As we all know by now, the Bank of England has reduced the base rate to 0.25%, with all nine members of the Monetary Policy Committee voting in favour of the cut. According to data from the Office for National Statistics, those with a variable 25-year repayment mortgage could save around £22 per month and those with a tracker product should see their monthly payments reduce by approximately £24.16 on a mortgage of £200,000 over an average 25-year repayment mortgage (or £41.66 if interest only). On the flip side, savers will be less impressed with the news and it should be noted that some mortgage products may include a “collar” in the small print, stating a minimum level at which their rate will drop to. The BoE are also to buy £60bn of UK government bonds and £10bn of corporate bonds. They plan to introduce a new scheme encouraging banks to keep lending, by allowing banks themselves to borrow at somewhere near to 0.25%.
George Osborne may no longer be Chancellor of the Exchequer; however he had made several tax changes, which directly impact the PRS, with arguably the biggest of them all still to come. Landlords currently enjoy tax relief on mortgage interest; however April 2017 will see the start of a 4 year plan to change this, with the potential to push lower rate tax payers into a higher rate of taxation. The changes will be phased in as follows: In the 2017/2018 financial year, the deduction from property income (as is currently allowed) will be restricted to 75% of finance costs e.g. mortgage interest, with the remaining 25% qualifying for a “capped” 20% “tax reducer” In the 2018/2019 financial year, that figure of 75% will become 50% (with the remaining 50% qualifying for a “capped” 20% “tax reducer”) In the 2019/2020 financial year, the figure of 50% will become 25% (with the remaining 75% qualifying for a “capped” 20% “tax reducer”). As from 2020/2021 all financing costs e.g.
As the holiday season gets into full swing and the 6 week school holidays begin, it’s quite usual to experience a summer slow-down. However, this summer will see sellers with even less buyers to choose from as some hold back, hoping prices may dip. As we have mentioned before, it’s important to establish the true reasons for a slow-down and a more traditional (a more evenly balanced) sales market, will often see less activity during the summer months and at Christmas. That doesn’t mean to say buyers stop buying, and with a ratio of approximately three “new” buyer registrations each day in July so far, there is still an appetite to buy property. For those looking to sell in the short term there is a choice, perhaps in some cases dictated by circumstance. Sellers can wait for the autumn market or try to sell now, either way, with less buyers around its worth doing everything possible to maximise your chances of attracting a buyer.
Having worked in the industry for some 20 years, I have witnessed various types of market; from peaks to crashes as well as everything in-between. It’s a case of using your experience to identify market changes, sometimes subtle, and then adapting the selling strategy and the advice given to sellers. There will be many people working in estate agency who are yet to experience anything other than a strong seller’s market, and when the time comes they will need to adapt and learn new skills in order to be successful in a more balanced, or weakened market. One of the key features in estate agency is providing the seller with feedback. In recent years, subject to a correct marketing strategy, demand has been so strong, that in many instances giving feedback has been a case of putting forward a number of offers (following an open day), then progressing those offers until a sale price is agreed.
Almost half the UK population own a pet, yet many landlords are reluctant to accept pets! According to research by The Dogs Trust, some 78% of pet owners reported that they had experienced difficulty finding rented accommodation that would accept pets. The Dogs Trust also suggest that some 45% of UK households currently own a … Continue reading Why Let Your Property to a Pet Owner
A few weeks back, our mortgage brokers alerted us to a new HSBC 2-year fixed rate deal at 0.99% and we are now reading various reports indicating that the mortgage market will become even more competitive post Brexit, with suggestions of 2 year deals as low as 0.95%. It would appear the "long term product" market, such as 5 and 10 year deals is set to grow, albeit there’s a view that early repayment charges are a stumbling block for some would-be long term committers. Click on the following link https://www.mortgagestrategy.co.uk/brexit-price-cutting-push-fixes-0-95/ to read an article by Mortgage Strategy Voices are whispering that a falling pound could actually lead to more foreign investment in some markets, and as is usually the case investors will look to buy at the bottom of the market. It’s a case of assessing when this time has arrived (an obvious point I know).
