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Buy To Let (Part 1)

Buy To Let part1

Buy To Let (part 1)

As pension funds shrink, many people consider the buy-to-let opportunity as a viable alternative, and with good reason. The effect of low interest rates and a historically rising property market make buy-to-let one of the most attractive investments accessible to the public. And the great thing is – you can use the bank’s money! The average national annual return is over 5%* excluding capital growth – which has always risen strongly over the longer term. (NB: such an investment was never designed to be a short term “fix”!)

The principle is this: The compounding aspect of the value of the property coupled with increasing rental returns far outstrip any inflation in running costs in the medium to long term. Your annually rising rental income should more than cover your mortgage payments in the long term, because repayments do not compound in the same way, although fluctuations in the rate of interest over the term should be expected.

In principle your surplus rental income should eventually pay off your mortgage, providing you with a regular “retirement” income whilst keeping your equity intact, and hopefully rising. Bear in mind that if you do choose to pay off your mortgage early, the whole of the rental income may be taxable. Some people purchase another property when they reach the point of surplus and build a valuable property portfolio.

SDLT (Stamp Duty) is usually 3% above the standard rate for the purchase of a BTL property and Capital Gains Tax may also be payable on any sale, so we would always suggest you seek the advice of an accountant before purchasing a buy-to-let property. But don’t let the tax tail wag the investment dog!

Please feel free to call us for a chat if you would like to investigate buy-to-let opportunities in this area.

Posted By Teresa Henson

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Manage Your Investment

Manage Your Investment

Manage Your Investment

Some landlords, especially those who are new to the experience, understandably wish to use a letting agent simply as a route to market in order to find a tenant. However, whilst a return on investment is one thing, sleeping well at night is quite another! A managed service is not just about chasing late rent, resolving disputes and inventory control.

When your property is professionally managed, it’s all about accountability. This means regular inspections to check that your tenant is treating your investment with the respect it deserves. During these inspections, well-trained staff are able to identify any areas that should be investigated in order to avoid or reduce costs later.

An example would be a blocked gutter. Normally, you would only hear about this when the tenant calls you to tell you that water is coming in, plaster has come away from the wall and there is mould on the ceiling. Call in the dehumidifier, plasterer, and painter – and you have a large bill and an unhappy tenant.

Many tenants also prefer to rent a property that is managed through a letting agent, possibly because they have had a negative experience with a previous landlord who may have not been aware of his/her responsibilities.

Additionally, no matter how compliant a tenant may seem at the outset, the last thing a landlord needs is someone phoning at all hours with some minor issue over a draft, dripping tap, clanking pipes, noisy neighbours, etc. All or these are part of a day’s work for a dedicated managing agent!

One of the most important considerations is that, as property managers, we get to know your tenants. We have a good understanding of their plans, often pre-empting a premature departure, so we can prepare and let the property in time to avoid it being empty – even for a day! So a managed service actually increases your yield, as well as providing the sleep-easy factor most landlords require from their investment.

If you don’t currently enjoy a managed service, why not put us to the test? You will be pleasantly surprised. Please feel free to call us on 01227 362248.

Posted By Teresa Henson

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Why Let Your Property To A Pet Owner

Benefit of Pets

Why Let Your Property To A Pet Owner?

Almost half the UK population own a pet, yet many landlords are reluctant to accept pets! According to research by The Dogs Trust, some 78% of pet owners reported that they had experienced difficulty finding rented accommodation that would accept pets.

However, if you are a landlord, agreeing to accept pets can help you maximise your return on investment for the following reasons:

• Your pool of prospective tenants is almost doubled!
• You are therefore likely to let your property quickly and avoid void periods
• Pet owners will often pay a larger deposit or sizeable “pet premium” due to the scarcity of properties that accept pets
• Pet owners are more likely to stay longer in a property and accept they may need to cover additional cleaning costs when they leave.

