There are a lot of ways of launching yourself into the real estate business. And if you are really close to the business, opportunities might be even more diverse. And that is because ‘diversification’ is a trend and it creates niches of investments one can miss as an outsider.
The property industry is constantly going through changes. This time we are talking about new standards for the UK lettings market.
We will wait and see what exactly is going to happen, but flexibility is a clear requirement these days.
Valuable advice for Buy-to-Let landlords to be ready for 2018:
1. Mortgage Interest Tax Relief Changes
2. Utilising Airbnb To Avoid Void Periods
3. New PRA Rules For Portfolio Landlords
4. New Minimum Energy Efficiency Standards (MEES)
5. London House Prices & Rental Yields
More in this article on Property Division:
“The mortgage market is in continuous move and it can affect you as well. ”
If you’re one of those shopping for a house soon and you are considering a mortgage, you should carefully analyse a couple of factors before making a decision. The location, the time you are going to spend in your new home (if it is temporary or, hopefully, for the rest of your life), the purpose of the investment (for your own living or if it is a buy to let), and other life circumstances should be considered when choosing a type of mortgage.
However, even with all these cleared up, there is still one more factor that might influence your decision. The mortgage market is in continuous move and it can affect you as well.
The analysis after the first quarter of 2017 proves that some types of mortgages are increasing, while other products for loans are remaining unchanged. For example, the number of contracted mortgages rose in the first three months. These are bank products offered for self-employed people, people with complex incomes or other underserved segments of the buyers’ market. Looking closely upon the offer of bank products, you may see that banks will speculate this moment and will come with new and improved offers. You will just have to pick the most advantageous for you.
The mortgage market also seems to be improving since the number of completed applications for first time buyers is rising. 67% of first time mortgage applications were completed in the first quarter of 2017, up substantially from 48% in the same period of 2016. Intermediaries have eased up the applications because of the struggle to obtain a mortgage that was intensely publicised last year.
And one of the most important news that the mortgage market received at the beginning of this month is that the lending rates reached their lowest point. The figures from the Bank of England showed that this year’s borrowers received the lowest mortgage rates ever.
These effects are sometimes connected and influence one another, but paying enough attention to the movements of the market might pay off eventually.
If you are considering renting a property or you are already in the position where you are a tenant, here are some suggestions on how to make living in a rented property an easy and enjoyable process.
Get Tenants insurance. Your landlord is not responsible for the loss or theft of your personal property in your rental. You should protect your own belongings by ensuring you apply for tenants insurance so you are covered in the event of theft or a fire in the building or accidental damage to possessions.
Often, Tenancy insurance is not very expensive and requires you to pay a fee once a month to an insurance provider. Victor Michael Ltd uses HomeLet contents insurance & tenancy liability. Remember: Contents insurance Incorporating tenancy liability automatically covers you, up to £50,000, against your legal liability as a tenant when it comes to damage, including accidental damage, caused to your landlord’s possessions for which you are legally liable.
Treat the property as if it’s your own. Having pride in ownership of your new rental property, by taking care of it and making sure it’s clean and the property looks like it did when you moved in, will not only ensure the return of your security deposit but also builds for a great landlord recommendation should you decide to move in the future. Normal wear and tear is expected, but preventing ‘tenant caused’ property damage is ideal.
The latest research from Simple Landlords Insurance has revealed that women now account for two in five landlords and use property to top up their monthly income.
Data analysis of tens of thousands of landlords revealed than 40% of landlords are women. By comparison, only 17% of SME owners are women, demonstrating how property is moving towards equality at a faster pace than other industries.
A poll of over 400 landlords showed how male and female investors have different goals for their investments. 63% of female landlords said using rent for monthly income was their long-term business goal, as opposed to long term capital growth, compared with 53% of men.
The findings, together with real life examples and practical advice for female landlords from the Female Property Alliance, are published in the Women in Property Report 2017 www.simplelandlordsinsurance.com/women-in-property-report
It charts how women have successfully grown from accidental landlords to full time portfolio investors and used property investment to gain financial independence.
