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Is the buy-to-let market still viable?

 

The buy-to-let market has had somewhat of a difficult time over the past few years due to changes in government legislation and taxation. Since July this year, however, the number of buy-to-let mortgages approved has risen considerably and is proving that there is life in the market for those looking to invest.

With competitive mortgage rates available, especially if a larger deposit has been accrued, anybody who has the desire to become a landlord now has the opportunity to do so. A new report by HomeLet showing that the average rent around the UK has reached a record high of £970 per month demonstrates that the potential to reap rewards through buy-to-let is exceptional.

HomeLet data shows that rents have increased in every single region of the United Kingdom over the past twelve months, up to 3.5% greater than at the same point in 2018. For those looking to invest, this presents tremendous opportunity to be able to invest locally and see the benefits.

Biggest annual increases in average rents

Region August 2018 August 2019 Annual Change
London £1,632 £1,689 +3.5%
North West £717 £741 +3.3%
South West £826 £852 +3.1%

In terms of rental yields, we are also seeing record highs in terms of the average yield that landlords are reaping, with the average now reaching 4.5%, up from last year and the highest in three years. For those looking to maximise their yields, there is a growing trend towards Houses of Multiple Occupancy, or HMOS, as they tend to provide a yield approximately 20% higher than a typical rental property.

So, which region provides the best rental yield?

North West 6.20%
Yorkshire & The Humber 5.90%
East Midlands 5.40%
Scotland 5.30%
West Midlands 5.10%
North East 5.10%
South West 4.40%
Wales 4.20%
East of England 4.10%
London 4.10%
South East 4.00%
National average 4.50%

 

On a local level in Fife, the annual rental increase is 2% and the rental yield is 4.5%.

However, in Fife, there are real gems out there producing yields of between 6% – 12% sometimes greater.

You can find out more by tuning in to our Lettings Director, Richard Cook’s Investment Property of the Week Vlog via our social media channels every Thursday @ 7pm.

Tips on selling as the days get shorter

 

As the days get shorter, it is more important than ever to present your property in an appealing manner if you are going to attract potential buyers. With that in mind, we have put together some season-specific advice to help you find a buyer…

Let the light in
Never is it more important in the year to keep your rooms bright and airy than during the change between seasons. This is because of how quickly the levels of light fluctuate, turning your beautiful property into a less-appealing version of itself, with dark rooms and corners. To avoid this, use uplighters to brighten up your rooms during viewings – this type of lighting can be easily placed into corners or areas which may appear darker. Furthermore, blinds and curtains should be drawn back to allow plenty of natural light and don’t forget to turn any lights on under kitchen cupboards etc. to create multiple sources of brightness.

Keep paths clear
During this time of year, leaves may start to fall from the trees leaving debris around your property. Ensure that your kerb appeal is kept to its maximum by clearing away any wilting plants and debris from your property, especially on the path to your front door where potential buyers will most certainly be looking. If you have the time, consider tidying up your flower beds and removing any shrubbery which may not be looking quite as lovely as during the summer months.

Clean, clean and clean again
Of course, presenting your property in a clean and tidy state is a given, however you should consider other areas to spruce up in order to maximise the available light. Clean your windows regularly to ensure that they sparkle for prospective buyers and let in as much natural light as possible (this will also help with the aforementioned kerb appeal). Clean your front door so that it looks at its best – many of us will have white UPVC doors to match double glazed windows, and if this is the case then use a cleaning product to rejuvenate it.

Keep it cosy
You want your property to seem cosy and inviting and the drop in temperature gives you the perfect chance to make your home comfortable and welcoming. Turn the thermostat up so that during viewings your property is warm and incentivises your viewers to really take their time looking around before they brave the cold weather once more. If you have a fireplace, think about lighting it up or at the very least light some candles.

These are all simple tips that really don’t need a huge outlay in money to do but could completely revitalise your property’s appeal, so it’s worth considering doing when selling to enhance the buyer experience as it often translates to a quicker and even higher offer.

