Buy to Let Abroad? Show Me the Tenants!

Lots of vendors of overseas property just love to talk about all the capital growth their investors will get. And that's fine.
But remember, when they say property prices have already gone up by X% or wil go up by Y%, who is saying that?
Is it a valuer the developer likes?
Or have properties actually really sold for those higher prices.
You see, the problem is in many countries is that it's really hard to nail down what something is worth because the number of comparable transactions are so much smaller than in the UK.
Also, rental yields in many parts of the new Europe for example are really low - so you may have to fund the investment heavily until you see those capital gains come through.
The reality is that in many emerging economies, personal incomes are still very low so people cannot afford to pay much in rent, plus the number of people renting is pretty small too, so you may also get long void periods.
And as you are in another country, agency and property maintenance fees will likely be higher for you, Mr. Foreigner too.
The message is don't be too bamboozled by vendors claims of big property growth figures. Factor in the low rents and ask them where are the tenants who will fill my property and what can these tenants actually afford to pay!
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PS I'd be interested in hearing from people who have bought abroad and are suffering big void periods and low rental yields plus, of course, those who have done well too.
Copyright: David Lawrenson

Where Has All the Property Gone?

I spent some of yesterday researching available property for a client I am showing around SE London tomorrow.
What's rather scary right now is how little stock is available for the type of house we are looking for. (My client wants a 3 or 4 bed property in the area)
What does come on the market is selling like hot cakes and consequently prices of houses here are still going up very fast.
One quite big agent had no stock of this type at all.
Two agents I spoke to pointed the finger at people buying into the area who have been priced out of West and North London (who were no doubt in turn forced out by people relocating from other even more up market areas. )
The fact of the matter is that big city money and foreign cash has a spill over effect right across the market in London - and trickles its way down eventually to all parts of the capital.
Meanwhile though, as Ann Ashworth pointed out in last Friday's "Times" property is proving harder to shift in fringe areas of Birmingham and Manchester.
Finally, a request - as lettingfocus.com grows I need the help of an experienced public relations person to help me on a part time basis.
If you are a PR or former PR or know someone who is available, do please get in touch with me at david@lettingfocus.com
Copyright: David Lawrenson
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What You Need To Know About Electrics for Buy To Let - Part Six

As well as Part P regulations on electrical work, all HMO landlords now have some additional management responsibilities with regards to electrical safety too.
An HMO is very broadly defined as where three or more unrelated people (forming at least two households) share a property. This means a two bedroom house with a couple and another unrelated sharer would constitute an HMO.
The HMO rules say that electrical installations should be inspected and tested at least every five years by a competent person - and a certificate obtained.
However, the degree to which this is being applied varies by town hall and most are not bothering unless the property needs mandatory licensing (usually where it is 3 or more storeys and had 5 or more people living in it - though some councils have extended this to smaller houses in their area.)
If the local authority asks for it, the certificate must be supplied within seven days of receipt of a written request.
That's the end of this guide to electrical regs.
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Copyright: David Lawrenson 2007

Could Buy to Let Investors Face Heavier Taxes?

This morning I've been listening to part of a debate on GLR (94.9 on the FM band) about London property prices.
Some callers to the show blame landlords for raising property prices by buying up lots of buy to let property and they propose various forms of tax or other limitations to reduce this investor activity.
It's an interesting debate.
Of course, people who argue for more taxes on landlords often forget that buy to let and the growth of renting is simply a reflection of the way we live and work today, because as more and more people have to move jobs more often, so renting gives them that added flexibility.
It also ignores the fact that despite high property prices there are still many people who can buy but choose to rent instead as it fits their lifestyle more.
Sure, the activities of investors do raise house prices but it's our lifestyles (including the hire and fire work culture) that are driving the choice to rent instead of buying too.
So, I think it's unlikely that the government will do much to further tax buy to let.
However, I do think that second home owners who leave their other property empty and create ghost towns in the process - are more likely to come in for more punitive taxes in the future.
I'll continue with my look at electrical regulations tomorrow.
Finally, look out for Rosie Millard's piece in the Sunday Times Home Supplement on Sunday 28th Jan, which should include a quote or two from me!
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