Thursday, September 29, 2005

New Homes Attracting Investors

Find A Property 27 Sep 2005

There won't be a repeat of last autumn's hibernation in the new homes market this year, according to Linden Homes...
Research carried out by the house builders reveals a 47.9 per cent increase in reservations for new homes across the UK, rising from 1,484 in the first two weeks of September 2004 to 2,196 in the same period this year. The company has also seen an impressive 83 per cent of their new units in Sunningdale and Dorking sites snapped up by investors last week.

Speaking about the figures, Philip Davies, Chief Executive of Linden Homes, says: 'I am encouraged by the numbers of investors returning to the market this September and making reservations. 'Professional landlords with plenty of cash have held their nerve over the summer but many were choosing not to expand their portfolios until now. They are investing for the long term and are not expecting a return to the house price inflation of previous years.'

'Market Gathering Momentum'
August's reduction in interest rates has helped to restore buyers' faith in the market, says Linden Homes, and househunters are now expecting prices to remain stable into 2006. Philip Davies continues: 'The combination of a more realistically priced second hand home market and a general lowering of expectation regarding sale prices mean we can look forward to the market gathering momentum over the autumn period.'

A bit of good news for the housing market. Get a good deal and buy for the long term and you should be ok, even if the market continues to weaken in the short term.

Chris Bell

Link

Look out for mortgage rip-offs

By Cliff D'Arcy (TMFCliff) September 27, 2005

As the housing market comes off the boil, sneaky mortgage lenders are frantically looking for ways to keep the gravy train going. One way to lure in over-stretched buyers (especially first-timers) is to offer ultra-low interest rates. For example, you can fix your mortgage for five years at an annual rate as low as 4.39%, which looks pretty attractive at first glance!

However, with the Bank of England's base rate currently just 4.5% a year, a lender won't make much money from this deal. Hence, mortgage lenders have come up with ways to boost their profits by raising fees and other charges. Here are three tricks to watch out for!

1. Soaring arrangement fees
The majority of homebuyers or remortgagers (especially those who are over-stretched) probably don't look beyond the attractive headline rates on offer. However, they should, because the devil's in the detail, especially in the Best Buy tables!
Essentially, mortgage lenders are giving with one hand and taking away with the other. Those Best Buy headline rates are offset by rapidly rising arrangement fees, especially for remortgages. Indeed, taking additional fees and costs into consideration, it's unusual for the lowest headline rate to be the cheapest home loan."

These extra costs can now be quite significant for the property investor so take care to consider them when you are looking for a new mortgage.

Chris Bell

full article

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Tuesday, September 27, 2005

More ways for landlords to profit from their properties

There's more to being a landlord than collecting rent. Chris Partridge reveals some extra sources of income
Published: 22 June 2005

So you think you have done everything you can to maximise the return on your buy-to-let investment, from redecorating in cool, contemporary colours to installing new kitchen appliances. But the rent is just the bread and butter. Creative landlords can often identify extra ways of making money to put jam on it.

So you think you have done everything you can to maximise the return on your buy-to-let investment, from redecorating in cool, contemporary colours to installing new kitchen appliances. But the rent is just the bread and butter. Creative landlords can often identify extra ways of making money to put jam on it.

Moneymaking wheezes include renting out spare parking spaces, putting mobile phone masts on the roof, and selling wall space for advertising billboards.

Sites for billboards are in demand, and the poster advertising companies have surveyors looking for potential sites nationwide. But they always welcome enquiries from landlords, says Cliff Pratt, development director for Clear Channel.

"The things that make a site valuable are audience delivery and length of visibility," he explains. "A wall with passing glimpses from a B-road will be worth little, but a site visible for a long distance of a main A-road will be valuable."

The return varies from one or two thousand pounds a year for a 20ft hoarding somewhere in the countryside to over £100,000 a year for a piece of land with room for a high-technology lightbox on a major London approach, such as the Cromwell Road, Pratt says.

Billboard operators will do free surveys for landlords who think they have a suitable spot. If the survey is positive, the operator will do the rest. "We handle obtaining planning permission on behalf of the owner and thereafter we are responsible for finding advertisers, maintaining the site and paying insurance and business rates," Pratt says. Planning permission is almost impossible to obtain in purely residential areas, he says, so the best type of property for billboards is a shop with flats above, on a corner site, with a big blank wall on one side.

Some landlords gain extra income by allowing a mobile phone company to erect a mast on the property - but it's a controversial area. Demand for mast sites is soaring, partly due to increasing demand and also because the new 3G video phones need base stations closer together than those for current mobiles.

