23rd Sep2011

Are studio flats a good investment?

by admin

Interest rates have never been lower, with rents rises and house prices falling, if you have some spare cash is now the time to jump into the buy to let market.  The purchase of a Studio flat does not often require such a large capital outlay. But do studio flats make such a good investment?

Often cheaper to purchase than a one bedroom flat, purpose built studios are often no very big in terms of square footage, and compromising on space for the sake of initial out lay may not represent value for money. Increasingly Estate agents value properties on square footage, which may well in real terms not make studios so appealing.

As with all property investments, location is key, when investing in a studio flat.  Studios have a more limited appeal. Estate agents will often have studios on their books for a lot longer than other types of flats, due to their postcodes and the demographics of the area. Whilst those in core city centre locations being snapped up straight away.

There are some drawbacks to consider when considering investing in a studio, space is one. If you have additional bedrooms, it does provide you with the option to appeal to a wider market. Tenants do not often stay for long periods in studios, and you therefore may well have increased costs with void periods and additional re-let fees. Also when the property market picks up again, it could mean it has less appeal should you wish to sell on.

Financing for a studio purpose can also prove to be hard. Mortgage providers are not always keen to lend on studios, often because lenders are concerned about the potential resale.  Often lenders will not consider anything less than 380 square feet for mortgage purposes.

Despite saying all the above, studios can still make good investments, but location is the key. They can make ideal serviced apartments, or short term corporate lets. Look for prime central locations with good access to transport links and eateries. Look for locations in up and coming areas that attract professionals who have more disposable income.

Like with all investments there is always a risk, but with careful research a studio could well be the best investment for you.

If you are considering investing in Bristol or need assistance with your existing portfolio, I have over 15 years experience in Letting and Property Management in Bristol, letting properties from studios to Penthouses. Feel free to call me today on 0845 652 1428 or contact me at www.igloolets.com

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09th Aug2011

Buy to let – not quite as simple as it looks

by admin

If we discount the weather as an indicator, the British summer has arrived, so that means the silly season has arrived aswell, as oft they go hand in glove with one another.

Even if you have stopped buying newspapers, you will no doubt have seen a overabundance of articles on the buy to let market. It would appear that Buy to Let investor are now more favoured that first time buyers, and Nat West have been advertising some very attractive deals

Housing prices in most areas have been reduced this year and the levels of income nationally from rental properties is mostly growing steadily. It would be hard to imagine better conditions for entering into the buy to let arena. But all is not well in the economy here and elsewhere. And it’s better to be careful.

Although inflation is down slightly this month, it remains very high, and there is no doubt that whilst it might not be next month or even this year, interest rates will rise at the earliest opportunity.

It is also very uncertain there. Just look at the recent U.S. tightrope in the debt ceiling. And who knows what else will manifest itself from our other EU partners, there is no doubt we have not heard the last from the like of Greece, Spain and Italy. Some commentators are openly predicting the demise of the euro. There are certainly more difficult to arise.

One thing that all smart business people value, that is certainty, it helps to make a solid plan. However just at this moment the one thing we don’t have is certainty. So in the context of Buy to Let, if you are considering entering or making any Buy to let investments, caution and shrewdness is advised.

There are certainly some good Buy to let options out there, but do not fall under the hype. BTL is not a dead cert, and it is up to you if your investment is sound. Above all, it has never been more important to study the local market where the property you want to buy is and make sure the rental demand is strong.

Mostly the people who run into difficulties with Buy to Let are those who have not done their homework. They ran headlong into cheap property only then to find out why they had not been snapped up already: it simply wasn’t the place that prospective tenants wanted to live. Of the two major components in Buy to let, the actual purchase of the property is the simple part, actually letting is out and getting tenants can be surprising tricky for the novices.

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04th Aug2011

Landlord watch your cost in these tough times.

by admin

Unless you live in a cave somewhere, or never leave you small dark room, you will be aware of rising costs. Petrol costs, food, and utilities to name just a few.

Now is as good a time as any to analysis your costs as a Landlord, and make sure that what you are spending is giving you value for money or a return on investment.

Landlords need to make sure they are running a lean and tight machine at all times, however, in these times this is even more important.

Be pro-active in maintenance issues. £100 spent now could well save you £1000′s in the longer term

Make sure that what you are spending is essential, never forgetting that each pound you spend is off your bottomline.