A blanket ban on pet ownership by tenants is actually regarded as an “unfair term” by the OFT, and there is no reason why most pets cannot be accommodated within the existing terms of the lease (which already provides for “no damage”). Obviously goldfish, budgies and hamsters are unlikely to cause a problem, but landlords can worry about cats and dogs.

Cat-owning tenants should confirm that a “scratching post” will be provided. The inventory clerk should also pay particular attention to scratchable areas. Not all dogs moult, and not all bark. Indeed, having a dog that barks occasionally can increase security in the area.

A written reference from a previous landlord is probably a good idea, and you may wish to meet the pet first – it will then be up to you as to whether you wish to accept them.

We have a separate “Pet Policy” that accompanies our lease documents where required to help you maximise your return on your investment, whilst protecting your property. Please let us know if you would like further details.

Posted By Teresa Henson

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July 2020 Market Comment

July 2020 Market Comment

July 2020 Market Comment

Finally, after the pent-up frustrations of lockdown, we have some very good news to report:

Firstly, the Chancellor of the Exchequer, Rishi Sunak, has announced a substantial boost for the housing market with the raising of the SDLT (Stamp Duty) threshold from £125,000 to £500,000. This really is quite incredible and will save buyers up to £15,000 (£10,000 for first time buyers who already enjoy a discounted SDLT rate). The concession also applies to buy-to-let investors and second home owners.

If the idea is to kick start house sales then this is certain to do the trick. There are plenty of buyers around, enjoying low interest rates too, but stock is woefully low, with 15% fewer properties available than this time last year. This boost will encourage people thinking about moving to do so immediately, as the concession expires in March 2021.

This additional activity will in turn generate knock-on sales and inspire even more confidence in a market that has come out of lockdown with only slight bruising. Indeed, before the SDLT concession was announced, over 85% of movers said they still planned to move, despite the effects of the pandemic. The survey of over 2,000 movers was conducted by Zoopla, who also predict that annual house price growth will hold at around 2% over the coming months as a result of renewed demand and overall activity.

What will happen as soon as the SDLT holiday comes to an end is yet to be seen, but hopefully it will coincide with people coming to terms with lifestyle adjustments and being able to make longer-term housing decisions. Rightmove has already reported that over 12% of movers are actually doing so as a result of virus-related living/working changes.

But for the time being, if you are considering moving up, moving down, moving on or moving out, there will be no better time than right now to do so. And that’s not just bullish agents’ speak – this is exciting!

Do let us help you quickly and safely bring your property to this fantastic market and help you secure the very highest price. Put us to the test and call us on 01227 362248 today. You might be pleasantly surprised!

Posted By Paul Clarke

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The Tenant’s Garden

Tenants Garden

The Tenant’s Garden

Landlords often ask us what they should do about their garden and what they can reasonably expect of a tenant in terms of maintenance.

Having a well-cared-for garden can definitely help to attract good tenants, particularly if they arrive on a sunny summer’s day. However, if the garden is just too magnificent and obviously requires lots of work, then it may actually scare some people off. In an ideal world, pleasant and tidy but without too much work is probably ideal.

Of course, any properly prepared tenancy agreement will require the tenant to maintain the garden in good order. But we can make that demand more realistic by keeping the garden relatively simple, ie mainly lawn with perhaps the odd flowerbed and shrub. With this kind of garden, it is both realistic and reasonable to expect the tenant to look after it properly.

People sometimes ask who should pay for the gardening equipment. Our advice is that it is reasonable for the landlord to provide a garden fork and spade if they are needed, but that for reasons of safety and maintenance the tenant should provide their own lawnmower. After all, we expect them to provide their own vacuum cleaner for the house, so why not a mower for the garden? With one of the large supermarkets currently offering a mower for under £20, they can hardly object on cost grounds.

Last but not least, if your garden really is your pride and joy and reflects years of hard work, then it may be wise to keep things under your own control by employing a gardener and including the cost in the rent. This removes the possibility of misunderstandings and should ensure that you get your garden back in the same condition that you left it – albeit slightly more mature!

