Why Did I Ever Invest in Buy to let?

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My wife and I bought our one bed flat in a town in the NW of England in 2007 – the plan was simple keep it for 10 -15 years then sell using the increase in valuation as a means to diversifying our pension provision. We never bought with a view to growth in units… Read more

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Budget busters!

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Does it add up? The experts at Belvoir reveal six expensive economic errors… and how to avoid them

Perceptive purchasing

“One of the most costly mistakes a landlord can make often occurs right at the beginning of their investment journey and before a property has even been purchased,” says owner of Belvoir Swansea and Belvoir Mumbles Ben Davies.

“Investment errors at the initial stages will inevitably affect profit potential. In fact, choosing the wrong property or paying the wrong price can significantly reduce monthly rental return, expected yield and capital growth on resale.

“Make sure all the finances add up before signing on the dotted line. Research the market to find out how much rental return you can expect for a property of that type and size, plus how similar properties have performed on resale in that area. Don’t be afraid to negotiate on the sale price either – many vendors are willing to reduce the asking price, especially if you’re a cash buyer or are in a good position to proceed.

“Remember too to look at the small print regarding the terms and conditions of the sale (especially on leasehold properties), plus make sure you commission a HomeBuyers Report to identify any issues that may prove expensive later.

“Additionally, make sure the property will appeal to your target tenant. What are their needs and wants? Which types of properties are renting quickly and consistently in your chosen area? A rental property is an investment vehicle so it’s vital to approach the purchase from a business prospective and not based on your own tastes, wants and desires.”

• Negotiate on the purchase price

• Buy with your target tenant in mind

• Find out about potential rental return

• Make sure the finances add up

Marketing mistakes

“Void periods cost money and if you’ve ticked all the boxes in terms of property type, area and tenant appeal then periods of void may simply be down to marketing mistakes,” says co-owner of Belvoir Liverpool West Derby and Belvoir Liverpool Central Adam Rastall.

“If tenants don’t know about your property then they’re not going to be queuing up to rent it. Similarly, if the quality of your marketing material is poor, then the appeal of your property will dramatically decrease.

“Well thought-through strategies and high quality marketing material help let properties at speed. Ensure that your wording is clear and concise, highlighting the key features of the property and taking the potential tenant on a journey through the benefits of living there.

“Include several good quality recent internal and external pictures too, preferably taken by a professional on a bright sunny day. It goes without saying that the property should be looking at its best with beds made, rubbish bins emptied and toilet seats down.

“Make sure your marketing ‘sells’ a lifestyle so a tenant can imagine themselves living there before they’ve even taken their first steps through the front door.”

• Forward plan your strategy

• Highlight the property’s key features

• Add a selection of good quality photos

• ‘Sell’ a lifestyle through your words and pictures

Presentation power

“Presentation can make or break a rental property,” says Ben. “Poor quality presentation with tired fixtures, fittings or appliances will lower the property’s appeal and, of course, the rental return you can expect. Likewise, shoddy décor with peeling paper or paint will shave pounds off your profit.

“It’s a common mistake to underestimate the modern renter’s demands and needs,” he continues. “Today’s tenants want contemporary, fresh and neutral properties so ensure yours is desirable and move in ready.

“Check out the competition too. Competition complacency can be an issue for some landlords so always thoroughly research the presentation level of similar rental properties in your area so yours remains streets ahead.

“While a good level of presentation is vital, however, it’s also important to stay practical and within a set budget. Don’t overspend on expensive and elaborate presentation which costs more to execute than is cost effective.”

• Keep it neutral, contemporary and fresh

• Assess the competition

• Keep your target tenant in mind

• Don’t blow the budget

Tenant trouble

“Getting a ‘bad’ tenant can cost you dearly in many different ways,” says Adam. “If they consistently pay late or don’t pay at all you will be losing income and may be left with no choice but to start eviction proceedings.

“Similarly, if someone doesn’t look after the property and causes damage, malicious or otherwise, it will also affect your profit potential.

“To improve your chances of getting a ‘good’ tenant it is important to get to know a bit about them and their background before you commit.

“Never rely on gut instinct alone, however. It’s vital that you do full checks on them and their financial circumstances. This will include ensuring they have the Right to Rent, plus thorough credit checks and reference gathering (from employers and previous landlords) which should then be verified.”

