Just who exactly ARE your tenants?

A cautionary tale to all landlords...

Do you REALLY know who you are renting out your property to? How do you know that the person you meet is the person they say they are, and not an illegal sub letter? Would you knowingly want to be involved with shady tenants, or would you rather be protected from them?

What if your tenant trashes the place, rips off doors and radiators, kicks holes in the walls or runs a cannabis factory from home? Where do you stand – probably not where you want to be, that’s for sure. We have reports of these horror stories (and worse!) from even some of our seasoned landlords, who all had enough experience to cope with such matters – or so they thought. Can you imagine the stress and financial burden this would put on a novice at the start of their investing career?

 

The common denominator here is people – well, specifically tenants. Property investors often forget this is a PEOPLE business, it’s all about how you deal with them and how they interact with you, how you pick the good from the bad in the first place, and how do you know who to trust? Well if you don’t do thorough due diligence on your new tenants then the truth is you don’t. Would you honestly spend, for example, a quarter of a million pounds on a nice 3 bed semi and then effectively hand it over to strangers? Some landlords, and even agents, state that they want (and will get) a tenant living in an empty property before the week is out. Hmm, OK, let’s think about this – I don’t know you, you want to potentially be entrusted with what is in effect a LOT OF MY MONEY tied up in the value of my property, not to mention that I will effectively be offering you credit to the value of 6 months’ rent – well I certainly want to know all I can about you my friend! First I want to take up references from your current and previous addresses, I also want to contact your employer to confirm not just your salary but also that you DO HAVE a permanent position there for a period covering your initial tenancy. Got any CCJs or financial defaults? If so then I want to know, because as I don’t know you, it tells me you are a financial risk that I could do without.

 

 

Obviously, anyone’s situation can change, so I’d like to pop around in 4 weeks to make sure you have settled in OK and got to grips with everything at the property – oh did I mention, I’ll be back in 3 months as well, and every 3 months after that, just to keep an eye on my property. Sorry what’s that, you don’t think that’s fair? Well there are currently 97 other agents listed locally on Rightmove, perhaps they could accommodate you.

You see at Belvoir, our landlords get the protection from all of the above in the detailed level of service and tenant referencing we offer. What we want our landlords to understand is that we DO know our applicants even before they become our tenants, and that’s one of the things you pay your monthly fee towards. Come on, would you really gamble £250k for a saving of around £16 per month on your fee? If so, there are 97 phone calls you could be making. If not, just the 1 call to us on 01908 562582 is all you need to make.

Campbell Park 2 bed apartment offering 6.2% yield

Have a look at this tidy 2 bed apartment in Campbell Park, offered for sale through Elevation for £140k and would easily rent for £725 to £750 PCM at this time. It doesn't appear to need any work doing to it, and this would appeal to young professionals working in CMK who don't particularly want to live down at the busy end of the city above The Hub and can't afford to live in Vizion. A nice 6.2% minimum can be earned from this, so go and have a look.....

http://www.zoopla.co.uk/for-sale/details/33934681

Downs Barn 3 bed terrace, £190k investment gets this nice, easy property for the new investor

This is a decent property in Downs Barn, for sale for £190k through Haart, offering contemporary living and decent quality in a reasonably central area, this will rent out for around £850 PCM giving a yield of 5.3%, but with no modernisation or big expenditure required on your part. Might be worth a look for an easy option to start with....

http://www.zoopla.co.uk/for-sale/details/33918022

 

 

Netherfield potential high reward 7.5% yield

Following on from my post on 11 July (see older posts), here is an example of just what I was illustrating back then:

http://www.zoopla.co.uk/for-sale/details/33901525

 

 

 

Here we have an absolutely typical 3 bed terrace in the inimitable style of this area, complete with off road parking, downstairs WC and a converted garage. Wilson Peacock have this up for £120k, haggle a few pounds off for a bit of redecorating and possible tidying up internally (there are no photos, so best to go and see what it is like before doing all the sums), but if it is generally OK it would go back on the rental market at £750 today - and you would get that no problem. Based on these figures, it could yield 7.5% for you.

