Why to take a hands-off approach for managing your Buy to Let property portfolio

Why to take a hands-off approach for managing your Buy to Let property portfolio

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Buying a property can lead you down one of two roads. One can be employing a professional lettings company to handle everything for you. The other is becoming a landlord yourself, and this comes with lots of responsibilities. These can consume your life, and before you know it, you’re overwhelmed with a matter of issues relating to your property.

In this article, I will explain why it isn’t necessarily preferable to be a Buy to Let landlord. It’s not a decision to be taken lightly becoming a landlord simply because it’s so time consuming. Here are the reasons why…

Lots of DIY needed

Most property investors live busy work lives (after all they must have secured the money to invest from somewhere!) Chances are, they don’t have the time, effort and means to buy a property and spend several months and thousands of pounds refurbishing it to sell back on.

Repairs and maintenance issues are another problem, particularly if you’re not based near the property you’ve bought. A tenant reporting on a faulty tap or broken washer is something that is best left to the professionals. A reputable managing company removes all the hassle you would have in dealing with problems of this nature.

Letting out your property

Finding a tenant for your property can be easy because of the huge demand for property felt nationwide, but what you don’t want to occupy your property is the tenant from hell. Argumentative, loud tenants who don’t pay rent on time is what every landlord wants to avoid, so a proper and extensive vetting process needs to happen if you want a good tenant that causes no problems.

This search is any experienced lettings companies’ bread and butter. They deal with letting out hundreds of properties on behalf of landlords and using them is preferable to dealing with everything yourself, particularly if you are not inclined to do so.

Void periods

A void period is the space of time your property is unoccupied due to your tenant leaving. This is what you may have to deal with at some point when owning a property and most investors factor this into their cashflow before they even decide to invest.

If you’ve bought under a guarantee you will earn a set amount of rent every month (guaranteed by the developer/managing company) then you don’t need to concern yourself with the possibility of void periods. You will still earn your assured rent without question- this clause will be written into the contract before purchase so it’s a legal obligation. One potentially major hassle is removed by using a lettings company.

Limits your purchase to your local area

If you decide to be a landlord and take on all the responsibilities that come with it, you will likely need to be near your property in order to manage it. This limits your money-making investment to your local area only. Chances are, property just around the corner from your house isn’t the most ideal location to invest.

By employing a lettings company, you can broaden your search to invest anywhere in the country and identify the best Buy to Let hotspots regardless of how far you are from there. After all, the lettings company you’ve employed will manage everything, so you barely have to even view your property, if at all.

Dealing with rent collection/increases

Having a good tenant eases much of the stress involved with managing a property but even the best tenant can delay or miss a rent payment. Chasing up rents is not what any landlord wants to spend time out of their day doing.

A professional lettings company has likely guaranteed you your rent every month, so in the unlikely event your tenant misses the rent, your money will come out of the managing companies back pocket instead. Because of this, the company will chase the rent due up heavily because they don’t want to lose money on the deal- it’s in their interests to do so because they profit from your property as well as you.

Legal matters

Let’s face it- most of us aren’t legal experts when it comes to buying property. With more and more government regulations with regards to property law being implemented, a greater knowledge of said matters is important.

A trusted lettings agency will abide by the law and keep on top of new rules and regulations affecting your property. For example, if you try to evict a tenant but are unwittingly breaking regulations in doing so, you could be stuck with a cashflow problems for months and potentially face fines. Leave all this in the hands of the professionals whilst being kept abreast of any issues with your property.

Ultimately, many investors decide they have better things to do with their time than managing their own properties. The more time you save by hiring investment property managers to do all of the day-to-day work, the more time you have available to research the best places to invest in UK property. It means you invest better and make more money. It’s this profit which more than pays for your properties to be managed by the professionals.

For more information on our latest investment opportunities, click on the Investments tab on our homepage. Alternatively, give us a call on 0208 445 6542 or email us at info@tarquinjones.com for more details.

 

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Commonly asked questions regarding studio apartments

Commonly asked questions regarding studio apartments

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I’ve spoken with many first-time investors who, at first, completely dismiss studio apartments as potential investments. Largely, they attribute this to the size of studios, but just because they are naturally smaller than 1- and 2-bedroom flats, that doesn’t mean to say they are bad investments. Quite the opposite in fact- studios have a huge demographic in terms of prospective tenants which leads to big demand for them, especially in major city centres.

In today’s article, I will answer some of the most commonly asked questions about studio apartments that I get asked on a regular basis and try to debunk a few myths regarding them as investment opportunities.

