Buy to let deal of the day - Twickenham two bed flat vs two bed house

Sorry been a bit quiet for a few days - I've been to a wedding in Dublin which was highly entertaining as you can imagine. Boy do the Irish know how to drink - I take my hat off to them!!

So, last week I went to meet a landlord who had been reading my blog and newsletters and was interested in pin-pointing his next buy to let investment. He lives in Twickenham and has a budget of £400k to spend and was asking me whether it was better to buy a house or a flat. So, that led me to take a look at what's out there and how the figures stack up.

There's a development about half a mile away from the train station which is extremely popular with renters with one road in particular, Varsity Drive, that has both two bed flats and houses therefore making a comparison simple. 

I picked out these two as examples to show my landlord...

Two bed house

  

This is a modern house with private south facing garden and off-street parking. All good so far. On at £399,950 and will rent every day of the week at £1,350pcm making a yield of 4.1%

http://www.rightmove.co.uk/property-for-sale/property-47115530.html

Two bed Flat

 

So, this is the two bed flat. Great size, nice looking development with parking. Also has a long lease so no issues there. Always do check that as if a flat is cheaper than it should be then that's usually why.
So this one is on at considerably less that the house as £285k. With a rental figure of £1,150 that gives you a yield of 4.8%. 

http://www.rightmove.co.uk/property-for-sale/property-46827272.html

So you'd think from that that you would automatically go for the flat yes? Well, there's a couple of other things to take into account first which may change your mind. The flat will have a ground rent to pay which immediately eats into your profits and the house is more desirable than the flat and so will rent quicker. The flat could therefore have longer void periods which, again, eats into your profits.

The choice, as they say, is yours! 

Rebecca Smith.

Buy to let deal of the day - nice 4.5%

I like this one. Purpose built, attractive, block in Hampton Wick. Very close to the station and walk-able into Kingston so attractive to renters. There are no internal pictures although the description says 'very well presented' which suggests its suitable for the rental market so no money should need spending on it.

With added benefit of residents parking and private courtyard there's not much to dislike about it. On at £350k it should easily rent for £1300, a bit more if the specs better than I imagine or you want to throw a bit of money at it. That would give a very nice yield of 4.5%. :o)

http://www.rightmove.co.uk/property-for-sale/property-31334157.html

Rebecca Smith

Time to raise the rent?

In the last 6 months we've raised far more rents than we would usually do in Teddington in a 6 month period. Landlords are benefiting from changing market conditions - longer tenancies and fewer available properties mean rents are creeping up in both Teddington and Hampton. They haven't moved massively, but properties that are well maintained are trading at maybe £50 to £75 more than they were 12 months ago.

When can you raise the rent?
Earlier in the year I was asked by a landlady who owns 2 cottages in Hampton why I hadn't raised the rent on her properties every 6 months as another agent had told her I should. Rents can be raised annually, and once they have been raised they can't go up again for another year. That's the law.

Why NOT to raise the rent!
For some landlords, the rent review date is the main event on their lettings calendar. It shouldn't be - the gas test renewal date is far more important, as the primary focus of any landlord should be to ensure they are legally compliant and don't end up in a situation where someone can sue them. There are a number of things a landlord in Teddington should bear in mind when considering a rental increase:

• A rental increase is not an entitlement. It doesn't follow that just because a tenant has been in a property for a year, the rent needs to go up. I've known occasions in both Twickenham and St Margarets where the landlord has agreed a rental reduction with a tenant in order to ensure that tenant doesn't leave. Those were the market conditions at the time, and sensible landlords needed to adjust to reflect this.
• A rental increase does not relate to the landlords own costs. If your mortgage has gone up, or you are saving for a holiday, that doesn't mean your tenant is liable for more rent. We hear this sort of thing argued more often than you might imagine. We've never heard landlords who are experiencing low interest rates (as many are currently) argue that their tenant should get a rental reduction, by the way! :0)
• A rental increase does not relate to what you've read in the newspapers. The fact that you may have had an increase in another town, or the fact that your friend may have increased the rent at his property locally and got away with it does not mean you can or should do the same! The amount of rent chargeable relates to the state of YOUR property and the local market. 
• It's possible of course that your tenant can't afford a rental increase. The current rent may be stretching them already and the extra £20 you're proposing will mean they either fail to pay or choose to leave. This may not bother you if you can get another tenant at the higher sum, or you may decide that losing the tenant over an extra £20 is actually a false economy when a small empty period and the costs of re-let are considered. Different landlords have different views. 

Why you SHOULD raise the rent.
So at a simple level, the only real factor in determining whether a rental increase is appropriate is local market conditions in Teddington. You may not have had an increase for 6 years, but if your tenant can go and find a similar size and standard of property In Teddington, Hampton or anywhere locally at a lower rate, it's going to be hard for you to justify an increase. If your property is managed by an agent, you'll have the benefit of being guided by them - remembering that they should know the local market better than you as it's their job! Agents are usually on a cut of all rent received so it's in their interest to propose rental increases where appropriate - but, like you, they don't benefit from an empty property so it's unlikely they'll propose an increase where one can't be justified. The safest thing is to leave it to them. Equally, tenants aren't stupid! If they can see the rent you're proposing is fair in relation to the property and the market, they'll pay it. If they think you're seeking an excessive rent, there's every likelihood they'll take their business elsewhere.

As always, I'm happy to give any advice for free so please do get in touch for a chat if you're interested in anything 'buy to let'.

Rebecca Smith

Buy to let deal of the day - cheap and cheerful!