Yes, we all know Waltham Forest introduced a selective licensing scheme last year and under their early bird scheme it cost £250 for a 5 year licence, rising to £500 thereafter – only this is no longer the case because as from 1st April 2016 the cost of a 5 year selective licence has increased to £650 so by the time 2020 comes, and on the basis the council extend the scheme beyond the initial 5 year period, how much will a licence then cost? Many landlords saw the introduction of this licensing scheme as a money making decision, whilst others wanted to see rogue landlords punished, feeling it unfair they tow the line whilst the few bad apples continued to give landlords a bad name, and as such welcomed the scheme.
Earlier this year a landlord was fined over £11,000 for letting a property which had a dangerous gas boiler. Another landlord was fined and handed a suspended prison sentence for installing a boiler that was not checked by a suitably-qualified gas engineer. In another case, a landlord was fined almost £3,000 for failing to provide a gas safety record for two rental properties. There seems to have been a spike in the number of landlords being fined for gas safety failings and there are of course the new rules that came into play last October in relation to smoke and carbon monoxide alarms. Is your gas safety check up to date?.. and have you issued your tenant with a copy of the current gas safety record/certificate, within the required timescale? Which? Mortgage Advisers have given some tips to help people avoid a long chain, therefore increasing the chances of a successful purchase. 1.
The Upper Leytonstone Jumble Trail is happening again this year! It's on Sunday 26th June between 11am and 4pm. More information.
Those of you living in Waltham Forest will probably remember recent reports of bricks being stolen from local churches and even people’s front gardens. Thieves would drive their van into the wall before making off with the bricks, which would sell on for around £1 per brick. The bricks in question are of course the old yellow “London stock” type, some dating back before the Victorian era, and a very popular choice for property owners looking to build an extension with a desire to match the extension to rest of the property. This is not the first time we have experienced an attack on our front gardens. Several years back people were waking up to find their front gate had suddenly disappeared. One week we had over half a dozen reports from confused tenants curious as to the whereabouts of the front garden gate.
As you look through the pages of most online property advice sites or property-related newspapers and magazines, you are likely to come across one survey or another that seeks to prove how various property improvements add a certain percentage to the value of a property. There has been a marked increase in the number of people undertaking improvements whose motivation is specifically to increase the value of their property prior to a sale. If you are considering such improvements, you should approach such surveys with caution. For example, the public’s response to a previous survey as to which home improvements were most likely to add value were at odds with the view of a panel of property valuation experts and Chartered Surveyors. The public’s view was that a new kitchen would add more value than either a loft conversion or an extension.
When a landlord finds a good tenant they usually want to try and keep hold of them, likewise when a tenant has a good landlord they will want to stay on at the property. There are of course circumstances that mean a tenant needs to leave the property, perhaps they are buying a home of their own or their work takes them away from the area; however, sometimes a tenant will look elsewhere simply because they are not happy with their landlord. Research by Direct Line has found that on average the British renter spends an average of 18 months in a rented property. In Birmingham the average stay is 2 years and 4 months, whereas on the opposite end of the spectrum the average Cardiff renter vacates within 12 months, followed by Leeds (12 months) and Bristol (14 months). The analysis also focused on how long it takes a landlord to replace a tenant, with an average time of 22 days. Such void periods are costly and should be factored into your yield calculations.
When you are planning to move house it can be tempting to accept the first buyer who comes along with an attractive offer. However, buyers come in all shapes and sizes, and it is important to assess your purchaser’s ability to perform before accepting any offer. We often receive offers from people who themselves have … Continue reading Should We Accept the Offer?
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According to the latest research from Gocompare.com Mortgages, dodgy home repairs, tiny rooms and poor lighting are just some of the things that would send a prospective buyer running for the hills - but what is the biggest turn off? The survey conducted by Gocompare found that damp was the biggest area of concern for house-hunters with 71% of those asked saying that evidence of damp patches on walls or ceilings would put a stop to them buying a property. 65% said they would avoid homes that had been poorly maintained. Odious odours were also cited as deal breakers with 61% saying that bad smells from pets, damp or cigarette smoke would turn-them off a property. Matt Sanders, mortgages spokesperson for Gocompare.com said, “Moving home is a big undertaking for sellers who want to attract the best price for their property and buyers who, in the main, want well maintained properties.