What are studios?

Studios are small, self-contained flats which typically vary in size between 250-400 square feet. They normally belong to working class professionals in metro cities all over the UK and are seen as a low-cost affordable option for accommodation amongst many young people. They are often the quickest plots sold within a development because of the low pricing and high demand from a tenant perspective.

Why should I invest in studios?

Besides the low price, another great advantage is that many if not all studios avoid one of the major drawbacks that many landlords fear; stamp duty. Most studios fall below the £125,000 mark so this is one less expense that investors have to worry about. Service charge and ground rent are the only real expenses which are lower than on one or two bed flats, making many want to invest in studios.

What’s the target market for studios?

Young working professionals, graduates and students are all the key target markets for studio apartments. They typically don’t have the funds to purchase their own property yet and many like the flexibility that renting gives them, being able to move homes quickly if they need to. Many work busy hours at their workplaces so don’t spend much time at home anyway and with many big new developments containing studios that are close to nearby transport links, they can access their work with ease.

What returns can I expect?

Studios typically have higher rental yields than 1- or 2-bedroom apartments because of the lower price. Yields are normally anything from 1%-1.5% higher on studios compared to 1 bed apartments i.e. if a 1 bed apartment in Liverpool has a net yield of 7%, a studio would have a net yield of 8%-8.5%. Any investor looking purely for a steady rental income with a high yield is best suited to investing in a studio placed in a major UK city.

What’s the resell value?

Studios are seeing good levels of capital appreciation on studios, albeit slower than 1- or 2-bedroom apartments. To counter this however, studios have a higher demand for resell because of the lower price and because of the larger demographic that studios target for tenants.

Are there any additional facilities on-site?

Public perception is slowly changing regarding studios from the model of a cheap run-down second-hand property to a high-quality new build studio apartment that comes with plenty of amenities. These include gymnasiums, cinema and game rooms, a concierge, reception and high-end specifications. Young people now expect this style of living with flats that don’t need fixing constantly and investors like new build studios as they know they won’t be getting hassled constantly regarding maintenance issues.

Are studios popular from an investment point of view?

Studios are a great option for first time Buy-To-Let investors as it is a low cost, low risk form of investment. The huge demand for studio apartments in big cities means there is always a tenant in the property paying rent so there is rarely any void periods. Studios also target investors who are less concerned with short-term capital gains but whose main goal is to have a steady, long-term rental income which they know will sell on in a number of years.

Are they furnished?

Many studios have the additional option of a furniture pack which comes at an extra cost. Many investors choose not to buy this however, as the small size of studios does not require a huge level of furniture- furniture which the tenant may already have to move in. This saves the landlord an additional cost, although it’s worth consulting with the tenant to see if this is the case first.

Can I get a mortgage on a studio?

Most mortgage lenders will not consider financing on any property below 310 sq ft, so depending on how large your studio is; you may or may not be able to get a mortgage on it. Many investors choose to pay outright for studios anyway due to the low cost and to maximise their rental income.

Summary

Studios are best summarised as low- maintenance, low cost investment options located in the heart of major cities. They face a high demand as a result, and investors love the constant stream of rental income they get from them. Any person with cash in the bank facing pitiful interest rates looking to get their foot on the property ladder would be well placed to start their portfolio with a studio purchase.

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Autumn 2018 UK Budget- what it means for Buy to Let property investors

Autumn 2018 UK Budget- what it means for Buy to Let property investors

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There has been much made of the latest UK budget and how it relates to Buy to Let property investment. Any seasoned portfolio owner keeps an eye on how this affects what they own, so today we’re going to look at the implications on both landlords and aspiring first time investors alike.

Tax implications

This was Philip Hammond’s third budget as chancellor and the main points that reached the headlines were the income tax cuts and who they would benefit. However, the Budget addresses much more than how much extra people will take home in their pocket after income tax though, with investors and home owners also being impacted.

The personal allowance threshold is due to increase to £12,500 in 2019, a year earlier than expected. This means that overseas investors will be able to take home more of their rental income. For example, units in Allen Street, a Sheffield student accommodation investment have a typical purchase price of £67,500 and 10% net yields would generate £13,500 per annum. Overseas investor could purchase two units and only pay £200 in income tax if it is their only income in the UK.