• Always credit check potential tenants

• Gather references too

• Regularly inspect the property to make sure a tenant is living within the terms of the Tenancy Agreement

• Long-term tenants can save money on re-marketing costs and periods of void

Maintenance mishaps

“As with any business you will have costs and expenditure to consider and one of these that you can’t afford to ignore is maintenance,” says Ben.

“It’s advisable to factor in one month’s rent per annum for essential maintenance and repairs. Work out your net yields taking into account that you may have to spend out on the property throughout the year in order to protect your investment.

“Ideally, all maintenance issues should be resolved before a tenant moves in which will help minimise the risk of something going wrong during the tenancy.

“Throughout their stay it’s then important to visit the property regularly and troubleshoot issues as they arise and at speed. Ignored maintenance often escalates generating more work and larger bills.

“Another budget busting mistake is cutting corners to cut costs. Using substandard materials or ‘cowboy’ contractors rarely saves money in the long run and can, in some cases, compromise the safety of your property and tenant.”

• Ask your tenant to report maintenance problems

• Regular pre-arranged visits to the property will allow you to assess its needs

• Deal with issues immediately and before they escalate

• Commission reliable and recommended contractors

Expert opinion

“Never ignore the valuable resources offered by your local letting agent,” says Adam. “Experienced and knowledgeable about the industry, a letting agent’s help and advice can be bank balance beneficial for landlords both old and new.

“Not only can an agent help ensure the property is ready for rental and is legally compliant, but they can also help reduce your vulnerability to ‘bad’ tenants.

“Once a property is tenanted they can then make sure that the tenant is living within the terms of their Tenancy Agreement, plus they can organise trusted contractors to carry out essential maintenance in a timely and efficient way.

“Additionally, a good letting agent can help you assess how your property is performing plus help you grow your portfolio so you can increase your investment return and protect your profit potential.”

• A letting agent’s help and advice can be invaluable

• They understand lettings legislation and will be able to keep you up to date with recent changes

• A letting agent can help you source additional properties and grow your portfolio

• They can also assess how your property is performing and help you maximise your investment

Article Courtesy of: Belvoir

… LandlordZONE.

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Is your MP a Tenant Tax Target?

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In the run up to the Spring Budget we have been urging our members to visit their MPs and raise awareness of our campaign to scrap incoming changes to Mortgage Interest Relief. We have had considerable support from our members who have been sending letters and requesting visits with MPs across the country. Thank you […]

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What the wear and tear allowance means for landlords and how to maintain your profitability

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Tax has been a worry for landlords throughout the past 12 months. Many changes have been brought in, most notably the stamp duty hike, and a wave of further regulatory and tax changes are due to take effect in April 2017. With the scrapping of the ‘Wear and Tear’ allowance in April 2016, it’s not been easy for landlords, has it?

The wear and tear allowance served landlords well, but the recent changes have caused most buy-to-let mortgage owners a headache. Under the old ‘Wear and Tear rules, landlords were able to deduct 10% of their rental income in calculating taxable profit to allow for wear and tear of a property. Nice and straightforward. It was beneficial to landlords as there was no clear definition of ‘furnished’ and even if a landlord hadn’t bought any new furniture, it was still possible for him or her to claim the 10%. However, this was replaced by the Replacement Furniture Relief (RFR) system, allowing landlords of residential property to deduct only the actual costs incurred on replacing furnishings in the same tax year.

Here, Managing Director of Online Mortgage Advisor, Pete Mugleston, explains what the changes mean and shares ways to maintain profitability despite amendments to the allowances.

What is eligible for relief?

Relief is available for ‘domestic items’ which includes:

• Moveable furniture

• Household appliances such as fridges and freezers

• Kitchenware such as crockery and cutlery

• Furnishings such as carpets, curtains and linen

• Televisions

If you invest in an empty property that needs furnishing, you won’t be able to claim any relief against any new furniture, as essentially you’re not replacing anything. To avoid the potential lack of income, it’s worth considering buying an existing buy-to-let property with worn furniture. When you replace the furniture you’ll obtain a tax deduction for the costs.

It’s important to note, you’ll only be able to claim ‘like-for-like’ replacements. So if you want to replace a £300 cooker, then only buy a £300 cooker to replace the old one. Of course you can’t stick to exact figures, but don’t replace a standard appliance with top-of-the-line.

You’ll be pleased to know that it’s not just the physical furnishings that can be used as deductibles. Removal, disposal and delivery costs can be calculated to ensure you don’t miss out. Also, the money spent on selling the old appliance or furniture, such as an auctioneer’s costs, can be used as a deductible too. But note, the money you make from selling the old furnishings will be taken from the total amount you’re eligible to claim back.

