Archive for September, 2009

How have you found it getting a buy-to-let mortgage recently? Is it still easy to find options, or have you experienced any problems?

According to research carried by The Paragon Group, professional landlords are reporting that buy-to-let mortgages are becoming difficult to obtain.

The findings arouse after Paragon’s recent Trends research, which involved a panel-based survey of UK landlords. Over half of the professional landlords taking part in the research (54%) had attempted to obtain a buy-to-let mortgage in the three months leading up to the end of August 2009, either for buying a new property purchase or for remortgaging purposes.

Of those 54%, nearly nine out of 10 commented that it was more difficult to secure a buy-to-let mortgage than it previously had been.

Nearly one in 10 (8.4%) people said they’d not noticed any change in the availability of buy-to-let mortgages and 2.8% said they’d found it slightly easier to get a mortgage.

The number of buy-to-let mortgage options available has dropped slightly from May 2009, from 218 to 196, but they’re certainly not unobtainable.

One of the advantages of buying property from HBF Investments, compared to on the open market, is that there are dedicated panel brokers at hand to help you get the best mortgage deal.

If you’re going to purchase an investment property with HBF Investments, you’ll be registered with a panel broker, who’ll quickly and efficiently check out the latest mortgage deals and help you find the best option for you.

At a time when the number of available buy-to-let mortgages seems to have decreased, it’s even more helpful to have such an individual, tailored option available.

Location, location, location – not only is it the name of the popular Channel 4 property hunting show, hosted by Phil Spencer and Kirstie Allsopp, but it’s also one of the most crucial aspects to get right when you’re investing in property.

First time property investors often assume that they should find a property in close proximity to where they’re based. The reasoning behind that thought is that they’ll be near by to sort out any problems, can check on it regularly and keep an eye on the local rental market.

But whilst it may seem sensible, serious investors need to look at other factors in relation to the location too. It doesn’t matter whether the property is located just down the road or two streets from you, what matters is whether the figures add up and if it’s a good location for tenants.

Here are six important factors to consider before you part with your cash:

1. Most importantly, you need to consider what the cost of the property is, what the return on the property is likely to be and what rental yields you could achieve. 

2. Study the existing rental market in that area and the prices being achieved. Is it in an area where the demand for rental properties is outstripping supply?

3. Is the property near popular children’s primary or secondary schools and could it attract families looking to rent?

4. Is the property located near universities or colleges and would it be attractive to the student rental market?

5. Are there any large hospitals or factories nearby? If so, it could attract workers needing conveniently located housing.

6. Is the town part of a regeneration project? In time, this could help increase the value of the property.
Although it may be tempting to go with the first property you see available for sale, if you want to make money from your investment, you should do your homework first. If it all adds up, then go for it.

A recent press release from the Council of Mortgage Lenders (CML) on current UK Lending stated that in July there was a +19% increase on residential property loans compared to the previous year which is the first significant increase since early 2007.

The figures from the CML showed that house purchases accounted for 56,000 loans totalling £7.5bn. This was a +24% increase on June 2009 and a +19% improvement on July 2008.

Whilst the majority of lending was focused on home movers and remortgages, there was an +18% increase in loans to first-time buyers in comparison to the previous month, and this was a +22% increase from July 2008.

Paul Samter, a CML economist, said: “ There is certainly concrete evidence that lending for house purchase is increasing, but t he overall lending picture is likely to stay relatively subdued for some time, especially as the wider economy is far from robust as yet.”

source: www.property-investor-news.com

The average residential property price in the UK house price rose again in August with houses now just 10% cheaper than the same time last year.

The latest house price index from the Halifax puts the average price at £160,973, up 0.8%. It said low interest rates and cheap prices are attracting buyers back into the market.

‘Overall, house prices nationally are very similar to the level at the end of last year.

Demand for housing has increased since the start of the year due to better affordability and low interest rates,’ said Martin Ellis, Halifax housing economist.

‘This, together with low levels of property available for sale, has boosted house prices over the last few months,’ he added.

The figures will boost confidence in the real estate market as all the major indices are now reporting increasing demand for properties.

Halifax’s analysis shows the proportion of disposable income households devote to mortgage repayments has fallen significantly over the past 21 months, and is below the long-term average of 35% over the past 25 years.

