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LettingFocus

Unbiased buy to let, property investment and letting coaching, mentoring, advice and seminars for landlords from top selling property author and media commentator.

Why I like houses more than flats by Lawrenson of LettingFocus.com

Ah, us British and Irish we just love those lovely Victorian and early Edwardian houses don’t we.
We love them so much so that we are happy to chop them up into “conversions” and make little flats out of them.
Our love affair for the converted flat can be seen in the fact that many people are prepared to pay as much if not more for a two bed converted Victorian flat than they would for an equivalent two bedroom ex local authority freehold house with a garden on a nice estate in a similar area.
As a property investing landlord who has owned both types of property, I’m not convinced by these Victorian conversions.
In the long run, properties that are freehold and have gardens will always keep their price – just as long as they are in decent areas.
If I had to choose between a converted Victoriana flat with no garden and a freehold two bed modern house with a garden I would always tend to go for the house.
Why?

CONVERSIONS CAN BE A PAIN IN THE NECK
Well, it’s more than just money, it’s time too.
You see, if you have a problem with a flat, you may also get problems with neighbours too. Think leaks and how leaks tend to damage anywhere below where the leak occurs and you’ll know here I am coming from.
Often, conversions also seem to have poor plumbing and heating systems – another consequence of the fact that they were not built to be separate dwellings.
Think about noise and inconsiderate neighbours. In converted flats, noise is always a real problem because the properties were never built to be soundproofed in the first place.
And too many converted flats have problem leases too which make it really hard to get a freeholder to do anything, like fix the building.
Recently I looked after a property for some friends who had gone overseas.
What a nightmare! I constantly had noise issues, leaks, endless plumbing issues and antisocial neghbours to deal with.
A good pal of mine in the trade, who I can’t name, has a business where he helps people extend leases and buy freeholds. He knows how hard it is to enforce your rights as a leaseholder or get agreement on a shared freehold and he says he would never buy a flat. He should know!
If I really had to buy a converted leasehold flat, I would only buy where there was just one other leaseholder in the block – and even then I would want to see a rental yield at least 2% higher than on an equivalent freehold to make up for all the extra work involved.

BELOW MARKET VALUE SHOW GOES ON
At our recent networking event Simon Taylor, the founder of GetAnOffer.co.uk told us that serious buyers with cash or access to lending are still using the downturn to their advantage to buy below market value properties.
Simon has accepted that with legislation imminent, the party is over as far as Sale and Rent Back is concerned but is still confident that on his site where sellers pay to advertise their properties below market value deals can still be had.
His site has some interesting features and is worth checking out.

INFLATION NOT DOWN MUCH – SHOCK HORROR
I see that the commentators were a bit surprised that the latest inflation numbers were not as low as expected. Goodness gracious, where did they study economics.
I would have thought it pretty obvious that with the pound so low, the impact of “imported inflation” for anything made abroad (which these days is pretty well most things) was always going to be pretty significant.
The scribes were also surpised that yesterday’s mortgage numbers were the highest since way back in the autumn.
More proof that the doomsayers who forecast further huge falls in the price of property will be proved wrong.

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ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the property letting experts. Read Articles for Landlords.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Landlords Book.
The new edition is for accidental and experienced landlords and is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on sale and rent back.
I’m an expert property writer and property speaker - and I run the well known landlords blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property letting advice and consulting to anyone looking to buy property for themselves or to let out. I can help private individuals with any aspect of buying property or buy to let.
What’s unique about lettingfocus.com is that we are independent property investment advisors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from these sources.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
Find out about some great deals we have arranged at our Landlords Resources page.
Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
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I’M STILL NOT INVESTING IN FLATS BY DAVID LAWRENSON OF LETTINGFOCUS.COM

