Saturday, September 03, 2005

Buy to let: speculation out, long-term investment in

"Numbers of new property investors entering the buy to let market have almost halved in the past year, figures released by the Mortgage Trust have revealed. The Trust's borrowers survey has shown that the number of new investors has fallen from 23 per cent in July 2004 to 12 per cent in May of this year.

The market slowdown has discouraged many of the purely speculative and opportunistic that had been fuelling buy-to-let growth in recent years - certainly not a bad thing for those prepared to wait for the big returns on their investments, says Mortgages for Business managing director David Whittaker.

The decline of part time property investment has also bought those who are prepared to stay in the market other dividends, such as more flexible and affordable mortgage lending. Buy-to-let mortgage lenders have had no choice but to ease restrictions on their products to keep property investment capital flowing, say analysts. Buy-to-let lending criteria has fallen to as little as five per cent deposits requirements and rental interest cover of only 110 – 125 per cent, compared to the 130 per cent of a year ago."

Quick capital growth is a thing of the past. New investment in rental property must now stack up from an income point of view.



Friday, September 02, 2005

House prices fall in August

Thu 01 Sep 2005

LONDON (SHARECAST) - House prices fell last month, according to the latest official survey, though the outlook remains positive with more expressions of interest from buyers.

The Nationwide reported a 0.2% fall in prices in August compared with a 0.2% rise the month before, while the annual rate of growth slowed to 2.3% from 2.6% the previous month.

The annual pace of growth is now at its slowest since May 1996, while the average UK asking price for a house is now £157,310 compared with £153,743 last year."

I think we'll see this trend continue.



Property investment by the seaside

01 September 2005

Seaside properties are rocketing in price. A research report by Halifax Estate Agents said seaside properties across the country were continuing to sell for much more than their inland counterparts, with prices in Falmouth rising 125.5 per cent more than the national average over the last ten years.

Picturesque scenery and the classic Cornish feel of Mevagissey saw the village attracting the fifth largest rises in the country, with the average house price shooting from £47,890 in 1995 to the current level of £174,990 - an increase of more than 265 per cent.

Colin Kemp, managing director of Halifax Estate Agents, said: 'What is clear from this research is that homebuyers are still prepared to pay more to enjoy living by the sea.'

Have you thought of looking for the next second home hotspot?



Tenant deposits - important changes coming up

Tips for student deposits 01 September 2005

The start of a new academic year is fast approaching and many students across the country will have already begun the search for next year's accommodation. Over the coming weeks, as parents and students alike hand over cheques for deposits, many may not realise that from October next year such an easy arrangement will no longer be possible. In the meanwhile, the National Landlords Association urges landlords and student tenants to play fair on deposits and offers some tips to ensure that the exchange of deposits goes as smoothly as possible.

As part of wide ranging changes to regulation of the private rented sector under the Housing Act 2004, deposits will have to be placed in an authorised tenancy deposit scheme. Two forms of tenancy deposit scheme are envisaged: a custodial scheme and an insurance scheme.

Under a custodial scheme landlords will pay deposits into a specified account. The money will then be kept in the account until the end of the tenancy. Either the landlord or tenant can apply at any time after the tenancy has ended for the deposit to be returned to them. If both parties agree on how the deposit should be split the administrator of the scheme has to pay out the amounts within 10 days of receiving the request.

In the case of an insurance scheme the landlord keeps the deposit on the basis that at the end of the tenancy an amount agreed between tenant and landlord will be paid to the tenant. The insurance will come into play if, at the end of a tenancy, the landlord does not pay back part or all of a deposit within 10 days of a tenant's request. If this is the case the tenant can approach the scheme administrator. The landlord will then be required to pay the amount into an authorised account within 10 days of receiving notice from the administrator. Once a dispute has been settled the administrator must pay the tenant within 10 days. The insurance will come into effect if the landlord fails to pay the deposit into the account as requested.

I haven't decided what method to use - they both involve extra admin. I have also seen other ways of dealing with this issue. No doubt we'll read a lot more about this.



Thursday, September 01, 2005

Yorkshire - best return for property investors

Why landlords love Yorkshire - in2perspective
1st Sep 2005

Despite the market slowdown, regions such as Yorkshire and the North West are continuing to outperform other parts of the country, according to the latest Paragon Mortgages Buy-to-Let Index.