Those who are able to raise mortgages are typically spending 29% of their take-home pay on servicing their debt, well below the peak of 48% in the autumn of 2007 when prices were at their highest.

n recent weeks inter-bank lending rates have started to fall and some lenders have passed on these cuts through more competitive fixed and discount rate mortgages.

However, they are still demanding large deposits from buyers and taking few chances on what they perceive to be riskier borrowers.

Last month Halifax said it expected prices to end the year 7% down, halving its original forecast that the residential market would fall by 15% in 2009.

Nationwide and the Royal Institution of Chartered Surveyors have also revised their year forecast and are more optimistic about the year end.

Source: www.propertywire.com

Diary of a UK Property Investor – www.hbfinvestments.co.uk

When your investment property business is maturing and is generating lots of sales to investors, the time may be right to start building business-to-business [B2B] relationships to generate more leads and increased sales.

All of the highly reputable and mature property investment businesses source their deals from other companies.  Examples of properties available from B2B sources include: New Build, Off-Plan, Overseas, Portfolios, Commercial, Distressed/Repossessed Stock & other types of Property Investments (e.g. buying shares in property ventures/funds and investing through SIPPs).

From personal experience, cracking this nut is the most difficult ways of generating great deals, especially in the credit crunch environment, and for two key reasons: (i) investors have been put off traditional New Build, Off-Plan and many other of the usual B2B property investments that once thrived because they have proven to be very risky and hard to finance; & (ii) it is difficult to find the right B2B partners/companies who are reliable, trustworthy, deliver every time and do not mess you about!!

Assuming you can find the right B2B partners, for your business to successfully capitalise on the relationships and opportunities, it is vital that your business has the right client base to buy the properties that are in supply.  For instance, there is no point trying to source New Build properties or portfolios from Receivers if you do not have investors willing and able to pay deposits or have the funds available to buy portfolios.  You need to focus on building and strengthening your client base if you are to make a success of B2B opportunities.

Ensuring your business is mature, reputable and has the right investor client base is fundamental if you are to be successful at building B2B partnerships.  However, once you crack the nut and you start delivering time-and-again for your B2B partners – ‘the sky’s the limit’ for your business – you will effectively have ‘FREE’ sales for your business. 

 “FREE B2B sales + lots of hungry buying investors” = “the recipe for success for your property business.”

Source:  David Coughlin – HBF Investments

One of the biggest difficulties for landlords is finding themselves faced with problem tenants, especially when they’re not paying rent and refuse to move.

With the case of Thanos Papalexis in the news (an example of how not to deal with a problem tenant), here are five useful tips for avoiding tenant problems.

1. Use a property management or lettings company

Although you may be tempted to go it alone and avoid the extra cost of using a professional property management or lettings company, they do have their advantages. They’re especially useful to have on board if problems occur, and if you’re new to letting out properties, as they should be up-to-date and experienced with dealing with problem tenants.

2. Credit check your tenants

Either you, or your letting agent, should carry out credit checks of your prospective tenant. There are various credit reference agencies available to use and this will highlight any debt issues or any previous County Court judgements against them.

If they don’t have good credit references, or if you discover they don’t have a bank account, then avoid renting your property to them.

3. Check tenant references

When you’re first letting out your property, it’s crucial that a range of references for your tenant are thoroughly checked out. This includes their employment references, so you can check their current and past jobs, and their personal references, for example from a previous landlord, so you can find out about their tenant track record.

4. Sort out maintenance problems quickly

Some tenant problems can occur due to landlords not fixing problems soon enough, and tenants then getting stroppy about not paying rent until things are put right.

So, if any maintenance issues arise with the property, ensure they’re fixed and sorted out quickly (if you’re using a management company, then they should have established contacts with maintenance workers).

5. Carry out regular landlord visits or property checks

Regular landlord property checks can highlight potential problems in advance and give you time to sort them out before further issues occur. Do remember to give your tenants notice if you’re going to be calling around (negotiate a convenient day and set time), as unexpected visits will not go down well.

Source: David Coughlin – HBF Investments

Fund manager Managing Partners Limited (MPL), which runs the British Property Opportunities Property fund, is looking to increase its exposure to commercial property.

It says that there are some very strong yields to be obtained in the sector and that many commercial properties are currently attractively priced for cash rich funds and investors.

MPL’s British Property Opportunities Fund invests in both residential and commercial property, including distressed portfolios, high yield rental units, development opportunities, leasebacks and reversionary gains schemes.