They include the story of Bindar Dosanjh, who built a multi-million pound portfolio after she became a single mother and she had to rent rooms to pay the bills and survive.
Bindar Dosanjh, a multiple award-winning landlord, property mentor and founder of the Female Property Alliance, said: “For me, investing in property was about having the freedom to make choices about my life.
“Women cannot take our health, our relationships, our careers, or our families for granted. I have made plenty of mistakes along the way but have been able to fall back on property income when I lost my job in the 2008 recession and again when I became seriously ill and was unable to work. I say to my students you don’t have to be passionate about property but you need to be passionate about your life.”
The research also found that women are more likely than men to have become accidental landlords. Some 48% of female landlords are deliberate buy-to-let investors, compared to 61% of men. Women were more likely to have become landlords after moving in with a partner and renting out their own property or through purchasing a property for a family member to live in, such as a child attending university.
For accidental landlords, this raises the importance of staying up to date with legislation, tax changes, inspections and ensuring rental properties are protected with specific landlord insurance rather than homeowners buildings insurance.
Female landlords are also likely to provide rented accommodation to a more diverse range of tenants than men. Some 35% said they would rent to housing benefit recipients, compared with 25% of men. Women were also more open to renting to pensioners, students and single employed tenants.
Landlords renting to different types of tenants may wish to consider additional insurance products such as for malicious damage by tenants, rent guarantee and legal support.
Alexandra Huntley, Simple Landlords Insurance Head of Operations, says: “As recently as 1970 women could be refused a mortgage without a male guarantor. But buying, selling, renovating, and renting property is no longer just for the boys. Those stereotypes are firmly consigned to history. Women have been steadily gaining ground over the last 50 years and are increasingly gaining financial independence through property investment.”
Bindar added: “Being a good communicator, a good negotiator and being good at managing people are key attributes for any landlord. They are also things women can be great at – but don’t always recognise as valuable and transferable skills. These are all skills that can be learnt.
I see many women who have ‘hidden’ skills, that can be applied to property investment more easily than they think. For instance, women often fall into being the family organisers, and keeping alot of balls in the air – another vital ability if you’re going to run a successful portfolio.
It is very important that women surround themselves with the right advice, experts and protection so they can take control of their property, their money, and their futures with speed, safety and certainty.”
‘Cheap’ insurance can quickly become expensive if something goes wrong. Always read the small print.
Specialist landlord insurance is not a legal requirement, but if you don’t have it, you could find yourself out of pocket if you are unfortunate enough to have your property occupied by squatters, vandalised or worse still damaged by fire or flood. If you rent out property and have purchased a standard homeowners buildings and contents insurance, you will not have cover for extended vacant periods greater than 30 days or if a tenant is injured on your property and claims against you. Tenants living in a property generally pose a greater risk than the owner living there, so it is vital to take out a specific landlord policy, shifting the risk to your insurer rather than taking on that risk yourself.
Having made the decision to purchase landlord insurance, what comes next?
It is extremely tempting to use a comparison site to get a speedy quotation and find the cheapest option available. This is obviously an easy way to search for a policy and it will give you a benchmark for price, but there is usually a reason for the quote being so cheap.
Dispelling the myth that cheaper is better
It is always advisable to choose a quality policy that offers extensive cover and peace of mind. The insurers behind NLA Property Insurance have been carefully vetted to ensure that the product, service and claims service is ‘best of class’ and provides the widest cover available at the most competitive prices for landlords and buy-to-let investors. Unlike comparison sites, there is help at hand to make sure that you understand the small print and purchase an insurance product that will work for you when you need it the most.
In the field of landlord insurance, the menu of ‘extras’ can be extensive. Some of the bigger, well-known providers may provide what appears to be a cheap quote at the outset, but once you start adding on the ‘optional extras’, additional premiums will apply – pushing up the overall cost of the insurance.