 

So you get a decent immediate return, but you would be unlikely to see a highly appreciating asset over time, and structurally it may need more work doing to it in the future as well (flat roof, external corrugated cladding). It is not in the most desirable of areas yet will always find a market, and for someone with the  gumption to take this on, it could offer a good income.

Oxley Park, stunning apartment offering a potential 6.2% return

Here we have a lovely 1 bedroom apartment in a very desirable and up-and-coming area, Oxley Park. Rhyen Jordan have this stunning apartment on the market for a tad under £140k, haggle hard for a few pounds off if you can! Offering 2 parking spaces and a totally up to date interior, this would rent to a young professional for £725, offering you a potential return of 6.2%. Pop along for yourself to see just how nice the area is, and why it is worth the money.

http://www.zoopla.co.uk/for-sale/details/32022952

How can you find a good property deal in MK?

The subject of a lack of Milton Keynes property bargains over the last couple of years has always been near the top of most local landlord’s thoughts. I have built up an extensive database of property sales in the area since the late 1990s, so I am able to give an objective and unbiased opinion on what does (and what doesn't) make a good property deal/investment. Knowing what is currently happening and what has happened previously to the property market in Milton Keynes enables me to spot any trends or opportunities for buy to let landlords.

 

 

 

Here is one the bargains that I spotted last year. A three bed mid town house on Downdean in Eaglestone. It came on the market in the Spring of 2013 at £148,000 and sold in the Summer for £143,000. The owner gave the 947 sq ft house a lick of paint and some TLC (no more than a few hundred pounds looking at both sets of pictures), and it sold again 6 months later at Christmas for £156,000..... a 9% increase in value in 6 months (interestingly, the MK average over those same 6 months was only 2.4%).

 

 

Whether you are a landlord of ours or not, or someone thinking of investing in the rental market for the first time, pop into our offices for advice and opinion on where the bargains are in the area or follow our ‘Milton Keynes Property Blog’ which is updated daily. You see, as I don’t sell property, I can look at the whole of the market. Please email me on stephen.tunney@belvoirlettings.com or pop into my offices on London Road in Stony Stratford for my opinion on the Milton Keynes property market.

Walnut Tree beautiful 2 bed + garage, rent at £795 PCM for a 5.6% yield

How nice is this! A very tidy, modern 2 bed semi with a garage - our waiting list of tenants could accommodate 20 or more of these right now, you will not go wrong with this house in this area - great schools nearby, a range of local shops, nice views across to Woburn Sands, and close to the M1 for commuters. Inspired Sales & lettings have all the details, so be inspired and talk to them before someone else does

http://www.zoopla.co.uk/for-sale/details/30188576

The basics on buy-to-let

Size is not always the main consideration, quality and location are more important. Investing in new-build flats, old houses or typical suburban terraces all have merit in different ways, it depends on your investment objectives, timeframes and budget. Before investing there are numerous things you need to research including – but not limited to – cash amounts, mortgages and rates, fixed costs (such as service charges in flats), potential repairs and improvements, furnishings, gross and net yields, plus likely returns on capital employed. 

Houses seem to be more popular than flats, larger bedrooms are better than singles, good nearby transport links are also useful and double-glazing is becoming a requirement for most tenants. Location of the property is also vitally important - the main drivers are access to train stations, good shops and restaurants and in the case of growing families, good schools.

The condition of property should also be considered. Tenants want dry, structurally sound properties in good condition (cracked fittings, marked walls, damaged appliances, grubby kitchens and bathrooms are all a turn off). Think carefully about the size and layout of the accommodation too. Most tenants will dislike small living spaces, odd shaped rooms and bathrooms without natural light. And remember, tenants have a strong sense of rental values so the days of landlords setting the rent to cover their mortgage are gone and they must therefore buy wisely.

A BTL property should look good from the outside (kerb appeal). If the inside is immaculate but the outside isn’t, you will struggle to get people through the door. Ideally the property should be semi-detached and have gas central heating and a shower. Double-glazing is another benefit.