To date the fund has been solely focused on the residential property market but it is expected to move into the commercial sector this year.

Jeremy Leach, Managing Director, MPL said: “Commercial property values are now down by 41% since their peak in 2007. This means that there are a number of attractive opportunities for us in this market and we feel that current yields, even allowing for a realistic allowance for tenant fallout, will provide a strong real return.

You can get yields of 8% to 9% on commercial property that on their current value can also enjoy some strong capital growth – two very attractive features.

source: http://www.propertywire.com

Residential rental prices in the UK are stabilising as the number of accidental landlords declines due to an improvement in the property market, it is claimed.

The latest figures from the Royal Institution of Chartered Surveyors show that 6% more estate agents reported a rise in new instructions from landlords in the three months to the end of July, compared with 21% in the previous three month period.

The number of rental properties coming on to the market is falling quickly, leading to less choice and potentially higher rents for those priced off the housing ladder, it says in its report.

The main reason for the fall in new landlords is the disappearance over summer of so-called accidental landlords who decided to rent rather than sell their properties in a falling market.

Their numbers increased at the end of last year as property prices reached lows but now evidence of price stability in the housing market has encouraged owners to sell instead.

‘This may be the first indication that the stabilisation in the residential sales market is having an impact on the number of accidental landlords entering the lettings sector,’ said a RICS spokesman.

It now expects rental prices, which had been falling, to start to stabilise.

The balance of surveyors reporting a fall rather than a rise in rents was 29% in the quarter, compared with 55%.

In an optimistic sign for buy-to-let landlords, an increasing number of agents expect rents to rise in the coming months.

The balance expecting a fall rather than a rise improved from 25% to 6%, RICS said.

‘The number of properties coming on to the rental market has slowed as the sales market has begun to stabilise.

This is good news for landlords, who were coming under pressure to reduce rents as a result of oversupply.

The need to respond in this way is easing and, providing the housing market holds firm, the outlook for the rental market should continue to improve,’ the spokesman added.

However, the change in sentiment could put those searching for affordable accommodation at a disadvantage.

Figures from RICS, due next week, are expected to show that housing market activity continued to improve in August.

source: http://www.propertywire.com

The number of buy-to-let transactions in the second quarter of 2009 has increased, according to recent reports from the Council of Mortgage Lenders (CML).

The new figures show that there were 21,600 new buy-to-let loans advanced in the second quarter, totalling £1.9 billion. The figures also showed that the number of mortgage arrears seem to be decreasing too.

Although there’s still a way to go until the market is fully recovered from the effects of the recession, it’s certainly good news to see that the number of buy-to-let purchases being made has increased. It’s a positive sign that the situation for property investors is picking up again.

Rob Thomas, a senior policy advisor for CML, commented, “Whilst house price falls have limited the scope for some landlords to remortgage, there’s no evidence that landlords are exiting the market in large numbers and some landlords have the opportunity to make acquisitions and take advantage of higher yields.”

Low interest rates and declining house prices, along with the continued need for private rented accommodation, are two of the factors helping to boost the property market.

Ian Potter, from the Association of Residential Letting Agents (ARLA), also welcomed the news and said, “We’re encouraged by the fact that mortgage arrears seem to be declining, which is not only of benefit to landlords facing financial difficulty, but also to their tenants who have been threatened with the repossession of their home and who have little protection against this.”

The end of the year sees the UK governments stand duty reduction come to an end with properties valued between £125,000 and £175,000 attracting a 1% stamp duty charge from 1 January 2010. Currently the UK government has exempted property purchases within this specific range in an attempt to try and inject some confidence and interest into the UK housing market.

While there is no doubt that the reduction in stamp duty has attracted the attention of many homebuyers across the UK there is a feeling that an opportunity may have been lost because of the reluctance of UK mortgage lenders to increase liquidity. It is only now that UK mortgage lenders are encouraging homebuyers to speed up their purchases to avoid the 1% stamp duty payment, something which homebuyers need to be very careful about. Without doubt, the acquisition of a property will be one of the biggest and most stressful transactions which you will complete in your life and you need to be sure that everything is correct and in order.

Those who are potentially blinded by the opportunity of saving 1% stamp duty by completing before the end of the year may well live to pay the price if they have rushed in and acquired a property which was possibly not “100% right” for them.

source: FinancialAdvice.co.uk