Over 50s favour BTL for financial security

The phrase 'safe as houses' hasn't been around for such a long time for no reason and it looks like more people are starting to rely on property investment once more.

Here's a story highlighting research that sees people over the age of 50 using property investment as a way of providing financial security for their retirement.

The research found that property investment was more than twice as popular as shares. Combined with disappointing interest rates for savings, the appeal of well-chosen property investments is obvious. 

In Edinburgh, we have seen a number of clients this year who are approaching retirement and have decided to put a chunk of their funds into residential property. Interestingly they are mainly buying in cash and then happy to live off the rental income as their pension.

For the sort of properties our team is buying in the student rental market the long range outlook is pretty solid, meaning investors can see a secure income for many years to come.

Being sure about the type of investment, the location and any obligations attached is key to a successful investment. Take a look at our brand-new Property Investor Guide for more information!

Looking ahead to 2014

December is upon us and it's time to take a look at what's in store for 2014. 

For the first time in a few years, most property experts agree that things are looking good for the UK property market, both for landlords / investors and tenants. House buyers can also look forward to a  bigger choice of properties becoming available. 

One of the key factors that will continue to help the market expand is the availability of finance. The number of mortgages available to investors improved throughout 2013 - this does not just mean higher numbers but also includes more competitive rates as lenders were looking to 'woo' larger numbers of clients. Mortgages for Business predicts that the trend is set to continue next year and envisages a 25% increase by this time in 2014. 

Their research also shows that around 60% of landlords are keen to increase their portfolio by the middle of next year, while only 7% are looking to shrink theirs. This means good news for tenants, as the supply of private rented property will grow as a consequence.

At the same time, a larger number of rental properties available means that landlords will need to offer quality at a reasonable rate in order to attract suitable tenants. In fact, online service Rentify predicts that rents will plateau in 2014 in all but a number of select areas. In our opinion, rents will largely remain stable, but there is potential for growth where some of the most sought-after properties are concerned. 

In Edinburgh, this would include larger tenement flats popular with students. As the student population continues to grow, these properties continue to be in high demand, offering great returns for investors. 

Is your property well looked after?

A couple of stories about London-based landlords have caught our eye this week: One talks about a landlord being fined over £12,000 for breach of fire safety laws in an unlicensed HMO property. The other features a landlord being jailed over the faulty installation of a boiler, leading to several leaks. The boiler eventually had to be disconnected and sealed off by the National Grid.

Whilst you may think these are stand-alone examples of rogue landlords, breaching regulation is easier than many private, self-managing landlords believe. In most cases, there is no malice behind the breach - it's a simple lack of information, both from the tenant and the landlord.

Letting and managing your own property may not be rocket science, but it does require time and the ability to stay on top of new laws and regulations. In Scotland, landlords need to be registered with the local council. The individual properties
require gas safety certificates and PAT tests, with HMO properties having to fulfill further criteria.

All of this comes before advertising a property, managing viewings, completing a tenancy agreement, collecting deposits and placing them into one of the tenancy deposit schemes approved by the Scottish Government. We're not keen on scaremongering, but with all the work involved, it's easy to see why using a professional lettings agent makes sense.

As a first-time - and maybe even a 'reluctant' - landlord, you may wonder about the costs, but the amount of hassle and time saved make up for it in the long run.

At the moment, our team manages around 400 properties across the city of Edinburgh, and our tenants are a mixture of students and professionals. Some of our landlords own one property, some rent out a larger number. All of our clients, landlords, tenants and investors, benefit from our industry knowledge, giving them the peace of mind to know they won't be the next landlord in the dock.

The only way is up for property in Q3 of 2013

A host of stories this week confirms that the property market is continuing its recovery and we thought, we'd share the good news.

Figures from both the Office of National Statistics (ONS) and the Council of Mortgage Lenders (CML) are showing that - despite a seasonal dip in September - the last quarter has been the industry's strongest since 2007, well before the recession set in.

The CML reports that buy-to-let (BTL) lending is up 36% year on year with 43,900 loans compared to the same quarter last year. The value of these loans - £5.7 billion - even equals a rise of 43% compared to 2012.

Numbers for BTL house purchases and remortgaging also continue to grow at a healthy level.

Where the property market as a whole is concerned, house prices have risen 3.8% in the year to September, up from 3.7% in the 12 months to August.
It's a small rise, showing that the recovery continues - without a bubble.

Looking regionally, London continues to grow fastest, whilst Scotland as a whole still shows falling prices. Edinburgh itself has always enjoyed a microclimate when it came to the property industry and prices are starting to grow slowly with more growth forecast. Interesting times!

