Buy to let hits the headlines

Buy-to-let property investment has hit the headlines of property blogs quite a lot over the last few days - and the stories have been about more than the likes of new mortgage rates.

In fact, writers have urged potential landlords to exercise caution when it comes to choosing the correct mortgage product for an investment and to find a trustworthy financial adviser. At this time, landlords-to-be are falling prey to deals that quite simply sound too good to be true, offering them an investment without having to pay a deposit. What happens then quite often involves applying for a mortgage stating a higher property value than what is actually being paid.

If the deal goes ahead, the landlord effectively defrauds their mortgage provider. If you as the landlord are then audited at a later date, you may well be in for bigger problems?

So how do you prevent falling victim to this and similar scams? First of all, you cannot invest in property without having money to put down a deposit. There are no 100% buy-to-let mortgages available; in fact, lenders tend to look for higher deposits for a buy-to-let property. Second, insist on transparency throughout the purchase process. Use a reputable solicitor and financial adviser and ask for recommendations if you're unsure.

Perhaps the most important thing to consider before investing is that you do actually have the funds available to buy the property using a sensible method of finance. Repossessions among buy-to-let landlords have remained steady at around one in five repossessions for a few years and this year's figures suggest the same.

However, with numbers of first-time landlords continuing to rise and more people considering long-term renting a viable alternative to getting a foot on the property ladder, it will be interesting to see how these figures change in the future.

There's a new regulator in town

Since the beginning of April, the financial services industry is being regulated by a new government agency, the Financial Conduct Authority (FCA).

The FCA supercedes the Financial Services Authority (FSA) and regulates companies providing financial services in the UK. Their remit is to advise customers on which providers to trust, allowing you to conduct your financial affairs with confidence.

Their website, www.fca.org.uk, currently holds information for consumers as well as companies, highlighting spams and explaining complaints and compensation procedures.

Just as the new body gets up and running, its Practicioner Panel, which is headed up by nationwide Chief Exec Graham Beale, has warned that the new body should not over-react to market problems, but also needs to improve communications with the firms it regulates.

It'll be interesting to see how the new agency develops over the next few months.

4 bed flats prove most popular in Edinburgh

Four bedroom properties have come top in Edinburgh in Citylets' Quarterly Rental Report, from an investor's point of view.

Those properties, often rented out to students, are proving to be in high demand with 36% rented within one week and 80% rented within one month of coming onto the market. Rents for those larger flats increased by 6.9%, well above the national average of 1.7% which is in line with inflation. 

Are Edinburgh rents exploding, possibly as much as data we analysed yesterday is suggesting? Not necessarily. The developments are a reflection of Edinburgh's continued popularity with students (numbers have been growing for a few years) and their demands for high-quality flats. 

At the same time, more and more landlords have realised that high-quality properties will attract more interest and will therefore be let more quickly. And whilst we have seen an increase in this report, the laws of supply and demand will help ensure that flats remain affordable.