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05th May2011

BOING BOING Buy to Let Bounces Back

by admin

With the increase difficulty in first time buyer being able to obtain mortgages, because of the increased financial constraints.  Renting has become the only option for many. For the seasoned property  investor that is only good news.

‘Since the credit crisis impacted the buy-to-let market in 2007, many landlords have experienceddifficulty obtaining mortgage finance in order to purchase residential rental properties. However, thebuy-to-let mortgage market has now stabilised and is starting to show positive signs of recovery.

‘During the last 12 months we have seen new lenders entering and existing lenders returning to thebuy-to-let mortgage market, including Paragon Mortgages, the specialist buy-to-let lender.

‘Lending criteria is also starting to ease somewhat and there is now a choice of products availablefor limited companies, light refurbishments and houses in multiple occupation. Loan-to-values havealso increased and just this week we have seen the return of the 85% loan-to-value buy-to-letmortgage. Landlords have been faced with providing much larger deposits during the last couple ofyears so this is great news for residential property investors in the UK.

Lenders havedisplayed a conservative attitude toward risk over the last couple of years, despite the highperformance of buy-to-let mortgages compared with the wider mortgage market, but there isevidence that confidence in providing buy-to-let finance is returning.

According to TBMC’s Landlord Profile Tracking Index, optimistic signs during the first quarter of this year included higher loans on offer during the period.

The index also showed that London, followed by Portsmouth, Sheffield and Brighton, are the most popular places for buy-to-let investment, and that terrace houses and flats are the most popular property types.

Andy Young, chief executive at TBMC, said: “During Q1 2011 the average loan size for offers received by TBMC was £136,359, up from £130,145 in the previous quarter – an increase of almost 5%.

“Average loan-to-values also continued to rise during the period, with 49% of mortgage offers made with LTVs of over 70% and the overall average LTV at 66%. This reflects the increase in lenders offering more 75%, 80% and even 85% LTV buy-to-let mortgages.

“During the course of last year fixed rates were a more popular choice by landlords, making up 63% of applications in the last quarter of 2010, with just 37% of applications for variable rates. However, this preference appears to be changing as the Bank of England base rate has remained at its historical low of 0.5% throughout the first quarter of 2011.

“During Q1, 52% of applications were for variable rates, perhaps reflecting opinion that any interest rate changes during the year will be small. There have also been some very attractive discounted rates available via a number of regional building societies, resulting in an influx of applications for these products.

“Interestingly, the average rates chosen during the period increased slightly. The average fixed rate was 5% (up 0.24%) and the average variable rate was 4.20% (up 0.13%). However, one set of results is not sufficient to tell whether this is a developing trend or just a minor deviation compared with the previous quarter.

“According to the index, terrace houses (33%) and flats (31%) are the preferred buy-to-let investment properties for landlords in the UK, accounting for over 60% of the mortgage offers received during the last quarter. This is a consistent trend observed since the index started, together with over 90% of buy-to-let tenants being either families or professionals. These options are clearly the most reliable for a good yield.

“Unsurprisingly, the results of the index show that London is the most popular location for buy-to-let investment with over 17% of mortgage offers received for properties in the capital, followed by Portsmouth, Sheffield and Brighton. Major cities such as Birmingham, Manchester and Cardiff also show steady buy-to-let property investment.”

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21st Apr2011

How to apportion your Income from letting your property

by admin

Now that you’re a landlord and are in receipt of rental income, you may well be tempted to start buying those little extra luxuries you always promised yourself. But before you rush out  and go buy the new car or big-screen tv, STOP and  think of what your aims goals and objectives are:

Do you really need to spend the income as shortly after you have actually got in —or are your investment ambitions greater than that?

Think about splitting your rental income into separate accounts that can assist in growing your investment property business enterprise—and your following rental property may well be closer than you imagine!

Account 1: Expenses

All of your immediate payments come out of this account, like the mortgage, insurance, taxes, and property management expenses. Look at and consider a goal of holding on to, at any rate three months’ worth of these disbursements in this account at all times.

Account 2: Maintenance

Into this account, you will carry-over cash to address regular maintenance and everyday repairs. Whenever you are able to keep back a month of gross rent in this account, you ought to be in good shape. Naturally, whenever the property is in need of upgrading, you will be expending more from  this account for the short-run.