No property price bubble in sight as BTL yields grow

For a few weeks now, there has been talk about a property price bubble getting ready to burst. With prices on the up for a few months now, more properties coming onto the market and mortgage finance options increasing, it's easy to see where the concern comes from, although it does seem to be a little premature.

This week's Halifax House Price Index confirms that there is little or no threat of a bubble as house prices are rising more slowly. The latest quarterly increase was measured at 1.6%, the slowest since May. At the same time, mortgage approvals and home sales have risen sharply compared to the same time last year.

Part of this development may be the beginning of the seasonal slowdown in the property market, which may see activity remaining the same or dropping slightly as the colder weather sets in.

Looking at the buy-to-let market, London property specialists Assetz are seeing continued rental yields of around 7 to 8%. Those strong yields are connected to investors having bought when prices were relatively low. However, current price rises are not strong enough to lower rental yields.

Taking the maths one step further and considering combined capital and rental yields in Edinburgh, two current examples show that there are a number of very interesting properties for investors to consider. As prices are rising (and they are in selected areas of Scotland despite the quarterly average for the country), capital growth will follow, thus adding to rental yields.

These are exciting times for investors!

Buy to let returns on the up as investors shell out more

Buy-to-let investments are providing higher gross yields despite rising property prices. This is the tenor of Mortgages for Business' Complex Buy-to-Let (BTL) Index.

According to the index, standard residential properties increased their yields by 6.3% in the three months to the end of September, up from 6.1% in the previous quarter. HMO properties, which are especially popular with student tenants, showed even more improved yields.

Gross yields tend to fall as property prices rise, but the fact that they are keeping up is taken as an indicator of the strong rental market.

At the same time, the Landlord Centre has found that BTL investors are purchasing more expensive properties with the average price stopping just short of £170,000 over the last quarter, an increase of over £7,500 compared to the period from April to June.

Apart from increased confidence and consistently high yields, competitive mortgages with low interest rates are cited as the main reason for investors to spend more. The research also showed that student properties performed better than other types of residential properties.

Whilst there is a plethora of news about the sector each day, the overwhelming trend has remained the same for a number of months: property prices are rising, but rents are keeping up. And despite more property sales, a large number of people remains keen to rent long-term, giving investors the security to be able to make long-term decisions about their properties.

Property market continues to soar

The Office of National Statistics (ONS) has published its latest statistics for the UK housing market and reports the highest year on year change since 2010.

House prices increased by 3.8% between August 2012 and August 2013 due to price increases in England, Wales and Northern Ireland. Scotland is currently lagging somewhat behind with a 0.7% decrease in property prices.

The overall trend for the UK property market is clear - prices are rising steadily. There is no sign of a housing bubble yet, but there is certainly an upwards movement. For potential investors, this is an interesting time to look for their next property.

Rising house prices are attracting more sellers into the market, increasing investors' choice of suitable properties. At the same time, while prices are starting to rise across the UK, they are moving slowly. Therefore, investors can still find very good deals.

Edinburgh is currently especially well placed for property investment. With sellers' confidence rising, more properties have come onto the market. At the same time, property prices in Scotland are rising even more slowly which means often property prices can be negotiated.

Looking at the longer-term development of your investment, demand for rental properties continues to be high and rents for high-quality properties are rising steadily. With property prices now rising as well, the capital value of the investment is increasing, too.

Look after your property and your property will look after itself

Well, maybe your property won't quite look after itself, but looking after your rental property is key to its performance. 

Whilst much has been written about competition for the best rentals among prospective tenants, there are certainly enough properties available to allow tenants to choose the better quality flats and houses first. For you as a landlord or a property investor, having a desirable property translates into achieving higher rents whilst maximising occupancy. 

So, what makes a flat desirable? There are obvious factors, such as location and number of bedrooms that can't be changed. However, a surprising number of small adjustments can make the difference between a property standing empty or being snapped up:

1) First impressions count

Make the property look fresh, welcoming and cared for. A new lick of paint will make a huge difference to someone looking to move into a new home. At the same time, you are showing tenants that, as a landlord, you care about the state of your property, encouraging them to look after it better.

2) Make your property energy efficient

If you are looking to invest in your rental property at all, improve its energy efficiency. Cavity wall insulation, double glazing, energy-saving light bulbs and efficient white goods are some of the ways you can help tenants lower their utility bills, making your flat more desirable.

3) Deep clean the property

Invest in oven cleaner, grout stick and a professional carpet clean. Showing your property at its best does not necessarily mean redecorating. Investing in a professional clean might well do the trick. 

Is it all worth it? A recent study by Strutt & Parker found that those who regularly invest in the maintenance of their investment, even with a sitting tenant, spend less over a three to five year period than landlords who wait until things get dire. 