Take a big name like Direct Line: purchasing cover for malicious damage, or even theft by tenants/guests will increase your premium substantially, but it is covered as standard under the NLA Property Insurance’s Superior policy. If your rental property is deliberately trashed, then repairs could run into the thousands. You may have taken a deposit from the tenant but findings provided by mydeposits shows that even a deposit equivalent to six weeks rent is often not enough to cover the replacement costs.
A closer examination of Direct Line’s landlord insurance reveals there are several aspects of their policy which are either inferior to those offered by NLA Property Insurance, or not covered at all without additional premiums. For example, the NLA policy will insure an unoccupied property for 90 days compared with Direct Line’s 60 days. Our public liability cover will pay out up to £5M in the event of death of bodily injury, compared with Direct Line’s £2M – a large difference especially as liability claims have been known to cost several millions and increasing with the new compensation laws that have been recently introduced.
Whether you have a single property or a portfolio of properties, the Superior policy offering from NLA Property Insurance offers highly competitive premiums (including a 15% discount for NLA Full Members) and includes many ‘extras’ such as accidental damage, alternative accommodation or loss of rent as standard.
As a landlord, you will be looking to minimise risk and maximise peace of mind. Remember that home insurance isn’t designed for rental properties – you need specialist insurance for landlords. Choosing a cheap quote from so called big names may seem like a low risk option but don’t forget to check what is included in the price.
A new survey lifts the lid on the UK property market, with Brits sharing exactly what made them buy their homes.
Wood flooring specialists Flooring Republic asked 1,000 Brits what led them to fall in love with their homes, and which factors they consider non-negotiable when buying a property – and between community appeal and room size, it seems Brits are swayed by more than an attractive price tag.
After the BBC reported that the number of first-time buyers was at its highest in a decade, this new study reveals what it takes to get Brits excited about buying a house. With 60% of the vote, a safe and friendly neighbourhood took the top spot, followed closely by the price of the property (52%).
The local community also proved to be a key selling point for 45-54 year olds – with a huge 73% citing this as a major factor in their decision-making process. In terms of what Brits love about their living space, room size came out on top – taking 38% of the vote.
At one with nature
For 31% of participants, a good-looking garden is what got them to sign on the dotted line – and half of over-65s declared this the ultimate highlight of their homes. Natural elements proved popular across the board, with a fifth of those surveyed saying natural light is what they love most about their home.
Price versus practicality
Perhaps surprisingly, just over half of all respondents believe the price of a property is the most important aspect when it comes to making an offer.
Generation Y are more price-conscious, however – with 18-24 (57%) and 25-34 year olds (69%) admitting the asking price was the thing that ultimately swayed their decision. Space proved a key concern for 37% of Brits, who said the number of rooms in a property would influence whether or not they bought it.
When it comes to a property’s appearance, it looks like it’s not just what’s on the inside that counts – with 16% of Brits saying they’re swayed by both exterior appeal and interior styling. For 17% of male respondents, the outward appearance of a house is a deciding factor – while 18% of women favour the property’s interior design.
11% of Brits revealed they bought their home because of high ceilings – a factor which sweetened the deal for just under a quarter of 25-34 year olds.
According to 35% of all respondents, parking availability is a key issue when it comes to deciding on a suitable property – and more than half of over-65s agree. This is less of a concern for those living in the capital, though – with just 17% of Londoners put off by limited parking. Organisation addicts across Britain declared practicality a priority when buying a house – with storage space scooping 15% of the vote.
For 14% of homeowners, accessibility is a deal-breaker – with proximity to local transport networks and amenities proving particularly important. Respondents were also invited to offer up their own answers when it came to the reason they fell in love with their home and what they consider to be the key factors when buying a house – with answers including the property’s character, affordability and a double garage.
With Brits divided over what makes the perfect home, as housing prices continuing to fluctuate, the future of the property market shows no signs of stabilising any time soon.
Mark Haskell, Ecommerce Manager of Flooring Republic said “It’s great to see just how many Brits value a welcoming neighbourhood, and it’s really interesting that most homeowners are concerned with more than the price of a property. Spacious rooms and beautiful gardens will always hold plenty of appeal for buyers – although they generally come with larger price tags.”
