Dos And Don’ts In The Buy To Let Boom

The latest Q3 2010 figures on the UK housing market further confirm an ongoing boost to the private rented sector. Data from the Council of Mortgage Lenders (CML) reveals Buy To Let (BTL) lending increased by 12% during the third quarter of 2010. This is a total of £2.8 billion and signifies the second, consecutive, quarterly rise. Compared to Q3 2009, this new figure is up 14% in lending and 33% in value.

Buy To Let - a £25 billion industry

For example, Precise Mortgages, an intermediary provider backed by US-based private equity firm, Elliott Associates, has launched a new BTL product range. Dev Malle, sales and marketing director at Precise distributor PTFS, comments: "The Buy To Let market continues to play an important part in sustaining the housing market. We have already had a positive reaction to the panel appointment from members of our community."

CML director general, Michael Coogan, explains: "We would expect Buy To Let demand to pick up further if current rising rental trends continue and house prices remain broadly stable. It is clear that in a market where access to home ownership has become more difficult, the private rented sector is experiencing and will continue to benefit from high levels of demand for good quality housing."

Analysts at Datamonitor predict Buy To Let financing will considerably increase over the next four years. The prediction says it will rise from £8.5 billion in 2009 to £15.8 billion in 2012, £20.2 billion in 2013 and £25.6 billion in 2014.

Sales and rents still on the up

Datamonitor's ‘Buy To Let and the Rental Sector' report says investor confidence will be further boosted by house price stabilisation and the ongoing, high, tenant demand. The report also points out that in spite of the recession, more investors have purchased than sold Buy To Let property in the last two years.

Rents also continued to rise for the ninth consecutive month in October 2010, increasing to £691 per month from September's record high of £689. While rental yields are reported to "remain stable at 4.9%", Axis clients have recently been seeing yields of up to 11% on properties purchased through us.

‘Bidding war' for homes to rent

The BBC also reports landlords and their letting agents are increasingly asking prospective tenants to complete by making ‘sealed bid' offers. Would-be tenants are submitting their bids in sealed envelopes, arranged to be opened at a pre-arranged date and time, in a ‘competition' to ‘win' the tenancy.

This practice is relatively commonplace in the residential buyers' market, but is seen as a new development in the rental sector. According to the BBC report, landlords insist sealed bids are not a device to get tenants to gazump each other and pay more.

Chris Norris of the National Landlords Association (NLA) says: "The sealed bid has been seen as a fairer option, compared to a situation when a landlord may agree a tenancy in good faith, only for another would-be renter to come along and say they are prepared to pay 20% more."

Certainly, this robust market is showing no signs of slowing down and savvy investors are securing their financial futures by expanding their BTL portfolios today.

Top 5 turn ons

Last time, in From Savvy Investor To Smart Landlord In One Easy Lesson, we looked at how to ensure a lucrative and happy relationship between landlord and tenant. In this article we shall take a look at how to make your BTL property more desirable to prospective tenants.

Axis clients, of course, have the advantage of being offered fully-refurbished and often ready-tenanted properties. However, if you want to know what's hot and what's not, read on for the highlights from Post Office Mortgages' recent ‘dos and don'ts' report.

Top 5 turn ons:

• New kitchen and bathroom
• New fixtures and fittings / modern appliances
• Original features
• Plain and modern interiors
• Being clean, tidy and clutter free

Smart refurbs for added value

Properties purchased and/or refurbished through Axis always meet the above specs - whether the property is a new build apartment, or a converted HMO. Specifically, kitchens and bathrooms are of upmost importance.

According to the National Association of Estate Agents, a new kitchen can increase the value of a property by 5% to 10% and an en-suite bathroom could add value of 15% to 20%.

This increase in value is even more beneficial when you know all modernisations have been completed before purchase and you are still buying, through Axis, significantly Below Market Value.

However, if you are not yet an Axis client and have been trying to sail the refurbishment seas alone, you had better watch out for the following.

Biggest turn offs and worst fads

• Old fashioned kitchen (includes brightly coloured Formica) and bathroom (peach or avocado bathrooms are an absolute no-no)
• Signs of damp, mould and staining
• Removal of original features / addition of mock features
• Artex or woodchip walls, wood panelling, stone cladding and exposed interior brickwork
• Bad smells and signs of pests

Buy To Let the Axis way

You might think landlords would be ensuring their properties are 100% up to scratch in today's competitive climate, but you'd be surprised how many can be lackadaisical about such things. As winter approaches fast, it is more important than ever to ensure BTL properties are well-kept, in good working order and warm.

This, however, does not mean more work for you. The Freedom Plan at Axis is all about making our investor clients' lives as easy as possible. Therefore, all our properties meet the high standards both you and your tenants would expect ... and there's not an avocado bathroom in sight!

To find out more about currently available properties and/or have a no obligation chat about our property investment strategies, call Russell Bonner on our UK hotline 0333 444 0034 or email him at russell@axiscontact.com

Live with Abundance

Rod Thomas FCA   

Posted in UK Property News

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