Account 3: Long-Term Expenses

Every few years rental property calls for expensive repairs. A new, boiler or roof covering or even tree removal can hit a big dent in your profits. it is a lot more beneficial to put away a set amount of money each month to address the disbursements that appear every 10 or 20 years. And if your roof appears that it will need rrenewing  in, say, 3—5 years, start putting away a greater monthly amount.

Account 4: Emergency Expenses

This account should be as large as you feel comfy with. A lot lof landlords feel that  three months’ rent is adequate, others like a six-month buffer or more. There will be with out  a shadow of a doubt,  periods  when your rental property is empty and you will need to make the mortgage payment out from this account. Or, you might access it when a  plumbing emergency causes an insurance claim and your excess or premium comes due.

Account 5: Future Investments

As often as you lay aside for disbursements and emergencies, save for your future investment, also. After all, the additional hard cash you have, the earlier you will have the deposit for another investment property—which leads to greater cash flow.

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24th Mar2011

Tenants struggle as rents continue to rise.

by admin

Tenant arrears have increased rapidly, as rents continued to rise in February. Rents are now 3.9% higher than this time last year.

Rents overall rose throughout England and Wales by 0.2% to an average of £684 per month.

12.6 of all UK were either unpaid or late at the month end. This was a rise of 11% on the previous month.

Unpaid rent totalled £296m across the UK in February, up from £258m in January.

Latest figures from the LSL Property Services Group, the largest Buy to Let index in the UK, said that the average yield from property increasd to 5%, as the rent increased at a quicker pace then rental property values.

With London recording only a modest increase in February in comparision to previous months, however rents overall in the capital have increased by 7.7% overall.

Wales saw the biggest monthly incease where they rose by 1.9% in the north east rent actually fell by 1.4%. in the South West we saw rents fall by 1.%

 

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15th Feb2011

New buy to let deals on offer at 85% LTV

by admin
Improved mortgage products are being provided to buy-to-let investors,  one lender is now offering  mortgages equal to eighty-five per cent of a property’s value – the highest loan to value accessible to landlords since the credit squeeze.
The move arrives because more main street lenders look for entry into  the buy-to-let arena , which, may well constitute  more competition in  the sector  and offer additional options for property investors.
Kensington Mortgages, owned by Investec, the South African bank, recently became the first provider of mortgages  since the downturn to step-up its loan to value on buy-to-let loans to 85 per cent. The previous week week, Paragon, a buy-to-let lprovider which specialises in offering finance for professional landlords , set up a new array of products directed at smaller-scale landlords anticipating expanding  their portfolios.
Yorkshire Building Society announced recently that it was debating whether to offer buy-to-let mortgages this year. Santander has also showed an interest in coming into  the market for non-professional landlords.
“Following our merger with Chelsea Building Society, we have an existing buy-to-let mortgage book,” explains a spokeswoman for Yorkshire Building Society. “We are currently working on the possibility of pursuing new lending in this area.”
This has been received as a favorable act for a market that has been badly hit by the liquidity crisis, with lenders bowing out of the sector and the amount of products for landlords shrinking dramatically.
Now the accessibility of finance for buy-to-let properties is increasing  - at a time when the prospects for buy-to-let investing looks more and more appealing. With rents climbing sharply across the past year on the back of increased  demand, experts consider this may well  constitute a good time to invest for the long-run.
But there are still only a very few options for buy-to-let investors with a down payment  of 20 per cent or less. Nigel Bedford of Largemortgageloans.com, says that only three lenders – The Mortgage Works (TMW), Clydesdale Bank and Kensington – offer up to 80per cent of a property’s value.
Kensington is only providing one product at 85% loan to value: a two-year fixed-rate mortgage at 5.99%, with a 2.50% fee. It has eased its rental cover demand – the annual rent as a percentage of annual interest repayments – from 125% to 120 per%.
“It has to be a welcome addition to the current range of buy-to-let products on the market and opens up options for those keen to invest without making such a big capital outlay required of many lenders,” says says spokesman David Hollingworth of London & Country, the mortgage brokers.
However, mortgage brokers advised  that the new deal wouldn’t be appropriate for all buy-to-let investors.
To enable an investor to take up the full 85 per cent, a property would have to yield in excess of 6.1 per cent, However, experts have said that  landlords with properties in cities such as Nottingham, Liverpool and Manchester, where yields can be 6-9 per cent, will find the deal actual appealing.
Landlords will likewise need to watch out for the high reversion rate at the closing of the mortgage period, says Melanie Bien of Private Finance. Under Kensington’s terms, borrowers will move on to a variable rate of 5 % Libor – the rate at which banks lend to one another – which would currently give a rate of 5.75%.
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21st Jan2011

Buy to Let – Now is the time

by admin

At the close of 2010, the Royal Institution of Chartered Surveyors (RICS) predicted that house prices in Britain could fall more than 2% in the next year. Although, while this is bad news for homeowners, the fall in house prices could spur an increase in the level of interest in investing in property. Could, therefore, 2011 be the year of boom for Buy to Let?

