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Straightforward Publishing - Roger Sproston

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80 pages

English

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This latest publication in the Easyway Guides Series, A Guide to Letting Property The Easyway New Edition, revises and updates the previous edition in the light of ongoing changes in law and also practice to 2022, specifically changes in the Private Rental Market generally and also changes to energy performance requirements. The book is comprehensive and should provide those letting property, whether experienced or new to the area of landlord and tenant, with a thorough grounding in property management.

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Publié par	Straightforward Publishing
Date de parution	30 juin 2022
Nombre de lectures	0
EAN13	9781802361605
Langue	English
Poids de l'ouvrage	2 Mo

Informations légales : prix de location à la page 0,0300€. Cette information est donnée uniquement à titre indicatif conformément à la législation en vigueur.

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A GUIDE TO LETTING PROPERTY THE EASYWAY
ROGER SPROSTON BA, MSC
Easyway Guides
Easyway Guides
Straightforward Co Ltd 2022
All rights reserved. No part of this publication may be reproduced in a retrieval system or transmitted by any means, electronic or mechanical, photocopying or otherwise, without the prior permission of the copyright holders.
ISBN: 978-1-80236-059-2 ePUB ISBN: 978-1-80236-160-5 Kindle ISBN: 978-1-80236-152-0
Printed by
4edge www.4edge.co.uk
Cover design by BW Studio Derby
Whilst every effort has been made to ensure that the information contained within this book is correct at the time of going to press, the author and publisher can take no responsibility for errors or omissions contained within.
C ONTENTS
Introduction
Ch.1 Deciding to invest in Property-points to consider
Ch.2 Developing Your property Portfolio-Costs
Ch.3 Finding Suitable property-Buying a property
Ch.4 Buying a property at auction
Ch.5 Sourcing Suitable Tenants and Management
Ch.6 What should be provided under the tenancy
Ch.7 Knowing The law
Ch.8 Understanding Rent and Sources of Rent
Ch.9 Repairs and improvements
Ch.10 Houses in Multiple Occupation (HMO S)
Ch.11 Taking back your property
Ch.12 Private tenancies in Scotland
Ch.13 Managing the finances-tax and other issues
Useful websites
Glossary of terms
Index
****
I NTRODUCTION
The aim of the new edition of this book (updated to 2022) is to demonstrate in a clear and uncomplicated way the main considerations involved in developing and managing a residential property portfolio.
Although more stringent financial rules are deterring some landlords from investing in the rental sector and although it is getting a lot harder for the would be landlord to gain access to the buy-to-let sector in the south east of England because of high prices, the opportunities for landlords to invest and make a decent return generally, in particular in the Midlands and North, are better than ever, with rents across Britain set to rise by more than 20% over the next five years and with more and more individuals and families moving into the private rented sector.
However, a cautionary note here. The housing market in the UK is in a mess, particularly in the southeast of the country. We have all heard of the problems associated with London rentals, which is now spreading to Brighton and other coastal areas.
Although it might be good for investors to receive high returns on their properties, the record rents inevitably mean hardship for many. Hardship for many in a time of high inflation and possible stagflation (2022) could mean a threat to rent flows in that tenants cease to pay rent. Another factor is that also property prices could start to fall.
So, ask yourself as a landlord or potential landlord: Why are you investing in property at such a time? Are you in it for the long term and can you weather a fall in property prices? Where are you going to invest? In short, what are your motivations for investing and do you know of the perils that might arise?
Having said all that, overall, private letting of residential property has grown significantly in the last 30 years. However, in some cases those who are involved in letting property do not have the professional knowledge needed to manage effectively and often end up in a mess. Little thought is given to the fact that a complex framework of law covers landlord and tenant, defining the relationship between the two.
Coronavirus temporary law changes
The law changes enacted because of the pandemic have been relaxed (at the time of writing in 2022) and landlords are now free to take appropriate action against tenants who have missed rent payments. However, always refer to government guidance.
This book covers the acquisition, letting and managing of property in depth and should enable the landlord, or potential landlord to develop a portfolio of properties and manage effectively and efficiently, at the same time protecting his or her asset, whether it be a house, flat or House in Multi-Occupation.
Also included in this edition is a guide to landlord s tax obligations, including capital gains tax and advice on how to minimize liability.
This book is essential reading for any landlord, or potential landlord and should prove to be invaluable.
****
Chapter 1
DECIDING TO INVEST IN PROPERTY-GENERAL POINTS TO CONSIDER
