Bargains in the Andover area

A Landlord of ours was after advice about property in Andover with a reasonable yield but that also should keep up with price increases in the area and not hit a ceiling, as some properties can so I did a bit of research for him.

I found a four bedroom detached property with integral garage on the very popular estate of Winton Chase was bought in July 2013 for £240,000.  It was then sold on in June of this year for £360,000, a huge 50% increase in a relatively short space of time.  Admittedly it had undergone some upgrading and the market had naturally gone up over that period but still a very impressive increase none the less.  Across the SP10 region average prices have gone up by 29% so this property has performed very well.  You should achieve a rental value on a property like this of around £1300pcm thereby giving a yield of 4.3% which is respectable.  Therefore if you can find a property like this, needing a little tlc you can make a sensible return and benefit from the re-sale value when you are ready to sell on.

If your budget is slightly more modest there are still opportunities out there.  I found a two bedroom flat on Woodpeckers, Heather Drive which sold in January 2014 for £115,000 then resold in July this year for £145,000 giving an increase over that period of around 26% which, again, is pretty good.  Add to this a rental value of £675pcm this will give you a yield of 5.5% which is about right for the area. 

So, its all about knowing what you can do to a property to lift the value without just relying on natural uplift as this doesn’t always happen but making sure it will give you a good rental return as well.

For more hints and tips, pop in or follow our blog.

More Landlords incorporating a recent report shows

A recent report by lender Kent Reliance has stated that a number of Landlords are incorporating as a way of getting around the mortgage interest relief changes.  The report also states that it is likely that tenants will bear the brunt of the hike in stamp duty.

The report “Buy to Let Britain” shows that, up to the first quarter of this year, four in ten applications for buy to let mortgages have been from limited companies.  This figure is expected to rise to more than half by the end of the year.  In 2015 a fifth of applications were from limited companies while in 2014 it was only 15%.

The entire market showed that just under 38,000 loans were issued to limited companies which is nearly four times the figure compared to a year ago.

Going down the limited company route sadly does still mean that the extra stamp duty surcharge has to be paid but it does mean that mortgage interest relief can still be claimed.

The report showed that landlords with portfolios of 20 or more are the most likely to incorporate and that a third of Landlords surveyed said they were considering it with 7% having already done so.

A survey of 1097 Landlords showed that 39% expect to increase their rents over the next 6 months with 75% of them blaming the changes to mortgage tax relief forcing them down this route.

Whilst a high percentage say that the changes will affect their investments an encouraging 71% still believe property investment to still be better than other investments.

The report also estimates that the private rental sector will grow from 5.1m to 5.3m by the end of this year, further increasing to 5.6m by the end of 2017.

Andy Golding, chief executive of Kent Reliance, said: “Driven by a political agenda that prioritises home ownership and a view that buy-to-let is harmful to the UK’s housing market, property investors are seen as the scapegoats for the nation’s housing issues, whilst regulators are turning their attention to the lenders that support the market.

“This constant focus on managing demand does nothing to address the real issue, which remains the lack of supply of new housing.

“However, notwithstanding the various initiatives aimed at curbing buy-to-let, the reality is that the market, and the PRS that it supports, are essential parts of our housing supply.

“It is unfortunate that this is not acknowledged by policy makers, whose actions will primarily affect the tenants who they are arguably aiming to support: the prospect of higher tax on buy-to-let is already pushing up rents.

Factors that can devalue property – both sales and rental

Two similar properties in the same street can end up with very different values.  Below are 6 possible reasons for this which can affect both sales and rental:

Anti social neighbours

You may think a property is a perfect buy-to-let investment but if it has anti social neighbours this will result in tenants not staying long and the property possibly being difficult to sell on.  If you are considering a property, visit the area in the evening when it is busiest and walk the area.  Check out the condition of neighbouring houses and gardens, if they don’t look good, walk away.  If you are buying a flat, make sure it has good sound proofing in the floors and walls as this can be an issue for you, a tenant and your neighbours and can cause issues.

Home improvement

Lots of home improvements require planning consent, sometimes even a fence will need it.  If you are buying a property or considering improvements to an existing one, make sure all necessary planning consents and building control sign off is in place.

Flooding

This is becoming more and more of an issue with insurers.  A property you have or are considering may be considered at risk of flooding, even if you cannot see how!  Always check with the local authority who keep a register of “at risk” properties and run the post code past a few insurers.  They will quickly tell you if the property has been black listed.  This issue can be researched quite easily on the internet now.

All important kerb appeal!

This is so important, both for sale and let.  Always keep the frontage tidy and looking fresh.  If this means a fresh lick of paint then so be it but it may be as simple as a few plant pots.