At the end of the day, it pays to look at the long term in regards to investment in property. While housing prices are low now, they can only grow in the long term, which means that your property will gain positive equity.

Of course, renting property isn’t for everyone. Not only is it a long term commitment of hard work and dedication but it is also expensive. For most Buy to Let properties you will be required to pay at least 25% in way of an initial deposit. Similarly, there are various other costs to consider such as legal fees, letting agent fees and landlord insurance, just to name a few.

However, if you have the money to make that initial investment (and let’s face it, the rates of return on other types of savings and investments are hardly attractive at the moment), then Buy to Let could be the ideal solution. As lenders stick to tighter underwriting criteria than ever before – particularly for first time buyers – more and more people are driven to renting.

If you are interested in dabbling in the Letting Market but are unsure whether or not it will be a long term benefit for your personal circumstance, then you are advised to weigh up the following specifics. First, determine your projected rental income, this, above all, will highlight if the investment will be worthwhile in the whole. Also, calculate how much you’d intend to charge in rent and compare this with current rental costs on the market. Finally, you must predict what your ongoing spending will consist of, for example maintenance, insurance etc.

In order to work out these exact figures, it is advisable to seek help from an independent financial adviser. However, if you would like to try it out yourself, the basic calculation is as follows: Total projected rental income minus Total annual costs divided by Total initial costs. So these include all of the factors mentioned above such as the initial deposit, the mortgage repayments, letting agent fees and general maintenance and repair fees including initial decoration and furnishing required at the beginning of a tenancy.

These calculations are important as they allow you to determine whether or not investing in property will be worthwhile. Additionally, organising your figures and paperwork will prove to your mortgage lender that you are serious about the decision to rent property, so they will be much more likely to lend to you. Also, as the calculations are all based on estimates, you are given a certain degree of flexibility with your figures, over compensating or under compensating to ensure that you will be able to cope in a fluctuating market.

The specialised nature of Buy to Let finance means that the best value for money will not be found on the high street. Looking for a mortgage broker is the advisable route to take in this instance, as they really do know their stuff regarding the Buy to Let market.

It is even more important that you approach a broker if this is the first time you have looked into renting property. Independent brokers who work on a ‘whole of market’ basis will be able to help you find the best rates and deals on the market. They will additionally be able to understand your personal circumstance and exactly what form of mortgage or financial assistance would suit you best.

So, is 2011 the right time to Buy to Let? With the housing market as it is at the moment, now has never been a better time to enter the letting market. The environment is favourable for landlords and demand for rented property is increasing almost daily. So, if you are looking for a new adventure as we enter the New Year, then consider buy to let as the biggest and best investment of your lifetime.

If your considering investing in property in Bristol, why not give me a call, I have been a specialist in the private rented sector in Bristol for over a decade.www.igloolets.com or you can contact me 24/7 on 0845 652 1428

Follow me on twitter @kevinigloo – for topical tips, tricks and ideas for Landlords.

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27th Oct2010

Is this the death of Buy to let

by admin

My good co-professional colleague Sally Asling of Surrey Lets, has recently written a great article on Buy to Let and has it come to an end or era.

It such a good article I wanted to share it with you, Sally like myself has had considerable experience in Lettings well in excess of a decade. Just like myself she has also worked in the corporatate world of lettings, and both our companies have come about because of wanting to offer our clients something better.

So in Sal’s own words

Why the “Buy-to-Let” era is still alive and will not ever die

I recall the lettings industry before “Buy to Let”. There is no question that the onset of Buy to Let changed the Lettings Industry, but at the end of its first decade in 2007, we heard it was the end of of the Buy-to-Let era, that the Bandwagon had been and gone, and that those entering property investment were too late. However, whilst with all things in property there are good times to buy and good times sell, I don’t believe for one moment we can look at Buy to Let as an era gone.