Despite the fact that many people regard letting agents as more or less the same, there are in fact numerous selection criteria on which to judge the good from the bad, and the exciting from the mildly indifferent. For example, there are many services and innovations which can make a difference to how effectively your … Continue reading The Right People
1: So here’s the obvious one. Now days most people regularly switch energy suppliers, seeking out the best deals available. However, not everybody finds the time and others may have tried this a few years back and found that the potential saving hardly seemed worthwhile. Well prices and deals do change. When your deal comes to an end you will usually be moved onto the standard tariff, costing you more than before. If it’s been a while since you last switched, why not spend half an hour looking around on-line. Your current supplier can tell you how many units of gas / electric you have used over the past 12 months, which will be helpful when browsing through the price comparison websites. Don’t be worried about asking the question, you are entitled to the information and don’t owe your current supplier any loyalty, not when they are offering new customers a better deal than the one you will be moved onto once the contract ends.
So here we are at the height of the Spring market, following a roller coaster ride, triggered by the Stamp Duty Land Tax deadline that prompted so many investors and second home buyers to act before the additional 3% tax kicked in. It is interesting to note the short term effect this has had on the market. For example, April saw an otherwise unexpected rise of 62% in transaction volumes – that’s about 60,000 more transactions. The knock on effect in terms of property value has been profound, with lower end investment and first time buyer properties rising by 6.2% over the past four weeks alone, against a much smaller (0.4%) rise in the price of property entering the market in the last four weeks generally (excluding London). In fact, the top end of the London market, which has so often skewed the view of the market when included in national figures, has certainly lost its froth, with some prime postcodes in the capital falling by up to 12% over the past year.
As an estate and letting agent, our job is to sell or let a property. Sounds obvious really! However, some people judge an agent’s ability to do the job on the varied amount of advertising undertaken on behalf of each client, rather than on the strategy and reasoning behind their advertising policy. Clearly, it is virtually unheard of that someone will buy or rent a property on the strength of an advert, without actually visiting it. So the purpose of a property ad is not to sell or let the property, but rather to encourage an interested party to enquire further and arrange to see it. Nevertheless research, and our experience, has shown that in many cases a buyer or tenant will not go on to purchase/rent the first property they enquired about from an advert. The chances are that once they have made contact, the agent will begin to gain a thorough understanding of the home seekers wants, needs, preferences and areas of potential compromise.
You only get one chance to make a great first impression! When it comes to letting your home, attention to detail could be pivotal in securing the best possible rent –quickly. Most tenants have a good idea of their preferred location, minimum accommodation needs and ideal style of property. Yet it is often presentation that makes the greatest difference. A well-presented property not only looks more attractive, but also suggests that the landlord cares for it. This in itself can attract a more careful tenant. So here are a few tips that we hope landlords might find useful:A new coat of paint on the front door gives a great first impression. Have the carpets professionally cleaned. Check that the grouting/sealant in the bathroom is not discoloured. A bottle of wine in the fridge suggests that you will be a welcoming landlord! Make sure all the lights work and the house is well-lit – even during the day.
We recently heard that Mortgage Trust has revamped its buy-to-let range to include a revamp on some existing products, as well as launching over 20 new products. Fixed rate deals for Landlords include a two year fix at 3.05% (75% LTV) and a five year fix at 3.50% (75% LTV). Research carried out by Direct Line for Business has revealed that 1 in 10 private landlords do not have a formal tenancy agreement in place with their tenants. They go on to say that even where contracts are in place, landlords may unwittingly be asking tenants to sign documents that are not legally compliant, and of those who do not use a letting agent, 58 per cent used adapted tenancy agreements from either old agent contracts or other landlords (38 per cent) or an updated template they found online (20 per cent).