Personal taste

Poorly decorated properties and those with odd colour schemes are both difficult to sell and let and can affect value as people will just be thinking of the cost and effort to put it right.  With rentals you are safest with neutral carpets and good old magnolia as the tenant will then jazz it up with furnishings.

School catchment area

More and more families are buying and renting close to their preferred school.  This can affect rents by up to 15%.  For Landlords this is obviously great and leads to tenants staying for much longer periods than normal.  On the flip side however, properties in these areas do tend to sell for closer to the asking price which is not great for Landlords.  Just bear in mind that if you buy in an area with a struggling school, you are less likely to attract families.  A good agent should be able to tell you which schools in your area are performing well.

We hope this has been helpful but if you are thinking of buying either a property to rent out, or for yourself but are not sure of the area, pop in our office and we will be glad to advise you. 

New to the market - lovely little investment property

We have just put this lovely little 1 bedroom bungalow on the market for sale.  It’s in immaculate condition having recently undergone refurbishment which included a new kitchen, new bathroom with separate shower cubicle, complete redecoration and new carpets. 

It would make someone a lovely little home or investment and should look to achieve around £725pcm giving it a very respectable 5.3% yield.  Add to that no block management fees and no work required to it, what’s not to like!

http://www.rightmove.co.uk/property-for-sale/property-63066584.html

If you would like to have a look, please give us a call and we will book you in.

Top ten tips for Landlords

1. Take advice from a letting agent. Your market research should always include talking to a local letting agent. Simply ask "what type of properties are you always short of?" to find out the properties and areas that will give you the best yield.

2. Invest in kitchens and bathrooms - it costs relatively little to tile a bathroom (and it’s cheaper to over-tile than to strip off and replace the existing tiling), alternatively, fit the now freely available shower walls which minimise the need for sealant and grout thereby preventing future issues when grout discolours or starts coming away. Provide clean and hygienic new worktops in kitchens. A bathroom with both a bath and shower will be the most popular.

3. Install a hardwearing/plain decor. Keep practical and functional. Properties with a

plain colour scheme will be more favourable.

4. Providing an allocated parking space, especially with a town centre apartment. A flat with a parking space will let long before all the other flats in the block and will achieve a price premium.

5. Review rent regularly, particularly when the same tenant stays in the property.

Allowing rent levels to fall behind the market rate can significantly impact your yield.

6. Do not instruct too many agents or none at all to get the property let. One or

two agents working to let the property is best and the landlord should expect weekly

progress reports. If you instruct one agent agree a timescale of three weeks in which

you will expect a tenant to be found or you will bring in a competing agent. If you have

more than two agents working on it, they each decide they only have a reduced chance

of securing the tenant and give it lower priority to their sole agency instructions. This

may involve a longer wait or having to accept a lower rent.

7. Ensure identity and independent credit checks are carried out on tenants and Right to Rent checks if necessary. The most credible looking tenant may have CCJ’s and a record of exploiting the unwary landlord.  With regards to Right to Rent checks the fines to both Landlord and Agent are significant as these are not done correctly.

8. Take out rent guarantee and legal costs insurance. In the current market this is

vital.

9. Keep on top of tenancy expiry dates. Ask tenants in ample time whether they

intend to stay. This is one of the most effective ways to eliminate void periods and needs

effective management.

10. Ensure tenancies do not end just before Christmas. It will be hard to find

another tenant. Set tenancies in June to last for 7 or 8 months to end in late

January/February when there is generally a shortage of properties available.

For more advice, please give us a call or pop in to our Bridge Street offices.

Andover or Newbury for a buy to let investment - which is best?

Should you be investing in Andover or Newbury?  Both are fairly similar in size but Newbury has had an overhaul in recent years although this is reflected in property purchase prices.

The average property value in Andover is £339,000 and in Newbury is £449,800.  Remember this is an average value and there are certainly cheaper properties in both towns!  The average rents are slightly different in that in Andover its £850pcm whilst in Newbury its £950pcm.  This gives Andover a yield of 3% and Newbury 2.5%.  Again, bear in mind this will be significantly higher if you buy the right property.  You should be able to achieve 5% plus in both towns with the right purchase.

The average property price in Andover has gone up by just over 7% in the last 12 months whereas in Newbury it as only risen by just over 1%.

Both towns are highly desirable for tenants but, certainly on paper, Andover would appear to be a safer bet at this current time.

For any advice on a good investment, please pop in and have a chat.