Purchase price: £135,000 (combined)

Income per annum: 10% Net @ £13,500

Personal Allowance: £12,500

Outside allowance taxed at 20% = £200

The extension of the higher-level tax threshold would make someone earning £37,500 six hundred pounds better off (£3,000 X20%). This could help in small way reduce the affordability of property with London prices falling since the introduction of second home stamp duty in on the 1st April 2016.

Stamp duty changes

There was some good news for first time buyers as the Chancellor extended the stamp duty exemption on first home purchases up to £500,000 where the property is part of a shared ownership programme (in England and Northern Ireland). The previous tax free threshold was £300,000 for all first time buyers.

Retirement funds?

Those saving for retirement will not find any benefit from the new budget as there was no changes in tax relief rates or tax-free cash. It means that it would be wise for those who are nearing retirement to utilise tax relievable options whilst they are still available in terms of gifting money or investing.

How does all this affect the housing crisis?

The Autumn Budget 2018 also fell short in terms of housing, with many experts saying that Hammond needed a far more ambitious plan to achieve any kind of success in combatting the housing crisis. The government announced that it was looking into measures that will simplify the conversion of commercial buildings to residential property which will provide more accommodation options, and of course there will be an effort to build more houses but that does not go far enough to address the shortage.

However, in a range of measures to address the housing shortage the Chancellor also announced £2 billion of new funding for the Affordable Homes Programme – this should give housing associations greater funding certainty over the next ten years, £1 billion of British Business Bank guarantees to support smaller housebuilders, plus an extra £500 million for the Housing Infrastructure Fund, which improves the infrastructure to enable new sites to be used for housing. Time will tell if these measures will drastically affect the property markets, but the noise they’re creating should boost confidence in the markets certainly in the short-term.

Summary

The above announcements would imply that there is still scope for profitability in property investment. Although the government will implement some measures to address the housing shortage, these would not nearly go far enough to tackle the issue. The extension of the Help to Buy scheme to 2023 will help some purchase their own homes, but currently it has only assisted 420,000 households, which compared to the country’s 5 million renters is a small number.

The huge pool of potential tenants will still be an attractive fundamental for existing and would-be landlords, and in cities such as Manchester, Liverpool and Birmingham which have a high young population, investors can achieve excellent yields with buy to let investments.

For more information on our latest investment opportunities, click on the Investments tab on our homepage. Alternatively, give us a call on 0208 445 6542 or email us at info@tarquinjones.com for more details.

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Why are more and more businesses and workers relocating away from London?

Why are more and more businesses and workers relocating away from London?

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Recent reports have shown that more and more companies formerly based in London are relocating their headquarters to more affordable northern locations.

It has emerged that a quarter of companies in the capital have seen staff leave as a direct result of the lack of affordable housing. Many of these are moving elsewhere and big businesses are following suit to keep a large number of their employees.

The Confederation of British Industry (CBI) recently found that 28% (176) of London’s top companies reported that some of their employees had left because they could no longer afford to live in London. Even at a senior level, 59% of the companies surveyed said they had struggled to recruit mid-level managerial staff because of the housing crisis in London, while 22% had had similar issues with senior level staff.

The average house price in London stands now at over £470,000 compared to the UK average of around £225,000. This means that young working professionals are considering their options outside the capital, and with major transport links being enhanced in the future i.e. HS2, it means that people will be able to pay for easy access into London without necessarily paying London prices.

Even at a senior level, 59% of the companies surveyed said they had struggled to recruit mid-level managerial staff because of the housing crisis in London, while 22% had had similar issues with senior level staff.

Birmingham is one such city that is facing an influx of businesses and their employees relocating there. Deutsche Bank and HSBC have both moved to the Midlands city from London recently to capitalize on the cheaper rates whilst putting their trade in one of the UK’s fastest growing cities. Channel 4 is set to move hundreds of staff out of London to Birmingham as well, just reinforcing Birmingham’s overall appeal.

HS2 will be arriving in Birmingham first and will offer a 45-minute journey into London once complete. This will only lead to an increase in those taking up residence in Birmingham especially from London as it will become a commuter zone for workers travelling to and from the capital.

Eddie Curzon, CBI London director, said: “The potent combination of lack of supply and high prices means businesses themselves are being priced out of the market, as they can’t afford to recruit and retain their workers, from entry-level to senior staff.

“And with two-thirds of firms not optimistic the [London] housing market will become more affordable in the next three years, we have a stark challenge on our hands.”

Where are there more affordable options in the UK?

As a whole, prices in the UK are increasing so affordable options are becoming fewer and fewer. However, there are still major cities in which prices are nowhere near the inflated London prices.