When it comes to large sums of money there will always be those looking to exploit the vulnerable. As a licensed member of ARLA (Association of Residential Landlords Association) we receive notification when a scam comes to light and felt this one was definitely worth sharing with our readers. In addition we have information about a different scam, one which has recently struck right here in Leytonstone. So what does a scam look like to tenants? They will first try to gain the victims trust, often citing that they themselves have been let down before, to try and get the victim to empathise with them, before requesting funds to be transferred: Email from fake landlord (upon receiving a response to their “fake” property advert) "I inherited the apartment from my grandfather when he passed away, I am from Munich, Germany, so I decided to rent it out.
One of estate agency’s fundamental tasks is to secure the highest price that an able purchaser will pay for your property in a given market. In an ideal world, we would have a hot-line to Camelot who would feed us with a regular supply of lottery winners prepared to pay ridiculous prices for modest properties. Unlikely, but we’re working on it! In the real world, most estate agents operate using certain procedures and protocols that have been employed for decades, if not centuries. In addition to the somewhat archaic system of property transfer we have in this country, there are traditional elements of the sales process that have become “the norm”. Examples of these include the way in which viewings are conducted and how buyers and sellers are treated, both of which could do with a concerted makeover nationwide. The most obvious example is the way in which prices are maximised.
In a previous article we focussed on issues to think about when buying an unmodernised property. However, sellers should also be careful when considering the sale of a property in need of renovation. Firstly, unmodernised is unmodernised! It is usually a waste of money to make improvements to a property on which people will want to do their own thing, and you could well fall between two markets. Certainly clear away an overgrown garden and remove whatever debris you can from the house. Preventative maintenance such as repairing a leaking gutter (miniscule cost to repair, but huge consequences if left unattended to) should also be undertaken. It may well be that you have several buyers, which potentially puts upward pressure on the price. However, a surveyor might possibly “downvalue” the property, especially if his estimate of the renovation costs is higher than the buyer’s or there are no comparable sales in the vicinity.
The property market is, as expected, hotting up in line with expectations for the Spring. The flurry of activity in the Buy to Let market prior to the April Stamp Duty increase deadline has now died down although it did appear to have ignited a chain reaction in asking prices, with Rightmove recording a record high in the average asking price of £303,700 - up 1.3% on the month (7.6% on the year). The Office for National statistics confirms a similar increase in annual sale prices, although they cite £284,000 as being the average house price (NB Rightmove figures relate to new entrants to the market prior to any reduction and can be skewed by a number of other factors). Whilst intense deadline-driven investment-buyer demand may have made life difficult for first time buyers, hopefully the way forward will now be clear for them to compete favourably with their BTL competitors.
Whatever further plans the chancellor has in mind for the PRS there is a train of thought that come 2020 many landlords could be making a loss on their rental returns. This idea is based on changes to mortgage interest tax relief coupled with a series of theoretical rate rises between now and 2020. There will always be theories and suggestions, although given there are a number of on-line mortgage calculators why not perform your own "stress test" based on theoretical rate rises. The chancellor has targeted landlords and we are yet to see whether more changes lay ahead, we sincerely hope not. At 6pm on 21st March, in the Council Chambers in Waltham Forest Town Hall, there is a landlord forum.
Our friend Marc Bradshaw will be braving the gruelling London Marathon again this year, raising money for St John Ambulance. We wish him all the very best of luck. Please consider sponsoring him at Marc's London Marathon fundraising page.The Virgin Money London Marathon is one of the great British sporting events, combining elite athletics, mass participation and record-breaking fundraising in one race. The course is a gruelling 26 miles 385 yards long, passing through the streets of London from Blackheath to the famous finish line at The Mall.
In a previous newsletter we considered some of the dangers associated with pricing your home in relation to other properties available for sale (i.e. those remaining unsold). This time we'll consider pricing in relation to the properties which have actually sold. When considering what asking price to quote, common sense dictates that the price of other homes, which have sold, could be a good indicator as to the price you should be quoting. However, your research may well prompt you to price your property at a level which could under- or over-estimate your optimum sale price. Irrespective of national trends, the property market is very sensitive to imbalances in supply and demand. When there are many buyers all seeking a particular type of property, of which there is only one available, the competition factor will result in the seller being able to maximise the achievable price.
