As another Buy to Let lender faces trouble as the detrimental effects of the credit crunch are once again seen in the property market. Earlier this week Paragon revealed that it was forced to draw up an emergency rights issue. Just like Northern Rock, Paragon relies on raising money in the credit markets and has been left exposed by the credit crunch. Unable to get a government bail out the rights issue has wiped nearly 39% of Paragon’s shares. Even Bradford & Bingley the buy to let sectors biggest lender has had to take remedial steps and has sold off more that £4bn worth of loan books.
Whilst these moves ensure that all existing debts are financed as the credit crunch continues it is difficult to see these lenders writing any significant volume of new business.
The direct affect on private landlords and buy to let investors is the change in mortgage products available to them. With stricter criteria and many lenders reducing the maximum loan value on new build properties, it has claimed that buy to let investing faces the danger of becoming a playing field for the wealthy.
There are however many things a buy to let investor can do to protect themselves. One of the most important things to look out for is arrangement fees. With many lenders offering what seems to be attractive interest rates buy to let investors must be aware of the higher arrangement fees of up to 3% of the loan. This is particularly important on one year products where an annual remortgage could result in a deficit to the investor who struggles to create enough rental yield profits to cover large annual costs.
Rental yields need careful consideration as the housing market slows. In the last two years significant house price inflation has allowed investors to become more relaxed about rental yield seeing their investment returned in capital. Today investors are turning back to rental yields to support their investments. With indicators showing rental increases with increased demand for rental properties alongside speculation of interest rate cuts buy to let investors should be comforted by better rental yields as their capital returns slow.
Rental yields can be further improved through quality buy to let furnishings. Lodge Furniture has reported an increase in sales of their durable packages specifically for rental properties. It seems increasingly clear that investors need to have long term investment strategies for capital growth supported by their rental yields.
Showing posts with label Buy to Let Furniture. Show all posts
Showing posts with label Buy to Let Furniture. Show all posts
Monday, 26 November 2007
Wednesday, 14 November 2007
Is the property Market all doom and gloom – Not for Buy to Let Investors!!
It seems that we are besieged at the moment with stories of uncertain house price inflation and the market slowing down but what does this mean for the buy to let investor.
Some recent reports have claimed the buy to let investors can no longer afford their properties and with the threat of falling house prices are selling in droves whilst others claim that house prices and interest rates are still prohibitive to first time buyers who are supporting the buy to let market by having to rent properties.
In this uncertain climate with such conflicting views it is extremely difficult to know what to believe. Last weeks Hometrack figures (Considered by some to be the most accurate and reliable source in the housing market) revealed a drop in selling prices of 0.5% in the most affluent London areas. However Hometrack also reported that less people were putting their houses up for sale, perhaps they are waiting to see what happens with the much speculated interest rates or are unwilling to commit to a new property in such uncertain times. This combined with the CML (Council of Mortgage Lenders) prediction of a rise in repossessions and a drop in mortgage lending in 2008 give a very gloomy picture of the housing market indeed. However conflicting with this are figures from Nationwide published last week that show house prices were up 1.1 % but they went on to say that ‘The underlying dynamics of the market are clearly not as strong as this time last year’ and again a report of less people searching for properties and less mortgage approvals was indicated.
The resounding opinion coming from the leading estate agents seems to be that although the market is not as buoyant as that of 2000 and the height of the boom is over that it will be a soft landing rather that a crash and house prices will remain steady and show modest 3% rises.
What does this mean for the private landlord and buy to let investor ? Well, the hardy among us who are in it for the long term will benefit from peoples caution to commit as they seek to rent for a longer period. Property Investment company Inside Track’s Head of Communications Pierre Williams said the negative headlines were not ‘borne out by reality’ and that short term fluctuations were not the prime factor - it was how the market performed in the long run. He went on to say the worsening undersupply situation and the buoyant overall economy would underpin long term property prices. He added that the high inflationary state in the market was ‘not sustainable’ and the slowdown could be seen as a ‘relief’. If the market stabilises long term growth will be underpinned and investors should be able to plan for an investment future in the property market.
In the short term there is much a buy to let investor can do to protect their investment. The savvy investor:
· Keeps tabs on the property locations through local newspapers and websites
· Performs their own due diligence with respect to rental yields
· Takes décor into consideration. Poor décor can be costly in both time and money.
· Furnishing their property to suit the potential tenant. Companies such as Lodge Furniture can supply furnishings with a style and cost to suit most rental properties.
· Gains as much local knowledge as possible.
In the long term investors should be able to plan ahead with the promise of a more stable market.
Some recent reports have claimed the buy to let investors can no longer afford their properties and with the threat of falling house prices are selling in droves whilst others claim that house prices and interest rates are still prohibitive to first time buyers who are supporting the buy to let market by having to rent properties.
