Property of the week

8 Newton Drive, Stapleford, Nottingham, NG9 7GS - £105,000

Click here to see the property on Rightmove

This property has been marketed since 15/06/2012, the price initially started at £110,000.

A similar property on Newton Drive sold for £114,950 on 27th April 2012.

The property is situated near George Spencer School which is highly sought after, it should therefore Let readily and attract long term tenants. It will also benefit from the Toton Tram service which will help with long term capital growth.


It should let out for approximately £550pcm, so you are looking at a gross yield of around 6.2% (based on the asking price alone).

Questions & answers

We have a legal team at Belvoir Lettings that all of our landlords can make use of (via our staff),  please see some questions below that have previously been asked, and the answer:

*(info supplied by the Belvoir Legal Helpline)
________________________________________________________________________

Question:
I had a new tenant move into a property whereby the electric cooker was not working for 7 days. The tenant has brought in receipts for dining out which amount to over £211 and wants reimbursement. Can he do this?

Answer:
The tenant deserves some compensation for the non-use of the cooker but would suggest this is in the ball park of £20-30. It certainly does not give the green light for the tenant to eat out at restaurants etc.
________________________________________________________________________

Question:
We have a tenancy where husband was the only tenant, although his wife and children also live at property. Husband and wife are splitting and husband moved out. We issued a Section 21 to terminate the tenancy 30th August. Husband paid rent to this point. We have today received a call from the council, who advise that they are searching for a property for the wife and children but no joy as yet. She will not be out by 30th August. I don't think the husband will continue to pay rent as says not his problem. Do we just go ahead with possession order although the tenant will have surrendered tenancy but wife not moved out?

Answer:
The tenancy continues, for the tenant, until such time as he grants vacant possession, therefore it is his problem. If the wife and children do not move out his tenancy continues whether he lives there or not and he remains liable for the rental and upkeep and care of the property. The tenant has not surrendered the tenancy, as again he has not granted vacant possession. Therefore you can start possession proceedings whilst bearing in mind that until vacant possession is obtained the tenant remain liable. I suggest you make him aware of this without delay, if he will not accept this suggest he takes his own legal advice.
________________________________________________________________________

Question:
Gas safety record - Tenant on holiday for the next three weeks, did not inform us of extended time away. We contacted her regarding arrangement of the test and asked if the engineer could go in with keys, but she has refused access. Should we write and say she is in breach of contract by not allowing access?

Answer:
Yes; point out it is your statutory obligation to do this test. Ask her if someone could represent her and accompany the engineer into the property. Copy your letter to the local authority, so that is on record that you tried to fulfil your obligation. Also, as you suggest, include in the letter her further breach of the terms of the tenancy agreement by going away for an extensive period without notification. Make sure that you make a diary note for the test to be done as soon as possible, which would appear to be upon her return.

Question:
A tenant has sent a text saying that someone tried to break in and could we send someone to repair the broken lock. Both the landlord and tenant say this is not their responsibility.

Ask the tenant for a crime number as this should have been reported to the police if this incident is genuine. If it is genuine then the landlord is responsible for the upkeep of the structure of the building, therefore this will be his responsibility.
________________________________________________________________________

More to come!

Landlord looking to sell

8 Brookfield Mews, Sandiacre, Nottingham, NG10 5DG 

Click here to see the property on rightmove

Please see the rightmove link for extra detail.

We are currently in the process of re-letting this property, however the owner has expressed interest in selling. We have Let this property out since June 2008 and the first tenant stayed for over three years.

Its current rental value is £695pcm, it has recently had a light re-refurbishment (décor, new carpets) and it is ready to Let immediately.

Sandiacre is popular with professionals as it is located half way between Nottingham and Derby. It is also within minutes of the M1.

Offers in the region of £175,000.

Gross yield based on asking price = 4.7%

If you are interested in submitting an offer, please let me know.

Property of the week

 9 Stevens Road, Sandiacre, Nottingham, NG10 5FU -  £95,000

LINK TO RIGHTMOVE

Click on the rightmove link above for further details.

This property has been marketed since 20/04/2012, the price initially started at £99,950.

The average sold price on Stevens Road based on the last 5 sales is £108,299 (data collected since April 2009).

The property will Let out for approximately £525pcm, so based on the asking price alone you are looking at a 6.6% gross yield. This will obviously improve with any deduction you get on the asking price.

We have Let several properties in this area before and they always go quick. This property appears to be ready to Let out immediately.

