Commentary RF

Almost one in five landlords say they are in the business for the long term

Recent polling data, taken across the UK, shows that despite the overhaul that the British government has instituted regarding buy to let policies, most landlords across the British Isles are not in any hurry to stop doing what they do. The data showed about a fifth of those polled were determined to stick it out long term. This contention, according to the study, stayed the same across both a younger and a middle-aged demographic. Those with four and more properties were even more inclined to stay in the business. The highest percentage of those determined to keep their landlord chops going were in the Eastern part of London. About a fourth of that demographic was determined to hold the line. This is good news for all the market doomsayers who were predicting a seepage of landlords leaving the industry as regulations amped up. In fact, those landlords with portfolios, according to the data, tend to represent a group that has been invested in the landlord business for more than 10 years, with many clearly intending to make it to 15 and 20.

Key Takeaways:

Although the UK has undergone some overhauling of tax laws recently, most particularly germane to those in the landlord biz, nearly 20% say that they have no intention of getting out of the business.
This particularly held true in the Eastern part of England, where nearly a quarter were sticking to the landlord guns.
Data does suggest that some, a significant minority of about 6%, say that they intend to be in the landlord business for nor more than one or two more years tops.

“The research also found that 20% portfolio landlords have been a landlord for 16 to 20 years, showing that, with enough time to develop experience, monitor the value of properties and even make renovations to their offerings, the buy to let market can prove worthwhile for this group especially.”

More than half of UK landlords are optimistic about outlook for buy to let – PropertyWire

As the world slowly emerges from the worst of the tsunami that began with the 2020 pandemic, various industries are shaking the water off their ducks and trying to get them marching along in a straight line again. Across the UK, in the housing market, it seems a number of those in the industry are feeling at least moderately optimistic. Recent polling shows that about half of the UK landlords surveyed feel that their industry outlook is positive. Approximately a third felt disinclined to put a pin it either way. This left less than 20% feeling actively negative vis a vis their economic outlook as landlords in the post-pandemic world. Even with Brexit looming and a number of regulatory shifts and an emphasis on improving social housing, most landlords felt that their biggest concern was maintaining properties. Most felt that they would not consider letting a property go within the coming year.

Key Takeaways:

A recently instituted survey shows that more than half of the landlords surveyed in the UK remain optimistic about the buy to let industry.
In the wake of many regulatory shifts in the buy to let sector, more than 15% felt a bit negative about the outlook of their industry.
Brexit posed a serious problem in the eyes of about 30% of those polled.

“The survey also reveals that the two most important considerations to landlords are ongoing maintenance and upkeep costs, cited by 83%”

What are the penalties for landlords who break the law?

Ensuring that social housing is unbiased and provides a springboard to permanent housing and long-term security is an ongoing concern across the UK. Due to this stated priority, there have been almost constant ongoing tweaks in the legalities that govern landlords in the UK, particularly within the last decade. The minefield of potential infractions for which a landlord could be penalized is daunting. Safety and proper usage are big concerns. For example, a landlord that is not properly licensed to let an HMO, or home for multiple occupants of differing households, can be penalized. If a tenant experiences a mold problem, or a smoke detector fails to act to ensure safety, these issues can result in landlord penalty. If a landlord is found liable, due to a regulatory infraction, she could incur a stiff monetary penalty, be barred from future employment as a landlord and potentially serve jail time. With potential steep penalties facing landlords that do not comply with all regulations, the wisest move is to hire a managing agent. Such an agent oversees day to day administrative concerns and ensures that all regulations are met.

Key Takeaways:

There are numerous instances that could result in legal penalty for a UK landlord, one such being if a notice was improperly served against a tenant.
Failure to get the proper licensure required to let a property as a house in multiple occupation could result in legal jeopardy for a UK landlord.
To ensure total compliance with all legal UK strictures governing the landlord business, it is wise to employ a managing agent.

“The lettings industry is heavily regulated, with around 168 specific laws now that landlords and agents have to abide by in England and Wales.”

5 reasons you won’t want to sell your buy-to-let property

Let’s assume you bought a buy-to-let property in one of the up-and-coming-investment areas across the UK, back before the pandemic hit. Perhaps, your Manchester or Birmingham buy-to-let seems a bit less attractive now. But don’t give up on it. Although the worldwide economy is still creaky, there are slow and steady visible improvements. For example, travel bans are being lifted. Birmingham has proven itself over time to be a major lure for International students, featuring truly stellar overseas programs. Naturally, these hit a major pause during the pandemic. However, demographic studies show that many young professionals elect to make their home in Birmingham. It’s still a great place to own a buy-to-let. The area still houses a number of the country’s well-known Universities. So, there will always be students and new-graduates sussing out that new place to live. Investment company data is showing that homes in the Manchester area are also still very desirable. Late summer and early fall numbers in 2021, revealed that more than half of the housing sales featured a Manchester property. Overseas investors are looking hard at Manchester too, as the areas’ guaranteed return on investment continues to be high. If you’re lucky enough to own a buy-to-let in Snow Hill Wharf, definitely do not let go of that gold mine. Snow Hill Wharf is the slated home of the much-anticipated HS2 rail link, coming in 2026. Commuters could see a newly revamped commute between Birmingham and London cut down to less than an hour.

Key Takeaways:

Many UK companies have reported a peak in interest in buy-to-let properties in the Manchester region.
Data shows that during the late summer and early fall months of 2021, property investment sales in the UK featured Manchester properties about 70% of the time.
Birmingham is looked at as a property investor’s dream, because it is home to five distinct universities, besides offering stellar overseas programs that regularly lure in International students.