So this one seems too good to be true but it remains to be seen what it will actually go for. I know I'll be keeping an eye on it. It's a one bed on Waldegrave Rd so perfect place for an investment property - right next to the university where there are people jumping over themselves to rent a property like this....

  

http://www.rightmove.co.uk/property-for-sale/property-45280579.html

It's on at offers over £200k which means it could go for anywhere up to £280/£300k if it starts a bidding war. For the sake of arguement, lets say you get it for £250k, you don't need to spend a penny and you'll get £1000pcm in rent. That makes a very tidy 4.8% yield. You could be lucky though and get it for nearer £220k which would make a 5.5% yield. Worth a try?!

Rebecca Smith

Buy to let deal of the day - 4th July 2014

During a conversation with one of my landlords yesterday she was getting frustrated at the fact that she didn't seem to be getting more than a 3.5% yield. Not taking into account the capital appreciation, she was looking for nearer to 5% in order for her to pocket a decent amount each month.

Without looking too hard its not difficult to come across 5%-ers, you just need to do the maths. And don't forget, although yields aren't amazing at the moment, we've seen some seriously impressive capital appreciation over the last couple of years so always factor that in when doing your sums.

I love this one. This is a cute 3 bed terrace, this time in Whitton, Twickenham. There's a strong rental market in Whitton as it's not as pricey as Twickenham, Richmond and Teddington, but still nice and has the commuter links into London.

 

http://www.rightmove.co.uk/property-for-sale/property-45216100.html

Very good standard for rental and includes a pretty, south-facing garden so should attract a premium of around £1700pcm. The price is quoted as saying 'offers in the region of' £425k which means they're looking for around £420k. So, say you get it for that, that means a yield of 4.8%. Not bad. And when you consider that the prices on average in Whitton have increased by 9% over the last year, not bad at all!

Rebecca Smith

Rise of the buy to let pensioner in Teddington?!

With the recent unlocking of rules on how people can access their savings in retirement, could a new breed of ‘buy to let pensioners’ be ready to enter the local property market in Teddington?

Just last week I was asked again by someone who follows the Teddington Property Blog, but who hasn't yet ventured into the buy to let market, my opinion on the Chancellors budget announcement that savers will be allowed to withdraw their entire pension fund from the age of 55 or over, rather than take the money slowly as an annual income. That got me thinking, particularly about the property market in Teddington, and whether buying an investment property really is the best way to make your well earned money work for you in retirement. Needless to say, I'm not an expert in pensions but I do know property and so am happy to share my thoughts on  the subject....

Recent surveys report that buy to let has outperformed other mainstream investments, so it could be an attractive option for those wanting to safeguard their capital and maximise income during retirement. Yet, whilst this may be the case, I strongly believe that anyone considering their first move into the sector must take professional advice.

Buy to let continues to offer great opportunities, but potential investors must have a clear strategy, and it should never be considered as a ‘get rich quick’ scheme.

Tracker studies indicate that since its introduction, buy to let investment has provided an average return of 16.3 percent – considerably more than most other asset classes. And don't forget, that takes into account the whole country and so the figures in Teddington should easily exceed this.

Over a third of Britain’s 1.4 million private landlords already view their portfolio as the main component within their pension plan – with the relative ‘safety’ of bricks and mortar investment combined with regular rental income making it an attractive investment choice.

The Chancellor’s recent pension reforms have ignited a great deal of interest in buy to let as a viable and attractive alternative to more traditional pension plans. Market demand for quality, well maintained, private rental property remains high and even before the recent Budget announcement I have definitely seen a growing number of enquiries from people seeking advice and guidance on how to enter this sector for the first time.

Some industry commentators are predicting returns of around 11 percent per year over the next decade and a number of specialist buy to let lenders have started to reconsider current age restrictions to allow people up to age 70 to apply for long term buy to let mortgages – subject to them meeting certain criteria.

It is important for first time investors to buy property at the right price, in the right location and to identify the type of accommodation that people will want to rent from them both now and in the future. With my local knowledge I can look in detail at potential property ‘yields’ - taking into account all outgoings, such as maintenance costs - and provide novice investors with a realistic expectation on returns. I am happy to sit down and talk to anyone wanting to learn more about becoming a successful property investor.

Rebecca Smith

Buy to let deal of the day - safe bet

I was talking to one of my Teddington landlords yesterday and he asked what I thought of buying ready made investments in and around Teddington against ones that require a lot of work to bring them up to standard. My answer was pretty simple - what do you want to get out of the investment and why are you a property investor in the first place?

He answered that he just wanted to make a bit of cash on the side but with the least amount of effort possible. He had no desire to be chasing around after builders, choosing tiles and carpets and such like associated with renovating a property. He had even less of a desire to be answering the phone to tenants at all hours who've got a broken toilet seat or don't know how to change a light bulb! That is probably the reason why I manage his 3 properties for him so that he never has to deal with the tenant and the only properties I recommend he buys are ready made investments. 

This one popped up this morning which is a prime example of a 'buy to let in a box wrapped up with a big bow'!!

 

http://www.rightmove.co.uk/property-for-sale/property-46925834.html

It's a one bed top floor flat just around the corner from Hampton Wick station which also makes it walkable into Kingston over the bridge in 5 minutes. Ideal location? Check. Top spec? Check. Share of freehold, river views and curb appeal as added bonuses? Check. What's not to love?!

It's on at £385k and considering the location, size and spec will comfortably fetch £1300pcm. That gives a decent yield of 4% without even considering the capital appreciation. This won't hang around for long though so get your skates on if interested!

Rebecca Smith