One thing to consider; the property has had two sales fall through since it has been marketed. This shows that the property is obviously popular, however I would want to confirm why those sales have fallen through. It is often to do with purchasers not securing finance, however I would recommend an in depth building survey to be safe.

Think rental & property management is easy?

There is a common perception that rental and property management is quite straight forward. On a lot of occasions it can be, however, as a landlord, you and the managing agent you employ are likely to face at least one unforeseen event involving one of your tenants at some stage. If not dealt with properly, you can face large fines (£1,000 - £10,000+), a caution from the police or even a prison sentence.

See one example below, this is an article I read in the 'Landlord Buy-to-Let Magazine' (Issue 35, page 20):

"Three landlords have been successfully prosecuted by Birmingham City Council following their failure to maintain a House in Multiple Occupation (HMO). 

The council started legal proceedings against Abdul Jabber, the owner, his wife, Azrah Begum, and the owner's brother, Gul Bahar, citing three breaches on the Management of Houses in Multiple Occupation. They were prosecuted for 'Flagrant, and dangerous, breaches of legislation' following a fire that occurred at the property in the early hours of 27th October 2011. The fire service was called upon to rescue people from inside the building.

Following the fire, officers from Birmingham City Council inspected the property and found that the property had not been sufficiently maintained e.g. several smoke detectors were still covered in their original wrappings.

On 29th August 2012 all three defendants pleaded guilty at Birmingham Magistrates' Court and were fined a total of £3,000 for the offences, a victim surcharge of £15 each, and were ordered to pay the City Council costs totalling £3,814.

The council has issued over 1700 orders since April 2006, ensuring that management standards and housing conditions in the private rented sector are maintained, and demonstrating that there are many landlords in Birmingham who comply with the specified regulations".

Have you ever moved 3 individual sharers in to a property? You may or may not know this, but you have created an HMO. The definition of an HMO is 'A house which is occupied by three of more unrelated persons, who do not form a single household'. This even includes a 'couple' (not married) and a single house mate. By doing this there are several regulations that you must comply with such as supplying certain size fire doors, fire extinguishers, fire blankets, wired in smoke alarms etc. There are two different types of HMO (Licensed and unlicensed), both of which have different regulations.

If Abdul Jabber and his family had employed a professional and licensed agent like Belvoir they would have been informed of their obligations as landlord...................

More stories like this to come.

My Buy-To-Let Investors checklist

When investing in a Buy-To-Let property, there are a few things you MUST do each and every time to ensure you are making the right investment for you. I thought I would put a check list  together for everyone to make use of. For the seasoned pro this will come as second nature, however for people new to the game it should come in handy.

Note - If you are unsure what the term yield means, I recommend you read my post on this first.

* Do the maths, what can you afford? - Before you start to look at property you need to set yourself a budget. A lot of B-T-L mortgage lenders are looking for a 25% deposit. My advice is to see an independent mortgage advisor. By doing this you will establish your 'top end' investment price and should have an idea of the repayments. Allow leeway for rate rises in years to come.

You also need to consider void periods, if a property sits empty for a month or two can you afford the mortgage repayments on top of your current outgoings?

* Yield or Capital Growth, what is the driving force behind your investment? - Obviously, we all want both. However most property investments tend to provide one more so than the other. So initially it is a good idea to decide on the following - Do you want an investment that is going to top up your monthly income? Or is your main concern long term capital growth? 

You can then base your property search on the decision you make. Areas that are already well developed with good amenities and close to universities will tend to attract good rental yields. Up and coming areas with new developments on the way (transport, education, leisure facilities etc.) will benefit from long term capital growth.

* Make a short-list - Once you have established an area and budget, it is time to get hunting! Use a web portal like www.rightmove.co.uk to pick out at least 10 properties. Once you have done this you need to look at the following:

 - Is the price competitive? Use a site such as http://www.zoopla.co.uk/house-prices/ 
   to establish this. All you need is the postcode and you can see the 'sold price' history.

 - Rental estimate, ask an agent who specialises in rental (like me) who can give impartial advice without any conflict of interest.

By doing this you should be able to narrow down your short-list to maybe 3-5 properties before you even arrange any viewings.

* Think you have found a good investment? Do a final check on the sums - Remember, if you are buying with a mortgage, rent-to-property price yield will not be the return you get.

To work out your annual return on investment subtract your annual mortgage cost from your annual rent and then work this sum out as a percentage of the deposit you put down.

