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What property type has the best rental yield?

With property renting still booming, and the so-called “generation rent” of 25 to 34-year olds still firmly entrenched in the rental market, it would seem that investing in rental property is still a safe bet for consistent returns. If you are thinking of investing or diversifying your investment portfolio, which is the best property type to invest in for the best yields?

Recent research from Yieldit shows that three out of the top five highest-yielding properties are houses with three bedrooms or more, producing net yields of up to 11%. This would indicate that properties which can house multiple tenants or larger families make a smart investment choice, as these properties are more frequently freehold rather than the less desirable leasehold, as well as having no service charges. Research from Mortgages for Business also supports this notion of HMOs (Houses in Multiple Occupation) giving the best rental yield with these properties bringing in the highest rental yield in 2016 and 2017 at 8.9%.

Houses as a property type produced average net yields of 6.4%, followed by studios at 5.3 % and apartments at 4.9%. When looking at investment data for apartments, the Yieldit data showed that for rental yields, apartments with fewer bedrooms actually command a higher net yield – the inverse of houses. The data showed that the average one-bedroom apartment produced a yield of 5.4%, compared to 4% for a two-bedroom apartment.

“Deciding on what type of property to invest in is one of the biggest choices a landlord has to make. Houses suitable for families remain a popular choice, and yields can be significantly higher when you remove costs like ground rent, service charge and self-manage – however, it’s important to note that this type of property might require more work and unexpected maintenance costs could affect annual returns,” says a Yieldit spokesman.

Fife Properties Group Office Owner, Jim Parker commented, “Being a Landlord is not for the fainthearted however I personally have been doing this for over 25 years and Fife Properties has been voted the No.1 Letting Agents in Fife for 8 years at the UK ESTAS awards by their existing landlords. This is a track record that no other agent has replicated plus we have all the experience to navigate a landlord from their purchase decision to full property management while protecting their investment”

To book a FREE Initial Consultation click on the following link: https://www.fifeproperties.co.uk/property-valuation/

“You will not be disappointed.”

The 2018 Budget and its impact on the property market

The recent Budget has ramifications for all of us – with the Chancellor setting out levels at which we pay income tax, fuel duty prices and the all-important “sin taxes” around cigarettes and alcohol. What, therefore, does the Budget 2018 mean for property?

Stamp Duty

Stamp duty has been abolished for all first-time buyers of shared ownership homes (whereby the buyer purchases a share of a home, with the local council or housing association owning the remainder) up to a value of £500,000. The policy will be retrospectively applied from the 2017 budget meaning those who already bought a shared ownership property within the past year will also benefit from the change. Further to this, first-time buyers do not pay any stamp duty on homes below £300,000.

Stamp duty rates in Scotland are now as follows:

  • First £145,000: 0% (£175,000 for First Time Buyers)
  • £145,001 to £250,000: 2%
  • £250,001 to £325,000: 5%
  • £325,001 to £750,000: 10%
  • £750,000+ : 12%

Help To Buy Scheme

There are a few changes being made to the Help to Buy scheme, one of the key points being that the term has been extended to 2023. Further to this extension, the new iteration of the scheme from 2021 to 2023 will only be available to first-time buyers rather than to all, as is the case with the current scheme.

Overseas Investors

A new tax will be introduced for overseas investors, the revenue from which will be used to tackle homelessness across the country. Overseas investors will face an extra charge of 1% to 3% when they buy a UK property, in addition to current stamp duty charges. As well as using the revenue to tackle the increasing problem of homelessness, the intended effect is to dissuade some of the rife competition from the London market which is making purchasing increasingly difficult in the capital.

New Homes

Although the Help to Buy scheme is being extended by two years, there are fears that the cessation of the scheme will slow down new-build homes as there will be fewer buyers able to purchase. The government is intending to give an extra £500 million to councils through the Housing Infrastructure Fund in order to promote the building of new homes and avoid any slowdown in the production of new properties.

Transformed High Streets

As part of a billion-pound boost to the UK’s struggling high streets, the Chancellor has announced a £675 million fund to help councils support their retail zones through this difficult period. An unexpected result of this could be the redesigning of empty retail units into homes – with the chief executive of the Federation of Master Builders, Brian Berry, estimating that as many as 400,000 new homes could be created by making use of empty space above shops on high streets.

Group Office Owner Jim Parker said: “Stamp duty is one of the biggest cons in the government’s history. Raising taxes on what is a necessity while not actually adding any value to the transaction at all or putting anything back into the system. Plus the 3% extra duty on 2nd homes has not solved the initial problem at all, which was to stop overseas buyers.”

Should the 100% mortgage be reintroduced?