The best sites for mobile phone masts are the tops of high buildings or higher ground in the countryside, but the networks are also looking for side walls to mount antennas to fill in holes in coverage. If your mobile always cuts out behind your building, it might be worth investigating if your network has a problem in the area that you might be able to help with. In the countryside, mains power must be reasonably close by.

Planning permission will be needed for a mobile phone mast. In the town, it can help to disguise the antenna as an architectural feature (the flagpoles on many churches are, in fact, mobile phone masts), and in particularly sensitive country areas masts have been disguised as trees.

The income from a mobile phone mast varies, depending on the area and the type of installation - a big base station shared by all the networks will bring in much more than a small infill antenna.

The main drawback to a mobile phone installation is the controversy over possible health risks from the microwave radiation they emit. Living under them is unlikely to cause problems, but tenants may be deterred. It is probably not a good idea to offer the site if the property is next to a school. The new police mobile communication system, Tetra, seems to have provoked particular attention from protest groups.

The creative landlord can often find unexpected commercial opportunities at their property, says Ian Dickson, of Winkworth, in west London: "I passed a house in Twickenham the other day, on the way to the rugby, and they had given permission for a hot-dog stand in the front garden," he says. Even such occasional uses should be licensed but rarely are. The main danger in giving permission for retail activities in the front garden is that the neighbours will complain about the crowd, noise or smell.

Letting out the parking space that comes with your buy-to-let flat, leaving your tenant to find their own space, can cause problems. The secret is to buy a small flat in a development with lots of big flats and houses nearby. "Mostly, tenants in one-bed flats don't have cars but the owners of nearby million-pound houses will have more cars than parking spaces," says Dickson.

Corner houses often have gardens with direct frontages onto a road that may provide rentable parking spaces, but planning permission may be needed to allow access over the pavement.

So you think you have done everything you can to maximise the return on your buy-to-let investment, from redecorating in cool, contemporary colours to installing new kitchen appliances. But the rent is just the bread and butter. Creative landlords can often identify extra ways of making money to put jam on it.

So you think you have done everything you can to maximise the return on your buy-to-let investment, from redecorating in cool, contemporary colours to installing new kitchen appliances. But the rent is just the bread and butter. Creative landlords can often identify extra ways of making money to put jam on it.

Moneymaking wheezes include renting out spare parking spaces, putting mobile phone masts on the roof, and selling wall space for advertising billboards.

Sites for billboards are in demand, and the poster advertising companies have surveyors looking for potential sites nationwide. But they always welcome enquiries from landlords, says Cliff Pratt, development director for Clear Channel.

"The things that make a site valuable are audience delivery and length of visibility," he explains. "A wall with passing glimpses from a B-road will be worth little, but a site visible for a long distance of a main A-road will be valuable."

The return varies from one or two thousand pounds a year for a 20ft hoarding somewhere in the countryside to over £100,000 a year for a piece of land with room for a high-technology lightbox on a major London approach, such as the Cromwell Road, Pratt says.

Billboard operators will do free surveys for landlords who think they have a suitable spot. If the survey is positive, the operator will do the rest. "We handle obtaining planning permission on behalf of the owner and thereafter we are responsible for finding advertisers, maintaining the site and paying insurance and business rates," Pratt says. Planning permission is almost impossible to obtain in purely residential areas, he says, so the best type of property for billboards is a shop with flats above, on a corner site, with a big blank wall on one side.

Some landlords gain extra income by allowing a mobile phone company to erect a mast on the property - but it's a controversial area. Demand for mast sites is soaring, partly due to increasing demand and also because the new 3G video phones need base stations closer together than those for current mobiles.

The best sites for mobile phone masts are the tops of high buildings or higher ground in the countryside, but the networks are also looking for side walls to mount antennas to fill in holes in coverage. If your mobile always cuts out behind your building, it might be worth investigating if your network has a problem in the area that you might be able to help with. In the countryside, mains power must be reasonably close by.

Planning permission will be needed for a mobile phone mast. In the town, it can help to disguise the antenna as an architectural feature (the flagpoles on many churches are, in fact, mobile phone masts), and in particularly sensitive country areas masts have been disguised as trees.

The income from a mobile phone mast varies, depending on the area and the type of installation - a big base station shared by all the networks will bring in much more than a small infill antenna.

The main drawback to a mobile phone installation is the controversy over possible health risks from the microwave radiation they emit. Living under them is unlikely to cause problems, but tenants may be deterred. It is probably not a good idea to offer the site if the property is next to a school. The new police mobile communication system, Tetra, seems to have provoked particular attention from protest groups.