Example - £100,000 property that could rent for £500 per month:


£75k mortgage at 5% = £312.50 (annual cost £3750)

£500 rent x 12 months = £6000

Difference = £2,250

Deposit + buying costs = £27k (your actual investment cost)

£2,250 divided by 27k = 8.3% annual return

Don't forget tax, maintenance costs and other landlord expenses will eat into the return.

If you can get a rental return substantially over the mortgage payments, then once you have built up a good emergency fund, you can start saving or investing any extra cash.


* Still looking good? One final check - Before making any offers, I highly recommend you arrange a second viewing on the property and take a competent contractor with you. Quite often they will spot things that your average Joe wouldn't even consider. You shouldn't necessarily be put off by anything they find (within reason), you can often use this as a tool to negotiate a bigger discount on the asking price! Ask for an estimate on the works involved to bring the property up to a good standard. Remember - Stick to your budget!

* Plan your offer - Firstly, I would attend the estate agency and build rapport with the agent who is going to negotiate on your behalf. You want the agent to be working with you, not against you! Build a constructive argument for your offer using points like amount of work involved, alternative properties sold in the area etc. 

Remember, as a B-T-L investor you have the same advantage as a first-time buyer when it comes to negotiating a discount. If you are not reliant on selling a property to buy another, then you are not part of a chain. This can be a sizeable asset when negotiating a discount, especially in a tough market such as the one we have now.

MAKE LOW OFFERS AND DO NOT GET TALKED INTO OVERPAYING!

So, you are now a BTL investor! Next comes the on-going management of your investment, piece of cake? Most people think so. Keep an eye out for my next post 'Think rental is easy?' coming soon.......

What does the term yield mean?

Since my previous posts I have been asked what the term 'Yield' means by a few people.

Yield is the annual return on your investment.

The way you calculate this is by expressing a years rental income as a percentage of how much the property cost.

For example:

Annual rental income = £7,200
Property price            = £100,000         

£7,200 divided by £100,000 = 7.2% yield.

Remember this is the gross yield, the net yield is after mortgage payments, repairs and running costs have been taken into account. More on this in my next post ....

A deal to be had.......

Ayton Gardens, Chilwell, Nottingham, NG9 6NQ

A deal to be had......

Very popular residential location (the modern estate in Chilwell opposite the retail park).

It has been on the market since July 2011, originally marketed for 122,500. The vendor recently had a sale fall through.

Being sold with a sitting tenant who is currently in contract until March 2013. Great news if you are depending on rent to meet mortgage commitments.

Currently Let for £550pcm, if you were able to negotiate a 10% discount on the asking price then you are looking at a gross yield of around 6%.

This property will benefit from the Tram which is coming to Toton and should therefore see a good return in capital growth over a number of years.

The Future of Buy-To-Let

The expected growth in population from 60 to 70 million over the next 15 years will drive a continued increase in the number of new households being formed and this in turn will require more homes to be provided for owner occupation, social housing and especially the private rented sector.

The increase in the number of people needing a home over the next few years and the lack of property stock we have in the UK to meet this demand, is already showing in the private rental sector, especially in London. Over the coming years, it is likely the shortage of homes in the UK is going to continue to be experienced via the private rental market rather than in owner occupation, and it will get a lot worse before it gets better.

This won't always relate to rising rents as we now know they are typically tied to wage inflation, but once the economy turns the corner and wages start to increase, it is likely tenants will start competing via price for the best properties, i.e ones in the best condition and location.

Overall the future of private rental sector returns for investors looking for income rather than capital growth,  things are looking good. There are some potential threats from institutional investors, but good properties with landlords willing to maintain them well and let them legally, are likely to see demand outstrip supply into the future.

Source for information: Belvoir Newsletter summer 2012

24 Wimpole Road, Bramcote, Nottingham, NG9 3LQ - £90, 500

24 Wimpole Road, Bramcote, Nottingham, NG9 3LQ - £90, 500

http://www.rightmove.co.uk/property-for-sale/property-34604596.html

See the Rightmove link above for further details.

This property is a repossession, it was dropped from £109,950 and Robert Ellis have now received an offer of £90,500. Anyone interested in submitting a higher offer needs to be quick! 

The average sold price on Wimpole Road based on the last 5 sales is £120,190 (data collected since Oct 2004). Over a number of years the buyer should see a good return in capital growth.

It will Let out at approximately £550pcm, so you are looking somewhere around a 7% gross yield.

Very popular residential location.