Posted By Teresa Henson

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Right to Rent

Right to Rent

Right to Rent

Immigration legislation means that all private landlords have to check that new tenants have the right to be in the UK before renting a property, although this responsibility can be given to your letting agent as part of a written agreement.

The penalties for ignoring the new legislation are severe. For the first time an agent/landlord breaches the rules, a fine of £1,000 per illegal adult occupier will apply, rising to £3,000 per adult for repeat offenders.

Subject to any Brexit-related changes, the legislation currently requires landlords to carry out extensive checks to ensure a tenant has British, EEA or Swiss nationality. If the prospective tenant is of a different nationality, their visa or passport will have to be checked to see if they have a right to rent.

Here’s our quick guide to help you stay on the right side of the law:

1. Obtain original versions of acceptable documents which prove right to rent and there are certain time constraints on this. Acceptable documents can be found on the relevant Government website (details below).

2. Fully scrutinize these documents in the presence of the holder or via live video link.

3. Consider whether the number of occupiers planning to reside at the property is reasonable for its size and type.

4. Make and securely retain uneditable copies of all documents recording the date checked.

5. Carry out follow up checks on time-limited right to rent occupiers and report breaches to the Home Office.

6. Understand which rentals are excluded eg: local authority tenants, job-tied accommodation, certain types of student accommodation and 7+ year leases.

7. Before dismissing a prospective tenant, you must be careful that you cannot be accused of discrimination under the Equality Act.

This new legislation is an additional burden on landlords and once more points to the benefit of appointing a managing agent such as David Clarke for complete peace of mind in an increasingly complex regulatory environment.

Further information and the government’s code of practice can be found here or please feel free to contact us directly on 01227 3622248.

Posted By Teresa Henson

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Upbeat Rentals

Upbeat Rentas

Upbeat Rentals

Superficially, lettings could be seen as relatively straightforward, and some firms do indeed regard themselves as a simple broking operation.

However, if your investment is going to provide you with peace of mind as well as a great return on investment, then you will want to know that the property is being managed by people who really care.

Our response to the ever-growing rentals market has been to take a good look at the opportunity to deliver a service to landlords which not only meets expectations, but goes way beyond. Indeed, many of our clients have commented that they have found our lettings service to be a “breath of fresh air” when compared to their previous experience!

For example, it is critical that all prospective tenants are thoroughly vetted and credit checked in order to ensure that they will not only pay the rent on time, but that they will also look after your property as if it were their own, if not better! Indeed, we are passionate about this issue, and during every tenancy we regularly visit the property personally. This not only means that we can keep an eye on how the tenants are treating it, but also allows us to advise you if any preventative maintenance should be undertaken (eg gutters cleared).

We find this ongoing relationship with your tenants is also an excellent way of showing them that you care, resulting in them treating you and your investment with the utmost respect, resulting in an optimum return and a peaceful night’s sleep! After all, that’s what a good letting agent is all about!

So when choosing a letting agent, why not choose the one who regards every property as if they owned it themselves? Why not call us for an initial chat on 01227 362248.

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Stamp Duty on Investment Property

Stamp Duty

Stamp Duty on Investment Property

If you’re buying a second home, Buy to Let, or investment property, you should be aware that there is an additional 3% Stamp Duty Land Tax (SDLT) on top of the standard SDLT amount payable. Since this regime was introduced in 2016, the market for second homes has certainly felt the pinch, especially for buy to let landlords who are also being penalized with a reduction in the amount of mortgage interest that can be claimed against tax.

Of course, if you are in a fortunate enough position to be able to buy an investment property or second home, then yes, an average £250,000 purchase will cost you an extra £7,500. This additional expense might ultimately have to be absorbed by the vendor, who may have to accept a lower offer than expected, as the investment buyer will have less in their pocket.

