Category: landlord

Where are the best – and worst – BTL buys right now?

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Buy-to-let: where’s the best place to invest?

Credit experts TotallyMoney revealed the best and worst UK postcodes for residential investment property this week. The most profitable areas are in Scotland (as we revealed in this blog last week ) and the North West.

The results reveal:

  • Despite issues around regulation and tax, the UK buy-to-let market is still strong, with many of the best performing postcodes turning a 7% to 8% yield.
  • Liverpool’s L1 postcode returns a 10% yield — the highest in the UK.
  • Two Scottish postcodes make the top three and a total of nine Scottish areas feature in the top 25 of the best yields
  • The North East also has some top performers. TS1 and TS3 in Cleveland rank fifth and 12th respectively, while Sunderland features twice (SR8 and SR5), and Gateshead’s NE8 has a 7.27% yield —putting it in 18th position.
  • All postcodes in the top 25 have property asking prices under the current UK national average of £232,710.

So despite continuing changes in tax relief and greater landlord responsibilities, TotallyMoney’s research shows a good number of UK postcodes returning healthy profits for property investors. Take a look at their map here https://www.totallymoney.com/buy-to-let-yield-map/

On the flipside, some of the country’s best-known commuter belt areas have the lowest yields. At the very bottom is AL5 in St Albans. The average buying price for a property here is £800,000 and asking rent is £1,300 per month. Total yield: just 1.95%.

This puts it below London’s W8 postcode (Kensington) which still manages to squeeze out a 2.05% return for landlords even though average property prices are a hefty £1,962,500.

Other commuter spots in the bottom ten include RG10 in Reading (2.26%), GU10 in Guilford (2.22%) and KT7 in Kingston upon Thames (2.20%).

So the verdict is that buy-to-let is still worth it but landlords need to do their homework. Research before buying – and stay flexible about where you spend your money. Get it right and there are still good returns to be made.

PlanetRent takes the hassle out of deposit payments

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planetrent logo

According to a story in the press this week, more than 2,000 tenants in Scotland appear to have forgotten to claim back their deposits at the end of their tenancies. SafeDeposits Scotland thinks this could add up to more than £500,000. 

Understandably, most landlords take a deposit from a tenant at the beginning of a new tenancy, so that if the tenant causes any damage to the property or doesn’t pay the rent, deductions can be made. But how easy is it for tenants to get their deposits back when they move out of a property?

Pundits believe there could be as much as £4bn sitting in accounts waiting to be claimed.  Like them, we suspect these unclaimed rental deposits are just the tip of the iceberg. So what’s the answer?

Ringley has a quick and simple solution that makes it really easy to move and track deposits so that no one ever need lose sight of where their money is held. Our PlanetRent app harnesses the latest technology to take all the hassle out of deposits for landlords and tenants in a few easy steps. Here’s how it works.
 

If there is a traditional Deposit – where tenants choose to pay a deposit, the landlord or letting agent must register it. PlanetRent is connected via an API to the Tenancy Deposit Service (TDS) and will automatically register deposits for TDS users.  The deposit repayment process is non-adversarial as both tenants and landlords can see proposed deductions and supporting invoices and either accept or dispute them item by item to narrow issues and help get tenants moving on.  PlanetRent also sends out a ‘how to get your deposit back’ guide, to help tenants know what they need to do and when.

Renting Deposit Free – PlanetRent brings this option to both Landlords and Agents.  PlanetRent is connected to Reposit which is FCA Regulated. With Reposit, so long as tenants pass referencing (which Reposit offers for free) the tenants can pay a non-refundable charge, equal to just one week’s rent. If there is a damages dispute Reposit will try to recover end of tenancy claims directly from the tenant. If this is unsuccessful, insurance (underwritten by Canopius) covers the landlord for up to six weeks of damages, or rent arrears.

PlanetRent is set up for Reposit and the TDS service and automatically sends tenants all the required advice booklets. So why not download PlanetRent today and make renting your property an easier and more efficient process for you and your tenants.