“Today, Birmingham is home to 87,000 International Students from 150 Countries making developments like Snow Hill Wharf, located right at the heart of Birmingham’s bustling city centre, a property investment opportunity like no other.”

Case Study: HMO in four weeks with Clair McArdle

One UK woman, Clair McArdle, found herself having what some might consider an early onset middle-aged crisis after the birth of her first child. Though already working for a prestigious UK corporation, McArdle decided her life required a better balance between home and work. So, she began her act two early, by becoming a house flipper. As a flipper, McArdle found her special niche in locating, refurbishing and selling properties specifically for the HMO market. An HMO, which is typified as being owned by three or more individuals not comprising a single household, usually feature lower and fixed-rate mortgages. Though it took Clair a couple of years to get her footing and discover her preferred niche in the housing market, by 2018 she was all about the HMOs. One winning example consisted of a property she found on the Flyde Coast. McArdle felt that the region was nice and the amenities afforded by the property were spot-on. The house had two roomy bedrooms and bathrooms. However, a review of the interior brought out some feature walls that needed overhauling. She also found that much of the home’s varnishing, tiling and paint choices were either excessive or very dated. However, by freshening the walls with new paint and opting for a modern Scandinavian-style redo to the décor, the house was saleable in a mere four weeks.

Key Takeaways:

Refurbishing a multiple-occupant home can be a giant undertaking, or it can simply involve some quick tweaks.
One woman, experiencing her second act as a flipper after leaving a giant UK corporation, found a home on the Flyde Coast.
Already possessed of two bedrooms and two baths, the well-located home merely needed some redecorating and some fresh paint to appeal to new owners.

“There was a glut of varnished pine and the feature walls were painted peach, terracotta or green.”

Breaking down the “financial freedom” dream

Being financially independent is something that most of us strive to achieve, regardless of the age or phase of life we are in. The truth is that it is very difficult to achieve this dream and it often remains a dream. In order to get to this goal, you need to start with detailed breakdown of your finances, analyzing the current state of it and then creating the list that will have criteria you would need to meet in order to feel financially independent.

Key Takeaways:

Those that imagine that becoming financially independent requires a windfall of millions of dollars are on the wrong path.
Acquiring financial freedom requires being super clear about your needs and what it costs in dollar amounts. Then to achieve it break it down into doable chunks.
Start by understanding how your weekly pay equates into a number that actually makes it into your bank account and what that means per day.

“Lots of people dream of being “financially free”. But for most of them, it’s never more than a dream – not because it’s impossible, but because they never work out what it actually means.”

The busy world of HM Land Registry

General public has a very different perspective when it comes to the work of the registry. They need a small amount of data and services that it offers, which leads to this kind of misconception. Admittedly, it is not a trivial effort to understand the goal of data entry and how it can actually change the world we live in. Try to approach the vast amount of data as something that looks like our towns. Few years ago, this would have been easier, because we still worked with paper and physical plans, but that is largely gone in these days of digitalization.

Key Takeaways:

Today the UK’s HM Land Registry covers 85% of England and Wales with more than 20 million separate titles.
The land covered by those titles is carefully mapped and is equal to roughly 48000 square miles.
Were one to rifle through the records of the HM Land Registry, one would likely uncover records equaling as much as 4 trillion pounds in currency.

“If you went back a few years, you would have had a much more immediate sense of our purpose at HM Land Registry.”

5 Common Off-Plan Investment Mistakes

There are five critical errors that investors can make when making off-plan investments. First, investors can plan improperly and without enough depth or consideration of possible future problems. Second, investors can fail to do enough research into the properties and developers that they are considering working with. Third, investors can allow their emotions to overrule their logical side. Fourth, investors can lack the necessary confidence to actually follow through with a particular investment even if they have done proper planning and have found the right developer. Fifth, investors can fail to perform their due diligence.

Key Takeaways:

For a property investment to pan out as planned it is imperative not to skimp on the research phase.
Look at the demographics, including population growth, tenant demand and regeneration in the area.
Look to empirical data to finalize your decision. Keep emotion at bay when deciding.

“It might sound simple but planning correctly can sidestep any potential issues further down the line.”

Where Should You Invest in the Manchester Property Market?

Manchester is increasingly being seen as a fantastic option for investing in property, especially in comparison to London, but some parts of Manchester are better investment options than others. The city center of Manchester has observed growth in upscale apartments, but some of the suburbs of Manchester (for example, Ardwick and Little Hudson) are highly profitable and are likely to grow in the future. Manchester is also experiencing gains in the investment of commercial properties as well as accommodations for the students of the universities in the area.

Key Takeaways:

Back in 2018, property investors were noting that investments in the London area were not providing the growth they once were.
With four area universities, Manchester in the U.K. has a demographic that can be served by the housing and leasing sector.
Since 2018, Manchester has been a commercially booming part of England.

“Manchester has been named by many estate agents as one of the UK cities likely to see a rise in house prices over the next decade, so now is the perfect time to invest in this market.”

Debt Financing – The Cost of Using a Bridging Loan

There are very many ways to refinance your debt, but one of the best ways to do it is by Debt Bridging. The first cost for doing this is around a 1% rate. That rate however, is close to the other ways to refinance your debt. There may be other rates that occur during the beginning or end. For example, there is an exit fee that you may have to pay. If you are trying to access more funds, it will be more expensive.

Key Takeaways:

Bridging your loans is one way to finance it. It does come with higher interest rates.
If you are going to bridge your loans, make sure you know what the proper fees are going to be.
Even with the extra costs and fees, debt bridging is usually a good idea.

“Today Rory and Amy discuss the cost of debt financing and try to pin down exactly what an average bridging loan would cost a property developer to make use of.”