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.