A Brief Guide to your Help to Buy options

 

If you’re a first-time buyer looking to purchase a property, then you’ll almost certainly be aware of the Help to Buy scheme and its success in helping people get onto the property ladder. What you may not be aware of is how the scheme works, and how it helps buyers to secure deposits for homes that would otherwise be out of their reach.

With that in mind, we’ve put together a rough guide to how Help to Buy works.

Can you get a sufficient deposit together?

Most standard mortgages require a deposit of at least 5% of the value of the home you want to purchase. If you are able to get the capital required, then you may not need to apply for any scheme.

Equity Loans

If your deposit doesn’t stretch that far, however, never fear! This is where Help to Buy Affordable New Build Scheme comes in. If you have a 5% deposit, you can apply for an equity loan for purchasing new-build properties. The Government will lend you up to 15% of the property’s price, and there is no interest to pay.

For example, should you purchase a £200,000 house, you’d pay £10,000 (5%), get a mortgage for £160,000 (80%) and the Government would loan you the remaining £30,000 (15%).

This scheme is open to first time buyers and existing home owners. For more information tap here: https://www.mygov.scot/help-to-buy/how-it-works/

ISAs

If you’re still saving for that all-important deposit, then a Help to Buy ISA is available to you, with the Government adding 25% on top of the value of your savings (up to £3,000) with up to 2.6% interest tax-free. A word of caution; if you’re considering this option, then you would need to apply for your ISA prior to 30th November this year. Click here to learn more.

Shared Ownership

If you can’t stretch your finances to be able to afford the entirety of a mortgage, Shared Ownership provides you with the opportunity to buy a share of your home (between 25% and 75% of the property’s value) whilst paying rent on the remaining share. You can also buy bigger shares in the property once you’re able to, offering you flexibility for the future whilst owning a significant stake in the home you wanted.

Purchasing a home doesn’t have to be beyond any first-time buyer. Speak to our financial experts about your Help to Buy options and find out how you can finally buy the property of your dreams.

Should you pay off your mortgage early?

 

New research from financial services firm Hargreaves Lansdown has shown that one in six of us who have purchased a property will either be over 65 by the time the mortgage is fully paid off, or the loan will never be fully paid off. The question stands, therefore, as to whether you should pay your mortgage off early or not?

As the average age of homeowners creeps upwards, and first-time buyers are entering the marketplace beyond 30 years old, the prospect of entering into retirement with a mortgage still to pay is going to be a reality for many. Research conducted by the Financial Conduct Authority supports this notion, with the FCA forecasting that 40% of first-time buyers in 2017 would still be repaying their home loans at 65.

First and foremost, do your sums to see whether you have anything to worry about in the first place. If you are going to be receiving a healthy pension anyway, then the prospect of continuing mortgage payments may not be anything to worry about. On the other hand, if you are going to be on a lower income than you’re currently accustomed to, then mortgage payments may well prove to be a stretch. If this is the case, here are a few options to help you pay that mortgage off sooner:

Overpay whilst you can

Speak with your mortgage provider to see when your prospective final payment is and use this to incentivise yourself to pay early when you can afford it. Many mortgages will not charge you for overpaying, instead embracing the higher payments so double-check with your provider and overpay in order to bring forwards that final payment date.

Consider re-mortgaging

With interest rates at record-low levels, many borrowers are now considering re-mortgaging in order to obtain a more favourable mortgage. Eventually, you will be moved onto your lender’s standard variable rate (SVR) if you do not remortgage or move onto a different deal during your mortgage term. Avoid these less favourable mortgage rates which will extend your mortgage term, and you could slice years off your repayment schedule just by switching providers or plans.