Think about the age of the property. The younger the property, the less maintenance you will have. If you purchase a Victorian property it is likely you will have to rewire the property, therefore I would strongly suggest that BTL landlords have the gas and electric checks done on the property before Exchange of Contracts. If problems are found the cost of rectifying the issues could potentially come off the agreed sale price.

2 and 3 beds are the most popular (with 2 beds usually giving a better return on an investment), but it is essential that you understand the BTL market and complete all your homework before purchase. I would urge all BTL landlords to carry out a cost analysis before committing and have sufficient funds set aside for potential void periods and major repairs (a new boiler could cost around £1500, if you cannot afford to replace it then don’t buy the property).

If you would like some advice about buying to let, whether you are a landlord with an existing portfolio or someone thinking of investing in the Milton Keynes rental market for the first time, please email me on stephen.tunney@belvoirlettings.com  or pop into our office on London Road in Stony Stratford.

A tidy starter flat for the novice investor, above shops in Heelands & offering a 7.2% yield

This one is nothing special, but at £90k for a fairly tidy 1 bed flat, how much cheaper can you get? It really doesn't need much doing to it either, perhaps a quick update in the kitchen & bathroom and put it straight onto the market again for at least £540, giving you a 7.2% return or down to 6.5% if you spent 10k on modernisation. Haart in Milton Keynes have all the details of this, so what's stopping you?

http://www.zoopla.co.uk/for-sale/details/33695060

Westcroft 1 bed flat giving a 6.1% return

This is not a bad area at all, with lots of great local shopping and on the fringes of Milton Keynes and close to open countryside. Connells want £110k for this, and in it's current state you would easily get £560-£575 PCM for it, giving a decent return of at least 6.1%, and with a 999 year lease you don't need to worry about being stuck with this in years to come.

http://www.zoopla.co.uk/for-sale/details/33782212

Netherfield property market outperforms Woughton on the Green by 72%!

Last week, a landlord who lives in Woughton on the Green in one of those nice executive properties, popped into see me whilst his wife was shopping in the town. He wanted to discuss what was happening in the Milton Keynes property market, especially what was happening to returns and the property values in the town, as he owned various properties around Milton Keynes.

 

We got talking about the different areas, such as Fishermead, Monkston and Old Farm Park but it was Netherfield that created the most interesting result during our conversation. It was a surprise to find that the property market in Netherfield has outperformed Woughton on the Green property market. I know it sounds unlikely, but let me explain.

 

Typical Netherfeild terraced property

 

This is because an average three bed three storey town house in Netherfield is worth £109,400 and the average rent for that type of property, depending on condition, is £694 per month. This means the yield (or annual return) which could be achieved is around 7.6% per year. When we compare this to property in Woughton on the Green, those large 4 or 5 bed executive houses, they are currently selling in the £450,000 region, they rent for £1600 to £1700 per calendar month, (depending on what the property offers), this would give any investor buying such a property, a yield of only 4.4% per year, thus making the Netherfield yield of 7.6%, proportionally 72% higher than the yield of Woughton on the Green.

 

Typical Woughton on the Green detached property 

 

However, we must remember that yield is not the sole consideration when investing in Buy To Let properties. Since 2002, Netherfield property values have increased by an impressive 75.4%. However, more impressive are the value increases in Woughton on the Green, as their property values have had a much higher rate of growth than Netherfield, rising by an impressive 101.6% in those same years. I appreciate these are the two extremes of the Milton Keynes market, it just goes to show you need to do your homework, because as a landlord, it’s not all about capital growth or yield, as it is very rare to get both. You must also consider protecting your investment by selecting the right area and the right tenant.

 

If you would like some advice about buying to let, whether you are a landlord with an existing portfolio or someone thinking of investing in the Milton Keynes rental market for the first time, please email me on stephen.tunney@belvoirlettings.com  or pop into our office on London Road in Stony Stratford.

Landlords, have you fully declared all your rental income?

