Thursday, 31 March 2016

Warrington Landlord Life


Good Morning blog readers. I hope everyone has enjoyed their Easter break and enjoying this short week back in work.

I would like to introduce Mark Alefounder from HD Consultants, Mark is guest blogging today with an article about the importance of life cover especially whilst being a landlord.
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I spoke to a friend of mine last week who owns and rents property. The reason he bought property was to provide him with more of an income when he retired, so that he could still afford to provide his children and grandchildren with all the things he could when he was working. I became concerned when he told me his health was declining and he still had a mortgage on his rental property, but no life insurance.

Nowadays, it’s rare to meet a property investor who has sufficient life cover to protect their property related debt. More surprising is that there are still a large number of people that haven’t even considered taking life cover for their property.

The need for life cover is something that all too often gets overlooked. In fact a great number of people will insure washing machines, irons and televisions before they consider insuring themselves!

Your insurance just needs to be fit for purpose – to give you confidence knowing you’ve got things covered.

What happens if I don’t have insurance?

Most people have very different ideas about what happens to their estate when they die. Many think that property held in sole name of a deceased landlord passes to another and they take over the mortgage. That is absolutely not the case.

 “What would be the effect of my death on my portfolio?”
·         Would your mortgage lenders just transfer the mortgage to your beneficiaries?
·         Would there be enough equity in the properties for your beneficiaries to refinance them?
·         Would the rental income be enough to satisfy the lenders criteria to refinance if interest rates increase?
Who knows?

What would lenders expect with a buy to let mortgage in place in the event of death of the landlord?
·         We would expect the mortgage debt to be repaid from either the cash funds held by the deceased’s estate, or the sale of the property by the executor of the will.
·         If a sole borrower then technically we would require the account to be redeemed.
·         In the event of death of a borrower/landlord if the BTL is in sole name we would ask for the mortgage to be redeemed in full.
·         It’s fair to say we would expect a sole mortgage to be redeemed.

Alarmed yet?

Many landlords might say the reason they bought property was to control of their own destiny and to build up a nest egg they could use in retirement.

It’s great if you get that far, but sadly a great many don’t. Instead, you are no longer around and that property is either passed to your surviving spouse or sold. Hardly what you had in mind when you purchased your first property is it?

What about your beneficiaries?

That’s another point to consider. When you started on your plan, you no doubt thought that your property would be for the good of everyone in the future. Good for you, your spouse, children… everyone.

What if you don’t reach retirement?

Does your spouse want to look after a property portfolio? Can your children help your spouse? In fact, would giving them your property portfolio be possible? If nothing else, your average tenant will still demand hot water, light, electric and gas. Sadly, there will be little sympathy for your spouse, regardless of personal circumstances.

Does your property really look after itself?

Even if your rental income far outweighs the monthly interest payments, the property does not look after itself. Take away the property manager, you, and who steps in? There isn’t necessarily a replacement.

Why take out life insurance?

While it won’t manage your property, it will look after those loved ones you leave behind. In a time where anxiety and responsibility could be forced upon those most precious to you, it can provide a cushion or buffer to enable them to return to a normal life. 

It also means your beneficiaries can potentially inherit a mortgage free property. It gives them some options and flexibility to make considered decisions. Some control.

They could keep the property going, but employ someone to manage any transition. They can still sell the property, but at a time they decide is best and convenient, not at a time dictated by a lender. Of course, they can also benefit from an income.

What is the best way to do this?

The simplest way of addressing all it all is to put in place a flexible, tax efficient life insurance policy, probably in trust, to make sure that the right people receive the money with minimum fuss.

All too often people are afraid to speak up, so instead they assume. In this instance we find that a great many people make an assumption which can potentially have a devastating effect on those left behind.

Speak to an adviser who can guide you through the options available. Get protection that will serve you well into the future. Give yourself peace of mind that you can continue to provide for your family when you’re no longer there.

Mark Alefounder
07717647928

HD Consultants

Thursday, 24 March 2016

Doom and Gloom for Warrington Property Market in 2016?




One of my landlords rang me last week from Grappenhall Heys, after he had spoken to a friend of his. Over Christmas, they were discussing the Warrington property market and neither of them could make their mind up if it was time to either sell or buy property. If you read the newspapers and the landlord forums on the internet, there is a good slice of doom and gloom, especially with changes in the taxation towards landlords, new legislation on checking tenants and the general uncertainty in the world economic situation.