At the start of a tenancy there will be certain information you should provide to your tenant, like a gas safety record/certificate, EPC, electrical certification, deposit protection documentation, an inventory and if applicable license conditions. Ensure your tenant is given all the essential paperwork, which can best be achieved by issuing a welcome pack, also containing copies of appliance manuals, safety instructions and emergency contact details. You never know when something might go wrong, but when it does it will need to be resolved, and often quickly. Consider all eventualities and have plans in place. Have a contingency fund and easy access to "checked-out" round the clock contractors who can tackle the more urgent types of repairs, at very short notice. Unlike a problem occurring at your own home, where you might decide it can wait an extra day or two, a rent paying tenant will have their own expectations on turn-around times.
George Osborne's budget on 16th March was pretty disappointing for the property market and it does seem that opportunities to encourage investment and to build more new homes were missed. The most important announcement was the confirmation that the 3% surcharge in Stamp Duty Land Tax (SDLT) on buy-to-let properties and second home purchases announced in the Autumn statement is to stay. Some commentators have suggested that this will push up rents, but we suspect that it will actually have the desired effect of making first time buyers more competitive in the market when bidding against a buy to let investor, who will generally pay a figure dictated by expected rental yields, not vice versa. The expected waiver of the 3% for institutional investors who buy more than 15 properties has not happened, further removing the types of investment that could have developed brownfield sites and desperately needed build-to-let developments.
There can be nothing better suited to the internet than property, and hits to property websites far outnumber those of any other industry. The ability to be able to search in the comfort of your own home, usually without having to provide any personal details, is certainly attractive and has transformed the way the public begins to look for their new home. So will the internet replace traditional estate agency? It would certainly seem not. Ultimately property search portals are regarded by buyers and tenants alike as a supercharged local property newspaper, with a fairly comprehensive selection of homes on offer. As many sellers have discovered, the benefits of using an estate agent far outweigh the simple ability to source a buyer or tenant. In some ways, finding the buyer or tenant is the easy bit!.
Over the past 2 years we have come across more and more tenants seeking shorter tenancies, or a tenancy with a break-clause allowing them the freedom to serve notice during the fixed term. The reason given - "we are saving up to buy our own home". Having said that the numbers are pretty low when compared with tenants looking for a more secure type of tenancy giving them a fixed period of certainty. We have read reports that up to 2/3rds of tenants are saving up for a deposit, with many prepared to look further afield in order to make their home ownership dream a reality. Elsewhere we have read that less than 50% of tenants have anything currently saved towards a deposit. Is the desire to own your own home anything new? Well no…., perhaps new to some is the realisation that if rents continue to rise the ability to save for a deposit becomes more difficult.
Stamp Duty rates changed in the December 2014 budget. Now you pay higher rates only on the proportion of the property price in the higher bands. Also, from April 2016, buyers of buy-to-let and second homes will pay additional stamp duty. Here's our handy guide to the new rates. BracketsStandard rateBuy-to-let/second home rate (from April 2016) Up to £125,000 0% 3% £125,001 - £250,000 2% 5% £250,001 - £925,000 5% 8% £925,001 - £1.5m 10% 13% over £1.5m 12% 15% Rates under the new system are based on various portions of the sale price e.g., for a sale price of £600,000 there is no tax to pay on the first £125,000, then 2% is payable on the portion between £125,000 - £250,000 (£2500) and 5% payable on the portion between £250,000 - £600,000 (£17,500): total tax due = £20,000.Under the previous system tax was payable at 4% on the £600,000: total tax due = £24,000.