The creative landlord can often find unexpected commercial opportunities at their property, says Ian Dickson, of Winkworth, in west London: "I passed a house in Twickenham the other day, on the way to the rugby, and they had given permission for a hot-dog stand in the front garden," he says. Even such occasional uses should be licensed but rarely are. The main danger in giving permission for retail activities in the front garden is that the neighbours will complain about the crowd, noise or smell.

Letting out the parking space that comes with your buy-to-let flat, leaving your tenant to find their own space, can cause problems. The secret is to buy a small flat in a development with lots of big flats and houses nearby. "Mostly, tenants in one-bed flats don't have cars but the owners of nearby million-pound houses will have more cars than parking spaces," says Dickson.

Corner houses often have gardens with direct frontages onto a road that may provide rentable parking spaces, but planning permission may be needed to allow access over the pavement."

Some good ideas here. Why not check out your properties and see if any of these can work for you? And keep them in mind when you're buying your next investment property too.

Chris Bell

Link

Landlord nightmares - how many of these do you relate to?

Price falls aren't the only worry in buy-to-let land, as seasoned pros confess all to ROSIE MILLARD

We are querulous types, it seems. Everybody thinks we are sitting laughing our heads off, tycoon-style, when the opposite appears to be more the case. A survey of my buy-to-let buddies has revealed the top 10 fears that keep us awake at night.

1. Bad tenants
The sort who pass all the references and credit checks and just turn out bad, says Oscar Lennox, who owns a clutch of buy-to-let flats in central Leeds. That is my key fear. One of my flats was raided at 5am and my tenant taken away by the police under suspicion of fraud and rape. All his references were wonderful.
Landlord fear factor: 50%
Likelihood: 20%

2. Price crash
A collapse in property values would, of course, wreck thousands of pension plans, nest eggs and mortgages, and smash the fragile structure on which many buy-to-let businesses are constructed. I started buying in 1999, says Lennox. Some of my flats have almost doubled in value since then. A crash is unlikely, but not impossible. The only defence against it is to make sure your portfolio comprises quality property, because quality will always sell. Of course, if prices do go down, a comforting thought is that rents are likely to go up.
Landlord fear factor: 20%
Likelihood: anybody's guess

3. Fire
“Getting a phone call to say that somebody has been hurt in a fire is my biggest fear,” says Andrew Levy of the Brand New Heavies, who owns several houses in Margate and London. “My houses are all covered and have no liabilities, but when personal safety is at risk, I get scared. I would feel very responsible if somebody got hurt.”
Landlord fear factor: 15%
Likelihood: fit those smoke alarms

4. Trashing of flat
“Mercifully, my London flats are at the other end of the market where I avoid what I most fear,” says Susan Browne, who owns properties in South Kensington. “But I also have a property in Sydney, Australia, that was utterly trashed by corporate tenants. There wasn’t a piece of furniture left undamaged. I am now in the process of going through a tribunal.”
Landlord fear factor: 15%
Likelihood: 15% (as long as you avoid medical students, who specialise in trashing flats)

5. Squatters
“Squatters are my numero uno fear,” says landlady Barbara Goldsmith, who has 40 flats across the country, “because I have had them. The property in question was empty for a couple of weeks. I had new tenants ready to move in. My builder went in to fit a couple of doors and came back with a white face. ‘There are 15 people in there with about five dogs,’ he gasped. I had to go to court to get them out. Oh, they know the law. My advice is to get good insurance. I had top insurance and they paid for everything. The bill came to £14,000.”
Landlord fear factor: 10%
Likelihood: depends on your locks

6. Voids
“I don’t think anybody at first realises what a disaster this is, financially,” says Browne. “It’s not just loss of revenue, but the fact that you are still having to pay council tax, services and keep the flat presentable. Voids can quickly send you into the red, so you must be flexible when negotiating a price. You are far better off asking for £300 a week than holding out for £375.”
Landlord fear factor: 10%
Likelihood: 90%, but reassure yourself that it happens to everybody at some point

7. Sitting tenants
“This is my Room 101,” says Richard Savage, who rents out several holiday cottages in Gloucestershire. “It happened to my father. He had a small bungalow in Cornwall that he rented out to somebody for six months. Thanks to my father’s incompetent solicitor, the man realised that as long as he paid the rent, he could not be moved. He ended up staying until he died, 30 years later. It was meant to be a family holiday home, but there was nothing that could be done. Of course, with assured shorthold tenancy agreements now this is much rarer.”
Landlord fear factor: 5%
Likelihood: zero if you bother to use a proper contract