If organisation isn’t one of your strong points, it may be time to change your ways. The new RFR rules require more managing and you need to make notes of what you’ve bought and where, how much it cost including the minutiae that come with it. So make sure you keep hold of your receipts.

With the old wear and tear allowance, it was swings and roundabouts. Sometimes your actual replacement costs exceeded the 10% allowance, sometimes the 10% exceeded the costs you’d made. The new system, although very structured, balances your finances out.

There’s definitely a lot more to manage with the RFR, especially if you have a considerable portfolio of properties. But if you make the necessary changes, you’ll still maintain profitability. Essentially, you don’t need to panic – there’s still plenty of options.

Acknowledgement: This article was supplied by Pete Mugleston, founder of Online Mortgage Advisor (OMA). OMA puts those looking for independent mortgage advice across the whole spectrum of situations in touch with experienced, whole of market advisors; including those who specialise in buy-to-let mortgages.

Article Courtesy of: www.onlinemortgageadvisor.co.uk

… LandlordZONE.

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Selective and Additional Licensing to Come into Force in Redbridge

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The London Borough of Redbridge has announced new Selective and Additional licensing schemes, both of which come into force over the next few months. The selective licensing scheme will be introduced in the wards of Valentines and Clementswood from 13th July 2017. Selective licensing affects all private rented sector properties that are not licensed under […]

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Listed Building Buying Guide

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Purchasing a property either for yourself or for the rental market is tricky enough – but listed buildings come with a whole host of considerations and legalities to consider.

Listed buildings defined

For a building to be listed, it must be classed as being of ‘special architectural or historic interest’ by the National Heritage list. When a structure meets this criteria, it is deemed listed and falls subject to rules and regulations regarding renovation, repairs and other work.

What criteria makes a building listed?

Any that were made before 1700 and are still in a manner resembling their original state are automatically included – as are many built between 1700 and 1840. However, particular attention is paid to buildings created after 1945 and few of these are listed.

In all, a building MUST be at least 30 years old to be classed as listed. Once it has been added to the National Heritage list, the building comes under special protections. There are different ‘grades’ of listed buildings which pertain to their architectural and historic interest – with Grade I the most important, followed by Grade II and II.

A listed building is protected against demolition and development that can harm its character. Unfortunately, what this actually constitutes is a tricky affair – so owners of listed buildings must seek permission from their local conservation officer before any changes are made. You can’t alter the look of the property without consent.

Caring for a listed building

As a result of the age of listed buildings, maintenance needs to be at the forefront of your development. Most maintenance jobs don’t need planning permission as long as they don’t involve altering the building itself – so placing flood defences such as door guards during rainy periods is fine. However, due to the age of the property you’ll have to defend against damp and decay – which can involve having maintenance work done to the property.

If this sounds in any way intimidating, you can’t be put off and avoid the work – as the local authority has the power to issue an urgent works notice. If ignored, they can enter the property and carry out the work itself then bill you for the task.

Hiring a surveyor to spot problems such as rising damp is also key – but you’ll need to be careful on the manner of repair, as modern measures such as filling walls with cement can prevent the building from breathing. In situations like this, the local authority’s conservation and planning officer will be able to advise you on the best course of action.

Energy considerations in a listed building

You’ll also need to keep on top of the energy demands of a listed building. Due to their age, they may not be as energy efficient as other homes or dwellings. Small measures such as the installation of a modern boiler can make a large difference – but other measures can cause issues. For example, installing loft insulation or double glazing will require planning permission. Thankfully, some companies offer glass options for listed buildings that retain the original window’s aesthetic look but place a second pane behind it to increase insulation. This is far more likely to be approved compared to standard double glazing.

As a direct result of all these considerations, buying listed building insurance from specialists such as Lycetts is vital for helping protect you against issues that may arise when purchasing and owning a listed property.

… LandlordZONE.

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A new property challenge for landlords seeking extra income.

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Last month, over 50 LandlordZONE members expressed their interest in the franchise, in which 72% of established franchisees have earned over £10,000 in a calendar month.

In addition to this, there will now be a new HomeXperts franchise in Bury St Edmunds, as one LandlordZONE member has already decided to take on a new challenge and become an estate and letting agent in a lucrative, and growing industry.

