Tuesday, November 29, 2011
Monday, November 28, 2011
Rental Index from Homlet.
Rental amounts lower in seasonal dip
The continual increase in average UK rental amounts has come to a temporary halt according to the latest HomeLet Rental Index, which seems to have given tenants a moment’s reprieve from other soaring living costs.
However, as seen from the report, this seems to be a seasonal trend caused by the increase in students applying for shared rental properties who generally pay lower amounts of rent.
Also despite the average UK rental amount lowering to an average of £763 per month, costs are still 4.2% more expensive than the same time last year.
The continual increase in average UK rental amounts has come to a temporary halt according to the latest HomeLet Rental Index, which seems to have given tenants a moment’s reprieve from other soaring living costs.
However, as seen from the report, this seems to be a seasonal trend caused by the increase in students applying for shared rental properties who generally pay lower amounts of rent.
Also despite the average UK rental amount lowering to an average of £763 per month, costs are still 4.2% more expensive than the same time last year.
Thursday, November 10, 2011
What may happen now! The future of house prices......?
Savills publishes its forecasts to 2016
Thursday, November 10, 2011
Published by MILLIE DYSON
Commercial | 0 Comments
Private rental market – the biggest challenge and the biggest opportunity, report Savills.
Rising demand from those unable to buy their own homes and those reluctant to commit in the current market means that rents will rise significantly more than house prices over the next five years, says international real estate adviser, Savills, which has today published its forecasts to 2016.
The company forecasts that private renting will account for one in five households by 2016 and it is unlikely that supply will keep pace with demand – at least in the next five years.
Competition among renters will drive rents higher, with growth in mainstream rents forecast to rise by 20.5% by the end of 2016. This growth significantly outpaces house price growth which is expected to total just 6.0% over the same five years.
This differential in capital value growth and rental value growth will push out yields and, says Yolande Barnes, Director of Savills Residential Research, is likely to be the catalyst for renewed investment activity in the sector by corporates and institutions looking for income rather than individuals looking for capital growth.
Rental growth of the scale forecast by Savills would see the headline average gross yield on residential stock (IPD) rise from 5.4% to 6.1% across the five year period.
In areas of low owner-occupier demand, and associated suppressed capital values, yields are already high and could see an even greater shift, perhaps averaging nearer 9% by the end of 2016.
In prime London, rental growth of 20.5% is forecast for the next five years, though the forecast of 22.7% capital growth will suppress yields.
For prime central locations then, capital growth will continue to be the major draw for investors. Prime locations outside the centre will see some outward yield movements though.
Yolande Barnes, Director of Savills Residential Research, says:
“We have long been advocates of residential property investment in the private rented sector. Until recently this has primarily been predicated on the expectation of increased capital value, but there is now a strong case on the basis of income.
“A strong investment case can also be made in terms of the rapidly rising demand for private rented accommodation, a situation that is unlikely to change for as long as mortgage finance remains scarce and first time buyer deposits are unaffordable.
"And although rents have risen sharply this year, the inbuilt supply shortage means that we see nothing overheated about this market.
“The biggest challenge now is how to deliver much needed supply into the private rentals market.”
Thursday, November 10, 2011
Published by MILLIE DYSON
Commercial | 0 Comments
Private rental market – the biggest challenge and the biggest opportunity, report Savills.
Rising demand from those unable to buy their own homes and those reluctant to commit in the current market means that rents will rise significantly more than house prices over the next five years, says international real estate adviser, Savills, which has today published its forecasts to 2016.
The company forecasts that private renting will account for one in five households by 2016 and it is unlikely that supply will keep pace with demand – at least in the next five years.
Competition among renters will drive rents higher, with growth in mainstream rents forecast to rise by 20.5% by the end of 2016. This growth significantly outpaces house price growth which is expected to total just 6.0% over the same five years.
This differential in capital value growth and rental value growth will push out yields and, says Yolande Barnes, Director of Savills Residential Research, is likely to be the catalyst for renewed investment activity in the sector by corporates and institutions looking for income rather than individuals looking for capital growth.