Looking at Edinburgh, there is strong tenant demand, but at the same time, tenants do have a lot of choice, making desirable properties fly off the shelves. 

Reluctant landlords leaving the market

New research from the Association of Residential letting Agents (ARLA) suggests that so-called 'reluctant landlords' might become a thing of the past.

The term was coined for those who decided letting their property because it could not be sold. ARLA members have reported a decrease of 5% in properties being let because they couldn't be sold over the last three months, bringing the total figure of 'reluctant landlords' to 21% of the residential property market.

The numbers are even more impressive when we compare them to last year's when ARLA members recorded that up to 42% of landlords had entered the market as a last resort.

ARLA's Managing Director, Ian Potter, puts some of these developments down to the increased activity in the residential sales market which will have caused a number of people to leave the lettings market and sell their property as originally planned.

The developments mean that competition for great value rentals may increase over the next few months. However, in our experience many reluctant landlords have not only been reluctant to enter the lettings market, but in many cases their properties have not necessarily been the most desirable for potential tenants.

This is not about properties not being looked after, it's simply the difference between a property bought with its potential as a rental in mind and a property bought as a family home. In Edinburgh, residential lettings have traditionally been strong. Especially sought after are larger, traditional tenements in areas popular with students. Whilst there is some competition over the more popular ones and viewings are usually very well attended, students do find somewhere suitable to live - although they may have to compromise on location at times.

Are your properties safe?

It's Gas Safety Week this week, an opportunity to remind landlords as well as home owners to look after their gas appliances.

It's all too easy to assume that cookers and boilers will work year-in, year-out and many of them actually do function faultlessly. But think about it like this: you wouldn't skip your car's MOT - it's equally important to have gas appliances checked annually to ensure they are working correctly.

According to research conducted by Gas Safety Week's organisers, 43% of Britons don't have their appliances checked regularly and 10% own appliances that have never been checked. Quite a disconcerting statistic.

For our landlord clients, we arrange annual checks with registered gas engineers as part of our comprehensive landlord services. If we source an investment property for you, manage its renovation and let it out, we also make sure that all relevant checks are completed before your first tenants move in. After that, annual checks are scheduled to ensure both your investment and the tenants are safe.

Whilst we are lucky to work with a trusted supplier who are registered 'Gas Safe' engineers, if you need to look for your own engineer, make sure to select a reputable company that will carry out checks carefully and thoroughly. More information can be found here.

First landlord charged under new tenancy deposit rules

Earlier this week, an Edinburgh landlord was the first one to be ordered to pay his tenants three times their deposit under tenancy deposit regulation brought in last year. The Scotsman's property supplement comments on the ruling today.

The new government regulations, designed to weed out so-called rogue landlords and ensure the fair return of deposits at the end of a tenancy, entitles a tenant to receive three times the amount of the deposit should they discover that the landlord did not place the money in one of the government-approved schemes.

Was this particular landlord a 'rogue'? We don't know. One thing this ruling has made clear is that all landlords need to be aware of the rules and regulations they have to adhere to. Whilst tenancy deposit schemes were introduced gradually, there was relatively little coverage in the mainstream media and the government did not run a large-scale information campaign. For those reasons, it's entirely possible that landlords - especially those who self-manage and are 'only' renting out a flat because they can't sell it - didn't know about the regulations.

Whilst not intentionally 'rogue', they may inadvertently find themselves on the wrong side of the law. This recent ruling spells good news for tenants as it makes it absolutely clear that the courts will find for them if landlords break the rules. For landlords, it shows that breaching existing regulation will not be taken lightly, which is definitely a step in the right direction: with very effective rules in place, it's up to the authorities to enforce them. The result will be increased fairness for tenants and those landlords who are happy to stick to the rules.

Student property investors buoyed by Moody's rating

Moody's Investor Service recently awarded a long-term A2 rating to bonds issued by Holyrood Student Accommodation Plc, showing the agency's confidence in student accommodation in Edinburgh.

Whilst the details of the rating are explained here, there are a number of obvious developments that have made the city a favourite with both students and investors for years, some of which have been mentioned in this blog before.

Take the reputation of Edinburgh's universities, for example. They are among the UK's leading academic institutions with a number renowned worldwide and notoriously hard to secure a place at. Accordingly, there is competition to study in the city and, whilst the universities themselves continue to grow, so has the student population over the years.

Many of Edinburgh's students are looking for good quality accommodation in convenient locations. Once out of halls, many want to share flats with friends and spacious, traditional tenement flats have long been a favourite. They continue to be snapped up year after year, yielding a net rental return of over 7%, on average.

