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Buy to Let Finance – be warned!

July 1st, 2019

PROPERTY FINANCE

Beware the ‘zombie banks’, buy-to-let owners told

As mortgage lenders leave the market in droves, experts have warned buy-to-let landlords to make sure they are not too reliant on a single bank for financing their properties.

Over the past six months, lenders such as the AA, Amicus Finance, Magellan Homeloans and Secure Trust Bank have quit the market. Tesco Bank has also announced plans to sell its existing mortgage book.

Nick Morrey of John Charcol, a mortgage broker, said the exodus of lenders should be a warning signal for landlords who may have multiple buy-to-let mortgages with a single provider.

In recent years there have been multiple instances where a mortgage book has been sold to a non-regulated third party, often known as a “zombie bank”. They are not able to issue new loans or alter existing ones, meaning customers may find it impossible to make small changes to their deal without remortgaging elsewhere.

This could force landlords to remortgage their whole loan to a rival bank, potentially incurring thousands of pounds in fees, if they wish to take cash from the value of the property. A landlord with multiple loans from a single provider is particularly vulnerable, Mr Morrey said. He urged landlords to spread their mortgages across multiple lenders.

“Landlords would be well advised to diversify not only their property portfolio but their lending portfolio as well,” he said. “If they use one lender that ceases trading, their portfolio would be at the mercy of whichever lender takes on their mortgages. Spreading the portfolio eliminates the risk of one lender selling them all to a zombie bank.”

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EPC (MEES) deadline.

January 13th, 2018

Many landlord needs to be prepared for the 1st April 2018. It’s when new-to-market investment properties need to meet new Minimum Energy Efficiency Standard (MEES). It will actually be illegal to let out a new property if its EPC rating is lower than an E, so both landlords and agents will need to check EPC ratings with care.
As for existing lets – those that are already in the market – there’s another date to watch. From April 2020, all buy-to-lets will need to meet the new MEES standards. It’s worth examining the EPCs of your managed buy-to-let portfolio now so you can identify properties with F and G EPCs and flag the issue up to landlords. This gives them two years to get the energy standards up to scratch and book a new EPC for a reviewed rating.
Two years may sound like a long time but in terms of accessing a rented property to carry out potentially major and disturbing works, it’s important to have as much notice as possible. If letting agents aren’t actively working with landlords, they may face losing stock because it has become illegal to let.

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To Buy or rent – A Guide for Graduates

April 21st, 2017

To Buy or Rent – A Guide for Graduates

So far in the way of living arrangements, you have experienced the works. From the family home you grew up in, to living with a bunch of strangers in halls or off of campus, and now you are about to come face to face with a whole new chapter of living. Not as a student, but as a fully-fledged graduate.

You may have already started to consider your options and how to go about making your first steps, but it always pays off to receive some extra guidance when it comes to making the next big decision in your life. Everybody’s situations are different too. So in this guide, we hope to provide a thorough breakdown for those considering solely buying, renting and for those stuck in the middle.

Sensible saving

As you approach the end of your academia, it is important to consider your spending and budgeting. Most students are blessed with a weighty student loan. If you are one of the lucky ones, allocate a small part of your time to sitting sown and budgeting your remaining loan to enable yourself to put aside some of it for when you finish. This is important to do, buying or renting, as you will require a deposit for wherever you decide to move to and being strapped at the beginning of your move isn’t a position you want to be in.  However, if your student loan wasn’t substantial, you can still be thrifty with your spending. it wouldn’t be unfair to sit out on a few student nights out so you can save up what you would have spent that night and also, make sure you budget your food shop by shopping at cheaper supermarkets to save extra pennies. The whole point of saving now is to make your money go as far as possible and to spend what you really need to live off. By getting into the habit of careful budgeting and regular saving now you will give yourself the best chance of staying on track and building up sizable savings for when you come to make your decision.

As well, getting a job, either on or off campus will help you to gain some extra money together and help boost your credit rating which will give you a head-start when it comes to applying for a mortgage, as you will need payslip evidence of a regular income to qualify for mortgage financing if you believe buying is a more suitable option for you.

The House Hunt

Buying a house is a massive commitment but an amazing opportunity to get started on the property ladder sooner rather than later if you are in the position to do so. If you are seriously considering this option make sure to do your research. It is all too easy to fall in love with properties at first glance, but don’t rush into anything without seriously weighing up some other choices. Assess the market and the area you’re interested in. If you don’t have a car, are there shops and supermarkets nearby? Are you near to a train or bus station? These are aspects which need weighing up so the property matches your lifestyle. If you’re looking to rent instead, the same applies in the way of suitability to your wants and requirements. If you use the gym, is there one within walking distance? Is the neighbourhood what you want? Additionally, with renting you will need to make sure that the property is within your budget, so you can afford to pay additional bills which you may incur such as gas and electricity, water and TV licence.