A recent poll from YouGov suggests that almost half of the United Kingdom think that the re-introduction of the 100% mortgage is a good idea. A total of 9,713 people were included in the government survey and participants were asked whether borrowing the entire cost of a home is either a ‘good idea’, ‘bad idea’ or ‘unsure’. Almost half of those surveyed, 48%, stated that the reintroduction would be a ‘good idea’ and almost a third regarded the borrowing as a ‘bad idea’ – showing that there is some consternation around the subject.

Currently, a total of nine lenders offer a 100% (or ‘loan-to-value’) mortgage. However, there are conditions around the borrowing option in its current format. In order to apply for a 100% mortgage, and depending on the mortgage provider, you must either have a guarantor who has a property to act as collateral against the mortgage or you will have a ringfenced amount of savings which can act as security (essentially making it an offset mortgage).

The suggestion to reintroduce the 100% mortgage would circumvent the necessity for guarantors or separate security accounts and could therefore help those who are struggling to take that first step on to the property ladder. Legal & General Mortgage Club head of lender relationships Danny Belton disputes whether the reintroduction of this type of lending would be beneficial, however, stating “the thinking and rationale behind the return of 100% LTV mortgage is interesting, but this is not the solution to the current issues facing first time buyers.”

Belton continues to critique the 100% mortgage, offering: “At the very least it would mean lenders would have to significantly increase the amount of capital they would be required to hold, which is just not sustainable. What would be more beneficial is for more buyers to utilise schemes such as shared ownership and Help to Buy, or even make use of a guarantor mortgage.”

In terms of age groups, the poll returned some interesting results, with 46% of those aged 18 to 24 responding positively to the proposition, compared to 49% of those aged 65 and over considering it a poor idea. The disparity in the age groups could be linked to the differences in the stages of property ownership; there’s the younger survey participants that are keen to get on the property market and are therefore more responsive, whilst the older participants have a higher likelihood of already owning a property and are thus more circumspect when faced with new propositions, such as the 100% mortgage.

Although the initial prospect of a mortgage for the full value of a property may appeal to potential buyers struggling to get on to the property market, the realities of living with such debt and the inflexibilities around it could dissuade the majority. The YouGov survey clearly demonstrates that younger people are keen to buy property and hence any new prospects which may help them in this endeavour will be well-received.

However, as Danny Belton has stated, there are several alternatives available to help people onto the property market. Those considering the 100% mortgage to be a good prospect should look in to shared ownership schemes and Help to Buy before plunging in to the loan-to-value option, no matter how attractive the prospect may appear on first glance.

Group Office Owner Jim Parker said, “The return of 100% mortgages is on the one hand good for the market in the short term. However, have we not learned any lessons at all from 2008 market crash? People will take as much as you give them as long as they can get their dream home, so the banks must bear some responsibility to ensure we do not return to this situation”. If you are looking for sensible advice on getting a mortgage, we are best placed to help with this in conjunction with our specialist partners who can search for the best deals out there. Some that are only available to them. Just call any of our office numbers by clicking the link:

https://www.fifeproperties.co.uk/contact/

UK property market set to revive next year after Brexit

With Brexit negotiations in Brussels reaching their crescendo, the reality of Britain leaving Europe is now truly upon us, and for the property market, it seems that this could lead to something of a revival.

During the drawn-out periods of consternation and uncertainty around Brexit, sellers and buyers alike have shown some restraint in their interactions with the market, and this pent-up demand is set to boost activity next year.

“People with important and costly decisions to make tend to pause and reflect, waiting for a time when the outcome is more predictable. The ongoing machinations of the Brexit process for the last two years are no exception, so it is little wonder that the property market has become increasingly subdued as time has gone on” said Richard Watkins, the land and planning director for Aston Mead.

“What’s more, despite the risks involved in the current challenging market conditions, we expect that come April 2019, those hoping to trade up will find that the gap in sale values and onward purchase prices will be the narrowest it has been for half a decade. So there continue to be real opportunities out there” he concluded.

First-time buyers will be buoyed by the two-year extension to the Help to Buy scheme offered by the government in the recent Budget and, with house prices growing at a steadier rate than in historical years, people looking to take their step on to the property ladder will surely benefit from the post-Brexit period.

Despite the well-publicised Brexit uncertainties, the property market has remained relatively stable this year and endured the period of political instability better than most predictions initially forecast. However, 2018 has still seen some slowdown in property transactions throughout the year, and therefore the notion of a post-Brexit revival will be good news for many. With the demand for properties now at an all-time high, and new-builds unable to keep up with this vociferous appetite by the masses to own a home, buyers and sellers should benefit equally after March 2019.