No deal would mean no change to Right to Rent until 2020

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No change to Right to Rent – yet.

The Government announced last week that there will be no changes to the right to rent for EU, EEA and Swiss citizens and their family members living in the UK until 31 December 2020 if the UK leaves the EU without a deal.

Landlords should continue to follow current Home Office guidance on how to check a tenant’s right to rent.

Tenants will be able to prove their right to rent using:

  • their passport or national identity card if they are an EU, EEA or Swiss citizen
  • their residence card issued by the Home Office if they’re a non-EU, EEA or Swiss citizen family member

You have a duty not to discriminate against tenants on the grounds of their race or nationality. You cannot require EU, EEA or Swiss citizens to show you that they have status under the EU Settlement Scheme or European temporary leave to remain when entering into new tenancy agreements until 1 January 2021.

Irish citizens will continue to prove their right to rent in the UK as they do now.

You should continue to conduct right to rent checks on all prospective tenants to comply with the code of practice on illegal immigrants and private rented accommodation and the code of practice for landlords: avoiding unlawful discrimination.

A new immigration system will apply to people arriving on or after 1 January 2021. You will not be required to undertake retrospective checks on existing EU, EEA or Swiss tenants when the new system is introduced.

Landlords should not be expected to act as immigration officers. It is stressful and can lead to bias in favour of tenants who do not require the additional hassle of carrying out checks. But until any new system is introduced this has become a fact of life for anyone renting property. So download the guidance, follow the rules and if you have any problems, contact the Landlords’ Helpline on 0300 069 9799.

Would you buy a BTL property now?

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Have you ever considered buying at auction? If so, do your homework first.

Are you brave enough to consider investing in a new buy-to-let property in the current market? Tough new regulations and tax changes plus the spectre of Brexit uncertainty aren’t doing much for the popularity of the sector with investors.  So we’re now seeing a major sell-off, with small landlords quitting the market to the tune of an estimated 4000 properties a month. But if you are a cash buyer – and you can hold your nerve –  now may be a good time to buy. And if you don’t have ready money, the Bank of England base rate is at a historic low, so this could be a good time to take out a loan.

There is plenty of demand out there for rental property and house prices are holding up well in most parts of the country. So if you’re willing to buy into the sector for the long term, capital growth still looks strong. So where to start looking? New research looking at the best places to invest in buy-to-let property based on rental yields, shows that Scotland is currently leading the field with rental returns in Glasgow at 7.5%.  The next best three places with good returns are in Midlothian (6.8%), East Ayshire (6.8%) and West Dunbartonshire (6.7%).  

If you are thinking of taking the plunge, it always pays to do your homework. The days of landlords needing to be close to their rentals are over, with the advent of PropTech such as our PlanetRent app making it easy to manage your properties remotely; we have connected with partners nationwide to help them manage their properties across the country.

This technology frees up investors to search the market for the best returns but once you’ve crunched the numbers don’t forget there are other factors that impact local rental markets. These include any major developments that are planned or new infrastructure in the pipeline, as well as the renter’s profile in that area. If you are looking in an area with a high student population, investing in a house split into flats close to a university will likely offer better returns than a large family home in a high end location.

Whether or not your property will hold its value long-term is another question and one that may be tricky to second-guess. That’s why it pays to get professional advice from a qualified and reputable property agent. You should also look for a good mortgage broker – if you need one – and a reliable accountant to ensure your BTL income is as tax efficient as possible.

Finally, there are often genuine BTL bargains to be found at auction – but again, research the market – and make sure you fully understand the way this sector operates. Purchasers buying rental property at auction can avoid the long-drawn-out conveyancing process, as properties are sold immediately the hammer falls. But buyers must do their own due diligence. They also need to make financial arrangements in advance. A 10% deposit must be ready for payment when the contracts are signed and they must have access to the remaining 90% within 28 days.

Don’t forget, there is more to buying property this way than simply turning up and making a bid.

Flooding: is your home at risk?