8. Complaining tenants
“We get wonderful tenants from the holiday company Rural Retreats, but about once a year somebody does this,” says Savage. “You know perfectly well that what they are complaining about is totally fatuous, but they try it on in the hope they’ll get some kind of compensation or get away without paying a bill. They go on and on and never give up. These are litigious times, remember. I suspect there are guidelines as to how to do it on the internet.”
Landlord fear factor: 3%
Likelihood: 3%

9. Fireworks (rural areas only)
“The neighbours get very unhappy about it, so we have to advise tenants not to bring in fireworks for birthdays or New Year,” says Savage, whose cottages are in swathes of silent countryside. “Because they aren’t the fireworks we all grew up with, are they? I’m talking minor military weapons, giving out fountains of flame.”
Landlord fear factor: 2%
Likelihood of annoying neighbours: 1%, unless on November 5, in which case 95%

10. Collapse of entire rental market
Highly unlikely, unless you are a born pessimist.

Interesting... but I would put voids and a property price crash at the top of the list.

Link

Monday, September 26, 2005

'House prices to double by 2025' - a positive view for property investors

23rd Sep 2005, a Friday

Property prices are set to double over the next 20 years, according to new research from Mint. The internet bank suggests the price of an average property will rise to over £330,000 by 2025 following a rise in solo living and second home ownership.

Mint examined the trends likely to influence spending in the UK over the next 20 years, and their effect on spending patterns. It predicts that the price of the average house will increase from £163,334 in 2005 to £335,674 in 2025, with many people expected to seek to buy a second home. The report also suggests that the growth in single person households will continue over the next two decades fuelling more demand for affordable properties.

According to the report, single occupancy will increase from 30% today to 35% in 2021. And it says that disposable housing - flat pack homes, module housing and pre-fabricated properties - will be the main beneficiary of this trend."

Long term property investors can be assured property prices will rise... but when and how much... who knows.

Chris Bell

Link

Foreign workers boost house prices - an opportunity for landlords

23rd Sep 2005, a Friday

Eastern European workers are helping to drive up house prices in Northern Ireland, the Royal Institution of Chartered Surveyors (RICS) has claimed. Tom McClelland, the group's Northern Ireland property spokesman, said the market had bucked trends in the rest of the UK as investors met demand for rental accommodation from skilled migrant staff. McLelland called for higher density building in urban areas in a bid to ease the pressure on first-time buyers.

'We have seen Northern Ireland house prices rise further in the last number of months fuelled largely by investors who are benefiting from a buoyant rental market, with rental demand coming locally as well as from workers from the EU accession countries,' he said.
'We are also seeing more and more educated workers from eastern Europe coming to Northern Ireland, helping keep the economy growing, which in turn is fuelling demand in the housing market.

'Add to this the growing number of health professionals from abroad who are moving from the rental market to become owner occupiers. In Northern Ireland we have tended to build at low density on green fields and around small hamlets, where there is little or no infrastructure, forcing us into cars and creating the growing traffic congestion that we see.'

I'm sure this is the case in other areas of the country too. Build up your contacts with say, Poland, and you can have an endless stream of new tenants through recommendation. It's working for me.

Chris Bell

Link

Guaranteed rent scheme for buy-to-let landlords in Edinburgh

Fri Sep 23, 2005 10:50 AM BST
By Lorna Bourke

LONDON (Citywire) - Property agents Orchard & Shipman have launched a new buy-to-let scheme in Edinburgh for private landlords that looks an attractive, no hassle, way of getting into this investment market. Orchard & Shipman has done a deal with the City of Edinburgh to provide up to 1,500 homes to beat the city's homeless crisis. The scheme offers long-term contracts to private sector landlords with a guaranteed rent for the whole period. These properties are financed by buy-to-let landlords and help local authorities to fulfil their statutory obligations to house the homeless. Orchard & Shipman has long experience of similar schemes with other local authorities.

Private Sector Leasing schemes are attracting growing interest from local authorities in England and Wales as well as Scotland. Orchard & Shipman already manage nearly 1,000 properties for the London Borough of Hillingdon and for Spelthorne Council.

Buy-to-let landlords who already own property in Edinburgh, and investors wanting to buy to participate in this scheme, will have the security of a long let of up to five years, with no voids, rents paid quarterly in advance, no management fees and the return of the property in good condition at the end of the period. If the tenants damage the property, it is repaired. Landlords get a market rent, less about 15 percent, but the money is guaranteed to be paid irrespective of whether the property is tenanted or not as the rent is guaranteed by the local authority."

If you are facing a tough letting market in Edinburgh look into this... but check out the carefully how rent levels compare and the level of expenditure e.g. on upgrading and repairs, that you are committing yourself to.

Chris Bell

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