Those in search of more affordable places to live will find the best value for money in the north-east, where the ratio of house prices to earnings is 5.18. However, for a stronger housing market with better growth predicted in the future, many are choosing to invest in the north-west, where the affordability ratio is 5.81, and Yorkshire and the Humber with an affordability ratio of 5.91.

The smart investment option is the North West right now with two of the UK’s largest cities, Manchester and Liverpool, undergoing huge levels of regeneration with relatively low prices in comparison to the capital. They combine great levels of capital growth along with decent rental yields also.

Big government led projects, such as the Northern Powerhouse, has also contributed to the North’s resurgence. Media City in Manchester, home to the BBC, has been a huge success for a number of years and is part of a major regeneration project which has transformed Salford into a more attractive location for homes and businesses alike.

The Midlands is also being touted as a location in which housing is preferable in terms of price than London. The levels of growth there are also exceeding London since Brexit with impressive house price increases of 7.3% in the year to February. This is down to the investment pumped into the region which has led to businesses taking up residence there and boosting the economy.

London is seeing less investment as a result of more and more businesses and their staff moving elsewhere. It’s by no means a doomed market from an investment perspective, but the consensus is that the smart money is going elsewhere at this particular moment in time. Capital growth and rental yields can be found in the northern locations mentioned amongst others.

For more information on our latest investment opportunities, click on the Investments tab on our homepage. Alternatively, give us a call on 0208 445 6542 or email us at info@tarquinjones.com for more details.

 

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Rents in Central London according to the experts

Rents in Central London according to the experts

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It’s a well-known fact that house prices in the capital have stagnated in the last year or so, and this frustration for investors is now being felt in the lettings market amongst landlords as well. Fewer homes are going on the market and with properties struggling to sell, it may be time to start looking outside London and at other major UK cities.

In today’s article, we’re going to look at the wider view that rents in Central London are falling and why so many are shying away from those markets as a result currently.

Rents dropping

Knight Frank recently published research that showed rents in prime Central London have declined by 2.1% in consecutive years in February since 2016. The same percentage drop in rents was seen in the year to January figures as well, leading many to believe this could be a trend set to continue in the near future as far as London is concerned.

This drop in prices is despite the growing demand for property in Central London, with 17.6% more would-be tenants looking to rent homes in the area in January again according to Knight Frank. 6.4% less properties were advertised to rent in the year to January 2018 than the previous year. It is this increasing demand that could see rental values regain some of their strength in the coming months.

How are sales affected?

On the sales side, prime property in London has seen a rising discrepancy between original asking price and final selling price, with the average gap now reaching around 10%.

A statement said: “The prolonged nature of the adjustment in prime London rents is due to the high levels of supply introduced to the market in recent years, including during the period following the introduction of an additional three per cent rate of stamp duty for landlords in April 2016.”

“As new supply moderates and demand strengthens, we expect to see continued upwards pressure on rental values.”

Barratt Homes pulling out of the capital

Barratt Developments, the UK’s biggest house builder, has said it will not seek to build any new homes in central London after being forced to cut prices on existing stock. David Thomas, Barratt’s chief executive, on Wednesday said the builder had not bought any new London development sites since 2014 and confirmed it had no plans to buy any more for the foreseeable future once those were built out.

“We’ve been in a position over the past 18 months where that market has become very challenging to sell,” said Mr Thomas, adding that Barratt had been lowering prices on homes to accelerate sales.

The fact that such a reputable and renowned developer like Barratt’s are starting to recognise London as ailing somewhat does not necessarily mean the capital is doomed, but taking longer than expected to recover from Brexit fears. The oversupply of properties in London is also a major factor in Barratt’s decision, and they now are likely to focus their efforts on outer London areas and other major UK cities, signalling them as the go-to places for investment right now.

A doomed market? Or a temporary setback?

Whilst London has been unrivalled in terms of capital growth for the best part of 10 years, based on current markets and projections, it looks set to merely level out the way it has done over the last year and a half. This signals a major change for the London property sector and many investors are aware of this moving forward. Although demand in London will always be very high, other major UK cities like Manchester, Liverpool and Birmingham have been much more resilient to the Brexit hangover than the capital has. They are where the smart money is going right now, and while London is not a finished market by any means, it doesn’t measure up in terms of the capital growth and high yields that can be found elsewhere.

For more information on our latest investment opportunities, click on the Investments tab on our homepage. Alternatively, give us a call on 0208 445 6542 or email us at info@tarquinjones.com for more details.

