased by over 40%.
It’s the old story of supply and demand, with mortgage criteria still very tight and with uncertainty in the employment market, more and more people are turning towards the rental sector rather than risking buying their own property. In the Midlands and the North, two bedroom houses are in the greatest demand with almost a quarter of potential tenants looking for this type of property. This means there are usually around 10 tenants applying for each rental as soon as itis advertised.
Some see the private rental market as the only option in the current economic climate, tough mortgage criteria and the Government’s cuts to the Social Housing Budget.
The high demand for rental property means that many landlords are able to maintain a god level of rental income whilst enjoying low mortgage interest payments and so maximising their return on investment.
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.
How to Rent out Your Home
February 26th, 2010
The property slump, recession and the phenomenon that is Buy-to Let has led to more and more accidental landlords. These are home owners who for whatever reason have decided to rent out their property rather than sell. Here are a few things they had to consider:
1] Do your maths: Do all your figures add up? Does your rental income cover all your houses outgoing costs? Don’t forget your tenants will be paying the utility bills and Council Tax.
2] Go it alone or get an Agent: letting Agents take the hassle out of renting out your property; they will find a tenant, collect the rent, arrange repairs and manage the rental from start to finish. What they will also do is charge a fee, and this can be anything from 5%-15%. Do your homework and choose a good agent not a cheap one.
3] Let your current lender know: You need your lender’s permission to rent out your property. If you do not inform them, you could be in breach of your mortgage terms and conditions. The majority of Lenders are not going to object, so what have you got to lose.
4] Know the rules: It is vital to know the rules and regulations, now you are a landlord. This may not be an investment property but you may still be liable for tax. Don’t forget you are now responsible for gas, electricity and fire regulations, Energy Performance certificates, Tenancy Deposit Scheme, etc.etc. etc.
5] Don’t forget Insurance: Your buildings insurance will be invalid as soon as you rent out your property, so this will need to be taken out as a landlord, and don’t forget to get cover if your tenants default on their rent.
Happy Investing!
2009 arrears lower than 2008
February 20th, 2010
LSL Property Services have released figures showing that rental arrears were much lower during 2009 than the previous year, despite the recession. This was totally contrary to all forecasters’ expectations that arrears would rise.
Figures show that 11.7% of rents were not paid by the due date, down from 14.5% in 2008, with 12.5% of rent remaining unpaid as at 31st December 2009 as opposed to 15.9% for the same time last year.
The expectations were that tenants would fall behind with rent as the recession took hold and people lost their jobs, but with the unemployment figures not reaching the levels many analysts anticipated, and landlords and letting agents keeping a close eye on rents, problems have been spotted early and dealt with promptly.
Happy Investing!