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.
Thursday, 16 May 2013
Tuesday, 7 May 2013
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.
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.
Wednesday, 1 May 2013
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.
Tuesday, 30 April 2013
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.
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.
Wednesday, 24 April 2013
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.
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.
Wednesday, 10 April 2013
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.
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.
Thursday, 28 March 2013
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.
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.
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