Our sources tell us that HMRC has sent out a second batch of letters to 40,000 landlords whom it suspects have either not declared or under-declared rental incomes. Part of the Let Property Campaign, landlords who have already received letters and who have not made a voluntary disclosure could face severe penalties and the possibility of criminal prosecution.
 

https://www.gov.uk/let-property-campaign

Although HMRC generally goes back six years, the law allows it to go back up to 20, warns chartered accountancy firm Jeffreys Henry http://www.jeffreyshenry.com/. The firm says that any landlord with undeclared rental income, or who has been under-declaring it, should come forward to make a voluntary disclosure before they receive a letter. Anyone making an unprompted voluntary disclosure will be able to negotiate lower penalties and affordable payment plans.
 

For the thousands of landlords who have already received letters, it is too late. Any disclosure they make now will be regarded as “prompted”. Interest will also be charged from the date the tax is due until the date it is actually paid.

 

HMRC is using a wealth of information to identify landlords who have not declared their rental income. These include records from other government agencies and local authorities, and also the tenancy deposit schemes and Land Registry.

Monkston Park 2 bed apartment, 5.6% yield

Now here is a lovely 2 bed apartment in the ever popular Monkston Park - this area is towards the top end of locations in MK right now, with a new Waitrose on it's doorstep, a fantastic secondary school very close by, and a lot of new developments planned in the neighbouring areas. On the market for £165k with Connells, it would rent to a professional couple in todays market for £775, providing a return of 5.6%.

http://www.zoopla.co.uk/for-sale/details/33802578

 

New build apartment in the centre of Bletchley, offering modern living and a 5.9% yield

How about this great 2 bed apartment, complete with all white goods (including washer/dryer and microwave), with en-suite to master bedroom. Put it straight onto the market for at least £795 and take a return of 5.9% on this one, without having to do anything to it yourself. London commuters can walk to Bletchley railway station in 5 minutes, so why don't you walk along to Taylors in Bletchley for more details?

http://www.zoopla.co.uk/new-homes/details/33737792

Belvoir scoops Lettings Franchise of the Year – for a record fourth time

Belvoir has once again scooped Gold at the prestigious Lettings Agency of the Year Awards, winning the title of Best Lettings Franchise 2014 – for a record fourth time. Belvoir also won the Bronze Award for Best Customer Service Agency (Large) in recognition of the outstanding service that franchise owners across the country provide to their clients.

 

The Lettings Agency of the Year Awards, in association with The Sunday Times & The Times, and sponsored by Zoopla, were held at the opulent Lancaster London Hotel. Dorian Gonsalves, Belvoir’s Director of Commercial and Franchising, accepted the award from inspirational businesswoman Katie Piper and paid tribute to the hard work of all franchise owners in the Belvoir network and their determination to consistently provide outstanding levels of customer service.

 

 

 

“As a network we have worked tremendously hard to become the agent of choice for landlords and tenants,” said Dorian. “To receive the Gold Award again for Lettings Franchise of the Year at such a high profile event makes me extremely proud."

 

“This award is always one of the most competitive categories at the event and winning Gold for the fourth time is fantastic recognition of Belvoir’s ability to meet and exceed the expectations of our clients. This is what sets us apart from the competition and has enabled Belvoir to grow into a nationwide force to be reckoned with. Belvoir’s core principles are specialism, professionalism and customer service and our franchise owners remain totally committed to improving the services that they deliver year after year. For this reason I am also delighted that Belvoir won the Bronze Award for Best Customer Service Agency (Large) as we continuously strive to be the best in the industry."

 

The judging of the Lettings Agent of the Year Awards is chaired by The Property Ombudsman and has the backing of ARLA and NFOPP. Judges comprise highly experienced property professionals including leading agents together with other industry experts and specialists.

 

"The panel found Belvoir to be one of the most responsible, ethical and well-positioned franchise businesses in the industry with a 19-year track record to prove it; and we are pleased to award it the gold for the third year running. In short, Belvoir is an outstanding franchise operation.”