Being a graduate, you won’t have the years of experience that your parents have in buying and selling property, so you need to research the local property prices to spot any market fluctuations and to get the best possible deal when making an offer on a property. Remember, if an advert seems too good to be true, make sure to do some homework. Identify where any hidden costs may catch you out down the line. If you decide to buy, you may need to deal with damp or structural repairs. If this is the case, you can make a low offer that takes into account the costs of putting things right. Alternatively, if a careful and objective appraisal of a property reveals significant issues, it might be best to walk away on that occasion, to continue searching elsewhere.

Bountiful Borrowing As a studious graduate, you are probably aware of how difficult it is to save money for property which continues to rise at an ever growing rate. But, where there is a will, there is a way. The government offer a variety of schemes to help you on the pathway to affording your very own home. It will pay off to work out the best loans, ISAs and deals available to you so that you know exactly the ins and outs of what you are being offered and how it will work in the long-run. One of the most popular and successful options is the government’s Help to Buy ISA. What this entails is that if you put money into this ISA once a month at a maximum of £200, the Government will boost your savings by 25%. So, for every £200 you save, you will also receive a government bonus of £50. The maximum government bonus you can receive is £3,000 if you have savings of £12,000 or more.

Additionally, you could look into the Help to Buy loan, which provides a loan of up to 20% of the purchase price of a new-build home. This loan is also interest-free for five years. Many parents are also on hand to chip in with their children’s first home, but only consider this option if you are sure that your parents can do this without putting themselves into any financial difficulty.

Do make sure to research all of the peripheral costs of buying a property, such as stamp duty and valuation fees, as well as understanding how the process of buying a property works.

If you decide to rent for a while, give yourself this time to build up a deposit to buy in the future. Both options need careful planning and organisation so find out what deposit you’ll need, what your monthly repayments will be, and what the other costs of owning a property are likely to be. Additionally, make sure you are clued up about renting your chosen property and the area you are looking at, so you don’t end up living somewhere you’re unhappy with.

So, to conclude, whether you end up buying or renting, make sure that your moving checklist is planned down to a ‘T’, so that your move from Uni to adulthood goes as smoothly possible.

By Holly Berry.

 

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Considering an HMO property as your next investment purchase?

May 9th, 2016

Are you considering an HMO property as your next investment purchase?

The Housing Act 2004 introduced a new definition of a House in Multiple Occupation (HMO) from 6th April 2006 in England and 30th June 2006 in Wales.

When you let a property which falls into one of the following types, it is an HMO:

  • An entire house or flat which is let to 3 or more tenants who form 2 or more households and who share a kitchen, bathroom or toilet.
  • A house which has been converted entirely into bedsits or other non-self-contained accommodation and which is let to 3 or more tenants who form two or more households and who share kitchen, bathroom or toilet facilities.
  • A converted house which contains one or more flats which are not wholly self-contained (i.e. the flat does not contain within it a kitchen, bathroom and toilet) and which is occupied by 3 or more tenants who form two or more households.
  • A building which is converted entirely into self-contained flats if the conversion did not meet the standards of the 1991 Building Regulations and more than one-third of the flats are let on short-term tenancies.
  • In order to be an HMO the property must be used as the tenants’ only or main residence and it should be used solely or mainly to house tenants. Properties let to students and migrant workers will be treated as their only or main residence and the same will apply to properties which are used as domestic refuges.

Whilst there has previously been no specific definition of an HMO in Planning legislation, changes introduced by Government to the Use Classes Order in England only mean that there is now a legal definition for planning terms which means that an HMO has the same meaning as in Section 254 of the Housing Act 2004.

Two specific sets of Regulations have been introduced in England taking effect from 6th April 2010. They are The Town and Country Planning (Use Classes) (Amendment) (England) Order 2010 and The Town and Country Planning (General Permitted Development) (Amendment) (England) Order 2010

Any new property to be occupied as an HMO in England will need planning consent under class C4 (HMOs), but planning consent will not be needed for any HMO reverting back to class C3 (dwelling houses). The Regulations do not apply retrospectively to any existing HMOs.

Tired of the maintenance headaches and regulations that come with managing HMO’s? Let HMO specialists Railton-Meeks manage and maintain your HMO for you, call Sylwia our Property Manager to discuss your requirements. 

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Can I put my rent up?

November 11th, 2015

Landlords can’t just go round increasing their rents whenever they want to. They do, however, have a right to adjust the rent at certain intervals. The way in which they can go about increasing the rent will depend on whether the tenancy is fixed or periodic.

Continue reading “Can I put my rent up?”

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Court Deposit Legislation in Turmoil – Be warned! Does a Periodic become a new tenancy?

November 18th, 2013

PIMS – Court Deposit Legislation in Turmoil – Be warned !