Reduce your mortgage term

Rather than overpaying on your current mortgage plan, reassess your financial status to see what you can really afford now. You will most likely be in a different economic position now to when you first purchased your property, and potentially able to afford higher repayments. If this is the case, and you are likely to remain in a stable position for the foreseeable future, then reducing your term and increasing your monthly payments is a guaranteed way to pay off your mortgage more quickly.

Remember this is all about doing your sums to put yourself in the best possible position later and just making additional contributions no matter how small they are each month can make a fundamental difference.

For example: On a £150,000 mortgage at 5% with 25 years remaining, paying off a £5,000 lump sum reduces the interest by £11,500 and means you repay 18 months earlier. *

Overpaying when interest rates are low means you’ll have a smaller mortgage to be charged the higher interest on later so this could be even greater.

The key though is to get the best advice and speak to a financial advisor or mortgage broker.

*Money Advice Service

A Guide to Loft Conversions

For some of us, a great option to increase the floor space in our homes is to move upwards into the loft area. However, if you’re considering converting your attic space into living space, there are a few factors that you should consider before starting any work…

Is it worth it?
When you are weighing up the potential of a loft conversion, it’s worth deliberating whether the cost of the work is equal to the value which you are adding to your property, so that you don’t end up overspending with no hope of recouping the costs when you decide to sell up. A loft conversion can add up to 20% to the value of a property, a significant amount; however, the cost of completing the works can vary depending on the type of space that you have available and the complexity of the requisite works. Shop around for your building quotes so that you have multiple options and then compare property prices in your area that have had loft conversions to see the difference in price; this should give you a strong idea in terms of budgeting and is it worth it.

Is my loft suitable for conversion?
Not all lofts can be converted into bona fide living space, as there are some caveats in terms of the available head height in the area, the pitch of the roof, the structure of the roof and obstacles such as water tanks or chimneys which may obstruct the area. When you measure from the bottom of the ridge timber to the top of the ceiling joist, you need to have at least 2.2m of usable space for a conversion to be suitable.

Do I need planning permission?
Depending on the type of conversion that you are implementing, you may not need any planning permissions whatsoever. “Permitted Development” rules grant rights to enable homeowners to undertake some types of building work without the need for any permissions. If you are completing a simple conversion, with no structural changes to the roof, then you will most likely not require planning permission, making the process a lot simpler. To read about “Permitted Development”, see the Scottish Government guidelines here: http://ow.ly/kion30puxur

How do I intend on using the space?
One of the most important questions to ask yourself before you commit to the building work is what exactly you need the extra space for. In some instances, this will be an easy question to answer; for example, if you’re a growing family in need of an extra bedroom. However, for others, the use of the room may not be so clear-cut. If you’re adding the extra space simply because you’re feeling a little squeezed for space in your property, then a loft conversion may well be the wrong answer as, although you’ll be increasing your living area, you will most certainly be losing useful storage metres. If you are looking for more space, then consider moving into a more appropriate property in your area – you may well have made a profit on your current property which would enable you to upsize.

Don’t fall foul of your insurer
Before completing any works on your property, ensure that your insurer has been fully briefed with regards to the possible changes to your property as you don’t want to invalidate your home insurance. Adding value to your property may affect your premiums, and any building work being completed (such as floors being taken up or electrics changed) can result in damage to the property which may not be subject to insurance claims.

Finally, getting the right contractor is key here. One that has a track record and comes in on the price quoted. Get everything written down in black and white so there are no arguments at the end over who should have done what. Effectively you’re drawing up a contract of works to be completed at the price quoted. Think about: How long have they been trading, ask for references and call these people to check how it went for them, plus google their name to make sure there are no horror stories. Check Facebook as well. Be prepared to make reasonable staged payments but always make sure you do not pay too much too soon leaving yourself in a vulnerable position should the contractor not live up to his/her word and you have to get someone else to finish off the job. It’s also worth getting a professional to inspect and sign their work off at various stages before you pay them to make sure it’s correct. Above all else get professional help and don’t try to cut back on essential costs if you have no experience in this or you could lose everything including the original house if it’s not done right.