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Is your home at risk of flooding? Dozens of flood warnings are in place across England today, with the Environment Agency issuing 60 flood warnings and nearly 160 alerts for coastal areas from Mount’s Bay in Cornwall to Seahouses, Northumberland.

With many rivers already swollen to bursting point after the last few days of heavy rain, block managers in these areas should already be preparing for the worst-case-scenario, delivering on-site protection such as sandbags or flood barriers to at-risk properties.

If flood warnings are broadcast, residents should be advised to move their cars to higher ground and belongings should be removed from ground floor flats and stored further up the building wherever possible. If residents have pets, they should try and make arrangements for them to be looked after by friends or relations and they should also try and find suitable overnight accommodation for themselves in advance should the worst happen. Some block insurance cover will allow for emergency accommodation but not all, so check with your property manager or landlord.

It is important for block managers to talk to residents, particularly anyone who is elderly or vulnerable, to make sure they know what to do and where to go should they find flood water coming into their homes. Checklists of what to take – such as medical supplies, mobile phones and bank cards – if residents are forced to evacuate, will help people plan in advance and leave the building calmly in an emergency.

Renters should make sure they have contents insurance with flood cover and don’t be afraid to ask your property manager/letting agent/landlord what, if any, flood protection measures they have in place. There should be a flood emergency and evacuation plan for your building. If you don’t have one, you and your neighbours can request one is drawn up. The Environment Agency runs a free flood warning service so anyone living in a flat can find out quickly if their block is at risk from potential flooding. And if you live in a ground floor flat, again, don’t be afraid to ask for sandbags to be provided so you can keep them on hand in case of emergency.

Renters living in houses rather than flats should speak directly to their letting agent or landlord if their home is in a high-risk area, to find out what they can usefully do to protect themselves or what action to take if their home becomes flooded.

Could you make money from corporate rentals?

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Does your rental property have the wow factor?

 Have you ever thought about company lets? If not, maybe you should. Corporate tenants work for companies which have agreed to cover the costs of renting a home for their employees. This is usually because they are relocating to a new part of the country or are on secondment to a different part of the business. Major cities attract the most corporate renters but even in rural areas, major employers often need rental property for temporary staff or new employees. Rather than renting through the company, businesses are likely to give staff an accommodation allowance and let them find a suitable home themselves.

For landlords the advantages are clear. Corporate tenants come with the security of regular rental payments from a reliable source and a reduced risk of arrears and – hopefully – disputes. They are likely to be on a fixed-term contract so will be able to sign up for a  tenancy agreement of two to three years, depending on their employment arrangements. And as most are highly paid professionals, they will be happy to pay a higher monthly rent if they find the right property.

Happy days we hear you say! But it’s important to appreciate that as well as coming with great credentials as renters, corporate tenants have extremely high expectations. They demand excellent value for money – even though they’re not the ones paying the rent! Furnished property is favourite and quality is key. As one expert in the sector says: “If you want to attract top corporate professionals, then you have to provide the wow factor that makes your property more attractive than anything else being offered in the same building. 

So, what are these tenants looking for? High quality décor, fixtures and fittings goes without saying. Families moving to the UK from overseas will be looking for fast, accessible local transport links, excellent amenities and good schools if they have children. Corporate tenants also expect properties to be well-maintained and they will expect to have a reliable point of contact to quickly resolve any problems. That makes excellent property management a must. A dedicated property manager and the reassurance of either an on-site concierge or a 24/7 service will give your corporate let the edge.

So if you are a landlord thinking of going down this route, contact us for advice. Our property managers will be happy to advise you.

Are you content to rent?

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Are you a long-term renter – or would you like to buy the home you live in?

Would you like to buy your rented home? If so, you’re in the minority according to Landbay which has carried out a tenant survey just as the Labour party is considering giving renters the right to buy. The specialist buy to let lender, says only 42% of private tenants want to purchase a property, based on a poll of 2,000 private renters in the UK.

The survey findings reveal that:

  • Older renters are the least interested in buying a home: only 13% of over 55s want to purchase in the near future.
  • Among those tenants aged 35 to 44, only 46% want to buy. 
  • Around two thirds of millennials aged 25 to 34 want to buy soon. 