While there has been much focus on the so-called ‘tenant tax’, agents are warned that new legislation coming into force today has been largely overlooked despite its potential significance.
It gives local authorities in England tough new powers to crack down on rogue agents and landlords.
For the first time, local housing authorities will be able to impose a civil penalty of up to £30,000 for a range of housing offences, including:
- Failure to comply with a housing improvement or overcrowding notice;
- Failure to have the correct licence for a property that needs a mandatory HMO, additional or selective licence; and
- Failure to comply with the HMO management regulations.
When it comes to properties that do not have the correct licence or where management rules for Houses in Multiple Occupation (HMOs) are breached, both the landlord and letting agent can be held liable.
Before imposing penalties, local authorities must have regard to government guidance, issue a notice of intent and invite representations. There is also an appeals process.
The Government has also expanded the Rent Repayment Order (RRO) provisions that enable the local authority or tenant to claim back up to 12 months’ rent.
Previously, this power was only available in relation to licensable but unlicensed properties, and tenants could not lodge a claim unless the local authority had prosecuted the landlord.
From today onwards, RROs are available as a sanction for a wider range of offences including:
- Illegal eviction or harassment of occupiers;
- Using violence to secure entry; and
- Failure to comply with a housing improvement notice or prohibition order.
Tenants will now be able to submit a claim without the local authority having prosecuted the agent or landlord, and the local authorities have the power to assist them.
Unlike criminal prosecutions, any income received from civil penalties and RROs can be retained by the local authority and spent on certain housing enforcement activity.
Isobel Thomson, chief executive of NALS, said: “Whilst we support local authority action to crack down on rogue agents and landlords, it is vital that councils resist the temptation to issue financial penalties for very minor infringements purely to raise income and fill their budget black hole.
“If used wisely, these powers could mark an important step forward in driving rogue operators from the market and improving consumer protection.
“With councils able to retain revenue from targeted enforcement action, the business case for introducing new bureaucratic and costly licensing schemes is weaker than ever. It is time for councils to think again and adopt a smarter approach to regulation.”
Victor Khatri, the Director of Victor Michael estate agents, has spoken out about the possible effects of Brexit, saying, “I don’t think the triggering of Article 50 will affect the property market directly from today. In one sense it removes the uncertainty surrounding when Britain’s withdrawal process from the EU will start, but in another way it will create economic uncertainty until we know what deals we will strike with EU and other commonwealth and non-commonwealth countries, America in particular.”
So what Brexit actually means for our country?
Mr Khatri continues: “Brexit will no doubt mean a turbulent two years for the London and UK market as we begin to hear what negotiations and proposed deals are being put forward for our exit out of Europe and the single market. I think we will see a continued slowdown or lethargic London market when it comes to sales volumes, and as we reported toward the end of last year, transaction volumes across London are already more than half of what they were before the 2008 crash. London has a significant part to play in businesses who trade and operate across Europe and the world, and a buoyant property market relies on the UK’s economic health. If Brexit negotiations go well this could cause further price growth as the economy grows and we see the nation’s confidence lifted, but equally, if a good deal isn’t reached then the international companies who operate here or look to relocate here might change their minds, reducing the number of residents who live in the capital and again further reducing the transaction levels, which could ultimately lead to price decreases (more supply then demand)”.
It’s therefore important that you make property decisions based on your personal situation and what you want to do, rather than gambling on how the market will play out. “Right now we may experience some uncertainty, but as the negotiations progress, we will regain some much needed stability into the housing market, as people realise that the effects of Brexit are not catastrophic and go on with their lives. We’ll hopefully see transaction levels increase as a result, which are currently dangerously low and affecting price growth across the capital. He continues, “Today’s events are likely to have a much more profound effect on foreign investment however, with the weakening pound expected to fuel demand from overseas buyers and investors.” Many are also speculating that today’s events will mean that the Bank of England will be hesitant to increase their interest rates, in spite of the recent inflation rises.
It will remain cheaper than ever to borrow and get onto the property ladder.