Welcome to today’s email of news and views…
‘Scam’ may be too strong a word but, from emails received from members this week, a pattern is emerging. See if this rings any bells. You are offered a BTL unit at an excellent price, no need to do any due diligence, no need to use your own lawyer, no need to even visit (d’uh, d’uh, d’uh) – it’s a perfect armchair investment. All you have to do is pay some money…a reservation fee…some mortgage and legal fees etc, no more than a few thousand, and it’s all yours!
Now, here’s what seems to be happening – a survey is carried out (at your expense) and the report comes back at £10,000 to £20,000 below the stated priced. Oh dear. Well, I never. Can we have our money back – the reservation fee, the mortgage and legal fees etc. A deathly silence…
If you are offered a BTL deal here’s what you do (I feel I need to speak very slowly and loudly here). You read what’s sent to you. You do your own desk research, zoopla, google maps etc. You visit! Go and see it – talk to estate agents and letting agents locally. Take some advice. Do your due diligence. Have a lawyer in place. Everything stack up? Not too good to be true? Then you look at proceeding and not before…
Move With Us reports that nine of 11 UK regions are seeing rising rents – the national average advertised rent is now £923 per month, up by more than £20 on February 2013. Advertised rents in Scotland saw the biggest increase of 3.96 per cent on the year, with the average now at £695.
‘2014 is shaping up to be a good year for landlords with rents increasing in most regions. The Council of Mortgage Lenders (CML) recently announced that gross mortgage lending was an estimated £15.5 billion in January 2014, a third higher than the same time last year when it was £11.6 billion. It’s likely that many of these mortgages have been granted to buy to let investors as we have seen a growing trend for people investing in property instead of using low performing savings account.’
‘The best places for investors however, aren’t necessarily where average rents are the highest but rather, the places with the highest rental yields. This means that, for example, the high rents in Greater London may be deceiving from an investment point of view. Rental yields actually tend to be better in places where property prices are lower like the North East, and the Midlands,’ he explained.
‘Any aspiring buy to let landlords looking to invest in property should follow the golden rules of finding a place with a good rental yield that is in a nice area and is close to local amenities and transport links. Landlords should also check that the property can easily be upgraded to meet the legally required energy performance rating that will be introduced in 2016.’ Food for thought but, of course, let’s not forget capital appreciation is as much a factor for many investors as rental yield.
I’m familiar with the Newcastle, Sunderland, Durham market not least because I looked to buy an apartment there when my daughter, Sophie, went to Durham University in 2011. I’ve kept up my research ever since, visited often, and regularly check what is coming through the system – at present, some expensive units in Durham (close to University), some okay-ish apartments in Newcastle and (in our view) not very good units in Sunderland!
We are, from April, going to do a region-by-region report for would-be buy-to-let investors and I think we will start with this corner of the North-East where there seems to be a lot of supply coming through, some is rather good and much is rather bad from what we can see. If you are looking to buy here, drop us a line for a free report, out around 9 April. You will need to register to receive this.
All for now, see you soon.