The demand that the Private Rental Sector is currently under, the national shortage of stock, the government plans for more social housing cuts and the tightening on lending criteria that prevents many young people from getting on the housing ladder, all point to the fact more rental accommodation is needed now and will be needed in the future. With property prices coming ever closer to reaching the “bottom” and pressure on the banks to start lending, I firmly believe for those looking at a medium to long term investment, Bricks and Mortar are still going to give you a great return on your investment.

Historically the rental market slumped at the end of the eighties because people were encouraged to buy their own homes, and with so much money to be made by owning a property many felt the age of renting was over. Of course this was not so as when the recession came in the summer of 1990 demand for property to rent hit an all time high as people held fire on buying, scared off by the reality that negative equity had it many buyers buying in the boom.
Meanwhile, the 1988 Housing Act and further amendments in 1997 made it far more favorable for Landlords to let and mortgage lenders we happy to loan to prospective Landlords. And so, the dawn of Buy-to-Let began. Buy-to-Let favorability started with ARLA who launched the initiative formally putting together panels of Lenders who were happy to provide new Buy-to-Let mortgages at competitive rates.

Property prices once again soared as many people took out mortgages on second properties, the growth in But-to-Let lending exceeded all initial predictions. In 1999 44,000 Buy-to Let loans were agreed and by 2001 the annual total exceeded 72,000, and was worth £6.9 Billion. By 2006 reports are up to 700,000 loans. In 2008 ARLA produced data from its mortgage lenders to form the ARLA arla_btl_history
Many investors who bought property as early as 1996 have experienced high returns on the capital value of their properties. This has allowed them to remortgage in order to release equity and buy even more property with the proceeds. Additionally, people who did not invest early have witnessed the returns the early investors have experienced and have also purchased buy-to-let property, hoping for similar medium to long-term gains. From 2002 – 2007 property prices in some parts of the UK hard risen by up to 90% giving investors fantastic capital growth.

It was inevitable that the Buy-to-Let bubble would burst at some point. From 2007 the supply of property on the lettings market was starting to prevent rents increasing and in many areas the glut was pushing rentals down. In 2008 in light of the global economic crisis, rents started to fall as many tenants were removed from the market making the oversupply problem worse. Corporate lets were the first to go with companies sending home employees and not bringing over employees and their families. As larger corporate lettings stood empty the prices were reduced creating a domino effect across the marketplace.

With house prices falling and lending criteria tightening, many property investors that had already built up good equity were selling quickly in reaction to the scaremongering that 25% plus could be taken off house prices. During 2008 – 2010 many Buy-to-Let properties were sold. Elsewhere, homeowners who were letting their property whilst going overseas to work, were being routed back to the UK. Other economic factors affecting the rental market are the changes being made by the coalition government reducing social housing and putting more strain on the Private Rented Sector. By Autumn 2010 the Lettings market was once again seeing a shortage of stock began to push rentals back up to pre 2007 levels.

With property prices close to being “at the bottom” and with a shortage of rental stock, is now the best time for investors to consider re-investing in the Buy-to-Let market once again? Is the cycle since the housing crash and recession of the 1990’s going to start again?

Interest rates are low and now is a good time to get a fixed mortgage, property prices are very close to, (if not at) the bottom, so a good time to buy and demand for more stock in the rental market is high, and speculated to be an area of significant growth over years to come, finally, we are on an island with a Housing Shortage – investing medium to long term in bricks and mortar will prove to be a good investment

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12th Oct2010

Buy to let mortgages – Boings back

by admin

The economy still appears sluggish and the future still looks a bit unpredictable, but for those landlords with a bit of spare cash around should now consider developing their portfolio.

After a long spell in the doldrums more lenders are placing offerings to the market place. Paragon one of the bigger players, before the recession has recently returned to the market after it was forced to close in 2008 due to higher costs. They have recently secured new funding and have  restarted to offer packages to the buy to let sector.

Their new product is apparently perfect for those who are keen to expand their portfolios or generate new funds, for capital works and refurbishment.

The new product offers up to 75%  loan to value, with various tracker and fixed rates available.

Funds are available for portfolios up to £5 million, while competitive  re-mortgaging is an option within six months for the same amount as the original loan, or is complete renovation works are required, although full receipts will be required to be presented.

If your considering investing in property in Bristol, why not give me a call, I have been a specialist in the private rented sector in Bristol for over a decade.www.igloolets.com or you can contact me 24/7 on 0845 652 1428

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