Landlords – Prepare Your Properties For Winter

Extreme weather such as unexpected snow, strong winds and gales like we have experienced in recent winters can put a huge strain on our homes, leading to burst pipes, boiler breakdowns and big bills.  All it takes is a few simple checks (preferably before the first cold snap!) to get your home winter fit. Here's how....

Do Some Pre-Winter Maintenance

 A few spot checks around your home will reduce the likelihood of winter rains, wind and cold causing structural damage. 

* Clean out the guttering and check for any leaks or damage.
* Cast your eye over the roof from ground level to look for problem signs such as loose or missing tiles. Check that TV aerials are securely fixed.
* Look out for cracked, loose or missing pointing or rendering on exterior walls and have this fixed before water finds it way in.
* Get your boiler and/or central heating serviced by a Gas Safe Registered engineer.
* Clear out leaves and debris blocking up drain grilles and clean patios and footpaths before they get slippery from a build-up of dirt.
* Have chimneys and flues swept if you use an open fire or wood burner.
* Get your insulation up to scratch - lag pipes and water tanks, fit draught excluders and insulate your loft properly.
* Make sure your smoke alarms and carbon monoxide alarms are in full working order.
* Show every adult and teenage member of the household where the stopcock is, plus where to turn off electricity and gas supplies in case of emergency.
* Keep a list of useful numbers handy in case of emergency. Include your plumber, gas installer, electrician and doctor.

Whether your home is one you own yourself, or a rented property, we all have to take responsibility for the effects of extreme weather.  Landlords of rented properties should also show due diligence in making sure that the above checks are carried out on their properties both to avoid additional expense to themselves and discomfort and inconvenience for their tenants.

Here at Martin & Co in Chichester, we can give advice on the types of precautions you should take and also who you can call if you need help with any of the suggested actions. We want all our tenants to be happy and comfortable in their homes throughout the winter, together with ensuring our Landlords get the steady income from their rental property with a minimum of hassle.  Why not give us a call on 01243 887887 to find out how we can help you? 

Important changes to Landlord taxes

As you may have read in the press recently, radical changes to rates of tax paid on rental income have been passed by Government, and are set for implication in 2017.

Higher rate tax payers who own buy-to-let property, and on which there is a large mortgage, will pay substantially more tax. Current base-rate tax payers may also suffer, as the changes may push them into a higher tax bracket.

Those worse effected may see the actual tax they pay on their investment rising two-fold (or more). Some will also see their tax payable rising above 100% meaning all of their profit is paid in tax, or worst still, the level of tax pushing them into making a loss - resulting in a landlord having to raise rents or exit the market altogether. 

The mechanics of the changes are that a landlord will lose the ability to deduct their mortgage interest from the rental income when calculating profit. This means that the Chancellor wants to tax landlords on their turnover rather than profit, meaning, in effect, that tax will be paid on non-existent income.

The easiest way of explaining the changes is by showing a worked example...

Mr Landlord is on a 40% rate of income tax, and has a property that brings in £1000pcm. His mortgage interest comes to £750 per month.

Currently this means he will pay 40% tax on the difference between his rent and the mortgage interest i.e. £250 difference (profit), less 40% tax (£100) = £150 per month profit. 

However the changes mean that the 40% tax will be applied to the whole rent (less a new 20% tax credit calculated on the mortgage interest)  i.e. £1000 rent received, less 40% tax (£400), plus 20% tax credit based on £750 mortgage interest (£150), less the £750 mortgage interest = ZERO profit per month.

Landlords with properties without mortgages will be unaffected. These changes, coupled with the prediction of interest rate rises next year could mean that now is an excellent time for landlords to review their financial affairs. 

Buy-to-Let Deal of the Day - Modern and Low Maintenance Two Bedroom Apartment Offering 5.2% Gross Yield

Whilst having a look through the latest Rightmove listings this morning I noticed a modern two bedroom apartment on the market with Whiteheads estate agents...

http://www.rightmove.co.uk/property-for-sale/property-37035192.html

The flat is located in Whyke Marsh, which is the development you can see on the left hand side of the road, just before the Selsey roundabout, when travelling eastbound on the A27.

Built in 2011 by Persimmon Homes, the flat looks extremely well looked after, and would be ready for letting upon completion of the purchase. An investor would also have the comfort of the remainder of a 10 year house builder guarantee on the property.

In terms of rental return, properties in this block have been known to fetch as much as £850pcm, however I feel £795pcm is more realistic. The property would attract a working couple, young family, or possibly professional sharers.

An asking price of £185,000 sounds fair and realistic, and coupled with the internal decorative condition, I wouldn't expect this apartment to be on the market for very long.

Based on a £795pcm rent the flat would return a very nice 5.2% gross yield.