There is also a notable gender discrepancy with 47% of women across all age groups keen to buy a home, compared to just 34% of men. 

The number of people planning to buy is highest in London (48%) and in Northern Ireland (47%). Those in the South West and Wales are least keen, both coming in at 37 % interested in buying – despite relatively lower house prices in these areas.

So why are the majority of tenants content to rent? Flexibility of tenure comes out on top and is largely seen as positive. A quarter of renters without home ownership aspirations say it’s the key attraction.

As Landbay rightly points out, there is still the assumption that most tenants are simply renting while they save a deposit to buy their own home. But the changing nature of employment, which supports the trend towards more flexible living arrangements make long-term renting attractive to a small but important majority.  

Earlier this month we slated Labour’s plans to give private renters the right to buy their home – even if the landlord had not put the property on the market. Landbay’s findings point to the wrong-headed thinking behind this proposal. Why pledge to introduce a right to buy policy if renters don’t want to purchase the homes they live in?

 Instead, any future government should encourage greater flexibility in the rental market, promote development of build-to-rent homes for all ages – not just young professionals – and look at ways to bring homes back into failing town and city centres. High quality, affordable residential property can be a driver to boost local economies and bring people and businesses back into neglected urban spaces. Vibrant, mixed-use development that works for all of us  – investors, landlords and a wide range of tenants – must surely be the way forward.

How landlords drive up quality in the rented sector

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Refurbishment is big business in the rental sector – and is helping drive up quality

Despite recent attempts by politicians to colour the PRS as sub-standard and riddled with rogue landlords, in fact the quality of rented accommodation is on an upward trend.

A survey published this week by InterBay Commercial proves the point. According to the specialist buy-to-let lender, the number of rented homes in England deemed ‘non-decent’ by the Office for National Statistics has fallen for the tenth year in a row. The most recent data reveals a decrease to 24.5% in 2018 from 44% in 2008. There is still a way to go but the vast majority of landlords are now providing good quality homes for people to live in. And this is in spite of the rapid expansion of the sector in the last decade, adding 1.5 million new rented homes.

Confirmation that quality is being driven up year-on-year is borne out by the latest English Housing Survey. This shows that the vast majority (84%) of private renters were satisfied with their current accommodation. 

In addition to the professionalisation of the sector due to the advent of buy-to-rent, which is promoting high-quality living space, InterBay claims that landlords’ commitment to upgrading properties has been a key factor in this improvement. 

The lender’s survey of more than 700 property investors shows that 70% of landlords who recently undertook a refurbishment did so to improve the property, either to enhance the presentation or to elevate the quality of the accommodation for tenants. 

As well as ensuring a property is an attractive prospect for potential tenants, refurbishment typically bolsters a rental property’s value and income potential: 74% of those who undertook a refurbishment said it enhanced the property’s value, and 82% saw monthly rents rise. Even after accounting for those who did not see the value of their property rise, the typical refurbishment added £13,000 to a house’s value.

So it may be an easy target for political point-scoring, but the private rented sector has been the success story of the housing market in the last decade. Growth and professionalisation have improved both choice and quality for tenants.

However, faced with a range of potentially damaging future policies and proposals from across the political spectrum, continued investment is not a foregone conclusion. Rather than demonising landlords and driving them out of the market, they should be well-regulated and properly supported. Interbay Commercial thinks that, should the current rate of change in the PRS continue, “it will weigh on landlords’ decisions to spend more on their portfolios, and risks undermining a decade of progress”.

We agree wholeheartedly.  

Top London rents: what else could you buy?

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We all know how pricey London can be – after all, it’s one of the most expensive cities in the world. With Hamptons International confirming this week that average rents are up by 2% since last August, everyone living in the capital must sometimes wonder how much more they could get for their money if they lived elsewhere.

Property experts FastSaleHomes.co.uk decided to have some fun with this. They have surveyed London’s rental properties to find out just how much money renters in the capital’s poshest areas actually spend on their properties. The research is a real eye-opener. Here’s what you could buy with the money you would have to spend on renting these properties for a year.

