How To Save Money Letting Properties

In the last decade or so, with house prices increasing so much, there has been a plethora of amateur landlords springing up all over the place.  Now that the market has changed, many of them may have found they got into the game a little too late and cost-saving is now even more important than usual.  Here are a few tips to help minimise costs if you wish to continue letting properties:

• Keep an eye on your mortgage deal.  If you’re coming to the end of a special offer, start looking at least three months before.  Don’t let it run out and find yourself paying the more expensive standard interest rate.  This could save you hundreds of pounds over a year
• DIY - if your own diy work is not up to scratch, don’t try to cut too many corners by doing it yourself, instead, use a local handyman, preferably one who is not VAT registered.  The price difference could save you hundreds of pounds
• Rental agents - make sure you negotiate the best deal possible, manage the property yourself and at the end of the initial contract, make sure the rent rolls over into a one-month rolling agreement to save having a new contract drawn up.  This will save you a couple of hundred pounds
• If you are still looking to expand your property portfolio whilst prices are low, consider taking your CeMAP qualification with a CeMAP training company so you can become a mortgage advisor and save on mortgage broker fees.  The cost of a CeMAP training course is only the cost of one mortgage deal with a good mortgage broker and over the years will save you thousands

Keep reading this site, there are many tips and much information to help you when renting property.

Different Mindset of various buy to let investors

Property investors, who are looking to enter the buy to let market, need to have a proper purchasing strategy, particularly in the types of property they choose to buy. At the core of any buying decision is the quantum of returns the property investor is expecting. In case of buy-to-let investors this means rental returns, or the margins they will make from the rents (over & above their mortgage payment they make), boosting their cash flow.

There is a large section of investors that tends to buy cheaper (often ex-council properties), and are generally new property investors. On the other hand, more experienced, often also richer from an aggressive income building strategy, target properties that have a strong capital growth potential.

Their strategy would generally be to buy better quality properties (typically period conversion flats in London) that over a period of time will go up at much higher rates than those of the ex-council properties. There is a downside to this since these have become expensive to finance, meaning that several investors need to supplement the rent that they get from their monthly incomes for covering the mortgage payments.

Skills shortage in UK’s construction industry

There is an acute shortage of skills in UK’s construction industry according to a survey report. The survey predicts that situation is changing from bad to worse.

2012 Olympics are going to be held in UK. Huge construction project, the biggest since World War II, is already underway. But there is equally big shortage of management skills. The industry is in dielima.
Many companies were relying on migrant workers staying in UK. The fact is many of them are either leaving or have already left.

A report published by the Institute for Public Policy Research in April, points out that half of migrants from countries of European Union have already left UK. Flow of migrants from Poland and other countries is continuously falling.

Survey statistics reveals that 90% respondents are of the opinion that UK construction industry is suffering from skills shortage; 83 per cent feel that that recruitment of senior management is difficult, while 84 per cent consider middle management recruitment more difficult in the current year. These figures are 7 to 9 % higher than the skills survey of 2006 by CIOB.

However, according to Michael Brown, deputy chief executive CIOB, 70% of respondents believe that not withstanding the credit crunch, demand in construction in 2008 will go up, causing further worsening of skills shortage.

The shortage of skills in the industry is now a global issue. Flow of professionals towards areas such as the Middle East, is worsening situation in UK.

What is in store for UK’s first time buyers in 2008

Buying a property is one of the biggest decisions in one’s life. It is the time when one decides to invest his hard earned money or thinks of raising finances for owning a property.
Many people confront problem of raising finances. They need to plan how to arrange for monthly repayments and even paying off capital. Buying is always more expensive and difficult than renting, but it makes you the owner of your own place.

Timing your decision to buy property is very important, but equally difficult. Finding best price for a property is a difficult proposition. There is a boom in the property prices in the past 10 years. According to Halifax Building Society average price of £70,000 in 1997 has gone up to £197,000 in 2007. The increase is almost 182%.

Rocketing property prices had an adverse impact in 2007. The number of first time buyers dropped to 300,000 in 2007, the lowest since 1980 and less by 15,000 than in 2006. It was also reported that 96% of the first time buyers in UK, could not afford such high prices.

But the picture is rosy for 2008. Property market witnessed a big crash in the house prices in the last quarter of 2007.David Kuo of the Motely Fool financial website is predicting a fall of 20% in the house prices during the year. Another prediction, favourable to the first time buyers is that base interest rates of Bank of England will also be falling to stimulate growth in economy. The first time buyers will be reaping dual advantage.

Martin Ellis, chief economist at the Halifax, feels that current state of UK economy is sound; hence the house prices will remain flat during 2008.

Though price front may not bother the first time buyers, getting their mortgage approved will be more difficult in 2008. Lending approvals were down by 40% in November 2007. The situation may improve if interest rate cuts take place as predicted. Overall climate seems favourable to the first time buyers.

Factor in various costs associated with a property purchase

It is not always what you think (as a landlord) that counts but what the tenants think of your property and the surroundings that probably matters the most. In other words, think from tenants’ perspective. They are not only renting your flat or house but also effectively lifestyle from you (the property owner) and your property. Of course, you budget also must permit you to invest in an area where property rates are high.