As with all leasehold apartments, it is important to obtain a full breakdown of maintenance and service charges, as these will all have an impact on your net return.

Buy-to-let deal of the day - Excellent investment property providing serious capital growth

As a landlord, it is very easy to become too focused on annual rental yields, rather than capital appreciation over time. 

A question I always ask our clients is "have you considered your exit strategy?". By asking this question it provokes the discussion as to whether a property investment is likely to be a long or short term venture for the client. 

Each landlord has different individual circumstances, some are investing in property for the long-haul, for their children when they grow up or as a nest-egg for retirement. Landlords such as this may want to research the history of sold prices in a specific street, as a substantial and consistent rise may outweigh the need to achieve 5, 6 and 7% gross rental yields. 

Other landlords may be property developers and investors, looking to maximise the rents they receive to raise capital to invest on further assets. These clients may want to see a minimum of 7% annual yield, before selling up after 18-24 months, and moving on to their next project. 

Chichester is a prime area for capital growth, hence why many landlords have purchased property with 10, 15, 20+ year strategies in mind. A perfect example of strong capital growth is this beautiful three bedroom house on the extremely sought-after Summersdale Road. Currently on the market with Henry Adams estate agents at £410,000, this property has seen huge annual capital growth, averaging a whopping £25,000 since it's last sale at £285,000 back in January 2010. Based on the properties condition and location, I don't think the vendor will have any difficulty achieving a quick sale close to the asking price. 

http://www.rightmove.co.uk/property-for-sale/property-52285931.html?premiumA=true

From a rental perspective, this property should fetch £1250pcm, returning a 3.7% gross yield, which is still greater than one can expect from a savings account at this moment in time.

All in all, a very sound investment!  

Remortgages are on the up

With mortgage rates currently at a record low it is widely expected that rates will soon begin to rise, meaning that it could be a good time for landlords to consider remortgaging. 

Figures from the British Bankers Association indicate that many landlords are reviewing their options, taking advantage of competitively priced offers, and securing fixed rate deals before they disappear. 

As well as protecting against Base Rate increases, the competitive nature of the mortgage market may mean that landlords can actually cut their mortgage costs now.

Assuming a base rate increase in spring 2016, it is likely that we may actually see interest rates gradually rise before then – so remortgaging a day before the base rate increase won’t be a good idea!

Our office has teamed up with London & Country to offer fee-free Independent Mortgage advice, so now may be the time to consider your remortgage options. Please give me a call on 01243 887887, and we will be happy to put you in touch with one of their expect advisers. 

YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Rents Rising in Hay Road, Chichester

A landlord I know has owned a few properties on Hay Road for the last fifteen years. She came in to our office to discuss the rise and fall of property prices on the street and how this has affected her yield over the years.

In 1999, when she purchased her first property on Hay Road the average value of a terraced house on the street was £76.950 which had a sharp rise to £146,250 by 2004. This rise in value continued, with average values being £174,950 in 2008 and £181,500 in 2011.

At the height of the property boom in this area in 2007, a semi-detached house on Hay Road had an average value of £224,975. This dropped slightly in 2013 to around £221,660, with the average value increasing to around £232,500 this year.

When she told me of the rents she had achieved on the street, they seem to have steadily risen over the last 10 years. In 2006 the average rent was £800 per month for a three/four bedroom house, and is now around £1200pcm, dependent on the property’s accommodation. Therefore, a landlord could expect a respectable annual yield of around 6.2% on Hay Road at the moment.

If you would like some free and impartial advice with a potential investment, please come and see me in our offices at no.12 Southgate, call 01243 887887 or email matt.berry@martinco.com

Is Roussillon Park a good development for buy-to-let investment?

As you may already be aware, Roussillon Park is a new housing development to the north of Chichester City centre on the site of the historic former military barracks. Previously the home to Royal Sussex Regiment and Royal Military Police, the site is being redeveloped to provide 250 new dwellings.

It generally takes a short amount of time to let properties on the developments. Tenants consider the proximity of the city centre to be an advantage, as well as the luxury of living in a new property. A two bedroom coach house, depending on size and outdoor space, could be purchased for around £280,000 or £290,000. The rents that could be achieved for these are between £975 and £1000 per month. This means landlords can potentially expect yields of around 4.3% per year.

Two bedroomed apartments can be purchased between £260,000 and £270,000 and they typically can let for between £900 and £950 per month. There is usually the service charge that a landlord needs to pay to the freeholder of the building, this usually includes building insurance and grounds maintenance. Even after paying that service charge, yields of between 4% per year are achievable.

If you have already done a search for property or are trying to figure out where to start, we’re happy to advise on properties before you buy. It’s in your interest that you purchase something that can let, so please give me a call on 01243 887887 or visit our office on Southgate. 

Developers website - http://www.roussillonpark.co.uk/