This month's Market Report comes at a somewhat confusing time for the financial aspects of buying and selling a property. It is effectively a crossroads at which recent Government initiatives seem to collide. These include things like Help-to-Buy, SDLT Stamp and inheritance tax changes, and higher taxes for buy-to-let landlords and second home owners. Indeed, the Institute of Economic Affairs has said that almost all of the Government's interventions in the housing market have been "a step in the wrong direction". For example has the Help-to Buy scheme pushed prices out of reach for whom it was designed to help? There has been a huge rush among buy to let investors forming limited companies since the beginning of the year in order to avoid the 3% additional stamp duty that they will need to pay unless they complete by 1st April.
We came across an interesting article on leaseholds and it prompted us to think “how many of our landlords have leases below 80 years?” A lease below 80 years attracts a marriage fee and many lenders will not lend on a lease with less than 70 years left to run. The lower the length of lease, the more costly it will be to extend, so when you do come to sell this could well be a bigger problem than you think. Check your lease and if you need advice then speak with a suitably qualified surveyor or a solicitor. Before we start, please note we are not mortgage brokers and when it comes to giving mortgage advice this should always be left to an expert, such as an independent mortgage broker. We noticed a high street lender advertising a 5 year fixed rate mortgage deal at a rate sub 2% with another offering a 10 year fixed rate at around the 3% mark.
When considering the value of a property prior to putting it on the market, many vendors understandably look at the asking price of other properties currently on the market locally, and draw pricing conclusions based on this research. Whilst this is not an unreasonable way of determining value, there are some traps to look out for. Firstly, an important observation is that if a property is on the market, it is by definition “unsold”. Unless it is relatively new to the market, an unsold property can often be one that is overpriced. If it had been priced correctly it would have sold, but in the event the market has rejected a property then it will probably only sell if the price is reduced. The longer a property remains unsold the less impact it will have, so if you have a similar property and you price it at about the same level as the unsold property, the chances are that yours will remain unsold as well.
If your tenancy is to work out well from day one, there are a few key guidelines you should follow: Position yourself as a strong contender by having good references from previous landlords prepared in advance. Your new agent will of course want to verify these references but the landlord of a property you are viewing may have a choice of tenants to select from so why not show yourself to be a good option? Make sure you agree with the inventory and condition report, then sign and date it to avoid any misunderstandings down the line. Always ask for a written receipt for your deposit and details of where it has been lodged. Ensure you have emergency procedures in place and that your landlord or agent provides a telephone number to call if anything goes wrong. Know where the water, gas and electricity cut-off switches are in case of an emergency.
Having just celebrated its first birthday, new property portal On The Market (OTM), has so far struggled to have a significant impact on the two leading portals, despite its TV advertising campaign. The service sought to compete with the likes of Rightmove and Zoopla yet traffic to OTMs site has been anything but impressive. According to independent web monitoring firm Hitwise, of the three main players, On The Market’s web traffic accounts for between 2% and 3% with Zoopla fifteen times this amount and Rightmove accounting for 68% of total hits. (Dec 2015)The reason this is so important is that many agents have signed a five year agreement with OTM – which is much cheaper than Rightmove and Zoopla – on the basis that the agent can only subscribe to ONE other major portal! We regard this as a serious obstacle for vendors and landlords.
We enjoyed helping out with the Davies Lane Primary School Winter Fair. Letter is reproduced below.
If your property is currently on the market, it may be tempting to assume that your agent is in full control of the situation, and that sooner or later a buyer or tenant will materialise. But don’t be so sure! Sometimes an agent will take the same view and simply sit in hope having, apparently, exhausted their own marketing options. We believe in a much more proactive approach and would invite anyone who is currently “waiting in hope” to contact us for a free and confidential marketing review meeting. Our aim during these meetings is not to criticise your chosen agent, but simply to help you consider some key facts about the progress of your sale from day one and offer constructive advice where we feel there are things you could do to make a difference. For example, we would review the following in context: 1. The response to date and feedback from viewings and advertising. 2. The number of viewings in relation to local averages 3.
What a great start to the year! Confidence is strong in what appear to be signs of an early spring market and all the talk of an early interest rate rise have been kicked into touch. A rise anytime during 2016 now looks very unlikely and a recent article in The Times gives an opinion that the next rate rise may not happen until 2019 and that markets are pricing in a 50pc chance of a rate CUT this year.