Yorkshire has seen rental incomes rise over the month from £9,383 in June to reach £10,495 in July. Over 12 months, rents in Yorkshire have risen by 36.7%.
Landlord property values in the region have increased by 38.6% since July 2004 to reach £143,684. Despite a large increase in property values, Yorkshire remains one of the highest yielding regions in the country, at 7.3%.

The North West has also seen a strong buy-to-let market over the last year, notwithstanding a slight decline in rents this month. Rental incomes in the region have risen by almost 30% and property values by over 34% since July 2004. Yields in the North West, at just under 7%, remain above the national average of 6.7% and on a par with the South West and East Anglia.

At the same time Greater London, consistently one of the lower yielding regions, has seen yields rise slightly to 5.8% this month as both rental incomes and property values rose. "

The ripple effect in action... these are historic returns and the trick, of course, is to spot the next hotspot (or hot region) and invest before the big price rises. With relatively low house prices, a strong rental market for students and expanding employment opportunities Yorkshire came up trumps.



Wednesday, August 31, 2005

Dear Property Investor, do you have a tenant problem?

Landlord Action UK

Landlord Action recovers rent and property from bad tenants.
We are not solicitors. We are FAST and our FIXED FEES include
everything - courts, solicitors, barristers, bailiffs and VAT.

We are a unique service for corporate and private landlords, anywhere in England and Wales. Within 48 hours we will have someone visit your tenant. It's not surprising that the London Evening Standard calls us 'A Blessing for Landlords"

If you have serious tenant problems check out this site. They've been going for nearly five years so they should have plenty of experience with any situation you can throw at them. (I haven't needed them yet - I like to think it's through careful tenant selection - but maybe it's just luck!)



How to invest in property for as little as £1

Wednesday, 15 Jun 2005 12:21

People wanting to invest in property can do so for as little as £1, after the launch of Opromark, an online property exchange.

Investors can buy stakes in any of the properties listed on the market, and are paid a share of the rental income made from the property as well as benefiting from rises in the value of their shares.

The exchange was created by Andrew Black, founder of online gambling exchange Betfair - which is now believed to be worth as much as £100 million.

'Opromark opens up the buy-to-let market to a broader range of investors, including those struggling to get on the housing ladder, by making the minimum investment £1 and ensuring that investors can diversify their investment cost effectively across a range of residential properties,' said Opromark chief executive Stephen Kenny.

Opromark offers several advantages to traditional buy-to-let investing.

These include the ability to spread risk across a number of diverse properties, the fact that there is no mortgage cost to the investment and so no interest rate risk, a dedicated property professional to manage the property and its tenants, and the fact that investments can be made for as little as £1."

I haven't looked into this one but it seems an interesting idea. As for the disadvantages, check out how you can get your money out; also be aware that only part of the rental income is paid out as a dividend - the remainder is absorbed by costs. I could see this working in a booming house market, but today...?



More residential properties coming up for auction

A more difficult property market for sellers has pushed more vendors to offer their properties for sale at auction. These are often traditional properties that need improvement and modernisation and are not being shifted by estate agents in the present climate. Property investors should look out for a greater number of opportunities coming up at auction.


Tuesday, August 30, 2005

Make Sure you negotiate a big discount for your next property investment

Guardian Unlimited House prices drop despite rate cut
Press Association Monday August 29, 2005 5:08 AM

House prices fell for the 14th month in a row during August with the cut in interest rates doing little to revive the market, figures showed.

The average cost of a home in England and Wales fell by 0.1% during the month, following July's drop of 0.2%, according to property website Hometrack. The group said prices had now fallen by 3.7% during the past 12 months to average £161,000, nearly £7,000 less than in June last year, and the market was showing no sign of imminent recovery.

John Wriglesworth, Hometrack's housing economist, said it was a buyer's market with people generally securing discounts of well over 6% of a property's asking price, the equivalent of around £12,000 of savings on an average priced property.

If you're aiming to buy further investment properties you should be looking for a big discount in today's market. However I think there will be even better bargains in the months to come as amateur property investors get squeezed out.