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Why student property is such a thriving asset class for investment?

Why student property is such a thriving asset class for investment?

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High quality, purpose-built student accommodation (PBSA) in the UK faces an ever growing gap in supply and demand. The scale of these needed is simply not keeping up with the increasing demand for new build student lets and the lack of the necessary housing means many investors will have to pay a premium for PBSA’s in years to come.

Many investors as a result are increasingly considering student accommodation as a means to flesh out their existing property portfolios and provide good levels of rental income combined with capital growth in major cities and towns across the UK.

Here we will detail some of the reasons why to invest in student property.

Increasing number of students

More young people than ever are attending university and it’s no longer considered something for the privileged elite. Student numbers have almost doubled in the UK since 1992- figures show that from the period March-May 1992 there was 984,000 people aged 18-24 in full time education. In May-July 2016, there was 1.87 million, approximately 1 in 3 people, aged 18-24 in full time education. Higher education is now commonplace, and this is all despite the rising tuition fees showing this is not considered a major deterrent among many looking to study in the UK.

Universities are unable to build enough properties to house the ever-increasing demand so many are turning to private PBSAs as the solution. International students in particular favour the new build accommodation as the high specification of these apartments and their city centre locations are attractive for many parents looking to house their children who are studying abroad. The rise in both domestic and international students mean now is a perfect time to invest in student property for those looking to capitalise.

Continued growth of privately built student accommodation

Purpose built student accommodation is now established as the frontrunner in the supply of new developments delivering 87% of all new beds so far in 2017/2018. Universities are providing just over half of their accommodation bed spaces at 57% in the same time frame meaning that just under half is now in the private sector. Far removed from the HMO model, the new build private sector accommodation are all complete with high specification finishes and a wide variety of on-site amenities. Gyms, Wi-Fi, games and entertainment rooms and high-speed broadband are all commonplace with many students much preferring this to the HMO model of over populated second hand apartments with low quality infrastructure and more frequent maintenance issues. Investing in new build student lets removes many of these issues making it a great reason why many are choosing to invest in student property.

Rising investor returns on PBSAs

Student accommodation is becoming more widely recognised as a growing asset class delivering excellent rental yields- Savills have forecasted a 17% increase in investment in student accommodation for 2018. Many developers and managing companies in the UK are guaranteeing yields of 7-10% on purpose-built student accommodation and Knight Franks recent average showed that to be 7.8% per annum.

In 2016, the student’s accommodation sector showed another consecutive year of rental growth which demonstrates a strong performance for the sector in general. Rents for student tenants rose to an average of £143 per week by the end of last year when only 5 years ago they were at an average of £120. This is largely attributed to the increase of students in the UK during this time in tandem with supply of PBSA’s not meeting the growing demand which has driven up prices on properties in this sector, marking this as a great reason to invest in student property.

Student’s growing expectation on their accommodation

Over the years, there has been a paradigm change in the lifestyle of UK students. Many are now shunning the previously traditional low rent second hand HMO properties as they see the new build purpose-built accommodation with higher expectations than they had done before. Value for money is increasingly becoming considered in terms of accommodation. Increase in tuition fees has created a new breed of modern students who see the burden of increased financial debt should result in value for money in terms of the accommodation services being offered. Many investors are taking note of this attitude change and this is a major, yet understated, reason why many are choosing to invest in student property.

All of the research from renowned property agents like Knight Frank and JLL have shown that UK purpose-built student accommodation will continue to grow and will provide a strong and long-term income for investors, which is the main reason to invest in student property. This is brought about by structural undersupply and positive rental growth every year throughout the economy.

Student property is evolving and now becoming recognized as an important element in the wider property market. This evolution is as a result of a shift in accommodation requirements and applications to higher education courses increasing every year. Student accommodation has been established as an asset class in its own right thanks to stability and performance together with improvement in a profile of the sector.

For more information on our latest investment opportunities, click on the Investments tab on our homepage. Alternatively, give us a call on 0208 445 6542 or email us at info@tarquinjones.com for more details.

 

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What to consider before investing in a Buy to Let property

What to consider before investing in a Buy to Let property

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The most important thing about property investment is to know each and every aspect of the deal you’re getting. This can be quite daunting, especially for first time investors, but by following this checklist, you can research everything you need to know about a potential BTL opportunity easily. Here, I will show what you need to research to ensure your next investment is a profitable one.