With the April tax changes drawing ever closer, landlords may be looking for an additional income stream and this could be the perfect opportunity for those with existing experience in property.

As you are aware property prices grow year on year, and there will always be an interest in property as people need a place to live. Therefore, this has to be an avenue for your consideration.

Landlords could also use their agency to manage their own properties, cutting letting agent fees at a time where that could provide a huge boost to the income you receive on your properties.

Accompany this with an impressive British franchising network, in which 97% of units (including new businesses) were profitable*, why would you not consider property franchising as an option for a new form of income?

With HomeXperts, hardworking franchisees often expand their territory, gaining employees to help them build an empire. Chris Tunnicliffe of HomeXperts Northwich stated: “I now have four franchise areas and 2 employees which I’m really proud of.

It’s safe to say that franchising and HomeXperts has given me more than just a business, it’s given me an exciting new future.”

If you would like to hear more about HomeXperts, they are contactable via 01905 678850. Alternatively, you can E-Mail franchise@homexpertsuk.com with ‘Landlord10k’ to receive more information on how to gain additional income.

For an quick insight into the HomeXperts Franchise Opportunity visit: www.home-xperts.co.uk and view the virtual brochure.

*British Franchise Association

… LandlordZONE.

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Which flooring to choose for your home

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There are so many choices when it comes to choosing flooring for your home, the decision can seem quite overwhelming. But it doesn’t have to be.

When choosing the best flooring for your home, bear the following 3 things in mind:

1) Your budget

2) The purpose of the room in which you are installing the floor

3) The style and colour scheme of the room

Once you have considered these three things, you will be much more equipped to choose the best type of flooring for your home. To help, here is a list of common types of domestic flooring and their properties:

Solid wood flooring

Solid wooden floors come in many different styles and colours. From oak to walnut to bamboo, you will be able to find a type of wood to match any interior. As solid wood is a natural product, it develops character overtime and does not fade or lose colour like carpets do. Solid wooden floors are durable, making them great for busy living rooms or hallways. They can last for years and do not need to be replaced when they grow tired, they can just be sanded down and refinished.  If you are not on a tight budget, solid wooden flooring could be an ideal investment.

Engineered wood flooring

Even more durable and easy to install than solid wood floors, engineered wooden floors are designed to withstand heavy traffic and last for years. They are made of compressed layers of plywood covered by a solid wood lamella. The solid wooden top layer means engineered wooden floors can look exactly like solid wooden floors. Engineered wooden floors offer homeowners flexibility in that they can be installed as a floating floor or over under floor heating.

Laminate flooring

Laminate flooring could be ideal if you wish to install the floor yourself and are on a tight budget. Laminate is cheaper than solid or engineered wood but can be finished to look like real wood. It is easy to clean and can be coated to make it waterproof, making it ideal to use in kitchens and bathrooms. Laminate flooring comes in a range of thicknesses. Thinner laminate would be perfect for bedrooms or areas with low foot traffic whereas thick laminate would be suited for installation in busy hallways.

Vinyl flooring

Vinyl flooring could be perfect if you are looking for a waterproof floor for your kitchen or bathroom. Vinyl can also withstand heavy foot traffic and can be made to look like wood or stone, depending on your preference.

Rugs and carpets

Carpets and rugs come in many different colours and thicknesses which can suit a variety of purposes. Rugs are often purely used as decorative devices to complement the design of a room or act as a centrepiece for the room. Carpets can add comfort to a room as they insulate rooms by retaining heat. They are ideal for most rooms except those where they may come into contact with water and become stained. Carpets can easily gather dust so may require more maintenance than wooden or vinyl floors but are often considerably cheaper.

Article Courtesy of: Luxury Flooring & Furnishings

… LandlordZONE.

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Property Investment in the East of England

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From East Anglian cities and towns like Norwich and Ipswich to the less urban areas of Essex or Cambridgeshire, there’s a lot to discover when it comes to property in England’s East. The East of England is made up of six areas: Bedfordshire, Cambridgeshire, Essex, Hertfordshire, Norfolk and Suffolk. Properties in the area range vastly… Read more

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Harrogate Building for Residential Conversion

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Property Developer Newby has purchased the former headquarters building of education charity AQA in Harrogate Town Centre with plans to redevelop the site into luxury residential apartments. The site, which is centrally located at the junction of Kings Road and Springfield Avenue and adjacent to the Harrogate International Conference Centre, recently became vacant as AQA […]

… LandlordZONE.

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