The 5 best ways to add value to your property (4 min read)

When we decorate our properties, it is often driven by personal preferences in order to make a space fit into our own idea of what is stylish. However, if you are not just looking to decorate a space but to maximise the potential value of your property, then this guide explores the best ways to add value to your home.

Solve Existing Issues
Don’t jump straight to improving the appeal of rooms in order to gain the “wow factor”; instead, make sure that your property is structurally sound. It may have less cosmetic impact, but a house with a leaking roof, subsidence or damp will severely hinder you in achieving a strong asking price due to the perceived costs and effort in fixing the issues. Take the time to assess your property and ensure there are no major defects, and this will give a solid foundation to achieve the best price on the market as buyers will not be scared away by problems, nor will they be able to barter the price down.

Central Heating
Take a look at the central heating system in your house – If your central heating is on its way out then replacing this is more than likely to add value to your property as it is another issue which has the potential to put buyers off. Although the initial outlay for the central heating refit may seem high, you should more than recover these costs when selling the property as it is another key point which will assure buyers that your property is well-cared for.

Extra Space
Adding additional living space will always attract buyers as this offers them versatility in the way in which they will use the property. However, before you convert that loft or garage, we would recommend doing a little research. A converted loft can add thousands to the asking price of your property, so it is certainly something to consider – before you undertake this take a look at similar properties in your area and do some investigation as to what the top-selling price has been lately. There will be a ceiling price for the properties in your area and therefore before you add a room, make sure that there is the potential to recoup the cost or more in the asking price.

Decoration
If you want to add value without any major outlay then picking up the paintbrush could be the answer. Freshen up any decoration that has seen better days around the house and do the same in the bathroom, checking on any sealants to ensure they are crisp and clean. Clean up a few simple defects and buyers will see your property in an entirely different light and could be willing to pay more for a home that they perceive to be in excellent condition. This should extend to the frontage of your home, so ensure lawns are mowed and outside areas look cared for. Kerb appeal is everything and first impressions count.

Kitchens and Bathrooms
That old saying that homes are sold due to their kitchens and bathrooms is so true. Having a modern kitchen and bathroom will add considerable value to your property, as well as generating much more interest from buyers. If you don’t want to invest in a brand-new kitchen and bathroom, then update them in order to make them more sellable. Kitchen cabinets can be painted to modernise them and changing the door handles to something sleeker will also help to create the feeling of a newer space. In the bathroom, refresh the paint on the walls, keeping it as neutral as possible, and ensure that the space is bright and airy – add mirrors to make the space feel bigger and use accessories to add colour.

This is clearly a different take on the typical advice and some of these top tips can be done at an inexpensive price which can completely revitalise your property so it’s often worth doing when selling to enhance the buyer experience as it often translates to a higher offer.

However, do your sums. Work out how much it would cost first, get quotes from local contractors and do some research on the valuation now and the valuation after the work. Then work out if it’s worth doing. Getting a local Estate Agent to help on the valuations and give practical advice will pay dividends but make sure you choose one with a proven track record and experience in refurbishments.

6 Simple Kerb Appeal Improvements for Homeowners in Fife (4 min read)

Making a good first impression is key when presenting your home for sale. Potential buyers and renters are always extra vigilant when it comes to viewing properties, from the front gate to the back garden, meaning it’s even more important to present your home in the best light from the start. Continue reading 6 Simple Kerb Appeal Improvements for Homeowners in Fife (4 min read)

Mortgage lenders predicting even more approvals in the run-up to Brexit

With mortgage approvals at record levels, the outlook for those looking to purchase a property is extremely positive and with even more approvals being predicted to be approved in the run-up to Brexit, now could be a perfect opportunity to gain that all-important mortgage.