At the same time, buy-to-let (BTL) mortgage finance has made a return this year with more products available at competitive rates. Metro Bank's latest offering is only one example.

For more detailed information, read our case studies or get in touch.

Edinburgh beats London property

One of the biggest attractions Edinburgh property holds for investors are reasonable property prices, allowing relatively easy access to a good choice of high quality flats or houses. In fact, many of our investor clients tell us that -  apart from average net rental yields above 7% - it's this accessibility that attracts them to the Scottish capital.

Their alternative? London has continuously shown high demand for rental property, both from tenants as well as investors. However, in many cases the rental yields don't match Edinburgh's and the amount of cash required to invest has certainly made buyers think twice.

Research from estate agents Knight Frank is now backing up our anecdotal evidence that investors are starting to think twice about spending their money on London property as 'buyers are becoming more resistant to continued price rises'.

Whilst buyer interest is still growing slightly, it has certainly slowed down at the top end of the market, for properties worth more than £5 million. At the same time, rents for prime central properties have fallen slightly, by 1% since the start of this year.

By comparison, Edinburgh rents have remained stable or grown, depending on the size and location of the individual property. For a better idea of Edinburgh investment opportunities, click here, or contact us directly.

Asking prices, mortgage lending and availability - all on the up

It's been a flurry of good (property) news on the Property Reporter website today. It's more than enough to give you a bit of a round-up here and all down to increase confidence in the property market.

Asking prices for properties for sale are becoming more steady, with less of them being dropped by sellers looking to move a flat or house. In fact, Edinburgh showed the second-lowest proportion (after London) of discounted properties in the UK with only 27.7% of properties for sale having their price dropped. This is compared to a much higher national average of 32%, which fell from 37% last year. On average, property prices are being reduced by just over 6%, down from 7.6% last August.

Altogether, the trend is pointing towards a growing confidence in sellers, who appear to be happy to wait for the right buyer to come along and pay a price they are happy with.

At the same time, things are starting to look up for first time buyers as gross mortgage lending hits nearly a five year high at an estimated £16.6 billion in July, a 29% on last year. In fact, it is the highest estimate the Council of Mortgage Lenders (CML) has published since October 2008. According to the CML, the increased lending activity is down to stronger housing and mortgage markets as well as falling interest rates on fixed rates due to the Funding for Lending scheme.

Having said that, those looking for a mortgage also have a lot more choice than they would have had even a year ago. Last month, more than 10,000 mortgage products were available to consumers, the highest number since September 2010. The typical home buyer borrowed just under £160,000, a slightly increased loan to income ratio.

In our opinion, all three of these stories reflect a growing upwards trend in the property market. For those looking to invest, this is a great time with plenty of choice of mortgage products available and property prices still stable. At the same time, despite the number of mortgage products increasing, many still require a sizeable deposit which will keep a large proportion of people in the rental market for years to come.

Low interest rates for 3 years, but is now the time to buy?

The Bank of England’s (BoE) new Governor, Mark Carney, has announced his first ‘forward guidance’, saying that the Bank ‘will not even think of raising interest rates’ until UK unemployment drops below 7%. The rate is currently 7.8%. The BoE envisages that this will take about three years to achieve.

For potential property investors this means three years of financial stability, making residential property once more a low-risk investment. Add to this the net rental yields investors and landlords can currently achieve – on average around 8% on Edinburgh student rentals – and it’s easy to see why we have seen more interest and commitment from investors in the past six months than we have in years.

Looking at Cullen Property’s investor clients, shows of interest have increased markedly and we have purchased more than £1.1 million worth of residential property in the last month alone.

There’s no decent investment without risk, I hear you say. And what happens if the interest rate goes up sooner than envisaged by the BoE? After all, the bank did include a few ‘get out’ clauses in its guidance, as discussed in today’s Scotsman newspaper.

Whilst the BoE may interest rates sooner, Carney has made it clear that this would only be the case if the UK’s GDP increases and inflation rises. In other words, the economy would have to be doing better, thus allowing for unemployment rates to drop at the same time.

If that were to happen, not only would investors see their interest rates go up, but the rents achieved by their properties would follow.  It is also likely that the housing market would be improving along with the wider economy, bringing with it capital growth.  A win-win situation.

'Learner landlords' change face of buy-to-let

Reluctant landlords have been a bit of a buzz word over the last few years and to mark the trend away from traditional property investors the Association of Residential Letting Agents (ARLA) has now divided landlords into three groups - investors, good parents and reluctant landlords. 

We thought we'd share their thoughts and let you decide whether you think you fall into one of those groups. Within each group, ARLA describes a sub group of those new to buy-to-let (BTL) as 'learner landlords', which is possibly quite an apt description?