It has been observed that just about 5 per cent of property investors are debt-free and independently wealthy and hence do not need a mortgage for funding a property purchase. Many of these still borrow funds to be able to buy more properties and earn better profit margins. If you are new to the market, check the minimum level of deposit needed by lending institutions when they grant a borrowing facility on any ‘Buy to let’ mortgage. Property investors also should factor in other associated property costs on top of the deposit. These comprise Stamp Duty (a property purchasing tax that is paid to the Government.)

Government’s plan of 2 million homes by 2016 at risk

The UK Government’s ambitious plan of 2 million homes by 2016 is likely to get   setback.
According to David Stubbs, senior economist at Royal Institute of Chartered Surveyors (Rics), weak market and excess inventories of unsold homes has compelled building firms to drastically reduce building activities. The number of new-builds fell by 24% in the last three months as per the figures available with the government.

He opines that problems in mortgage market and slow down in economy will continue to cause decline in house building. Government’s pledge of building three million homes by 2020 seems a distant possibility.
Annual hosing start figure totalling 156,400 in 2007-08 fell by 10% compared with 2006-07. The figure is 18% less when compared with 2005-06. In fact since 1992-93, number of completions exceeded number of starts for the first time in 2007-08

National Housing Federation (NHF) spokesperson also says that it will be difficult for the government to achieve its target if it fails to take care on its part. At the same time he emphasizes that social housing is becoming all the more crucial due to high housing prices which people are struggling to afford.

The Home Builders Federation (HBF) the industry’s trade body will be urging the government assist the market.  Gordon Brown, fearing that property prices are likely to fall by ten percent, announced plans to help the market yesterday.

Think like a tenant to become a successful buy to let investor

When thinking of buy to let investment, seeking expert inputs makes sense. Their advice will come in handy as they will guide you about tenants’ requirements and will also inform you about latest trends in the property market, including areas or localities that are and will continue to be in demand. This is important because the rent amount must be able to service the mortgage cost or else your finances will come under strain.

Coming back to factors that are important in finding a suitable tenant, one key factor as already mentioned is location. In fact, in order for a buy to let investor to be successful, he or she needs to consider any decision regarding property purchase purely from a tenant’s perspective. You cannot afford to make a random choice.

However, most property investors think simply in terms of the level of rent achievable on their property investment. This (factor) seems to be at the core of defining their purchasing strategy, which is not right. Think from a tenants’ point of view, and you will invariably become a successful buy to let investor.

Devising a proper purchasing strategy

When considering a property purchase for the purpose of investment, the number one criteria is the location you choose. Choice of a good, decent location is a very critical aspect.  What does make a good location or the one that will continue to be demand irrespective of the market conditions? Tenants will look for not only excellent eating, drinking, shopping avenues in close proximity but also decent public transport network in form of Train, tube and bus stations just nearby.

Hospitals, educational institutes, entertainment facilities in the area also boost the demand for your property. It is also important for people - be it tenants or owners - to feel safe and secured in their homes.
If the location is messy, unhygienic and lacks basic amenities like transport, medical facilities, schools, colleges, restaurants, among others, the owner of the property there, will not receive the desired rent. Therefore to achieve good rents, an investor must choose a location where tenants would generally enjoy staying in their property and be comfortable with surrounding areas.

What do the house price trends in May indicate?

House prices in England and Wales continued their fall for the eighth consecutive month as potential purchasers shunned the property market even during the traditional spring buying season, according to a survey. The survey pointed out the 0.5 per cent drop in May prices followed a 0.6 per cent fall in April. This meant the average cost of a home was nearly 1.9 per cent cheaper than in May 2007, the fastest rate of decline recorded since November 2005.

The survey found the supply of homes continued to increase, with the 20 per cent jump recorded in the number of homes on the market (since February) further pushing down prices. There was a 6.7 per cent fall in the number of buyers who registered with agents over May, following a 2.8 per cent decline over the previous month. According to market analysts, the situation was an outcome of what they termed ‘buyers’ strike’.

Experts say it is too early to conclude whether the ‘slightly smaller monthly fall’ registered in May means that the pace of fall in prices was now moderating.

The UK housing industry hit by the shortage of skilled workers

To add to the woes of the UK housing industry, the shortage of skilled workers is now acutely being felt. A recent report published by the Institute for Public Policy Research, points out that half of migrants from countries of European Union have already left UK. The survey reveals that 90 per cent respondents are of the opinion that UK construction industry is suffering from skills shortage; 83 per cent feel that that recruitment of senior management is difficult, while 84 per cent consider middle management recruitment more difficult in the current year. These figures are 7 to 9 % higher than the skills survey of 2006 by CIOB.

However, according to Michael Brown, deputy chief executive CIOB, 70% of respondents believe that not withstanding the credit crunch, demand in construction in 2008 will go up, causing further worsening of skills shortage. 2012 Olympics are going to be held in UK. Huge construction project, the biggest since World War II, is already underway. But there is equally big shortage of management skills.

The shortage of skills in the industry is now a global issue. Flow of professionals towards areas such as the Middle East, is worsening situation in UK.