Update on the Right to Rent Act

Update on Right to Rent Act

You may remember previously we let you know about the rules and regulations surrounding the new Right To Rent Act.  Well, further changes will come into force before the end of this year.  The Home Secretary revealed the changes at the recent Conservative Party Conference and we have listed below the important points:

Current situation:

1.       Any agent or Landlord is now required to carry out Right To Rent checks in the prescribed fashion

2.       Any agent or Landlord found to be renting to a tenant who does not have the right to rent and the agent or Landlord cannot show they carried out the necessary checks will be liable for a fine of up to £3000

Amended rules:

1.       1  The process remains the same however any agent or Landlord found to be in breach of these rules still faces the same penalty as before but can also be prosecuted in the Magistrates Court with an unlimited fine and / or a 12 month prison sentence.  The agent or Landlord can also be prosecuted in the Crown Court, again with an unlimited fine and / or a maximum prison sentence of 5 years.  It has been pointed out this would be for repeat offenders

2.      2   The Agent or Landlord can be served notice by the Home Office that a tenant needs to be evicted and there will be a strict time limit on this action being carried out by the agent or Landlord.

So the general rule of thumb needs to be, do your checks!  There is plenty of help and advice regarding this from Government websites, or contact us and we can help you with check lists etc.

Considering becoming a Landlord - a few top tips!

Despite all the negative press property is still a good investment and is likely to give you a better return than your hard earned cash just sitting in the bank.  If you have made the decision that property is something you want to invest in as a buy-to-let Landlord there are a few important things you need to know before taking the plunge!

      Know your market.  Before you invest in a property, decide who you want to rent to.  Are you happy to rent to sharers?  Do you only want to rent to families?  If you are happy to rent to sharers then bedroom size is key.  Two sharers will want two double rooms whereas a family will take a house with two double rooms and one single but make the decision before you buy.  Don’t be put off by sharers.  People make the mistake of thinking one will end up wanting to leave but, believe me, this happens with couples just as much!  Many people share these days as it’s a cheaper alternative to having a one bed property on their own and, in our experience, they tend to stay a while.

2.       Invest in kitchens and bathrooms.  These two rooms tend to be very important for tenants.  If these rooms are a little tired look at re-tiling, putting in new worktops and changing cupboard doors if the units are sound.  Always make sure there is some sort of shower in the bathroom.  If either of these rooms need gutting and totally refitting don’t spend a fortune on it.  Consider shower boards instead of tiles.  It’s quicker to install and you have less grout issues later.  Don’t forget this is a business, not your home!

3.       Keep colours neutral.  You can’t go wrong with good old magnolia.  That way it is easier to freshen up the property between lets.

4.       Specialist Landlord insurance.  You must take out specific Landlord insurance.  This is different from your normal buildings insurance in that it will also give you an element of liability insurance which hopefully you will never need!  Also, consider rent guarantee insurance, especially if you have a mortgage on the property.

5.       Use the services of a good agent!  Again, make a decision early on about whether or not you are happy to manage the property yourself or just want a tenant finding.  Whichever it is its always wise to use an agent as they will be able to reference any potential tenants very thoroughly.  A good agent will also keep you up to date with changes in legislation.

6.       Freshen up between lets.  Always consider a bit of redecoration in between lets.  This will encourage tenants to keep it nice.  It’s better to redecorate a couple of rooms each time than doing the whole property in one hit, thereby spreading the expenditure.

7.       Employ a good accountant.  A good accountant will be able to give you the best tax advice on your investment and stop you falling foul of the rules!

Now sit back and watch your investment grow!

For further advice, give us a call or drop in to our offices.

The Andover property market outperforms Whitchurch

A Landlord with a nice little property portfolio came into our offices recently.  He lives between Andover and Whitchurch and has properties in both towns.  He likes these areas and wanted advice on which one was currently the best option.

Although they are only a few miles apart they are quite different beasts.  Andover is a good deal larger and there is always debate as to whether Whitchurch is a town or a village but we won’t start that debate here!

Looking at Andover first the average property price is currently £258,870 while the average rent is £843pcm.  In Whitchurch the average property price is a whooping £408,778 while the average rental value is an equally eye watering £1296pcm.  This gives Andover an average annual yield of around 4% whereas in Whitchurch it shows as being around 3.8% so not massively different but your investment stands to be greater at the beginning.

It goes to show that there isn’t a massive difference in return.  However, you need to factor in that these are only averages so the yields may fluctuate depending on the property, especially in Whitchurch which is very popular with commuters and tenants who work in Basingstoke.  In our experience, they will happily pay upwards of £900pcm for a two bed property which is not so common in Andover.

So, as always, do your homework, know your market, and take advice!