But let's take a look at the three groups:

(1) Investors

The majority of all BTL investors own a rental property as an investment. The main change in this group has been a move towards expecting a shorter term gain. While many investors used to look at property as a long term investment, this year, over half of new landlords were looking to "capitalise on low interest rates and schemes such as the Government's Funding for Lending programme".

(2) Good parents

Bearing in mind some members of this group will also be genuine investors interested in a profit, they have moved in to BTL to provide financial support or a legacy for their children. Over a quarter of landlords now cite this as one of the reasons for their investment.

Looking at Edinburgh student property, there has always been a group of parents who bought a flat when their first child went to uni and rented the other rooms to the child's friends. Once their course finished they became bonafide investor landlords, renting to the student market.

(3) Reluctant landlords

Probably the best-publicised group of the three, the number of reluctant landlords has grown since the recession started with those unable to sell their homes renting them out for the time being. Whilst generally looked at negatively, entering the market reluctantly does not necessarily mean a landlord is 'bad' or unsuccessful. 

What is important for any landlords is to work out their figures, ensure the rent generated by the property in question covers its outgoings and to also plan for void periods - most of which can be taken care of by a reliable letting agent. 

Rental market activity soars

Over the past couple of weeks, we've talked about the property market picking up in general. A Bedfordshire-based lettings company has now released their latest research, showing tenancies have increased in the UK by 22% last year and 20% in London.

How did that come about? While mortgage finance has become more widely available and 95% mortgages are back (we blogged about it a few times), many would-be first time buyers continue to struggle to take that first step onto the property ladder.

At the same time, property prices have remained relatively low for a few years and are still well below those achieved at the peak of the market in 2007, which has enabled investors to grab a number of property bargains.

Edinburgh students queuing to view a Marchmont property

Whilst a good choice of affordable buy-to-let finance took longer to become available, tenant demand continued to rise. Prospective investors and landlords are now in a position to choose between both desirable mortgage deals and great properties with high net yields. Take the months of may and June as an example: Over the space of three weeks, the Cullen Property team bought over £1 million worth of investment properties on behalf of our clients.

Looking back a little further, at what we consider 'student rental season' between February and April it's clear to see why residential property in Edinburgh, especially that aimed at the student market, remains so popular - all flats that became available for the coming academic year were rented out to new tenants within a number of weeks.

Good news keep rolling in for property market

Last week, we blogged about property sales across the UK rising. Taking a look at Edinburgh itself, the Edinburgh Solicitors and Property Centre (ESPC) has published its quarterly report showing that the last two months' house sales in Edinburgh and the Lothians have reached their highest level in five years.

Some commentators have rightfully pointed out that this increase has a 'catch': while sales numbers are up, house prices are still falling, especially in the city centre. However, in some Edinburgh suburbs, house prices are increasing by as much as 15% over the last twelve months.

Whilst this large increase may be a one-off, it has encouraged additional sellers into the market, giving buyers - including investors - more of a choice. And with house prices remaining stable it's a good time to look for great deals.

Add to this the Bank of England's announcement that interest rates are not going up for a number of months, and it's easy to see why confidence is returning to the property market.

At Cullen Property, we regularly source promising investment properties such as the ones in the picture. Click here for a list of our most recent opportunities. If you'd like to be the first to know about them, drop us a line with your email address and we will add you to our mailing list.

Property sales are up - good news for investors, too

Property sales in Edinburgh and the Lothians are increasing with both the Edinburgh Solicitors Property Centre (ESPC) and the Royal Institute for Chartered Surveyors (RICS) reporting continuously increasing demand during the second quarter of 2013.

After a number of months of displaying 'green shoots' the property market certainly seems to be on the up. And the trend is not just restricted to the east of Scotland - estate agents and solicitors in Glasgow and on the west coast are seeing equally promising developments.

Why is it good news for property investors? Faster sale times and generally increased activity will encourage more potential sellers to put their property on the market. At the same time, prices continue to remain in the 'sensible' bracket, with average house prices in Edinburgh over 4% lower than they were at the same time last year.

Whilst it wouldn't be wise to look at the figures only without taking into account the types of properties sold it's certainly an indication that great value properties continue to be available. At the same time, despite increasing property sales the rental market remains buoyant, especially in a city like Edinburgh where a growing affluent student population makes up a large percentage of potential tenants. 

We'll keep a close eye on further developments and will keep you posted on this blog. In the meantime, feel free to contact us for more detailed information.

Green shoots for landlords?

The last couple of days have seen a host of stories about landlords, buy-to-let mortgages - and often the main messages have been contradictory.