In this uncertain climate with such conflicting views it is extremely difficult to know what to believe. Last weeks Hometrack figures (Considered by some to be the most accurate and reliable source in the housing market) revealed a drop in selling prices of 0.5% in the most affluent London areas. However Hometrack also reported that less people were putting their houses up for sale, perhaps they are waiting to see what happens with the much speculated interest rates or are unwilling to commit to a new property in such uncertain times. This combined with the CML (Council of Mortgage Lenders) prediction of a rise in repossessions and a drop in mortgage lending in 2008 give a very gloomy picture of the housing market indeed. However conflicting with this are figures from Nationwide published last week that show house prices were up 1.1 % but they went on to say that ‘The underlying dynamics of the market are clearly not as strong as this time last year’ and again a report of less people searching for properties and less mortgage approvals was indicated.
The resounding opinion coming from the leading estate agents seems to be that although the market is not as buoyant as that of 2000 and the height of the boom is over that it will be a soft landing rather that a crash and house prices will remain steady and show modest 3% rises.
What does this mean for the private landlord and buy to let investor ? Well, the hardy among us who are in it for the long term will benefit from peoples caution to commit as they seek to rent for a longer period. Property Investment company Inside Track’s Head of Communications Pierre Williams said the negative headlines were not ‘borne out by reality’ and that short term fluctuations were not the prime factor - it was how the market performed in the long run. He went on to say the worsening undersupply situation and the buoyant overall economy would underpin long term property prices. He added that the high inflationary state in the market was ‘not sustainable’ and the slowdown could be seen as a ‘relief’. If the market stabilises long term growth will be underpinned and investors should be able to plan for an investment future in the property market.
In the short term there is much a buy to let investor can do to protect their investment. The savvy investor:
· Keeps tabs on the property locations through local newspapers and websites
· Performs their own due diligence with respect to rental yields
· Takes décor into consideration. Poor décor can be costly in both time and money.
· Furnishing their property to suit the potential tenant. Companies such as Lodge Furniture can supply furnishings with a style and cost to suit most rental properties.
· Gains as much local knowledge as possible.
In the long term investors should be able to plan ahead with the promise of a more stable market.
SHORT TERM LETTING BOOSTS BUY TO LET INVESTORS
As a growing number of people seem to be turning away from traditional hotels and opting for short term let or holiday accommodation we look at how this growing trend affects the buy to let investors, the advantages this brings and how the property needs to be presented including the correct landlord furnishings and features.
The key difference between the hotel market and this buy to let sector is price and quality. Many of the properties in this sector have luxurious fittings and comforts that you would expect to get from a 4 star hotel at a very affordable weekly rate. These luxury features become even more important for families who can enjoy a luxury spacious apartment with separate living and sleeping area compared to a cramped hotel room or the businessman who no longer needs to work in his bedroom.
Amid considerable speculation about property prices and interest rates these little gems can considerably boost the buy to let investor. Apart from the long term capital growth and the higher rental yields the buy to let investor with furnished holiday lettings can qualify for tax benefits. With ‘normal’ residential lettings only qualifying for non- business taper relief furnished holiday/ short term lets do qualify for full business asset taper relief this can result in substantial savings when selling.
There are also tax savings to be made when not selling. Many investors find that during times of high interest rates new properties in their portfolios could take a few years to come out of the red. With short term holiday letting buy to let investors do not need to carry these losses forward but can offset them against other income. Short term holiday properties also benefit from rollover relief where any sale profits can be reinvested without fear of losing profits in taxes.
Finally, where lettings are short term and the owner services holiday makers Inheritance Tax can also be avoided.
There are several qualifying factors which have to be complied with, these are:
- Situated in the UK and fully furnished.
- Available to let days a year and actually let for at least 70 days a year
- Not occupied for more than 31 days by the same person in any seven month period.
- Let to holidaymakers/ tourists and not local residents.
There are also several management factors to take into consideration in this buy to let sector:
- Properties must be maintained and cleaned regularly.
- Landlords remain responsible for all utilities and council tax bills.
- The frequency of tenants results in more frequent upgrades for wear and tear or breakages plus increased inventory management.
Despite these factors for those prepared ensure these factors are adhered to, this niche can be very lucrative.
To enter this niche and compete at the high end level against hotels investors should look for properties in high tourist areas with easy access to the main attractions eg. city, lakes, sea. Apartments and houses must be fully furnished to a very high specification. (www.lodgefurniture.co.uk can supply readily available superior furniture packages and products suitable for all your buy to let requirements). Properties should also be high technically specification with broadband access, digital television, stereos, DVD’s plus luxury fitted kitchens.
Obviously, this is the top end of the holiday rentals market and similar tax relief can be gained in the lower end but it is at the top end where any tax savings become more apparent and where demand is becoming apparent.
The key difference between the hotel market and this buy to let sector is price and quality. Many of the properties in this sector have luxurious fittings and comforts that you would expect to get from a 4 star hotel at a very affordable weekly rate. These luxury features become even more important for families who can enjoy a luxury spacious apartment with separate living and sleeping area compared to a cramped hotel room or the businessman who no longer needs to work in his bedroom.
