Poor old buy-to-let, once upon a time it was David Beckham, Wayne Rooney and Kate Moss all rolled into one - making headlines on a daily basis with every move endlessly analysed.
But while buy-to-let may no longer be the hot property it once was, as an income investment for those with enough money to raise a big deposit it looks attractive, especially compared to low savings rates and stock market volatility
Here is a list of 10 things to consider before you delve any deeper:
1. If you are new to buy-to-let, what do you know about the
market? Do you know the risks, as well as the benefits?
2. Promising does not mean the most expensive or cheapest. Promising means a place where people would like to live and this can be for a variety of reasons.
3. Before you think about looking around properties sit down with a pen and paper and write down the cost of houses you are looking at and the rent you are likely to get.
4. Do not just walk into your bank and building society and ask for a mortgage. It sounds obvious, but people who do this when they need a financial product are one of the reasons why banks make billions in profit.
5. Instead of imagining whether you would like to live in your investment property, put yourself in the shoes of your target tenant.
6. We have all read the stories about buy-to-let millionaires and their huge portfolios. But the days of double-digit house price rises are gone, so experts say invest for income not short-term capital growth.
7. Most buy-to-let investors look for properties near where they live. But your town may not be the best area for investment.
8. As a buy-to-let investor you have the same advantage as a first-time buyer when it comes to negotiating a discount. Make low offers and do not get talked into overpaying.
9. Before you make any investment you should always investigate the negative aspects as well as the positive. House prices are still falling in some areas and if this continues, will you be able to continue holding your investment? What will happen if you can't remortgage?
10. Buying a property is only the first step. Will you rent out and manage your property. You might decide to employ a good letting agent such as The Islington Company. In any case not all agents are the same and be sure to choose well as it is potentially a long term relationship.
Demand for good quality rental properties continues to outstrip supply, according to the latest figures from the Association of Residential Letting Agents. In the recent RICS residential lettings survey, demand for rental property rose at its fastest rate since the start of the year.
The latest survey shows that interest from would-be renters jumped to its strongest since January and suggests that the booming rental market is showing no signs of slowing down. However many analysts are sending a cautious approach stating that it is important not to rush into the buy-to-let market, and more important in finding the right property.
When you are looking for ‘the right’ property to by as an investment it is not the same as buying a home. As an investor you need to make sure your head rules your heart. The Islington Company letting specialists recommend looking for somewhere with good transport links, schools and shops, and low on-going maintenance costs, for example, buying into freehold properties as opposed to leasehold.
So where is this demand coming from? It is no surprise that there is a high demand for rental properties, millions of would-be first time buyers have been priced out of home ownership.
In Islington and surrounding areas there has been a recent surge of wealthy overseas students opting to rent rather than buying during their stay in the capital. “Many wealthy parents who would normally have bought an apartment for their children to live in during their studies are delaying a decision until the tax position is clearer, and renting in the meantime. This is having the effect of pushing up rents and leading to a scarcity of property for rent at the top end,” said Mark Harris, chief executive of mortgage broker SPF Private Clients.
If you fancy renting this gorgeous featured property above, you can find our more details here
The Government should help landlords meet the demand for residential property in London and across the UK by reforming the current tax system, says high-profile housing expert Julie Rugg.
After completing her report, commissioned by the previous Government, she concludes the current system needs to stop viewing the residential property sector as a method of private investment. Instead it should recognise the residential property sector as a business, unlocking the tax advantages that go with it.
“Government policies need to regard landlords as active business people rather than passive investors,” she said.
The Residential Landlords Association (RLA) is calling on Chancellor George Osborne to issue a series of tax measures designed to boost the private rented sector. The RLA represents over 15,000 private sector residential property landlords in England and Wales and has released a statement, saying:
“With a taxation system that fails to recognise the sector as a business, there is little incentive for existing landlords to invest in new properties or for new landlords to enter the market.”
Housing charity Shelter has just released a report showing supply is failing to meet demand with up to 5 people chasing each property coming onto the rental market.The RLA cite these figures as evidence of “the difficulties being faced by many for whom the private rented sector is their best hope of finding accommodation.”
Further evidence of the heightened demand for residential property in London is found in new research, showing a 12.2% increase in rents over the past year. The average month’s rent is now a reported £1202, while average tenancy length dropped from 27 months to 22. This is something that raises some concerns about rental properties in Central and North London and is something that we, at The Islington Company are seeking to address.
The RLA will now wait for the Chancellor to deliver his autumn statement, in which he is expected to announce the Government’s plans for stimulating the UK economy. Will that include measures to help landlords create more residential property supply? Watch this space…
Rental property in Central and North London is set to become even more sought-after as the year continues resulting in an even brighter outlook for landlords, The Islington Company has learned.
Surveyors dealing with properties in the capital and the south east of England report an increase in the number of landlords with tenancies coming to an end opting to sell their property rather than re-advertise it to let.
The statistics cover properties to rent in sought-after areas of London such as Islington, Shoreditch, Angel, Holloway, Highbury, Finsbury Park, Clerkenwell, Dalston, Hackney and King’s Cross.
The news comes at time when the latest report from the Royal Institution of Chartered Surveyors (Rics) revealed 34 more members reported a rise in rental prices in the second quarter to July compared to the previous three months.
And, in keeping with the first quarter, the demand for rental property is continuing to outstrip supply. Once again, the discrepancy has been blamed on tough mortgage conditions – particularly for first time buyers who can’t afford large deposits and are being forced to rent instead.
Rics James Scott-Lee said: "The combination of strong tenant demand and a limited stock of good quality properties on offer are pushing rents ever higher across much of the country. This is the case both for houses and flats.”
"Moreover, with mortgage finance for first time buyers likely to remain in short supply for some time to come, this imbalance is set to persist. The inevitable outcome is that rents will continue to increase."
Another five per cent of the 156 letting agents polled by Rics said they’d witnessed new landlord instructions for rental property coming on to the market.
Meanwhile, tenants in receipt of housing benefit made up 13 per cent of new lettings – the highest number since the quarterly survey began more than two decades ago.
For no-obligation advice on flats to rent and opportunities for landlords in North London and South London please contact our rental team at The Islington Company.
If you are a buy-to-let landlord, how was your August? Weatherwise it was apparently the coldest for 18 years but in the buy-to-let market, the temperature continued to rise.
Research by property advisors CB Richard Ellis (CBRE) finds over 90,000 students were seeking residential property in London during August. These join the existing 70,000 said to need somewhere to lay their heads during the forthcoming academic year. Universities reportedly offer just 42,000 bedspaces, enough for 15% of London’s students. Since the 1990s, public-funded student housing development is found to have has dried up, creating “a significant opportunity” for buy-to-let landlords seeking to acquire residential property in London, say CBRE.
According to the research, there is a “significant structural deficit of purpose-built student housing in suitable locations” and key Central London boroughs are set for “tighter planning policies” further restricting supply. Which is good news for landlords of residential property in Dalston, Hackney, Shoreditch, Old Street, Holloway and other London hotspots. Areas where The Islington Company lets numerous properties.
Demand for accommodation in London is particularly high this academic year from students keen to begin their degree ahead of next year’s hike in tuition fees. Coupled with the strong reputation of UK educational institutions, it’s not surprising that Darren Owen, director at Property and Finance Solutions says, “if you have got capital then there has never been a better time to buy”.
Looking ahead, “the long-term dynamics of the London student market remain extremely favourable” while the “values of existing stock will hold up in central areas”. For more queries contact The Islington Company.
Article written by Steve Alphabet for TIC Blog