Research from the Association of Residential Landlords, ARLA, is claiming that tenant demand is decreasing  whilst landlords are increasingly willing to buy new investment properties. At the same time, a third of landlords questioned by Paragon Mortgages found that buy-to-let finance is becoming more readily available.

So, are we facing a situation where landlords will be struggling to fill their flats? Far from it. Taking a closer look at the ARLA survey, tenant demand is based on members stating whether they believe there are more tenants than properties. This quarter, 54% said they felt demand outstripped supply, down from 57% last quarter. So, more than half of the landlords asked feel that demand continues to outstrip supply.

This will remain the same for the foreseeable future, especially in a city like Edinburgh. Here, demand continues to grow because the number of students coming to the city grows (and is forecast to grow) year on year.

At the same time, recent graduates are no longer in a position to buy a property immediately after they finish university which has lead to growth in the professional lets market. Combine these developments with researching the property you're interested in and investing in a sought-after area and property remains a solid investment.

Changes afoot for BTL mortgages

Similar to their residential counterparts, buy-to-let mortgages require applicants to tick a number of boxes before money changes hands.

Traditionally, requirements for BTL mortgages are based on both the property's potential as an investment and the buyer's financial background, including their annual income.

BTL mortgage provider BM Solutions, which is owned by Lloyds has now changed its criteria and removed the minimum annual income requirement of £25,000. The lender's reason behind the change? They believe that the affordability of a BTL property depends more on the actual property and the rental income it is likely to achieve than the buyer's finances.

Buyers are still required to state their annual income on the application, though. A step in the right direction? We're undecided. Whilst we agree with the notion that the success of a BTL investment is largely down to the selected property, there is an argument to check the buyers finances on a more general basis to ensure they can afford the property in the long term.

On a different note, Prime Minister David Cameron used this week's Prime Minister's Questions to clarify that the government's Help to Buy scheme will not extend to BTL mortgages, but is squarely aimed at owner-occupiers. Also excluded are those without a UK credit history to avoid foreign buyers benefitting from the scheme.

Property investment is back - with a vengeance!

Over the last three weeks, the Cullen Property team has bought just over £1 million's worth of prime Edinburgh residential property on behalf of investor clients.

Whilst you could argue this recent activity is a fluke, we're convinced that it's a lot more than that: proof that the buy-to-let property sector is once again growing, both in size and popularity with investors. If you've been following property news - or our blog - you'll find that the writing has been on the wall for a little while.

For several months now, finance has been easier to arrange with the range of products available to prospective landlords growing and better deals becoming available. At the same time, investor confidence in the (recovering) property market has grown and, with interest rates remaining at record lows, property is once more becoming an attractive option to prepare for retirement.

The latest figures from the Nationwide also show that property prices across the UK are consistently growing - a definite sign of returning confidence.

So, what did our team source for our investors? We hand-picked traditional tenement flats with at least three, but more often four+ bedrooms in areas that are popular with students. Whilst a couple of the properties selected require some refurbishment, all have high net rental yields which is essential for successful property investment.

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.

Are rents rising faster than tenants' incomes?

A report published today suggests that rents rose by over 3% over the last quarter whilst tenant incomes appear to have risen by less than 1% over the same period. The data was collected by HomeLet for the company's quarterly rental index, but let's have a look beyond the headline.

According to the story, the rental increase is less than it has been in previous years, which suggests a slow down in the development of rents for private rented property. However, the authors also hint at a decrease in the number of private rented properties available.

They may have a point here, especially when you add the news from the Land Registry which today announced a decrease in house sales between October and January. Not exactly the same period, but relatively similar nonetheless.

What's our take on it? It's quite simple, really. Prime residential property available for rent will always relatively high rents. However, tenants need to be able to afford the property they live in in the longer term - both when it comes to the rent as well as other monthly outgoings such as utilities. As a landlord with prime property, it is essential - and only fair to both parties - to check that you are renting the property to someone who can afford it.

Will rents continue to rise? This depends on supply and demand and will vary dramatically between different cities. In Edinburgh, demand for high quality lets for students and professionals continues to grow year on year which suggests that rents may continue to rise. However, more properties are becoming available, meaning supply is growing at the same time as demand.

The conclusion? At this point it looks like there's no need to panic just yet - at least not in Edinburgh.

Buy-to-let hot spots - does Edinburgh make the grade?

Research conducted by HSBC is showing that Southampton is the top spot for buy-to-let investment in England and Wales. Shame the bank didn't include Scotland in their study, but nonetheless, the results are good news for Edinburgh.

Looking at the top five cities in the survey, they all produce rental yields between 7 and 8%, have a lot of private rented accommodation available and the initial outlay for the investment is not too high.