Major consequences are expected for the private rented industry with the latest Court of Appeal judgement that opens up landlords to legal action from tenants because of unwittingly breaking the law on tenancy deposit protection.
The case that the judgement was passed is “Superstrike V Rodrigues a Court of Appeal Ruling

Continue reading “Court Deposit Legislation in Turmoil – Be warned! Does a Periodic become a new tenancy?”

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A Landlord’s Guide to Maximising Rental Income

March 17th, 2013

Here are some ideas I have out together to help you maximise your property investment.  Being a Landlord myself for the last 13 years, it now feels like quite a long road.  When I first started property investment seemed like an easy vehicle to make money, this was of course due to the property market going up and up.  The refurbishment and then the renting out of the property seemed easy compared to the market today. Students would accept  the regulation corduroy blue carpets and basic amenities, and the professional market thought a dishwasher was a luxury!  Now students also want a decent level of accommodation and  the professional tenants want something a bit special! Whether we find ourselves as an accidental Landlord or we chose this route of investment, we need to avoid those voids and maximise our returns. Some pointers which make very good sense in our current market:

  • When increasing the rent, ensure the tenants are given a feasible reason for this increase. For example you may include some utilities in your rent, and with fuel prices up, this would be a legitimate reason..
  • Don’t increase the rent so much that it is not affordable, and make sure it is comparable to the immediate local market and of a similar standard.
  • Visit your property every quarter, minimum. if you employ the services of letting agency, ensure that this is done and you are informed of any issues. A tenant may notice a leak but not report it until the flat downstairs reports a massive brown wet stain on their ceiling! Noticing issues early limits the big repair bills.
  • Attract your target market. Make your property fit the needs of tenant. This will ensure tenants remain at the property longer and won’t feel the necessity to move on.You will have higher occupancy levels.
  • Minimising void periods. Advertise the property to let ASAP, don’t delay! Make sure the rent is right, too much and you won’t get any interest. If you are made an offer weigh it up sensibly. Have they offered £5o -£100 less, but want to move in back to back with the last tenant, then Think about taking it, how much other interest is there? It is a false economy to hang out for the higher rent and miss a months rent you will never get this money back.
  • Note feedback from prospective tenants who have viewed and tenants who have moved out.  Why are they leaving? Is there something that they think would improve the accommodation? Listen to feed back it counts this is your audience.
  • Make sure your tenants know what is expected of them. Draw a list of things which the landlord will not pay for I.E blocked pump on the washing machine (pockets not being emptied) blocked kitchen sink drain (from foodstuff).
  • Before calling out the electrician etc. talk with the tenant on the phone, get as much info as possible. May be it is just a trip switch? Or something else the tenant can sort themselves. Teach tenants how to do re-light the pilot light for example. Or if you are handy perhaps you can do much of the basic maintenance yourself.
  • Treat tenants well build a rapport. Just not too well that they ring you at 2am drunk when they have locked themselves out of the house!! Some want you as a surrogate mother!

Whatever the economic climate, we should always be looking at ways we can save money!

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Property refurbishment

September 19th, 2011

Accidental investors are now cashing in on the high demand for good quality rental property.  They are realising that if they refurbish their property to a high standard, they will be able to benefit from the excellent rents we are able to gain on their behalf.

Railton-Meeks is refurbishing many properties for clients, and ensuring through good management practice that client’s properties are kept in optimum condition and not left to get shabby.

Contact Railton-Meeks to day for a free no obligation appraisal of your rental property.

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Are you looking to build a pension pot for your future?

November 10th, 2010

‘The wealth management world is more unsettled than ever, where when and how should clients money be invested.  However amidst the uncertainty is ‘real opportunity’. The various investments that clients can invest in has never been so varied.  These range from the very ‘safe’ to the outrageously risky’. The answer to what clients invest in depends on what they wish to achieve.  Experience shows that a broad and extensive portfolio stands you in good stead.  The aim is to not only position clients tax efficiently but allow them access to investment monies as and when required.

Property investment has gone through turbulent times.  Is there more to come? I would suspect so. However with the right assistance and expertise the once ‘taboo’ investments should now be welcomed back in the fold. Certain areas and properties have escaped the wrath of the recession.  Going forward by selecting the ‘right’ property real returns are for the taking.

The reality of looking after clients money is not to be overly concerned with labels, i.e pensions, investments, property but the single objective of creating wealth.  Wealth creation naturally leads to choices and flexibility, thus allowing clients to enjoy their monies in the way they see fit.

Property should definitely be one of the asset classes in any portfolio.’

Wealth management expert.

Tara says ‘ 

Although prices have fallen in some locations over the past couple of years, what matters is not just the potential for capital growth but the amount of rental income a buy-to-let property produces. Rental yield (income) is very important, especially in an uncertain market as it enables the investor to hold for long-term capital growth.

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