High risk = higher reward, 7.3% yield on The Lakes Estate

Hmmm, now this isn't an area we would normally advise a novice investor to buy into, but for the seasoned landlord or the brave hearted, this one offers great potential returns. The downside is that it is not the most desirable area by far, the upside being that if you could get the price any lower than £120K, with a rental of £775 PCM this would return 7.7%. Even at £127.5K, it will earn you 7.3%. Taylors in Bletchley have all the details for you, including (hopefully) some internal photos.....

http://www.zoopla.co.uk/for-sale/details/33662554

Great school catchment in Shenley Church End, this will return an easy 5% yield today

"Make me an offer" it says - so do that! £225k or less would see this great family home with a garage and conservatory yield 5% for you today, but better than that, it is in the catchment of one of THE best secondary schools in Milton Keynes, so this beauty will rent out year after year after year without any difficulty. Even better, they just built a brand new Sainsbury's on this road - what's not to like? Speak to Wilson Peacock and get that offer in before someone else does.

 
EDIT - you were too late!
 

http://www.zoopla.co.uk/for-sale/details/33662567

 

 

Woburn Sands 1 bed, £90k, potential yield of 7%

A nice little 1 bed apartment, close to the M1 for commuters or MK for local workers. Make a small investment in a shower for the bathroom and this could be back on the market and earning you £525 PCM. We ALWAYS have high demand for 1 bed properties to let, so this would be a relatively cost effective way for a new investor to get into the market. For further details, contact Christopher Francis in Woburn Sands....

http://www.rightmove.co.uk/property-for-sale/property-43927688.html

 

 

A good time to buy property in MK?

I recently had an interesting chat with a couple who live on the western edge of Milton Keynes. They are thinking of buying their first buy to let property and they wanted my opinion on the state of the market and whether it was a good time to invest.
 

They were particularly worried that with all the newspaper headlines of a booming housing market, there wouldn’t be any demand by tenants. One of the best pieces of advice I can give to those looking to invest in property is a simple trick of the trade. You can judge the affordability of an area’s property market (and thus how much demand there could be) by simply finding the ratio of the average property price to the average salary. The lower the ratio, the more affordable a property is.

 

When we put this to the test, we found that Milton Keynes currently has an average property value of around £235,400 with the average salary being £29,399 per year. This is a ratio of 1 to 8. (as a comparison, Luton’s is 1 to 7.19 and Aylesbury is an eye popping 1 to 11.23 ). Milton Keynes’ level of ratio is very fair, compared with other parts of the UK (the UK average is nearer 1 to 9.5), but even with such reasonable ratios (meaning property is relatively affordable) that doesn’t tell the whole story. On these sorts of figures, that would mean a first time buyer would need to have a salary of £47,080 to buy an average property in MK, and that is a lot of money in anyone’s terms, especially young MK first time buyers in the their early 20’s.

 

 

 

However, even worse than the issue of affordability, is the raising of the 5% deposit, you then need to add in buying fees and costs which will be in the order of between £13,500 and £14,500. Tenant’s inability to raise that sort of money for the deposit is driving demand for rental property. If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the MK rental market, please email me on stephen.tunney@belvoirlettings.com

Bargain 4 bed on Oldbrook, deal of the day

OK it won't win any beauty contests, but look at the size of property to be had here. Get yourself down to the open day on Saturday 28th June and get the inside track on this little gem offered for sale by Haart. Update the kitchen, tidy up the bathroom, plant up the garden and you're done. This could rent for around £925 giving a good return of around 5.5%. Close to CMK,  the train station and the Hospital, it must be worth a look....

http://www.zoopla.co.uk/for-sale/details/33504243?search_identifier=cfc9759e3d3b778898f97f5928cc5402

Stantonbury - 6.6% yield - BTL deal of day!

Whilst not the prettiest of houses, this came on the market this morning at £135,000 for a 2 bed house with garage, itwill rent day in day out at £750 per month, giving a yield of 6.6%. On the market with Elevation Estate Agents in Knowlhill, this will be snapped up any day now.

http://www.rightmove.co.uk/property-for-sale/property-44950111.html

 

Walnut Tree studio + garden, a great entry into BTL

This entry level property in Walnut Tree is on the market with Alan Francis for £124,995 and would make a great little BTL for any portfolio, giving you a 5.2% return on a rental of £540. Properties with 1 bedroom are highly sought after in this area from employees of the Open University and Red Bull Racing, with a garden as well it's got to be a contender.

