Monday 18 March 2024

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Chichester, £300,000, 5.0% yield


 Summary
3 bed house in Chichester
Listed for sale on 31/01/24 @ £320,000
Now = £300,000
Rent = £1,250pcm
Yield = 5.0%

The property is on the market with Leaders and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/131241017







Thursday 14 March 2024

Rent increases - are they necessary?

I must admit my thoughts as a landlord on rent increases have changed over the years. Previously I believed in not unduly increasing the rent if a tenant had paid on time each month and looked after the property. In fact, there were tenants of mine who had not received a rent increase for a number of years after moving in.

This was all well and good when the average rent in the UK was increasing by just 2.4% per year (as was the case, on average, between 2015 and 2021), meaning the original rental figure did not become too far off the ‘going rate’. Since the middle of 2021 though, rents in the UK have been increasing at an average of 9.2% per year (totalling an increase of 28% in the past three years), which has made it a little harder not to follow suit.


This is not just about ‘taking advantage’ of tenants though. The fact is that the financial landscape for landlords has changed drastically. An increase in legislation and a change in the way landlords are taxed has increased costs. And then we have interest rates…which have massively increased the cost to any landlords with a mortgage.

Now I’ll admit, when mortgage rates went down from around 6% in 2009 to 2% in 2020, I didn’t slash rents. But I did take into consideration that I did not need to increase rents because my mortgage costs were so low. This was a key reason I chose not to increase rents to good tenants during this period - a true win-win! Now that rates have reversed though, and with monthly mortgage payments suddenly doubling or even tripling, you cannot escape the fact that more income is required to counteract this i.e. rents need to go up. 

The alternative, which is one many landlords have taken, is to simply sell the property instead. This would result in the tenants both losing their home and facing much higher rents anyway on their next equivalent rental property when looking on the open market. 

But what about landlords without a mortgage - surely it is not necessary for them to increase the rent? Well, on the face of it perhaps not (although there are other costs that have increased), but there is also the opportunity cost to consider. Basically, if the rent is not increased, they will be getting a lesser return on their investment. When you consider they could sell up and stick the money in a savings account instead, which comes without the effort or associated risks of being a landlord, an increase in rent is necessary for it to remain worthwhile.

So, it seems rent increases probably are now necessary for most landlords. With that in mind, for my next article I’ll consider what is fair when it comes to rent increases. 

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Monday 4 March 2024

BUY-TO-LET DEAL OF THE WEEK: 2 bed house in Chichester, £285,000, 4.6% yield



 Summary
2 bed house in Chichester
Listed for sale on 13/10/23 @ £285,000
Rent = £1,100pcm
Yield = 4.6%

The property is on the market with Bell & Blake and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/86645421







Thursday 29 February 2024

Getting your property ready to rent

In my last article, I listed the basic things you’ll need to put in place before you can legally let your property. Assuming they’re all sorted, the next thing you’ll need to do is get the property ready for marketing and viewings. With that in mind, here’s a few things to consider to get the property ready to rent:
 
Consider improvements
We’ll assume any necessary repairs are done and the house is watertight and fully functioning. That being the case, you could now let it…but will anyone want it? It’s a lot easier to undertake improvements before a property is tenanted, and doing so is likely to attract a better, longer-term tenant, who may be willing to pay a higher rent for a nicer home.
 
So, are the windows and heating up to scratch? How old are the bathrooms and kitchen? Is there a decent shower and suitable kitchen appliances? Could the walls do with re-decorating or the flooring upgraded? It may seem boring but a crisp neutral décor is easier on the eye and provides a blank canvas that tenants can see themselves living in. 
 
Factor in the cost to undertake these works versus the uplift in the property’s value and the gains in tenant satisfaction, longevity of their tenancy and increased rental income.
 
De-clutter
Taking photos of a property with lots of ‘stuff’ in it won’t show it off to its full potential. It’ll also put people off when they come to view the property as it will make the rooms feel smaller and less inviting. Simply clearing surfaces and stacking things away neatly can bring some much-needed calm to a property.
 