Trends

I would admit, there are certain landlords in Warrington who have over exposed themselves in the last few years with high percentage loan to value mortgages. Those mortgages, with their current (yet artificially low) interest rates, will start to suffer, as their modest monthly positive cash flow/profit, i.e. income (rent) less costs (mortgage, fees, tax), will become negative when the tax and mortgage rates rise throughout 2017 and beyond.

It appears to me these landlords seem to have treated the Warrington Buy to Let market as a sure bet and have not approached this as a business. As a result, they will suffer - as they thought "Buy a house - rent it out so it covers the mortgage and make a few quid on top".  These are the people who will be thinking twice. I see opportunity everywhere and won't be stopping, I’m here to stay. It’s going to be an exciting new year.

Gone are the days when you could buy any old house in Warrington and it would make money.  Yes, in the past, anything in Warrington that had four walls and a roof would make you money because since WW2, property prices doubled every seven years…  it was like printing money – but not anymore.

What is changing now?

Since January 1997, the average price paid for a Warrington flat/apartment has risen from £35,154 to today’s current average of £128,416 in the town, an impressive rise of 265% and terraced/town house have risen in the same time frame, from £55,454 to £199,361, an even better rise of above 300%.



However, look back to 2005, and in that year, the average flat was selling for £115,844, meaning our Warrington landlord would have seen a modest rise of 11% and the terraced owner would have seen an increase of 32%, as they were selling for on average £150,911... Not bad, until you consider inflation.

The impact of inflation

Since 2005, then inflation, i.e. the cost of living, has increased by 33.4%. That means to retain its value, Warrington terraced property bought for £150,911 in 2005 needs to be worth £201,267 today. Therefore, our landlord has seen the ‘real’ value of his property drop slightly by 1.4% (i.e. 32% less 33.4% inflation).

The reality is, since around 2004/2005 we haven’t seen anything like the capital growth in property we have seen in the past and it’s not predicted to grow at the rates it has previously done either. So it is high time anyone considering investing in property stopped believing the hype and did some serious research using independent investment expertise.

You can still make money by buying the right Warrington property at the right price and finding the right tenant. However, remember, investing in Warrington property is not only about capital growth, but also about the yield (the return from the rent). It’s also about having a balanced property portfolio that will match what you want from your investment – and what is a ‘balanced property portfolio’? Well we discuss such matters on the Warrington Property Blog ... if you haven’t been, then it might be worth a few minutes of your time? 



If you are a landlord or thinking of becoming one for the first time, and you want to read more articles like this about the Warrington Property Market together with regular postings on what I consider the best buy to let deals in Warrington, out of the many of properties on the market, irrespective of which agent is selling it, then feel free to get in touch! email me on manoj@hamletwarrington.co.uk If you are in the area feel free to pop into the office we are based on 6 Bankside, Crosfield St, WA1 1UP plenty of free parking and the kettle is always on.


Don't forget to visit the links below to view back dated deals and Warrington Property News.

Facebook, https://www.facebook.com/hamlethomeswarrington

Twitter, https://twitter.com/HHWarrington

Website, http://www.hamlethomeswarrington.co.uk/

Thursday, 17 March 2016

Inheritance - Is buying Warrington Property still the best place for my windfall?




I had an interesting email from someone in Warrington a few days ago that I want to share with you. In a nutshell, the gentleman lives in Appleton, is in his mid 60’s and still working. He has a good pension, so that when he does retire in a couple of years’ time, it will give him a comfortable lifestyle. He also recently inherited £250,000.

One option he told me was to put the money into a savings account. The best he could find was a 2 year bond with the Post Office which paid 1.9% - meaning he would get £4,750 in interest a year. One of his other options was to buy a property in Warrington to rent out and he wanted to know my thoughts on what he should buy, but he did not want to take a mortgage out at his time of life. He was also worried about all the tax changes he had read about in the papers for landlords. 

Things any new landlord should consider

In spite of the war on Warrington landlords currently being waged by George Osborne, the attraction of bricks and mortar endures for many.

As our man is a cash buyer, he would not have to concern himself with the cut to mortgage interest tax relief that will diminish (or even eradicate) the profits of many Warrington landlords. It is true he would face the extra 3% in stamp duty to buy a second property, but with some good negotiation techniques, that could soon be mitigated.  

How is buying property better than a savings account?

I told him that buying a Warrington buy to let property is all about the total return on investment. True, he could put the money in the Post Office bond and receive his interest of £4,750 a year or, as he rightly suggested, invest in property in Warrington.

