Posts with tag: buy-to-let landlords

Why Property Has Been the Best Investment of the Last Ten Years

Published On: October 25, 2016 at 8:59 am

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Property has been named the best investment in the UK over the last ten years, delivering a significantly higher return than alternative options, such as the stock market and savings accounts.

A new study by estate agents Leaders and Romans compared the return an investor would have received in each of the four markets, had they invested an initial £50,000 in 2006.

Why Property Has Been the Best Investment of the Last Ten Years

Why Property Has Been the Best Investment of the Last Ten Years

The research revealed that the buy-to-let market has generated a 175% return over the past decade, equating to a profit of £138,936. In comparison, gold has delivered a profit of £50,673, interest on savings accounts is worth £14,447, and a £50,000 investment in the FTSE 100 has yielded just £2,969 over the same period.

The Letting Managing Director at Romans, Michael Cook, says: “Buy-to-let performs significantly better than other investments in terms of an overall return. Our research shows a buy-to-let investor in 2006 would be almost £90,000 better off today than somebody who invested in gold, and more than £135,000 up on somebody who bought stocks and shares.

“Although property investment can be more time-consuming and hands-on, with such incredible results at the end, it’s certainly worth it.”

Although gold, stocks and shares, and savings offer greater liquidity than property, which can take several weeks to buy or sell, this isn’t deterring astute investors, who value the dual benefits of a monthly rental income and capital appreciation over time.

Allison Thompson, the Managing Director at Leaders, explains why she thinks property is the best investment: “Despite many changes over the last ten years to the housing market and wider economy, buy-to-let is still the clear winner. As well as the most rewarding, it is also the safest of all the investment options over the long-term. We have seen historically that, although cyclical, house prices always rise in the long run. With the acute shortage of housing across the UK, this is only likely to continue.

“Cautious investors can minimise their risks in a number of ways, including utilising rent guarantee schemes to effectively insure their income – an option not available with other investments. This, along with the substantial returns to be made, make property more attractive than all other types of investment.”

If you are thinking of investing in or further into the property marker, you must be aware of the difference between Rent Guarantee Insurance and guaranteed rent schemes: https://www.justlandlords.co.uk/news/rent-guarantee-insurance-guaranteed-rent-schemes/

Do you believe that property is the best investment of the last ten years?

Buy-to-Let Remains an Attractive Investment Opportunity, Insists Together

Published On: October 24, 2016 at 10:13 am

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Buy-to-let property remains an attractive investment opportunity at a time of low savings rates and stock market volatility, insists specialist lender Together.

Buy-to-Let Remains an Attractive Investment Opportunity, Insists Together

Buy-to-Let Remains an Attractive Investment Opportunity, Insists Together

Despite a Government crackdown on buy-to-let landlords, including the 3% Stamp Duty surcharge on additional properties, the abolition of the automatic 10% Wear and Tear Allowance, and the forthcoming reduction in mortgage interest tax relief, Together reports that investors continue to be drawn to the buy-to-let market, as the returns regularly outperform those of other investments.

The firm’s Commercial CEO, Marc Goldberg, explains: “Buy-to-let has proved to be a resilient sector this year, despite the tax changes introduced by the Government.

“Buy-to-let lending continues to perform well for us here at Together, and we’ve been able to grow whilst maintaining a high quality customer base. Given this growth, we want to ensure that we offer a variety of products to meet the continued demand.”

Together has recently introduced a new five-year, fixed rate buy-to-let mortgage to meet the demand from this growing market, with the maximum loan size increased to £500,000, while offering landlords the opportunity to fix their costs.

Goldberg comments: “Our new fixed rate product, as well as bigger loan sizes, will help us deliver more funding to property investors through our network of broker partners.

“We offer both interest-only and repayment options, with loan-to-values of up to 75%, and we’ll accept projected rental incomes, so landlords don’t need to have a tenancy already in place to secure the funding needed.”

He adds: “We also lend to limited companies and have seen an increase in applications from limited companies for buy-to-let funding as a result of the various tax hikes.”

Under the forthcoming changes to mortgage interest tax relief, limited company landlords will not be affected; only individual investors will face a reduction in the amount of mortgage interest that they can offset against tax. The Government has a guide on how the cut will work: /government-guide-tax-relief-changes-residential-landlords/

Together recently announced record trading results, with annual new lending for the year to 30th June 2016 surpassing £1 billion for the first time in the firm’s 42-year history. Its current loan book exceeds £1.8 billion.

Work has to be done to reduce tenancy deposit disputes

Published On: October 21, 2016 at 8:57 am

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The Association of Independent Inventory Clerks believe that much more should be done in order to reduce the number of tenancy deposit disputes.

This comes despite the recent improvements recorded in released in figures released earlier this year.

Low volume

Despite their calls for improvements to be made, the industry body acknowledged that the volume of disputes is low. There were only 28,100 disputes requiring resolution by the three government-recognised protection schemes in the year to March 2016.

These figures came from the Department for Communities and Local Government, which revealed that this number made up just 0.82% of total deposits. However, the Association of Independent Inventory Clerks thinks many problems still need addressing.