At present all the talk is about the credit crunch and falling house prices and as usual with the press, the “headline grab” often obscures the finer details.
In reality, there are huge differences between the relative performances of different property types.
Even before the credit crunch took hold, government figures showed that between the year 2000 and 2007 the shortage of family houses led to detached homes doubling in value while the prices of new flats went up by just 18%.
The reason for this huge difference lies in the planning system which allowed or forced - choose your verb depending on whose side you are on - the UK’s developers to build too many flats and not enough family sized houses.
There has also recently been a smattering of TV programmes about how some novice buy to let investors lost money by investing in some of the many me-too-identikit-city-centre-new-build flats mainly in parts of northern England and the English midlands. Often these were flats they had never seen but they were somehow encouraged to by them at seminars hosted by property companies who persuaded them that they could not lose.
However, with too many of these flats being built and not enough tenants to go round, rents have been flat at best and prices, particularly for the identikit flats in large developments have been falling very heavily just at the same time that re-mortgages at decent rates have become very hard to find.
In some cases flats are now coming up at auctions at over a third less than what the investors paid and auctioneers report they are awash with repossessed flats many of which are not even making their auction reserve prices.

THE TYPICAL LANDLORD DOES NOT HAVE MANY FLATS
However, the novice investors who bought into such properties are actually a long way from what constitutes the typical landlord. For example, a survey last year by Mortgage Trust found that 77% of landlords have no new build in their portfolio at all. With landlords’ average loan to value around 60 percent and with landlord professionals (with more than five properties) owning 97% of the buy to let stock the typical landlord is not hemmed in by falling rents or lacking access to finance to build his portfolio further as the media would have us believe.
My own experience is that most professional landlords prefer bread and butter houses in established residential areas. And that’s not surprising, given that the lender, Paragon recently reported that rents on flats were up 6 per cent in the past 12 months but terraced house rents jumped by a whopping 20 per cent.
The same survey also showed that gross rental yields on terraces are 6.9% compared with 5.7% for flats. With an increasing number of families renting, the added space and flexibility that a house with a garden gives, is something that landords know will continue to be in high demand from tenants.
Figures from ARLA also show that about half of all buy to let investors expect to increase their portfolios over the coming 12 months and the vast majority of investment landlords said they would not sell if house prices should fall.
The facts are that smart landlords are investing. They know financially stretched sellers will listen to low ball offers and that rents will continue to rise fast as first time buyers are either unwilling to invest or unable to get mortgages. And, whilst the credit crunch means that these landlords now need to find at least 20% of a property’s value to get a decent mortgage deal, since many of them have lots of cash available from their existing portfolios that’s not a problem for many.

GIVEN THE BIG FALLS IN PRICES OF INNER CITY FLATS, COULD THEY BE WORTH ANOTHER LOOK AT TODAY?
But could the identikit flats being sold off cheap at auction today represent good value for buyers - whether landlords or for people buying for themselves?
For me, the answer to this just comes down to simple local future demand and supply. If there are many more flats about to come on stream in your area then avoid them like the plague.
At my consultancy, about 18 months ago I advised an investor client of mine with a large number of flats on a single huge development in Manchester to sell his portfolio because Manchester had given the green light to yet more flats in his local area - a fact that was easy to establish by just looking at the local authority’s website.
If there is not a problem with future supply, then maybe these flats could just be a good investment in the long term. However, all too often these identikit flats are full of short terms tenants and absentee landlords. And with no one around to push the managing agents to maintain the properties properly, they are often in a very poor state of repair and destined to become the poor ghettoes of the future.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson a landlord advisors lettingfocus.com.
I’m the author of “Successful Property Letting - How to Make Money in Buy to Let” which for the last 2 years has been the UK’s top selling property title: buy the UK's top selling property investment book
It is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on buying property below market value.
I’m an expert freelance property journalist and property speaker a well known property blogger and I contribute to newspapers and a host of property websites, write a number of columns in the press and I can provide landlords advice
I also work as a consultant helping banks, building societies, housing associations and web portals with their buy to let and property products and services and am a regular speaker at property shows.
You can read more of my blog & find details of my networking, advice, property investors networking programme at my website.What’s unique about lettingfocus.com is that we offer property investment mentoring because unlike most people in the buy to let and property “advice” business we are not linked to a property company, a developer, an agent or bridging loan financier and do not receive commissions from any of these sources.If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.
Copyright: David Lawrenson 2008. This blog is updated once a week. Permission must be sought before using the material in the blog.

