Landlords Building Up Cash Piles

‘Landlords are preparing themselves for a much publicised softening property market by refinancing their portfolios rather than trimming them down,’ so says Lee Grandin, managing director of Landlord Mortgages, a buy-to-let mortgage broker at www.lml.co.uk
Grandin believes that investors are putting themselves in a strong position by (building up cash reserves) to snap up potential bargain properties if the property bubble bursts.
I agree compeltely with Mr. Grandin on this point - and as a broker it's honest of him to say it.
You'll know my last post looked at the gap bewteen rental returns and costs in Manchester. And there is a similar gap in London, though maybe not quite as severe as Manchester.
All the more experienced investors I know are buying houses with gardens, not apartments (though flats can still do well, it's in very limited areas) or they are sitting on their cash and waiting.
Back to my main site at www.lettingfocus.com
Ps Finally, as I was out in a t shirt last night, I got to wonder when and how will the markets - stock and others- "price in" the risk and the effects of global warming! Now there's a thought!

Manchester a tough market

Just been speaking to a friend who is a big landlord in Rochdale.
Up there, there is quite a gap opening up between rents and property costs, but that's nothing compared to what he tells me it's like in the apartments in central Manchester.
He tells me of apartments near central Manchester that are on sale at £175,000.
He then went undercover and found agents offering him the properties at £500 (or less) per calendar month - meaning a gross yield of 3.4%.
Ouch!
I sure hope the landlords there get the capital gains to make up for their current term losses.
In the 2 bed terraces that are being regenerated they might yet, but in the apartments (where the pool of tenants is limited to singletons & couples with no kids) I dont think they will.
There are too many apartments and too few tenants.
See www.pacmanproperties.com
Back to main site at www.lettingfocus.com

Mortgage Lenders Bending Over Backward to Help Beleagured First Time Buyers

There is a good article in today's Independent - http://money.independent.co.uk/property/homes/article2068007.ece- which looks at all the initiatives, both government inspired and those by the mortgage lender's themselves to extend credit to first time buyers to buy property.
And they aren't doing this out of altruistic reasons of course! With interest rates currently low the lenders figure their default risk is low. And as long as unemployment and / or interest rates don't go up too much, they should be OK.
Which all got me thinking....
At my talks at the Home Buyers Show back in September, I asked the audiences what they thought the avergage London property price was in 1994 (having given them the figure for October 1988)
The first three winners got a free copy of my book, "Successful Property Letting"
Lots of people came up to the stand to try to guess the answer - but only one man won.
The respnses told me how many people had already forgotten that property prices dropped about 30% between 89 and 94 - most thought they would have increased over this time!
So when I read the Indy article today, I thought how I'd love to pose the same teaser to whoever sets policy at the mortgage lenders.
I bet you they have forgotten the great property crash too - or were still at school at the time!
Go back to main site: www.lettingfocus.com
PS Celebrated a milestone this week as the book went through 10,000 sales and continues to be the UK's top selling buy to let book. (Just don't expect to find it at Books Etc! No wonder Waterstones and Amazon are cleaning up the book trade!)
A new print with some minor changes to the text should be hitting the shops soon.
PPS For property news relevant to landlords the Indy (Wednesdays) and the Times Bricks and Mortar (Fridays) are the best of the broadsheets.

Holiday Lets are Taxed More Lightly than Normal Buy to Let

Holiday lets are treated differently from normal lettings and get additional relief from tax. To qualify as a “holiday” let, the property must be furnished to a degree necessary for normal occupation, available to let to the public for at least 140 days a year, actually be let for at least 70 days a year and not let to the same person for more than 31 consecutive days in a 7 month period. Lettings must be at market rents, not peppercorn rents to friends as the letting must be commercial, i.e. with a view to making profits.
With a furnished holiday let you can also claim capital allowances on the costs of fixtures and fittings, but the wear and tear allowance is not available, and you can “roll over” all capital gains onto another UK holiday let property.
If the property is let as a commercial letting of “furnished holiday accommodation” (or if it qualifies as commercial property), the rate of Taper Relief for CGT purposes is much higher than the taper relief that applies on normal rented property. You get what’s called the “Business Asset Taper Relief” which is nil for properties held for less an a year, 50% if held for between one but less than two years and 75% if held for 2 years or more!

House Price Statistics Should be Read with Care

Another day, another set of house price statistics.
Anyone reading the stats should do so with caution and look behind the figures because house price statistics hide a lot of information - so its worth going "behind the headlines" to get the actual press release and accompanying data to see what's really going on.
For example, in London right now house price inflation is massively skewed by hyper house price inflation at the very top end of the market - as city boys and girls with their ill gotten bonuses compete with Russian tycoons with their (often) ill gotten gains to out bid each other in sunny Kensington and Chelsea.
There is of course something of a spill over effect to more normal mortals of all this, but not much of one.
And so the effect of the hyper inflation at the top end is to distort the average - after all it takes 20 normal houses of £250K each to match one house of £5m.
The fact is that inflation for more run of the mill properties is not as great as the bald stats suggest.
www.lettingfocus.com