Data released from the Tenancy Deposit Scheme shows that cleaning disputes featured in 57% of all tenancy deposit claims that it deals with. Damage to either fixtures and fittings were mentioned in 51% of all cases.

Work has to be done to reduce tenancy deposit disputes

Work has to be done to reduce tenancy deposit disputes

Problems

Patricia Barber, chair of the Association of Independent Inventory Clerks, noted: ‘The issues of cleaning-or a lack of it-and damage in rental properties come up time and time again at the end of tenancies and it’s clear that these problems are responsible for a high number deposit disputes that do occur.’[1]

For a number of years, fair wear and tear has been a grey area for both landlords and letting agents, such is the varying nature from case to case. This high level of ambiguity leads to a high number of disputes at the conclusion of an agreement.

As such, the importance of an inventory is of paramount. Alongside being used in evidence in a dispute, an inventory as part of the check in and check out process will greatly help if an issue arises.

Barber continued by saying: ‘If landlords make sure tenants are issued with a detailed and thorough inventory at the beginning of the tenancy, then it’s easier for all parties to determine the condition of the property when the contract finishes. This in turn makes it easier for landlords and tenants to agree on any required deposit deductions which could lead to fewer formal deposit disputes.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/10/more-work-needed-to-reduce-tenancy-deposit-disputes

Housing market stays steady post-Brexit

Published On: October 20, 2016 at 8:57 am

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Despite ongoing uncertainty surrounding the Brexit vote, Britain’s housing and economy markets have showed resilience.

Residential property price growth has slowed slightly, but former Chancellor George Osborne’s predictions of a fully blown crash have failed to materialise.

Lack of panic

There has also been a lack of panic amongst investment buyers looking to get rid of their properties, with stagnation continuing in the market.

Marc von Grundherr, Lettings Director at Benham & Reeves Residential Lettings, noted: ‘Rents have flat-lined across most of the capital. We are advising all our landlords not to ask for rental increases and if the tenant has been particular good then to even consider a slight decrease or some works to retain them and avert any void.’[1]

According to Benham & Reeves Residential Lettings, tenants are readily agreeing renewals.

Housing market stays steady post-Brexit

Housing market stays steady post-Brexit

Capital gains?

Most noticeably, rent prices in prime central London have slipped for the second successive quarter. There has been an oversupply in rental properties in Belgravia, Chelsea and Knightsbridge, which is having a negative impact on rental values in the area.

von Grundherr continued by saying: ‘Prime central London arguably has the best value properties in the capital at the moment. And transformed pockets of North West London such as Colindale continue to offer excellent returns for investors who go in there early.’[1]

‘If you look at most of the Heat Map, rents have stayed the same over the past quarter. We’re in a period of uncertainty and fortunately, our landlords are listening to our advice when we tell them not to be greedy and simply value the tenants they have,’ he added.[1]

[1] http://www.propertyreporter.co.uk/landlords/rental-market-stagnant-after-brexit.html

 

10 New Build Investor Hotspots in London

Published On: October 20, 2016 at 8:42 am

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If you’re looking to invest in the capital’s post-Brexit property market, you must put location first. With this in mind, Portico has put together a list of 10 new build investor hotspots in London.

The London estate agent points out that new build locations have been specifically created with today’s tenant in mind, so they are usually based near great transport links in a desirable or up-and-coming area.

For landlords, this means that these new build investor hotspots offer good prospects for high rental yields and strong capital growth.

If you are looking to invest in London’s property market, here are Portico’s ten new build investor hotspots:

  1. Croydon 

This metropolitan area is soon to benefit from a £5.25 billion regeneration programme, which promises to transform the town centre. Westfield also has plans to build a luxury shopping centre in the area, which will likely push up house prices, as seen previously in the boroughs of Hammersmith & Fulham and Newham. Tenants will also be attracted to the 14-minute journey into Victoria, making this south London borough an easy choice for renters on a budget.

  1. Nine Elms, Battersea

Another location that’s benefitting from a multi-billion pound investment scheme is Nine Elms. Named the “next big luxury area”, it will soon be home to a new Tube station, a revamped high street and the American Embassy, which will drive more international workers to the area.

  1. Canary Wharf 

Canary Wharf is one of the most established new build investor hotspots that have sprung up over the last ten years, and has become extremely popular with young professionals working in the business district. It also has one of the capital’s most sophisticated travel hubs, including the DLR, Tube and Thames Clipper river bus services. Furthermore, when Crossrail is fully operational in 2018, the line will provide direct connections to Heathrow Airport and a number of east-west locations – further enticing tenants and investors to London’s financial centre.

  1. 10 New Build Investor Hotspots in London

    10 New Build Investor Hotspots in London

    Bermondsey

Bermondsey has also undergone a positive revival, this time as a result of the regeneration of London Bridge, which has attracted large businesses, such as News Corp, to the area. It is also a foodie hotspot, attracting young professionals and business types to its central location, trendy amenities and contemporary, luxury accommodation.