Amid considerable speculation about property prices and interest rates these little gems can considerably boost the buy to let investor. Apart from the long term capital growth and the higher rental yields the buy to let investor with furnished holiday lettings can qualify for tax benefits. With ‘normal’ residential lettings only qualifying for non- business taper relief furnished holiday/ short term lets do qualify for full business asset taper relief this can result in substantial savings when selling.
There are also tax savings to be made when not selling. Many investors find that during times of high interest rates new properties in their portfolios could take a few years to come out of the red. With short term holiday letting buy to let investors do not need to carry these losses forward but can offset them against other income. Short term holiday properties also benefit from rollover relief where any sale profits can be reinvested without fear of losing profits in taxes.
Finally, where lettings are short term and the owner services holiday makers Inheritance Tax can also be avoided.
There are several qualifying factors which have to be complied with, these are:
- Situated in the UK and fully furnished.
- Available to let days a year and actually let for at least 70 days a year
- Not occupied for more than 31 days by the same person in any seven month period.
- Let to holidaymakers/ tourists and not local residents.
There are also several management factors to take into consideration in this buy to let sector:
- Properties must be maintained and cleaned regularly.
- Landlords remain responsible for all utilities and council tax bills.
- The frequency of tenants results in more frequent upgrades for wear and tear or breakages plus increased inventory management.
Despite these factors for those prepared ensure these factors are adhered to, this niche can be very lucrative.
To enter this niche and compete at the high end level against hotels investors should look for properties in high tourist areas with easy access to the main attractions eg. city, lakes, sea. Apartments and houses must be fully furnished to a very high specification. (www.lodgefurniture.co.uk can supply readily available superior furniture packages and products suitable for all your buy to let requirements). Properties should also be high technically specification with broadband access, digital television, stereos, DVD’s plus luxury fitted kitchens.
Obviously, this is the top end of the holiday rentals market and similar tax relief can be gained in the lower end but it is at the top end where any tax savings become more apparent and where demand is becoming apparent.
Thursday, 18 October 2007
Good News for Buy to Let Investors
The next quarter looks good for Buy to Let investors as rents are pushed up due to increased demand for rental properties. With the effect of the interest rate cycle not yet fully revealed many house buyers are waiting until 2008 to see how the property market will react..
With competition fierce in the buy to let market and investors using the services of experienced companies such as Lodge Furniture to assist with their marketing the propesed increase in rents will halp many Buy to Let invetsors achieve positive cash flow earlier than forcasted. With rents remaining static in many areas for several months this is very welcome news.
http://www.lodgefurniture.co.uk
http://www.lodge.co.uk
With competition fierce in the buy to let market and investors using the services of experienced companies such as Lodge Furniture to assist with their marketing the propesed increase in rents will halp many Buy to Let invetsors achieve positive cash flow earlier than forcasted. With rents remaining static in many areas for several months this is very welcome news.
http://www.lodgefurniture.co.uk
http://www.lodge.co.uk
Friday, 12 October 2007
Buy to Let Investors Carry On
It is great that despite somewhat difficult market conditions that Buy to Let invetsors still seem to be determined to carry on building their property portfolios. Figures just published show a fall of 11% in mortgages given to residential buyers but an increase of 35% for Buy to Let investments. Admittadley these figures are for the year up to Aug 07 pre Northern Rock !!
With Buy to Let investors looking to claim another 5% of the housing market in the next few years it seems that specualation of a drop in interest rates will result in increased competition between investors. With this in mind investors are looking to attract the best tenants through quality furnishings.
Companies such as Lodge Furniture can assist the landlord or letting agent by providing quality, durable and affordable furniture at great prices and designed particularly with the Buy to Let market in mind.
Look at www.lodgefurniture.co.uk for inspiration for your property.
With Buy to Let investors looking to claim another 5% of the housing market in the next few years it seems that specualation of a drop in interest rates will result in increased competition between investors. With this in mind investors are looking to attract the best tenants through quality furnishings.
Companies such as Lodge Furniture can assist the landlord or letting agent by providing quality, durable and affordable furniture at great prices and designed particularly with the Buy to Let market in mind.
Look at www.lodgefurniture.co.uk for inspiration for your property.
Monday, 24 September 2007
LODGE FURNITURE LAUNCH
Last week saw the exciting launch of Lodge Furniture's new e commerce furniture shop. With buy to let properties and investors never out of the news we are very excited to finally have an on line furniture shop aimed specifically at this market. After the big launch it was tempting to sit back and rest but no here at Lodge Furniture we are committed to providing our clients with designs and styles to promote their properties. Luckily, we were able to attend the 100% design show at Earls Court and get a quick preview of the latest trends and designs. With a lot of emphasis on space saving and Eco friendly products as well as great new fabric colours we came home fully inspired with a lot of fresh ideas to discuss with our buying team.
Subscribe to:
Posts (Atom)