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Are New Build Flats Good Investments? Lawrenson of Letting Focus Takes a Look

If you are thinking of buying a new build flat, be careful because it’s now clear that increasing numbers of properties bought off-plan as buy-to-let investments are being sold at large losses through auction.
Auction houses are reporting a steep rise in the number of new builds going under the hammer.
Many of these are flats bought off-plan two or three years ago with rental guarantees.
They were often bought on fixed-rate mortgages which came to an end at the same time as the rental guarantees finished, leaving landlords stuck on much higher borrowing costs, buy wth lower rental income and possibly no tenant.
It gives me no pleasure to say I have been predicting this for 5 years.
The situation is, of course, especially grim for flats where investors have bought in a block of hundreds of other investors who are in the same situation.

New Build Prices Going Down
New build prices have also gone down each month for the last three months, according to SmartNewHomes, while UCB Homeloans, part of Nationwide is one of the main lenders who has stopped lending to landlords buying new apartments. It's not the only lender to have stopped either.
Knight Frank research show that yields are now at their lowest levels on new build flats.
Chris Town of the Residential Landlords Association is quoted in “The Times” telling of one landlord in Leeds who has recently been forced to reduce his monthly rent from £1200 to £800. My message is to avoid areas where there is an oversupply or can be expected to be an oversupply of the same kind of property in the future- and where there are too many landlords chasing a small pool of tenants. This is the situation in many cities in the north and the midlands of England right now. And it will remain so for some time.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the landlords’ expert and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased
seminars for buy to let investors and landlords as well as one to one advice covering all aspects of being a landlord and investing in property.
Unlike many in the still largely unreguated buy to let and property “advice” business I am not linked to a property company, developer, estate agency or bridging loan provider.
As such I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price. I can also explain how to reduce the risk of getting a bad tenant.

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Related Article
This article look at the credit crunch and how it is going to affect house prices generally:
http://www.lettingfocus.com/pages/myarticles_CreditCrunch.html

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Copyright of Blog: David Lawrenson 2009. This blog is updated roughly once a week usually on a Monday or Tuesday.
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Houses Are Going Up Faster Than Flats - You Heard It Here First

It’s nice to see that my argument at the Home Buyers Show that prices of terrace properties are going up faster than flats in many areas has been confirmed by none other than the Halifax in a press release that was widely picked up by the newspapers and TV.
Here is the link to the Guardian article on the story.
http://money.guardian.co.uk/news_/story/0,,2030291,00.html

Link to interesting article: Accidental Landlords

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of landlord information.
I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years.

Services to Businesses and the Public Sector

Primarily I am a consultant to banks, local authorities, social housing providers and other organisations – helping them with their landlord facing or buy to let product strategies and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing association / local authorities find private landlords (private rented access schemes, local letting agency models etc.)
I also write for property websites and am regularly quoted by the broadcast media.

Services for Private Landlords

For private landlords and other investors in the private rented sector, we do just two London seminars each year.
We also find some spare time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.

We pride ourselves on giving independent unbiased buy to let advice on either a one-to-one mentoring / coaching basis or through our occasional group seminars.
With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it.

We also show you how to manage tenants properly.

AT OUR WEBSITE LETTINGFOCUS.COM:

THE HOME PAGE OF THIS BLOG click here: Blog
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For general info on our CONSULTING click here: Consultancy and Seminars
ONE TO ONE PRIVATE CONSULTANCY click here: Property Mentoring

NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:Next Property Investment Seminar and Networking Event
We have OFFERS on a range of services and products for landlords too; click here including landlords insurance, tenant referencing, tenancy agreements and more: Services and Products for Landlords
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