  1. King’s Cross 

Once an industrial wasteland known for its underground night life, King’s Cross is now a thriving cultural and business community, home to some of the biggest companies in the world, as well as a string of new restaurants and bars, a huge Waitrose in Granary Square and the art installation Pond Club. Google is also currently spending £1 billion on a London headquarters in this trendy location, which will no doubt attract a wave of professionals and continue pushing up house prices.

  1. Aldgate 

Property prices have soared in east London over the past few years, thanks to the impact of the Olympic Games and the resulting gentrification. Aldgate is currently growing in popularity. It is close to fashionable neighbourhoods, such as Shoreditch, and is within walking distance of the City, making it an ideal spot for young professionals.

  1. Bromley by Bow 

Also within close proximity of the Queen Elizabeth Olympic Park, Bromley by Bow offers affordable accommodation, good transport links into central London and an up-and-coming, trendy atmosphere. There is a low supply of luxury rental homes in the area, which means that landlords here tend to generate healthy returns, as well as good prospects for capital growth.

  1. Dalston

Investors have been queuing up to get their hands on the developments dominating Dalston’s skyline since Boris Johnson re-opened the Overground station, Dalston Junction, in 2010. The line takes residents into Highbury & Islington Rail in under five minutes. The area is ruled by young renters and arty types, who are attracted to the trendy eateries, cool rooftop bars and London Fields to the east.

  1. Stratford 

Although house price growth here has outperformed most of London over the last few years, Stratford still remains affordable for both buyers and tenants, making the area an extremely popular place to live. The near completion of Crossrail will no doubt drive further price rises in this part of east London, giving Stratford the most growth potential of any London location over the coming years.

  1. Hayes

Crossrail will arrive at Hayes & Harlington station in 2018, which will be key in pulling in tenants and homebuyers looking for affordable homes and access into central London. As well as good transport links, Hayes also offers healthy rental yields, great schools and easy access to the M4, M25 and Heathrow Airport.

Portico reminds landlords that you must ensure all property acquisitions meet your requirements and to take professional, independent advice when considering investment potential.

Welsh Government Decides to Continue 3% Stamp Duty Surcharge for Landlords

Published On: October 19, 2016 at 8:31 am

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The Welsh government has decided to continue the 3% Stamp Duty surcharge for landlords.

The Land Transaction Tax and Anti-Avoidance of Devolved Taxes (Wales) Bill, which was introduced to the National Assembly on 12th September 2016, details proposals for a new land transaction tax to replace Stamp Duty Land Tax (SDLT) in Wales from April 2018.

At present, the bill does not include provision for a higher rate of tax on purchases of additional properties, which currently exists under SDLT in England and Wales and Land and Buildings Transaction Tax in Scotland.

Welsh Government Decides to Continue 3% Stamp Duty Surcharge for Landlords

Welsh Government Decides to Continue 3% Stamp Duty Surcharge for Landlords

The 3% Stamp Duty surcharge for landlords was introduced on 1st April this year. This guide explains how the additional tax will affect you: /landlords-guide-3-stamp-duty-surcharge/

To better understand whether the higher rate of tax should be introduced under the new bill, the Welsh government published a Treasury Paper and conducted a technical survey on the operation and application of the surcharge.

A total of 100 responses were received, with varied views. The government reports that some respondents believed it is important to remain consistent across the UK, so that distortions aren’t created, particularly across the England-Wales border.

Mark Drakeford, the Cabinet Secretary for Finance and Local Government, also believes: “As the Treasury Paper highlighted, there will be a significant reduction in the resources available for public services if we do not include a higher rate for additional properties in land transaction tax. Therefore, to protect the delivery of public services, I intend to make provision for a higher rate surcharge on purchases of additional residential properties in the Land Transaction Tax and Anti-Avoidance of Devolved Taxes (Wales) Bill during stage 2.”

However, he adds that the government will “continue to explore the suggestions put forward by stakeholders about how the higher rate can be adapted to meet Wales’ circumstances.”

A summary of the responses can be found here: http://gov.wales/docs/caecd/publications/161014-ltt-responses-en.pdf

The Managing Directors of both the Association of Residential Letting Agents (ARLA) and the National Association of Estate Agents (NAEA), David Cox and Mark Hayward, respond to the Welsh government’s decision to continue the 3% Stamp Duty surcharge for landlords:

“We are disappointed that the Welsh government has decided to take this decision and followed the rest of the UK in implementing this punitive regime for buy-to-let landlords.

“We have been highly supportive of the new devolved tax regime in Wales, precisely because it was a way that it could set its own tax agenda that works best for the housing sector in the region. In continuing with the surcharge, the Welsh government is not making the most of its new powers in order to increase the supply of homes that Wales so desperately needs.”

They also warn of further damage to the property market: “The measures will lead to increased rent prices through a fall in supply and increasing demand. Tenants will also see additional costs passed onto them, as landlords look for ways to increase the profitability of their properties in the face of spiralling expenses. Ultimately, this will lead to sub-standard accommodation, as money, previously used for the upkeep of homes, will be swallowed up in tax payments.”