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

Category : furnished, landlords, tenants, Uncategorized
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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.”

Category : landlords
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