Research the markets

Before looking at specific properties, it’s worth knowing what the markets are like as a whole in the UK. See what some of the country’s biggest property agents are saying about the state of the markets i.e. JLL, Knight Frank, Savills etc. They will give expert knowledge on the best cities to invest in the UK and provide up to date property news, so you know how your purchase will be affected.

Researching average property prices, analysing whether they are increasing or decreasing, and reading up on the latest property and political news to ensure no policies are being implemented that could negatively impact profits that can be achieved.

Research each property sector

There is such a wide variety of property investment avenues and whilst most follow the same set of fundamentals i.e. supply and demand, there are still differences to each of them and need to be judged on their own merits.

Residential property, student units, commercial sites, hotel rooms, care homes, car parking spaces etc.… It’s important to know what each of these achieve and how they stack up against each other. For example, student property is great for securing regular rental income but less so for its capital growth prospects. Traditional residential plots are better for capital growth but are normally more expensive.

It’s up to you to know what’s best for your money but researching each property investment sector will enable you to choose a property that best fits your goals.

Research the location

You need to know where the prime areas in invest in the UK are. Some are more lucrative than others and you don’t want to tie your money in a location that isn’t growing as much as it should.

The first thing you should know about the area you’re investing in is if there’s a strong demand for property in the area. If this is not the case, then your property will sit empty and you won’t earn regular rental income. A major UK city with great transport links, employment prospects and at least one university will have a strong demand for property versus a supply shortage. This pushes prices up whilst keeping rental income sustainable over a period of time.

Many first-time investors only consider their local area when it comes to investment which is a rookie mistake. The best place to invest is rarely around the corner from where you live and with a slew of managing companies out there to handle all the lettings responsibilities of your property, it enables you to look anywhere in the country.

Research who you work with

Working with trusted and established developers, solicitors, managing companies etc. is key to every investment you make. The last thing you want is to be let down by unscrupulous or incompetent companies who leave your investment in serious jeopardy.

Take the time to investigate the developer’s background for the property you’re buying. Make sure they have a track record of delivering sites on time and that sales progression will run smoothly. The same principle applies to the managing company you may employ to take your property on for you.

Research new builds vs second hand property

You may want to invest in a picturesque 3-bed period setting house, but then realise it requires a lot of maintenance work to bring it up to a good standard that will cost lots of money and eat into your profits. Also, if you choose a house, you may be responsible for finding tenants, and must be on-call to address any of their questions or problems.

Whilst these sorts of houses are innately charming, investors can be deterred by the constant upkeep and renovations. Many now opt for new builds or houses that have been refurbished by an experienced developer. The benefit of these types of investments is that being new, fixtures and fittings are likely to be in good working order. Also, blocks of flats are usually managed by an external company, which means investors do not have to spend their time sourcing new tenants and answering queries.

The decision ultimately lies with the investor and what sort of property they think will fulfil their investment needs, and how much money and time they can dedicate to it.

For more information on our latest investment opportunities, click on the Investments tab on our homepage. Alternatively, give us a call on 0208 445 6542 or email us at info@tarquinjones.com for more details.

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Torn whether to buy a house or a Buy to Let? Why to lean towards BTL property

Torn whether to buy a house or a Buy to Let? Why to lean towards BTL property

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There are many people out there with a lump sum of cash who want to achieve two things. One is to buy their first property for themselves to live in and the other is to get their maiden Buy to Let investment. These are not necessarily one and the same thing, so in today’s article, I will be making the case to invest rather than buy your own residential property.

BTL and residential search the same thing? Definitely not!

Many first-time investors will be looking to treat a property as a place for themselves to live as well as an investment. This is the wrong approach to take- a residential home carries completely different objectives to those of a property investment, and because of this, many first-time buyers look exclusively within their local area. This limits the buyer to properties in one location as opposed to many across the country, and with a slew of managing companies providing a completely hands-off investment approach, this enables investors to look anywhere with no limitations.

Investing as an alternative

Property investment could be the key to young people getting themselves into property ownership. Traditionally, the UK has been focused on owning and living in a property but opening the idea of buying a property to rent out could help first-time buyers on their way.

Investing money into property that can then be used to provide an income is a viable option for young people to consider. Once the mindset has shifted, they will find that it’s no longer a pipe dream, and they could potentially invest without relying on family help.

Securing a mortgage for a Buy-to-Let property isn’t necessarily impossible for people aged 18 to 25, although some lenders won’t allow it. There are group investment schemes open to young investors, and with some research and sensible decision making, owning a home could be safely within their reach.