Dress the rooms
Whilst the majority of properties are let unfurnished, you can at least straighten the lightshades and pull back the blinds or curtains to let in the most amount of light. If you are providing furniture though be sure to dress the rooms so they reflect who you’re targeting i.e. setting the dining table makes more sense for families than it does sharers.
 
Keep it clean
No one wants to rent a dirty property, so make sure it’s spick and span so it’s looking its best. Don’t forget the outside spaces either; make sure the frontage is clean and tidy, ready to make a good first impression. Tidying up the garden and creating a low maintenance space will make it more inviting, rather than looking like something tenants will have to be working on every weekend.
 
Once the property is up to scratch and made to look its best, it’s time to call in the professionals and get it valued, photographed, measured-up and marketed. A well-presented property that is priced correctly will stand above those on the market that have had less care taken with them and, as a result, should make finding tenants that bit quicker.

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Monday 19 February 2024

BUY-TO-LET DEAL OF THE WEEK: 2 bed house in Tangmere, £274,000, 4.8% yield



 Summary
2 bed house in Tangmere
Listed for sale on 16/11/23 @ £295,000
Now = £274,000
Rent = £1,100pcm
Yield = 4.8%

The property is on the market with Bell & Blake and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/142092392







Thursday 15 February 2024

The basics of letting a property


There are over 150 pieces of legislation that landlords and letting agents need to be aware of when they let out a property. Below are the basic things I always check first when visiting a prospective landlord at their potential rental property:

Is it leasehold?
If so, you’ll need to check there are no covenants that stop you letting out the property to a certain type of tenant or, in extreme cases, preventing you from letting it at all! You may also find the freeholder and/or management company needs to be alerted to the fact the property is to be rented (and to whom).


Is there a mortgage? 
If you have a buy-to-let mortgage, or no mortgage at all, then you’re all set. But if the property is currently your home and you have a residential mortgage you’ll need to apply to your lender for ‘consent to let’ and/or switch to a buy-to-let mortgage.


Is it insured?
Specialist landlord insurance for the property will cover the building, your contents (including fixtures & fittings) as well as providing you with legal indemnity cover.


Furnished or unfurnished?
Most long-term rental properties are let unfurnished, but if you plan to supply any furniture it needs to comply with fire safety regulations (look out for the manufacturer’s label).



Is there an EPC?
An in-date EPC (Energy Performance Certificate) with at least an E rating is required prior to letting (some exemptions apply). They are valid for 10 years and there’s a register online that you can check before you order a new one.


Got gas?
There needs to be a smoke alarm on each floor of the property and a carbon monoxide alarm in any room with a solid-fuel burning device e.g. an open fire.


Are smoke and carbon monoxide alarms in place?
There must be a working smoke alarm on each floor of a rental property. Meanwhile, carbon monoxide alarms need to be installed in any room with a ‘fixed combustion appliance’ (other than a gas cooker). That most likely includes a gas boiler, gas hob, gas fires & open fires all requiring a carbon monoxide in the room.

Are the electrics up to scratch?
All new tenancies require an EICR (Electrical Installation Condition Report) to be undertaken by a qualified contractor to ensure the electrics are safe and in a good condition. These are then valid for five years (unless the electrician says they need to be checked sooner).


These are the bare minimum legal requirements you must comply with before letting a property. There are many more points to consider though, such as the condition and desirability of the property, its likely target market and rental valuation compared to what else is available at the time. If you have a property that you’re thinking of letting and would like some advice or guidance, please get in touch.


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Monday 5 February 2024

BUY-TO-LET DEAL OF THE WEEK: 3 bed house in Chichester, £300,000, 5.0% yield


 Summary
3 bed house in Chichester
Listed for sale on 31/01/23 @ £320,000
Now = £300,000
Rent = £1,250pcm
Yield = 5.0%

The property is on the market with Leaders and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/131241017