Fife Properties Group Office Owner Jim Parker said, “People move because of their circumstances so even if we see a slowdown just now it will speed up later. If you are selling though and wondering when to do this the answer is NOW. Waiting any longer will only leave you exposed to a higher risk as uncertainty over Brexit continues and there is nothing to gain by waiting any longer. There isn’t going to be a jump in prices even though it’s a favourable outcome”. To book your FREE initial consultation on selling your home with one of our specialist agents tap the link:

https://www.fifeproperties.co.uk/property-valuation/

 

How much of an impact can a street name have on a home?

When considering the purchase of a property there are a number of variables to consider; how many bedrooms you need, if there are good schools in the catchment area and what the local amenities are to name but a few. However, it seems that there is one aspect which should also now be taken in to account – street name. Recent studies have shown that the name of the road which you live on can have an impact upon the value of your property – so the old adage of “location, location, location” may be even more accurate than ever previously considered when buying a home.

The regal touch

Streets with regal names such as Royal, Palace, Lord and Bishop can boost the value of your home – showing that royal prestige extends well beyond Buckingham Palace. Nearly 10% of house-hunters surveyed are willing to pay more for a property with a regal suffix, with 8% prepared to pay up to an enormous £30,000 more. This perception of prestige clearly has an impact on the price of a home and the overall appeal to buyers – so think carefully when browsing through all those homes for sale and don’t just consider their curb -appeal, but also their catalogue blurb-appeal.

The house on the hill

Aside from the prestige of the monarchy, it seems that certain road names also exert a hypnotic appeal upon buyers with properties on “Hills” and “Lanes” worth 50% more than the national average. Naturally, when you consider a hill or a lane there is the image of peace and tranquillity, which could be a contributing factor in their popularity amongst buyers. On the other hand, properties with “Street” or “Terrace” in their address are amongst the least expensive in the UK, perhaps because of the frequency of these names and as such, a perceived lack of exclusivity.

Bishop’s Hill or High Street?

Property buyers are a discerning bunch, with never-ending lists of requirements, and it would seem that a new addition to this list is an “exclusive” sounding address with many prepared to pay a premium for a premium-sounding address. This preparedness to pay for the privilege of living on “Royal Way” or “Hill Lane” however is split regionally – with those in London 24% more likely to pay extra for an address when compared to those in the North East. Perhaps, then, it is the high prices of the capital city and the greater level of investment it takes to buy in London which can woo buyers into spending just that little bit more – a premium-sounding address to reflect the premium cash outlay required to buy their property.

Fife Properties Managing Director, Jim Parker commented: ‘It is amazing how a simple a thing such as a street name can make a fundamental difference but in the past, we have had “Lovers Lane”, “Witches Wynd” which have all attracted more than their fair share of interest.’

Revealed: the biggest property viewing put-offs

When trying to sell a property we all do our best to make sure our home is in tip-top shape and that we present it in the best light possible.

The little things can go a long way when it comes to selling a home and what may look like minor issues to you could be deal breakers to a potential buyer.

ScS recently surveyed several prospective buyers with the goal of discovering the biggest turn-offs when viewing a property.

Whenever you’re selling a home, making each room feel as spacious as possible is key to the sale, so it comes as no surprise that the number 1 turn off is clutter or obvious lack of storage, with 41% of survey participants stating that they would be put off a property which is clearly lacking for space.

Not very far behind at all and chosen by 40% of participants was pets, bad smells and general mess, as it appears that the thought of lasting damage from pets and odours is a big enough deal breaker for some buyers.

Continuing the theme of wear and tear and chosen by 36% of those who took part in the survey was old/damaged carpets, flooring can be quite costly to replace so it is understandable that a worn-out rug could ruin a viewing.

The kitchen is arguably the most important room in a home when it comes to a viewing as if it’s not to the buyers liking, it’s easily one of the most expensive rooms to renovate. This holds true according to the results of the survey, as 35% of people said they would not buy a home if they were not a fan of the kitchen.

Coming in at 5th place was being near a main road, as one-third of us (33%) prefer a home in a more secluded spot away from noisy traffic.

The study also found which features were considered ‘must-have’ with 57% searching for a home with the right number of bedrooms, 40% looking for off-street parking, 32% wanting a well-maintained garden and a similar number of participants looking for new windows and a new kitchen, chosen by 31% and 30% respectively.

Fife Properties Managing Director, Jim Parker commented, “Buying a home is a major investment and while most people are put off by clutter, bad smells, worn carpets and having to renovate there is still a market for properties like this. However, with professional guidance from our experts, you would be surprised at what you can achieve. The key is to get the right professional advice before doing anything and that is where we excel.”

Fife Properties can do an initial pre-marketing home assessment to ascertain and advise of any issues that might affect your properties saleability. You can book a FREE initial consultation today at the following link https://www.fifeproperties.co.uk/property-valuation/

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