According to data from UK Finance, the number of mortgage approvals in June rose to 42,653 which is an increase from May, and nearly at the same level as April’s two-year zenith of 42,792. With such consistently high levels of approvals being seen in the marketplace at the moment, even when compared to the same time last year, the sentiment in the market is clearly positive.

Commenting on the figures, Andrew Montlake, managing director of mortgage broker Coreco, said: “Passing the March 29 Brexit deadline was a symbolic moment for the UK property market.

“Sentiment among prospective buyers shifted very quickly from apprehension to a more positive mindset.

“The sharp strengthening in demand for house purchases during the second quarter reflects this shift in sentiment, and the broader Brexit pragmatism that took root.

“Looking forward, lenders are clearly more optimistic than some about the trajectory of demand in the third quarter.

“If demand for house purchases remains unchanged given the potentially turbulent months ahead, then that will be a considerable achievement.

“We are at a pivotal point in the Brexit endgame and a no-deal Brexit is now looking far more likely.

“As we enter uncharted waters, the impact of a no-deal Brexit on demand for property is anyone’s guess.”

House prices forecast to increase 1.2% over next three months

A new study from reallymoving.com has found that current market conditions are indicating a 1.2% increase in property prices over the next three months of summer, which bodes well for a strong summer. The average UK property price now stands at £237,110.

These figures are supported by analysis by the Halifax looking at house prices over the last quarter. The latest Halifax house price index showed that property values actually increased by 2.4% over the last quarter, with Russell Galley, Managing Director of Halifax, explaining that, “Generally the housing market is displaying a reasonable degree of resilience in the face of political and economic uncertainty. Recent figures show demand looking slightly more stable, with mortgage approvals ticking along just above the long-term average.”

With regional markets also showing resilience in the face of the potential instability that can be attributed to the ongoing Brexit uncertainty, property is set for another strong quarter. Eight of the twelve regions of the United Kingdom are set to see prices rise in the period to September 2019, with Northern Ireland and Wales all showing extremely positive growth.

Rob Houghton, CEO of reallymoving.com noted that: “The chance of us leaving the EU without a deal seems increasingly likely and people are realising that the window between now and the end of October may present their best opportunity to sell. The market has proved itself to be surprisingly stable over the last twelve months.”

Nearly half of over-55s would downsize to fund jet-setting lifestyle

With more people living longer and ageing with much better health than ever before, those aged 55 and over are playing a key part in the national economy. Recent research from SunLife has surveyed this age group and found that nearly half would sell up in order to fund a more jet-set lifestyle.

Recent data from the Office of National Statistics has shown that the proportion of those aged 65 and over will rise by 5% over the next thirty years, with greater economic contributions coming from this group as the years progress. For those currently 55 and over, SunLife questioned 1,000 homeowners with a big choice; if they had the option between staying in their family home but never holidaying away from the UK again, or downsizing and then using the cash for foreign holidays which would they choose?

Interestingly, nearly 50% said that they would downsize (44%) in order to enjoy a jet-set lifestyle in their later years – what this does suggest, however, is that 56% would not be prepared to sell their family home. The research has shown that as we get older, the more attached we become to our properties; with those in the 65-80 group voting overwhelmingly to keep their property at the expense of not holidaying again.

Of course, as we get older the inclination to travel could decline as we may be less mobile or find the appeal of travelling for long periods less attractive than in our younger years, which could explain the growing desire to stay-put as we age.

Fife Properties Group Office Owner, Jim Parker commented: “Years ago this was never a factor but more and more people are realising that it’s more beneficial to release equity now by downsizing so they can either enjoy a better quality of life at a more affordable level and also passing some money on to their children to help them get started or pay off their mortgage. One other factor that seems to be appearing is the realisation that life savings could end up being taken by the government to pay for long term care if it’s needed.”

Fife Properties currently offer a FREE initial consultation service which not only provides an idea of the current value of your property but gives extremely useful advice on maximising the value when selling. To book click the link: https://www.fifeproperties.co.uk/property-valuation/

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