Saving money

Expensive and ever-rising rents are straining young people’s potential for saving. In addition to consistently low wages and very little chance of a raise, young professionals are struggling to live within their salaries.

As well as this, having a relatively low salary, with little opportunity for promotion, is restricting the chance of getting a mortgage from a lender. The only viable route to home ownership for many people in the younger generations is borrowing from family or parents.

The top three suggestions for the best way to get on the property ladder revolved around relying on ‘the bank of mum and dad’ or other family members to help.

Pitiful pension schemes and interest rates

Between the state pension and low interest rates, there is a big chance many will retire with a small pension fund and their money having accumulated little in the bank. An extensive BTL property portfolio allows you to self-fund your pension and live a life of luxury in retirement.

The rental income you attain will be enough to live the life you’ve become accustomed to, or you could sell large chunks of your portfolio for a huge profit. Either way, you are not reliant on any bank or pension fund to secure your future.

Shared ownership

Around 12% of respondents said that buying a property with a partner or friend was the best way for young people. Around a tenth thought that a Shared Ownership scheme is the way to go. The least popular responses included marrying a rich person at 5% and buying an overseas property at just 1%.

Change in millennials approach

It’s becoming harder and harder for the younger generation to own their own property which is down to wages not increasing in accordance with rising property prices. Not only is there a financial side to this, but also a change in attitude. Many young people accept they won’t own the property they live in and welcome the flexibility that renting brings. Buying a property to rent out as opposed to live is therefore becoming more and more popular amongst young people

While the older generation is stepping up to help their children reach their goals of owning a home, it could be that there is another way. Home ownership need not be beyond the reach of younger people, but they may need to change their mindset and accept that they won’t be living in the property they buy.

For more information on our latest investment opportunities, click on the Investments tab on our homepage. Alternatively, give us a call on 0208 445 6542 or email us at info@tarquinjones.com for more details.

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Why to consider investing in care home investment opportunities

Why to consider investing in care home investment opportunities

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Here at Tarquin Jones, we don’t limit ourselves to purely residential Buy to Let investment opportunities. We take a look at various property sectors that fundamentally serve as sound investments for our clients.

In today’s article, we will be going into the reasons why care home investment opportunities are proving a shrewd asset class for many Buy to Let property investors.

Ageing UK population

Despite the fact care homes have been existent in the UK for many years now, care home investment is currently very much a growing trend since changing demographics over the last thirty years or so have led to a substantial increase in the percentage of the UK population, which is aged 65 and over.

At present this is almost a fifth of the total population and it is predicted to increase to around a quarter over the course of the next thirty years. We’re constantly told that the UK has an ageing population and it’s certainly true amongst a large percentage of the total demographic. In the simplest of terms, the laws of supply and demand very much favour this market sector.

The figures show that there are more and more older people seeking these care homes and with a relative shortage in terms of supply on these, prices are going up on those that are available.

Strain on public funded care

English councils are facing growing numbers of elderly and disabled people who require care, whilst facing a lack of funding to pay social care fees. To meet the growing need all but four councils in England are planning to increase council tax by the maximum allowed to help pay for social care.

The implementation of the National Living Wage6 in 2016, coupled with financial pressures on local authorities has put added strain on the care industry. Rises in providers’ costs and the squeeze on local councils’ budgets are leaving some care providers in an unsustainable position.

The combination of both privately and publicly-owned care home closures, and increasing numbers of people requiring social care, means there are big opportunities for well-run providers of care to expand the development and refurbishment of care facilities in areas of high demand.

In some ways better than residential or commercial?

Investing in care homes offers the best advantages of commercial property investment and residential property investment, while minimising the potential downsides of both.

Other types of commercial property such as retail or office space can be affected by the same sorts of issues as faced by residential landlords. These include vacant periods, unrecoverable rent and changes in circumstances which negatively affect the property, such as changes to the employment landscape or to transport links.

The nature of care homes is such that these issues are generally of little to no concern.  The simple fact of the matter is that the UK population has been growing older for three decades now and is set to keep on growing older for at least the next three decades.  Older people require homes which are suitable for their needs in the later stages of their life and care homes provide an effective way of catering for this significant demand.

Increased bank lending for the sector

Care home investments have seen a massive influx of investment support from a variety of lending institutions over recent years, and therefore are becoming an integral part of any investment portfolio. Banks and other lending institutions are becoming very eager to lend for UK care and nursing home investments, due to the long-term, robust and lower risk income streams that it offers.