Comparing this to Edinburgh, it's obvious that the city is even better placed than its competitors 'down South'. Depending on the property purchased, net yields regularly break the 7% mark, with some of them as high as 12%.

Properties available for investors include highly sought after traditional tenements, some of which may be in need of refurbishment. For investors, this is often an advantage, allowing them to unleash the property's full potential as a private let.

What's more, Edinburgh has a large population of students and professionals who are keen to rent high-quality properties and are specifically looking for good value rather than the cheapest monthly rate.

And how about the initial investment? Edinburgh may not be cheap, but it certainly offers easier access to investors than London does. Looking at London's affluent boroughs of Hammersmith & Fulham and Kensington & Chelsea, which generate returns between 3 and 3.5% respectively, there is simply no comparison.

For more information about investment properties in Edinburgh, contact us directly.

Student property wins the day

Edinburgh student property continues to prove a solid, reliable investment with (nearly) all of Cullen's managed properties for the student market letting within weeks of being released. In fact, many of the flats in the most desirable areas such as Marchmont and  Bruntsfield were let within hours of the first viewing. So what makes student property in Edinburgh so popular?

From an investor's and landlord's point of view, the obvious draw is the rental yield which can reach up to 12% and is typically in the region of 7%. What's more, the capital required to invest makes the city a lot more accessible to investors than, say, London. Add to that an ever-growing student population and it's easy to see why the market is looking good.

Does that mean anything rents? No, definitely not. Buying 'any old property' and hoping students will live in it, won't work. It's about knowing the most sought-after areas, often closely located to universities as well as amenities, shops, bars and cafes, and the most sought-after property types. Many Edinburgh students are keen to share a spacious, traditional tenement flat with their friends, making three to five and even six bedrooms popular.

Edinburgh students want and can afford quality, so it pays to refurbish and furnish a property to make it attractive for prospective tenants. It would be hard to decide whether the city is a tenant's or a landlord's market - it really is a bit of both.

From a tenant's point of view, the city ticks even more boxes, including a choice of highly regarded universities, paired with unparalleled cultural offerings in a beautiful city setting. Then there is the availability of desirable traditional properties in great locations and while there is no shortage of student properties there is certainly room in the market for more high quality flats in popular areas.

Edinburgh property repairs sorted?

If you followed news about the city of Edinburgh last year, you may have come across stories about the Property Conservation Department at the City of Edinburgh Council.

Charged with managing repairs that applied to all flats in traditional tenements or any other shared properties, the department was found to have been favouring certain contractors as well as overcharging owners and much more. The wrongdoing was so substantial that it was decided to get rid of the whole department.

However, we felt strongly that Edinburgh residents and landlords needed some kind of authority to co-ordinate repairs, as it would simply be unrealistic and unfair to leave this work to individual home owners. Ironically, it is the council that is best placed to deal with co-ordinating those repairs as it holds data of registered landlords, council tax payers (i.e. tenants) and council tenants alike and should therefore be in a position to contact all involved easily.

Be that as it may, it is the council that has now announced its Shared Repairs Service is due to launch on Tuesday tasked with providing "advice and information to owners through the process of organising repairs from finding a contractor to arranging payment". 

The council also retains its powers of statutory notice, maintaining the current 24/7 emergency repairs service. Plus there is talk about expanding the council's responsibilities once more over the next few months.

So what does it mean for you? As a landlord, we will look after your property, including any liaison with other landlords in the same stair. As a home owner in Edinburgh, you have an instance for support once more and it will hopefully prove to be more accountable than its predecessor. 

Re-mortgaging on the up

It's the property story of the day - re-mortgaging activity has perked up by 17% in February, according to the Mortgage Advice Bureau.

After seeing increased activity in the first-time-buyer and buy-to-let markets for a few months now, re-mortgaging finally appears to be catching up. The source of the change appears to be the continuing drop in interest rates, which many believe is due to the introduction of the Funding for Lending scheme last August.

Similar to previous months, those looking for a better deal are keen to secure a fixed rate mortgage with more than 90% opting for two-, three- and five-year rates.

Good news also for buy-to-let investors where Aldermore have given mortgage distributors 3mc access to a deal starting from 4.8% interest at up to 70% loan-to-value. It's available on loans between £50,000 and £500,000. Certainly one to consider if you are planning on investing in property at the moment.

Whilst our team doesn't directly arrange finance for you, we are happy to put you in contact with one of our trusted partners to help find the best solution for you.

House sales on the up - but prices are down

We've come across a couple of interesting stories on the property market, both in Edinburgh and further afield this morning.

It's mixed news for the Scottish capital where house prices have fallen by 5% on average. Having said that, a number of properties are not only retaining their value but have actually increased in price over the past six months. There's also some good news for first time buyers as starter flats in a number of areas are becoming more affordable. Buy-to-let properties have grown in popularity, too, thanks to a strong rental market driven by both students and professionals.