 

 

http://www.zoopla.co.uk/for-sale/details/33608694

 

 

The grass is not always greener....or cheaper

We have had a number of landlords come to us in recent weeks after having experienced poor service at the hands of other letting agents, and in one case they had even suffered financial loss amounting to £9000 due to inaction and poor management by the agent. Why would we be seeing an increase in this type of scenario at this time, and what can be done about it? 

First of all, what they all have in common is that the landlords all took the cheapest deal available, from agents who promised to cut their management fees to the bone in order to win the business. The other thing that happened in each case was that the agent took the first applicant that walked through his door and placed them in the property within a matter of days, in some cases with just the most cursory of background checks. On the face of it, this was a win/win scenario for the landlord – a low cost deal and super fast service. Of course, by doing this, the agents did not provide such basic services as thorough applicant vetting & background checks, site inspections & property visits, or producing an accurate schedule of condition report before the tenancy began

But the bargain deal was not as it seemed, because the cracks took virtually no time to appear......suddenly landlords had tenants who were smoking within the property, damage was being caused and not reported or repaired, and tenants not looking after the garden (remember the warm & wet start to the summer – ideal conditions for any garden to become a jungle within a matter of a few weeks). In one case, the property was subsequently (and illegally) sub-let to 12 other people! And where was the managing agent in all of this – nowhere to be seen, that’s where! They had taken on so much new (and cut price) business that they could not cope, and in fact were never fully equipped to cope in the first place – because they were an estate agent who had branched into lettings when the sales market quietened down during the credit crunch years, and now that buyers had returned in greater numbers, the first thing to suffer was lettings. Here is why – an estate agent makes the bulk of their income from all of the add-ons they can sell, such as mortgages, life insurance, buildings & contents insurance and conveyancing, and their attention is now turning back to this highly profitable market as volume starts to return.

 

Through the poor service offered by other agents, we now have landlords saying to us “I wish I had just used you to start with”. We tell them that they can come to our office at any time and meet the team who will be looking after one of their most expensive assets for them – we are here in person, we are not a remote call centre, and we offer what the big corporates cannot – a personal level of service, tailored to meet any landlords individual needs.

 

If the above sounds familiar to you, or you know someone going through the same scenario, why not talk to us on (01908) 562582 or pop in for a coffee and some free advice at our offices in Stony Stratford.

Great Holm ... BTL deal of the day

This lovely 3 bed semi will rent day in day out at £900 per month in this condition, so if you could buy her for £190,000 (its on the market with Connells for £195,000), you will get a tasty yield of 5.7% a year. When you consider values in Great Holm have increased by 159% (on average) in the last 15 years .. a decent potential investment .. wont be on the market long ... click on the link to look at the nice internals

http://www.rightmove.co.uk/property-for-sale/property-39605527.html?premiumA=true

Willen Park 2 bed, £190k deal of the day

This has just come on the market with Visum (based in Wellingborough of all places) for £190,000 and would be a great property to let in this market for around £795. This won't be around long, so don't miss this opportunity to earn a 5% yield from this 2 double bedroom house. Follow the link below for internal photos of this deceptively spacious little property.

 

http://www.zoopla.co.uk/for-sale/details/33512378

 

 

 

 

 

Immigration checks could be legal nightmare for agents & landlords

Immigration lawyers have warned that a legal minefield awaits landlords and letting agents, as there are still far too many unanswered questions posed by the Immigration Act, which will introduce a duty to perform checks on the immigration status of tenants from this October.

 

According to our sources, landlords (and by implication, their agents) will effectively have a duty to check immigration status, yet many landlords and agents seem totally unaware of this new legal requirement and could be badly caught out. However, the detail of what actually will be required is not yet clear, but initially it is likely to involve obtaining copies of currently valid visas and maintaining a database of expiry dates, which would necessitate further checking upon their expiry.

 

The new requirement is to be implemented this October and there will be a code of practice issued. However, this has not yet been published and it is long overdue. We also understand that there will be a pilot area before the requirement is rolled out, but we do not know where this will be or how long the trial period will last, however we at Belvoir are already integrating these checks into our referencing procedure in order to ensure compliance and develop best practice throughout this year while we await further direction from the Home Office.