Rental growth of the scale forecast by Savills would see the headline average gross yield on residential stock (IPD) rise from 5.4% to 6.1% across the five year period.
In areas of low owner-occupier demand, and associated suppressed capital values, yields are already high and could see an even greater shift, perhaps averaging nearer 9% by the end of 2016.
In prime London, rental growth of 20.5% is forecast for the next five years, though the forecast of 22.7% capital growth will suppress yields.
For prime central locations then, capital growth will continue to be the major draw for investors. Prime locations outside the centre will see some outward yield movements though.
Yolande Barnes, Director of Savills Residential Research, says:
“We have long been advocates of residential property investment in the private rented sector. Until recently this has primarily been predicated on the expectation of increased capital value, but there is now a strong case on the basis of income.
“A strong investment case can also be made in terms of the rapidly rising demand for private rented accommodation, a situation that is unlikely to change for as long as mortgage finance remains scarce and first time buyer deposits are unaffordable.
"And although rents have risen sharply this year, the inbuilt supply shortage means that we see nothing overheated about this market.
“The biggest challenge now is how to deliver much needed supply into the private rentals market.”
Wednesday, November 09, 2011
Have you read our reviews?
If you search for us on Google you will find that there are five yellow stars under our name. We are loved by everyone who reviews our services so why not give us a try and let us know what you think?
It seems that we are one of the only agents in Abingdon with any reviews at all which is ....unusual. See: we told you we were unusual!
It seems that we are one of the only agents in Abingdon with any reviews at all which is ....unusual. See: we told you we were unusual!
Sunday, November 06, 2011
Sunday, July 24, 2011
landlordexpert.co.uk
Being a buy to let landlord: Top Tips
20/07/2011 06:28:00
Taking on a buy-to-let property and being a landlord is not just a shrewd investment move in today's economy, it's providing an essential service.
Taking on a buy-to-let property and being a landlord is not just a shrewd investment move in today's economy, it's providing an essential service.
According to the Association of Residential Letting Agents (Arla) the UK's private rented sector is being used more and more to take the pressure off a housing market which is impossible for first-time buyers to enter.
As a result, the rental sector is currently buoyant. Recent figures released by Endsleigh show rental prices in the UK have increased steadily over the last two years. Since 2009 rents have gone up by four per cent.
This is great news if you are a landlord, or considering becoming one. But if you are reading this as a tenant, you might want to pour yourself a strong drink before reading on – particularly if you live in London.
Endsleigh said the highest rental prices are in the capital city, where the average property is £1,372 per month – double the average price in the UK, which has reached £700 per month.
Scotland, meanwhile, is the cheapest costing the average tenant £299 per month to rent a property. Carlos Thompson, of Endsleigh, said: "The increase in cost of renting across the UK shows that despite the recession the lettings market has remained strong, which is great news for landlords and letting agents."
Meanwhile, with the average weighted rental returns, according to Arla, for both flats and houses coming in at five per cent – higher than the average interest rate earned through savings or a cash ISA – it's no wonder so many are considering buy-to-let.
But entering this marketplace can be a daunting prospect if you've never dipped your toe in before. Being armed with some helpful information to ensure you don't trip up can be invaluable.
If you think buy-to-let is the investment path for you, here are some expert tips to help you get going.
Do your research
As the statistics from Endsleigh suggest, the key to buying a property which will earn you a decent yield is to choose the right location. (see our article explaining rental yield).
But it's also just as important to buy the right property. It would be a wise financial move to buy a property in an area set for regeneration, or where a large amount of jobs are about to be created.
You may not find such great prospects in buying a large four-bedroom family house to rent in an area with no schools, or poor schools for that matter. Arla says it's important for potential landlords to remember buy-to-let is a solid, long-term investment not a quick money-making scheme.
It points out the rental market suffers ups and downs, and behaves very differently from region to region, so it's critical that you select the right property in an area you have researched in detail.