Across the UK, house sales have hit a two and a half year high in February, according to the RICS. The organisation's members have seen sales gradually increasing over the last few months.

We believe the good news are down to a number of factors coming together: potential buyers are ready to snap up a deal now, many potential sellers have re-evaluated their expectations and are willing to accept a more realistic sales price. Crucially, however, the banks have started lending at more accessible rates, bringing mortgages within easier reach of more potential buyers. It's a great start to the year and should mean more good news for potential investors over the coming months.

Much movement in property & mortgage industries

If you felt that last year brought a lot of contradictory news about property, mortgages, first time buyers etc, this year seems to be shaping up to bring us even more stories.

According to LSL properties, the number of homeowners in Britain has dropped to a 25 year low. Despite remaining in a majority of just over 65% over long and short term renters, apparently owning a home has got further out of reach for many, often due to the high deposits required.

At the same time, there are green shoots as usual - according to e.surv, part of LSL, the number of mortgage  approvals this past month are predicted to be hitting a four year high. The prediction is based on the company's own workload. Whilst it is good news, e.surv believe that the increase is due to borrowers signing on the dotted line of high loan-to-value mortgages, so will still not spell good news for first time buyers.

Confirming the observations above, the Mortgage Advice Bureau even talks of a 'fixed rate mortgage war' having been declared in the 60 - 65% LTV bracket. Good news for those with cash available for this kind of deposit.

What does it all mean for property investors though? What reads like bad news for potential first time buyers, means that there continues to be a substantial number of people who will be looking to rent in the long term.

So, this is a good time to invest in property and become a landlord. Having said that, it is worth investing in quality property and maintaining it well, as these properties will stand the test of time - no matter what tomorrow's news may bring.

Tenancy Deposit Schemes coming to Ireland

Interesting news on the Tenancy Deposit Scheme side of things - TDS has only been mandatory for a few months in Scotland and the schemes are now being launched across the water in Northern Ireland.

Having officially been launched last November, deposit protection will become mandatory across the province from 1 April 2013. Like in Scotland, the aim is to protect tenants from rogue landlords and making it easier and safer to store and return deposits.

Whilst many tenants in Scotland are still unaware of the (not so) new legislation, Northern Irish The Dispute Service are planning a roadshow over the next few months to inform landlords of their new obligations and tenants of their rights.

More regulation? No, thanks! More enforcement, please!

Over the past year, many stories on landlords and buy-to-let property investors dealt with newly introduced regulation, aimed to help ‘good landlords’ and prevent so-called ‘rogue landlords’ from operating. Do we need more regulation? No, we don’t. What we need is proper enforcement of the existing regulations as opposed to more registration, regulation and landlord-related schemes.

The idea of finding and getting rid of ‘rogue landlords’ is a bit old hat: looking back over the past decade or so a few examples come to mind. In 2006, the Scottish Government introduced the Landlord Registration Scheme (LRS), making it mandatory for landlords to register their properties. Ongoing changes to Scotland’s Private Rented Housing Panel (PRHP) are another example.

Figures obtained by the Scottish Conservatives now show that over the past two years, only 11 rogue landlords were 'found out' under the LRS regulations. Since the scheme started, 200,000 landlords registered successfully, whilst 40 ‘rogues’ have been revealed. Hardly an impressive success rate. All of this comes at a cost of £11.2m to the registered landlords. Annual running fees for the scheme’s website alone are estimated to be around £300,000.

The Scottish Conservatives call the scheme “farcical” – and I have to admit I agree. There is simply no benefit in tight regulations when there is no provision for policing and enforcing the scheme. To a degree, this is where the new Tenancy Deposit Scheme comes into play.

In theory, only registered landlords can place their tenants’ deposits with one of the approved schemes. If the deposit hasn’t been placed by a landlord within a set timeframe, tenants have the right to take their landlord to court and may be awarded up to three times the value of their deposit. In theory, this should encourage landlords to register, or should it?

As with so many other bits of regulations in our industry, there is no system of policing the regulation. In fact, the system relies on the tenant to (a) know about the regulations and their existing rights and (b) take the initiative and do something about them. It’s unrealistic and not very fair on the tenant.

What do we need? We do need regulation, but just as much as that, we need the Scottish Government, local councils or an independent body to enforce the rules they make. Otherwise, all regulation is just a waste of money. 

Cullen Property chosen to provide management service for ESPC Lettings

We're proud to announce that Cullen Property has been chosen wo provide a full management service to the newly launched ESPC Lettings division. Click here for more information.