A 3 bed terrace in Bletchley that's ready to go, BTL yield 6.2%

How about this really tidy 3 bed mid-terrace in Bletchley, it's on the market with Elevation for £165k and has to be worth anyone's investment. It has all the right things going for it - decent bathroom & kitchen, tidy gardens, laminate floors and a generally neutral palette of colours with just the odd colourful embellishment. This could easily rent for £850 in the current market, returning a yield of  6.2%. The best thing about it is that your tenant could just move right in and you would have nothing to do, so a nice easy starter for a novice investor.

http://www.zoopla.co.uk/for-sale/details/28273696

 

 

Monkston 2 bed BTL deal £180k

Todays property is a charming little 2 bed terrace that will let over and over again with no trouble. Your £179,995 (or less - haggle hard!) will buy this tidy property in Monkston from Michael Anthony in Central Milton Keynes, and your yield would be 5.3% on a rental income of £799. Could be an interesting proposition...

 

http://www.zoopla.co.uk/for-sale/details/33351206

Increased landlord investment predicted for 2014 as rental market continues to grow

The UK continues to edge ever closer to its European neighbours by becoming a nation of ‘renters’. There has been rapid growth in residential lettings, with over 15 per cent of all UK homes (3.2m) now in the private rented sector. Some Government estimates expect a further rise of 33 per cent in the residential rental market over the next eight years – taking private rented property to 20 per cent of all UK homes by 2021.

“Over the past year the private rented sector has remained on a firm footing and despite Government ‘pump priming’ initiatives such as the ‘Help To Buy’ scheme there has been no real impact on the continued demand for rental property,” says Dorian Gonsalves, Chief Executive Officer of nationwide lettings experts, Belvoir.

“All of our predictions are that in 2014, the number of people choosing to rent will continue to drive up demand. There are real indications of a recovery in the housing market with property prices predicted to rise, along with a projected 25 per cent increase in buy to let mortgage lending. With this we expect to see the re-emergence of more and more investment minded landlords looking to capitalize on this trend.”

A considerable number of landlords entering the sector over the last five years have been ‘accidental landlords’ – people who, for one reason or another, couldn’t sell, so decided to rent out their properties instead. In 2014 some of these are expected to take advantage of rising prices in order to make modest gains and exit the market.

“What we now anticipate is that over the next few years, new rented housing stock will come from different directions, partially from institutional investors returning to the market to provide much needed funding. It is pre-2008 since landlords sought out an increase in capital growth, on top of rental returns and this strategy is likely to be adopted again next year as more landlords look for real capital gains over the next 3 to 5 years, or even longer.”

With bank and building society interest rates still currently at a very low level we are also dealing with more and more enquiries from first time ‘novice’ investors looking for a better return on cash. We predict that buy to let will become increasingly attractive and accessible for these  smaller investors wanting to add another asset class alongside their existing savings and pension portfolios. Whilst landlords always need to ensure they invest in the right property and be aware of local market rents, they must also remember that a good tenant who looks after a property well will actually be worth more to them, by taking out longer tenancies and reducing potential ‘void’ periods. It’s a win, win situation.

Although increasing property prices will be good news for existing landlords, for those new to buy to let investment, or looking to expand their current portfolio, it could be tough to find the right deals in 2014. Most areas across the UK are reporting a lack of property for sale, making it increasingly difficult to find a property that ‘stacks up’ financially. If anyone is looking at buy to let this year it is essential to seek independent advice, not just from lettings professionals such as Belvoir, but also from financial advisors and tax experts who can assess the impact of adding property investment to individual investment plans.

2 bed apartment in Middleton, £169k, 6.7% yield

How about this beauty then - a 2 bedroom 2nd floor apartment with en-suite and stylish interior, in a superb block in Middleton. This sold for £169,995 and was up for sale with Christopher Francis. Of course, this was snapped up by a savvy investor and is about to go on the rental market, fully furnished, for £950 PCM offering a return on investment of 6.7%. Close to the Open University, great local shopping at Kingston and great schools, check it out here...

http://www.rightmove.co.uk/property-for-sale/property-29151321.html