A further frustration for investors is that the extra money may have to be found in cash if the additional amount pushes the buyer over their Loan-to-Value ratio as purchase costs such as SDLT may not be included in any mortgage borrowing.

Nevertheless, property remains one of the most reliable investments available and we are continuing to see strong yields for the savvy investor in this area. The old adage of “not letting the tax tail wag the investment dog” is probably worth considering!

You can be assured that our local knowledge and property expertise will guide you both through the process towards a successful outcome, irrespective of SDLT as our role as investment managers is to help you maximize your return on that investment. Please feel free to contact us today for straight-talking investment advice on 01227 362248.

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June 2020 – Market Comment

June Market Comment

June 2020 Market Comment | Herne Bay & Whitstable

It might be tempting to believe that the pandemic has been destructive and all-consuming on all fronts, especially in relation to the property market, which virtually ground to a halt a few weeks ago.

But we British are a resilient lot! Our compliant “keep calm and carry on” mentality has meant that we have/continue to do our bit to protect our community, without losing our focus on those other things in life that are important to us. Our home comes close to the top of the list, along with family, relationships, job, pets, well-being and general prosperity.

While some businesses, for example a coffee shop or an airline, will eventually start to trade again from where they left off, the property market is one type of business where the latent demand has accumulated during lockdown like a catapult being stretched. It is now at the point of being released and we are expecting intense activity over the summer.

In fact, recent research revealed that some 15% of home movers have been prompted to do so as a result of a change of plan due to the pandemic. During lockdown some people found that working from home suits them quite well, but they would prefer not to use their broom cupboard as an office. And if they are no longer expecting to commute to work, why are they paying a premium to live in a property near the station, especially if the broadband quality could be better elsewhere? Perhaps time spent during May’s warm and sunny weather has sparked an interest in gardening too?

Certainly, we are already seeing a surge of interest from Londoners rethinking their lives. Unlike other scenarios that might adversely affect the property market, we have a good balance of supply and demand, interest rates are incredibly low and banks are keen to lend. So although sales might be a little down this year, the consensus is that the rebound is likely to be strong.

The dynamics of the market may be changing, but we as estate agents a ready for the challenge. Whilst we are of course highly respectful of the guidelines for safe property viewings, our focus remains on offering sincere, straight-talking and sound property-related advice to our customers. The pandemic might have changed society, but, as we emerge from our confinement, our vision remains the same – we help people move, whatever the circumstances.

If you’re considering a move, why not call us on 01227 362248 for an initial chat?

Posted By David Jeavons

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The Meaning of Service

meaning of service

The Meaning of Service

Most lettings agents see their role solely as a “purveyor of tenants”, and they pride themselves on their ability to find the right tenant for a property and to negotiate attractive terms for the landlord.

But lettings agency has moved on. Indeed, finding a tenant is arguably one of the most straightforward aspects of letting a property. Wise landlords now seek other attributes in their letting agent.

We all know how emotionally traumatic a house move can be, and this is often reflected, albeit to a lesser extent, in a niggling concern about the care of, and revenue from, an investment property. Yet many agents fail to recognise their ability to reduce this overall burden by becoming thoroughly involved not only in the actual letting of a property, but also in the investment objectives as a whole. We feel this provides a great opportunity for the service-focused agent to deliver a level of customer service that really makes a difference. A service based on empathy. In other words, “seeing the world though the eyes of the tenant/landlord”. With this vision, a good letting agent can then anticipate and proactively respond to the very real needs of both.

An example of an obvious contribution that your letting agent can make is a hands-on approach the vetting and reference procedure. Is this just lip-service, or a real commitment to securing the best tenant? And what about a passion for avoiding the vacant periods that can undermine a seemingly good rental amount?

So if you are to make your investment enjoyable rather than simply endurable, choose an agent who believes passionately in supportive customer service that is delivered personally with accountability and commitment. Please – do feel free to call us for a no-obligation chat about your investment property and give us the opportunity to give you every reason to sleep easy!