The average yield at the moment in Warrington is 6.78% per annum, meaning our potential First Time Landlord should be able to earn, before costs, £8,199 a year.

(However, I told him there are plenty of landlords in Warrington earning more if he was willing to consider more specialist investment types of properties – again, if you want to know where – look at my blog or drop me an email).

The bottom line is that the success of investing in Warrington buy to let property versus a savings account with the Post Office (or whatever Bank or Building Society is offering the best rate) will depend on the performance of those assets.

Unlike a savings account, with property the capital you invested can also go up. Property values in Warrington have risen in the last twelve months by 9.6%. So, if our chap had bought a year ago, not only would he have received the £8,199 in rent, but also seen an uplift of £24,000 in the value of his asset… meaning his overall return for the year would have been £32,199 (not bad when compared to the Post Office!). 

What about values dropping?

The doom mongers among you will say property values can go down, as they did in 2008, and in 1988 and 1979.

But, after 1979 prices bounced back to their ’79 levels by 1984 and went on to grow an additional 58% in the following four years.

Then again, they dropped in 1988 and did take 13 years to reach back to those ’88 figures, but the following six years (between 2001 and 2007) they then increased by an additional 66%.

What would that £250,000 buy you in Warrington? A couple of smart 2 bedroom terraces close to town? A couple of great 2 bedroom houses on Chapleford Village or Stockton Heath?


In fact, the world is your oyster. But you need to decide what property is right to maximize your returns. As ever this blog has articles that cover that point but for more detailed. If you are a landlord or thinking of becoming one for the first time, and you want to read more articles like this about the Warrington Property Market together with regular postings on what I consider the best buy to let deals in Warrington, out of the many of properties on the market, irrespective of which agent is selling it, then feel free to get in touch!  email me on manoj@hamletwarrington.co.uk

If you are in the area feel free to pop into the office we are based on 6 Bankside, Crosfield St, WA1 1UP plenty of free parking and the kettle is always on.
Don't forget to visit the links below to view back dated deals and Warrington Property News. 


Thursday, 10 March 2016

Warrington landlords pause for thought





I have spoken to many landlords and would-be-landlords so far this year – many of them regular readers of this blog. I have spent much of this week catching up with many of them and there seems to be a change in the Warrington market.

What is the new trend?

Some of these landlords have bought and completed already this year, but are finding that the high rents indicated as achievable by selling agents have failed to attract any tenants. Some of those landlords need to let swiftly, from a financial perspective, so are reducing the advertised rent... In turn for some, this has made their monthly returns very marginal.

Further to this, the number of investors registering to buy has fallen dramatically. The chances of buying and completing before the Stamp Duty changes apply are ebbing away fast.

If you buy today you need to have a proactive solicitor, a chain free property (and if using finance, a very good lender) to stand a chance of beating the deadline.

We are again seeing some price reductions creep on to Rightmove (Rightmove indicates there have been more than 30 price reductions in the month of February, about 13% of what is available), primarily from those agents that are over ambitious with their pricing in an attempt to attract new business.

What happens next?

So, if the heat is coming out of over ambitious rental and sale prices, where are prices going to go? The Brexit referendum looms large in June and elections always have a dampening effect on the property market. I expect the referendum to have a similar effect.

Uncertainty is always bad news for the property market. We are all still a little uncertain of the impact the 2017 proposed tax changes are going to have. Are we really going to see thousands of landlords off loading their portfolios as the media suggest? I think not. At least, not in Warrington. 

Supply and demand

The demand for good quality rental properties in Warrington remains  and is not going to go away. However, tenants, like the rest of us, do not have ever deepening pockets, so I think we will see rents stabilise at their current (still high) levels. However if you are needing to achieve speculative high rents for your new shiny buy-to-let, you may want to double check your figures. In particular if you are paying a high price. Remember the rules of supply and demand.

Flat sale prices have been driven up by the lack of supply of houses NOT the strong demand for flats!

A bit of advice

As always if you are investing in property in Warrington seek out sound advice. Many landlords discuss their purchase with me before proceeding.

Questions you need to think about are:
·         What is really the achievable rent?
·         What work will I really need to do to maximise my return?
·         Is this the right price to be paying?
·         Will this location let readily?

Whoever you turn to make sure they know the area and the lettings market.


If you are a landlord or thinking of becoming one for the first time, and you want to read more articles like this about the Warrington Property Market together with regular postings on what I consider the best buy to let deals in Warrington, out of the many of properties on the market, irrespective of which agent is selling it, then feel free to get in touch!  email me on manoj@hamletwarrington.co.uk

If you are in the area feel free to pop into the office we are based on 6 Bankside, Crosfield St, WA1 1UP plenty of free parking and the kettle is always on.
Don't forget to visit the links below to view back dated deals and Warrington Property News. 