They’re a far cry away from flipped residential property or student accommodation in terms of potential lending- care home opportunities are safe and assured to earn you a steady income. Banks and other lenders love this in a property and will more likely offer good financing as a result.

Highly regulated industry

Due to the highly sensitive and important nature of care, the health and social care sector is a highly-regulated industry. The Care Quality Commission (CQC) are the independent regulator responsible for monitoring, inspecting and regulating health and social care services in England.

Because of the CQC’s regular inspections, most care homes are kept to the highest standard in terms of living space and building quality, meaning that any investor buying a room in these can expect very little to go wrong from their perspective. It’s a completely hands-off investment sector that is left in the hands of the professionals both on-site and from the regulators.

For the private investor, now is an excellent time to consider investing in UK care. There are a growing number of innovative developers offering great buy to-let investment opportunities within the UK care sector.

With the tried and tested sales model, finding an ethical, sustainable investment that delivers stable returns and prospects for capital appreciation is no longer the preserve of large institutional investment, and is increasingly becoming an attractive option for individual investors thanks to the security of long leasebacks and long-term cash flows.

Care home opportunities provide the investor with the chance to invest in one of the UK’s most unique asset classes to obtain a regular rental income. Capital growth is not something which is typically expected of care home opportunities but with some of the unique deals that Tarquin Jones manages to source i.e. St. Camillus in Blackpool, buyback options provide that aspect of the investment as well as a solid income stream.

AdminWhy to consider investing in care home investment opportunities
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How you can find the latest prime property investment area

How you can find the latest prime property investment area

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Once you have decided that you 100% want to invest your hard-earned cash, the next step is to look at where exactly you want to put your money. Location is key for property investment, and you want to invest where you will earn regular income whilst seeing your property rise in value simultaneously.

In today’s article, I will be outlining exactly what to look for when identifying a prime property investment area in the UK.

Strong economy

Investing in an area with a booming economic strength is infinitely better than one that doesn’t. Plenty of jobs and a large population to contribute economically means there is a high demand for property in the city and more people continue to travel and work there. This means that, even if a tenant of yours decides to leave your property, there should be a long list of potential replacements that will keep your void periods to a minimum.

A city with a strong economy is also highly likely to experience capital growth on property, a fundamental requirement for many Buy to Let property investors.

Plenty of regeneration

If the city you’re considering maybe doesn’t have the strongest of economies, then take a look at what is being done in the area. Is there money being pumped into the city in an effort to boost it’s economy and make the city a more desirable location to live in? If so, this may be the next prime property investment area.

Government led initiatives and local council efforts all go towards improving infrastructure, transport links and facilities within the city itself will all increase the demand for property near all this happening. The higher the demand, the higher prices will rise generally speaking.

Low supply of property

The basic business principle of supply and demand applies to property investment hugely and forms the backbone of any investors criteria when identifying a location. Major UK cities such as Manchester, Liverpool, Leeds and Glasgow are prime locations to invest in because of the fact that demand is incredibly high yet there is a supply shortage of properties being built in these cities.

Any property near necessary local services (I’ll get to those soon) will face a high demand as everyone wants to live in close proximity to them. The massive disparity between supply and demand is felt nationwide, but in these locations specifically, the effect is felt strongest. Therefore, these are the ideal property hotspots for any investor looking to achieve capital growth.

Easy access to local services

Prospective tenants will want everything close by and understandably so. After all, no one wants to have to drive for an hour just to get to the nearest supermarket. Investigate the local area where you are investing and make sure it’s got easy access to:

  • Convenience shops and supermarkets
  • Bars and restaurants
  • Gym
  • Leisure centre
  • Parks and green spaces

With all this nearby, your tenant will be happy, and you will have little to no problem letting out your property quickly and on a sustainable basis.

Check growth levels in areas

It can be worth looking into a location’s growth levels over the last few years to see if the area has a history of capital growth. A quick Zoopla or RightMove search can tell you how much house prices have increased over the last year, 5 years, decade and beyond. You can cross reference articles from years ago predicting property growth in certain areas with your own search to see if growth is actually occurring in the area you’re considering investing in.

Following these general rules of thumb should enable you to find great property investment locations that are prime areas to put your money into. The two main goals for any Buy to Let investor are securing a good rental yield, and also good levels of capital growth. Doing your research into your potential investment area should pay dividends for you with regards to these two goals.

For more information on our latest investment opportunities, click on the Investments tab on our homepage. Alternatively, give us a call on 0208 445 6542 or email us at info@tarquinjones.com for more details.

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