Many people think that agents’ property particulars are designed to give a comprehensive overview of a property that is on the market. We believe this is not strictly the case, and that their role is to encourage people to inspect a property that might be suitable for them. Too often the agents’ particulars focus on extensive flowery descriptions of the property, instead of sticking to the information that matters most. Our knowledge of buyers suggests that people simply want to know enough detail about a property to decide whether to rule it out or decide to view it. Too much detail at such an early stage is unnecessary and can actually be counterproductive. Some detail on the other hand is deemed essential to many buyers and we always listen to what people have to say on this subject.
As we approach Valentine’s Day it would seem that there’s a fair bit of love involved in estate agency! Estate agents are, if anything, matchmakers after all and just as people fall in love with the right person, so buyers also need to fall in love with a property if the sale is to succeed. Just as a good matchmaker will not simply put people on a database and expect them to enter into a long term loving relationship, so our job is far more than a simple broking service. That’s why we go to great lengths in trying to understand our buyers’ needs, preferences, hopes, desires and aspirations in respect of their future home. Only through this understanding can we help guide them to the right property. Of course, our matchmaking brief may be to find a Cheryl Fernandez-Versini or George Clooney, which, in property terms, can be somewhat ambitious, but in all seriousness buyers tend to have up to ten factors on their wish list that they seek to fulfil.
When letting your property, your primary objective is simple – you want to find a reliable tenant who pays the rent regularly and looks after your property as you would yourself. The reality is usually more complex than this. Letting your property comes with legal obligations and social responsibilities, many of which are unknown to anyone who does not make a point of keeping up with this rapidly changing legislative environment.It is certainly worthwhile getting professional advice at the outset, not just about how to maximize the likely rent you can expect to receive, but also about how you can avoid the various traps and pitfalls along the way. There has certainly been a steady increase in the number of obligations and responsibilities imposed on a landlord of late.
The 29th February only occurs every four years – which is about as frequently as many people used to move house during the heady days of property speculation that sparked the boom market. Nowadays most buyers and sellers are more level-headed and don’t leap from place to place quite so often. They tend to move for “real” reasons such as a change of job, children on the way, downsizing, debt, divorce etc. These “real” sellers tend also to quote realistic asking prices, as their main objective is to move, rather than simply to sit on the market hoping that someone will buy their property at that flatteringly inflated figure an over-optimistic agent suggested they should quote in order to get the business! Yes, even in this market an unrealistic asking price can cause a property to “hang around” for longer than the seller can afford to wait.
So here we are at the beginning of a new year and one of the most impressive stats that we look back on goes back not just to 2015 but over the past 20 years. A report just out by PPRM suggests that property has outperformed every other major asset class at an average annual increase of 9.34%. In fact an investment in the London property market 20 years ago would have performed 2.5 times better than the FTSE and four times better than gold, which was actually only marginally ahead of cash savings!Most of this gain has been via capital appreciation, and rental yields have now fallen slightly representing an average of 4% in the northeast and just 2.7% in London,Of course, for most homeowners, property is a tax free investment. The tax angle on buy to let is certainly going to be more noticeable this year, with a 3% levy on second homes and a phased reduction in the amount of tax that can be claimed against a mortgage.
As you will have no doubt heard, the Chancellor of the Exchequer George Osborne announced a 3% hike in Stamp Duty Land Tax (SDLT) on buy-to-let properties and second homes in his Autumn Statement. This was met with “outrage” from various quarters, such as the Association of Residential Letting Agents (ARLA) and others who describe it as “the nail in the coffin of the buy-to-let and holiday home market. Shares in some major estate and letting agency firms fell on the news. Certainly if you are in a fortunate enough position to be able to buy an investment property or second home, then yes, an average £250,000 purchase will cost you an extra £7,500. This additional expense might ultimately have to be absorbed by the vendor, who may have to accept a lower offer than expected, as the investment buyer will have less in their pocket.