Thursday, 3 March 2016

How to pay 5% Vat when renovating your Warrington investment Property.



Over the weekend I got chatting to a landlord who is currently renovating a few properties in Warrington. She is a keen reader of the Warrington Property Blog, so instantly we started to talk about the local market.

She mentioned something about paying VAT at a reduced rate of 5%. I was intrigued and needed to know more… and I thought my readers would love to know about this.

What renovations qualify for only 5% VAT?

If you are buying a home that has been empty for two years, then you may be eligible for the reduced rate of VAT (currently 5%) on works carried on at the house.

Basically, your contractor can invoice you with the reduced amount provided he/she is supplying and fitting.

So what types of properties qualify?
  •           Single household dwellings;
  •        Multiple occupancy dwellings, such as bed-sits;
  •        A building (or part of a building) which, when last lived in, was used for     a relevant residential purpose
  •      A building (or part of a building) which, when last lived in, was one of a       number of buildings on the same site that were used together as a unit       for a relevant residential purpose


Summary of Discount

You must use a VAT-registered contractor to be eligible for the discount.

Your contractor can charge VAT at the reduced rate of 5% if they are renovating or altering an empty home that has not been lived in during the 2 years immediately before the work starts – providing they supply and fit.

You will also need to ensure that your contractors understand the reduced VAT rate rules so that they invoice you correctly.


The two year rule

The renovations or alterations can only have reduced rates if in the two years immediately before works start, the premises has not been lived in.

The property must have been continuously empty for the two years prior to the work starting.

If the dwelling has been lived in on an occasional basis (for example, because it was a second home) in the 2 years immediately before work starts then services cannot be charged at reduced rate.

If, once the works have started, the dwelling is lived in again; the work is still eligible for the reduced rate.

Types of occupation which can be ignored are:

  •          illegal occupation by squatters; and
  •          non-residential use, such as storage for a business.


Proof of two years empty

Your contractor needs to be able to show HM Revenue & Customs evidence that the property has been empty for two years. Your Empty Property Officer can provide a letter documenting the last date of occupation of the property.

Where an Empty Property Officer is unsure, HM Revenue & Customs may accept a best estimate and call for other supporting evidence.



If you would like more information on this feel free to email me and I can point you in the right direction to other articles which go into more detail on this. It’s also worth speaking to your accountant to see if they know about this. If they don’t, then contact me. As I’ve stated above, I will forward more articles explaining this in much more detail.

As always you can contact me by phone on 01925 235 338 or email which is 
manoj@hamletwarrington.co.uk
alternatively if you are passing the area then pop in for a chat we are based at 6 Bankside, Crosfield Street, WA1 1UP (the kettle is always on)
Don't forget to visit the links below to view back dated deals and Warrington Property News. 

Wednesday, 2 March 2016

Warrington buy to let 'Deal of the Day' with a potential 7.9%...




Good Morning readers. I spotted a little gem on one of the Portals today and I just have to share it with you all

This house is ideal for any level of investor, however if you are a first-time investor this might be right up your street. It's a 2 bedroom terraced in a popular rental area of Warrington (Longshaw Street)



The house has 2 double bedrooms which is always a bonus as some of the other terraces on the street have one double and one single. The house is close to the giant Tesco supermarket on Winwick Road and also has a lot of smaller shops on the street.




Let's take a look at the actual property itself. Going off the pictures it doesn't look like it needs any work doing to it at all, possibly a little dust and hoovering but other than that its ready to let. This would fetch around £495 PCM giving you a yield of  7.9%


There is definitely room to negotiate as the last house sold on this street was 176 Longshaw Street, and that sold for £60k last year on 30th October. Also the last house on this street to sell at £75k was actually a 3 bedroom semi- detached and that was 178 Longshaw Street and it sold on the 13th March last year.

Don't be afraid to go in with a lower offer. 


If you are interested in this property then get on the phone to Mark Antony Estates in Stockton Heath and arrange viewings, If you would like a second opinion on the viewing then feel free to give me a call on 01925 235 338 or drop me an email at manoj@hamletwarrington.co.uk and I will be more than happy to pop along on the viewing.

If you are in the area then come and visit us in our office which is 6 Bankside, Crosfield St, Warrington, WA1 1UP. The kettle is always on..