The average UK house price is around £240,000, so with the £260,000 you would have to pay every month to rent a penthouse flat in Mayfair, you could BUY a three-bedroom house in Southampton. Or, a car enthusiast could buy a McLaren 720S supercar (which starts at £208,000). Alternatively, your month’s rent could sail two people around the world on a 112-night cruise – with spending money to spare. With the roughly £3M in rent payments for the next 11 months, you could invest in a four-bedroom, four-bathroom house in Florida. Or with just one year’s rent, you could buy around 16 properties in the East Midlands.

Two months’ rent on that Mayfair flat comes in at a whopping £520,000, but if you fancy moving to Manchester instead, that’s enough to buy you a new and luxurious three-bedroom flat in the city centre.

If you want to set your sights a tad lower, a flat in Hans Place – only a stone’s throw from Harrods – would cost you £97,500 monthly rent. The property comes with luxury amenities including a cinema room and 24-hour uniformed security and concierge services. However, if you could live without that, two or three months’ worth of rent and you’re already looking at making a big property investment outside of London. That £300,000 will buy you a four-bed, two-bathroom house in Edinburgh.

Or if you feel like splashing your cash, you could just buy a luxury car such as the Lotus Exige 3.5 Sport, or even an entry-level yacht, for only a month’s rent. A year’s rent in this part of Knightsbridge equates to around £1.1 million – which could net you up to seven properties in Yorkshire and the Humber.

Of course, for most of us, this is all just pie in the sky. The average monthly cost of renting in London is around £1737 pcm. But with three years’ rent you could buy a terraced house in Middlesborough or Blackpool.  And if you’re happy to continue renting, you could save yourself around £700 pcm by moving to Manchester and up to £1000 pcm by considering Leeds or Huddersfield.

So if you are thinking about leaving London behind – and don’t need to commute back into town every day –  why not look further afield. There is life – and property – outside the capital that could be worth considering. Why not check out the sales and lettings on our LifebyRingley website to find out more.

No slowdown for BTR pipeline in the Northwest

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Last week, the Northwest Insider event looked at issues around housing supply and demand. Life by Ringley MD Sam Hay was there, so for those of you who are interested, here are a few of the most interesting takeaways. 

When it comes to rental values, build to rent property continues to command a premium. Pounds per square foot does not come into BTR, instead it’s all about quality of product. Rental growth for July was around 1.13% but Andrew Cook from M&G commented that there will be pressures on pricing as more schemes come onto the market.

Low entry costs on BTR flats are making things much easier for renters. Increasingly, people want a transient way of life and easy entry and exit, so they are likely to try different buildings before they settle longer term. Lifestyle choices are changing fast and renting is no longer frowned upon. Renters react positively to being viewed as customers, not tenants; maintenance issues are dealt with fast and longer-term leases are expected to take off. As a result, BTR is a huge growth area with 1.4 billion total investment this year in Manchester alone. Manchester is currently at the hub of BTR and is very much being used as a test case. Manchester City Council thinks there will be an undersupply but at this moment in time, due to Section 106 requirements, consents are slowing down.

One downside of the BTR explosion and the high demand for one-bedroom homes, according to Tim Heatley from Capital and Centric, is that Manchester city centre is not ready for families. Chris Shaw from Urban Splash agrees. He thinks offers in our town centres need to change, and there should also be schemes in rural areas. Maybe with new ways to sell being considered, such as pre-approved mortgages where you turn up and pick your home. At the moment it is easiest to develop BTR schemes in city centres and building an investment case in other locations can be difficult.

Lambert Smith Hampton told the Northwest Insider audience that 54% of all housing investment in the North East is now for ‘alternative’ homes, such as BTR and student accommodation. The success of the latter in Manchester and other university towns has provided a model for new developments in the region. Diversification and a huge undersupply of high quality residential housing are now driving investment in residential portfolios as opposed to the standard commercial property investment model. There is even an argument in favour of BTR as a separate asset class.