Investing in Property
The overall demand for private rented property is now stronger than ever, with the mortgage market restricted for purchasers and house price inflation, particularly in the southeast, creating the need for high deposits which people cannot find. Essentially, accessing finance has become a big issue. The banks favor those with large cash deposits. This is the same in the buy-to-let sector as it is for domestic mortgages.
However, if finance can be arranged then the yields that one can expect from buy-to-let properties are high by comparison, currently standing at 6% on average. Of course, this depends on where the property is located. See overleaf for tables indicating the best and worst buy to let areas in the UK.
A yield is a portfolio s annual rental income as a percentage of total value. Because demand for private rented property is high, particularly as first-time buyers cannot get a toehold in the market, they are instead turning to the private rental sector, where rents are increasing. Therefore, investing in property, for the longer term, as opposed to investing for short-term gain, is still a viable option.
Best and worst buy to let areas in the UK
Landlords looking for the UK s best buy-to-let areas in 2022 should consider Liverpool and the Northeast of England, as well as Scotland. (Bear in mind that these figures change over time, and you should carry out your own research before buying).
Liverpool s L1 postcode is currently the best place to buy-to-let in England, Scotland, and Wales. It generates an impressive yield of 10 per cent, according to the new research. L1 is the main retail area, home to Liverpool One, as well as the commercial district and Chinatown
Liverpool is followed by Falkirk s FK3 postcode and Glasgow s G52 postcode in Scotland. They produced an average investment return of 9.51 per cent and 8.71 per cent respectively
The worst area for buy-to-let is in commuter town St Albans - its AL5 postcode produces a rental yield of just 1.95 per cent
Where are the best buy-to-let areas?
Sixteen of the top 25 postcodes are in the Northwest (predominantly Liverpool) and Scotland.
The Northeast also features prominently in the best areas for buy-to-let. TS1 and TS3 in Cleveland ranked fifth and twelfth respectively, while Sunderland features twice with SR8 and SR5, and Gateshead s NE8 is ranked eighteenth.
Most of the strongest postcodes in Britain have a yield of around 7 per cent. These include Leeds LS2 at 7.92 per cent, Cardiff s CF43 at 7.61 per cent, Aberdeen s AB11 at 7.2 per cent, and Lancaster s LA14 at 7.06 per cent.
According to the research, here are the 10 best buy-to-let areas 2020:
Area
Rental yield
Liverpool, L1
10.00%
Falkirk, FK3
9.51%
Glasgow, G52
8.71%
Liverpool, L11
8.67%
Cleveland, TS1
8.50%
Kilmarnock, KA1
8.31%
Liverpool, L6
8.12%
Leicester, LE1
8.00%
Leeds, LS2
7.92%
Sheffield, S1
7.83%
The remaining postcodes in the top 25 best areas for buy-to-let are:
Cardiff, CF43 (7.61 per cent)
Cleveland, TS3 (7.60 per cent)
Liverpool, L2 (7.56 per cent)
Paisley, PA3 (7.45 per cent)
Liverpool, L3 (7.40 per cent)
Sunderland, SR8 (7.38 per cent)
Glasgow, G51 (7.32 per cent)
Gateshead, NE8 (7.27 per cent)
Aberdeen, AB11 (7.20 per cent)
Glasgow, G67 (7.20 per cent)
Glasgow, G32 (7.13 per cent)
Liverpool, L4 (7.13 per cent)
Glasgow, G21 (7.10 per cent)
Lancaster, LA14 (7.06 per cent)
Sunderland, SR5 (6.99 per cent)
Where are the worst areas for buy-to-let?
These are the areas with the worst yields. The research found that many well-known commuter areas have the lowest yields. The lowest is AL5 in St Albans, where the average buying price is 800,000 and the average rent is 1,300, producing a yield of only 1.95 per cent. This puts it below London s W8 postcode (Kensington), which produces a return of 2.05 per cent. This is because average house prices are higher at almost 2 million.
Other commuter spots in the bottom 10 areas for buy-to-let include RG10 in Reading, GU10 in Guildford, and KT7 in Kingston-upon-Thames.
Sheffield has a postcode in both the top 10 (S1) and bottom 10 (S7). Also, Ipswich, as properties there have a median asking price of 397,500 and a rental value of 650.
Area
Rental yield
St Albans, AL5
1.95%
Ipswich, IP13
1.96%
Gloucester, GL6
2.03%
London, W8
2.05%
Birmingham, B73
2.18%
Sheffield, S7
2.19%
Kingston-upon-Thames, KT7
2.20%
Guildford, GU10
2.22%
Reading, RG10
2.26%
London, WC1X
2.28%
There are many websites dealing with buy-top-let hotspots, and it is well worth studying these before making investment decisions.
Rental yields
Investment properties which are rented out receive an income from tenants. To calculate the gross rental yield the annual rental income is divided by the purchase price of the property (annual rent price) X 100 = Gross rental yield). So, if the property was purchased for 75,000 (total) and the rent received is 450 per month the yield would be:
5400 (annual rent) 75,000 X 100 which equals an annual yield of 7.2. This is a very respectable return on your capital. Of course, if you are a landlord then you will want to factor in the costs of being a landlord, such as maintenance, insurance, loan costs, empty periods etc.
Capital yields
When a property increases with time, this is known as capital growth. A simple example is if you buy a property for 75,000 and it increases by 25% there will be a capital appreciation of 18,750. It is a rule of thumb that low price properties migh