Ian Potter, operations manager at the organisation, added: "Buy to let properties can prove to be a sensible, long term investment, but consumers must do their research in order to achieve success."
Arla recommends talking to a regulated letting agent who is based in the area you are thinking of buying your property. They should be able to provide you with an insight into what makes the local property market tick.
But it's worth looking at other sources too. For example, Paragon Mortgages recently published research revealing students and young singles generated the highest yields for landlords.
While the average rental yield in the UK is currently 6.2 per cent, the investigation found this figure rose to 6.45 per cent for students and 6.22 per cent for young singles. And before you slash quiet seaside retreats off your list, the research also revealed retired people as being among the most lucrative yield providers, generating averages of 6.16 per cent.
Nigel Terrington, chief executive of Paragon Group, said: "Student yields typically outperform the wider market because they are let on a per room basis, which can generate higher rental income."
But remember, these high yields can come at a price. Mr Torrington added: "On the downside, they tend to require a higher degree of maintenance, so landlords have to factor that cost into their overall business models."
Use the Myfinances.co.uk comparison tables to find the best deal on a buy-to-let mortgage
20/07/2011 06:28:00
Taking on a buy-to-let property and being a landlord is not just a shrewd investment move in today's economy, it's providing an essential service.
Taking on a buy-to-let property and being a landlord is not just a shrewd investment move in today's economy, it's providing an essential service.
According to the Association of Residential Letting Agents (Arla) the UK's private rented sector is being used more and more to take the pressure off a housing market which is impossible for first-time buyers to enter.
As a result, the rental sector is currently buoyant. Recent figures released by Endsleigh show rental prices in the UK have increased steadily over the last two years. Since 2009 rents have gone up by four per cent.
This is great news if you are a landlord, or considering becoming one. But if you are reading this as a tenant, you might want to pour yourself a strong drink before reading on – particularly if you live in London.
Endsleigh said the highest rental prices are in the capital city, where the average property is £1,372 per month – double the average price in the UK, which has reached £700 per month.
Scotland, meanwhile, is the cheapest costing the average tenant £299 per month to rent a property. Carlos Thompson, of Endsleigh, said: "The increase in cost of renting across the UK shows that despite the recession the lettings market has remained strong, which is great news for landlords and letting agents."
Meanwhile, with the average weighted rental returns, according to Arla, for both flats and houses coming in at five per cent – higher than the average interest rate earned through savings or a cash ISA – it's no wonder so many are considering buy-to-let.
But entering this marketplace can be a daunting prospect if you've never dipped your toe in before. Being armed with some helpful information to ensure you don't trip up can be invaluable.
If you think buy-to-let is the investment path for you, here are some expert tips to help you get going.
Do your research
As the statistics from Endsleigh suggest, the key to buying a property which will earn you a decent yield is to choose the right location. (see our article explaining rental yield).
But it's also just as important to buy the right property. It would be a wise financial move to buy a property in an area set for regeneration, or where a large amount of jobs are about to be created.
You may not find such great prospects in buying a large four-bedroom family house to rent in an area with no schools, or poor schools for that matter. Arla says it's important for potential landlords to remember buy-to-let is a solid, long-term investment not a quick money-making scheme.
It points out the rental market suffers ups and downs, and behaves very differently from region to region, so it's critical that you select the right property in an area you have researched in detail.
Ian Potter, operations manager at the organisation, added: "Buy to let properties can prove to be a sensible, long term investment, but consumers must do their research in order to achieve success."
Arla recommends talking to a regulated letting agent who is based in the area you are thinking of buying your property. They should be able to provide you with an insight into what makes the local property market tick.
But it's worth looking at other sources too. For example, Paragon Mortgages recently published research revealing students and young singles generated the highest yields for landlords.
While the average rental yield in the UK is currently 6.2 per cent, the investigation found this figure rose to 6.45 per cent for students and 6.22 per cent for young singles. And before you slash quiet seaside retreats off your list, the research also revealed retired people as being among the most lucrative yield providers, generating averages of 6.16 per cent.
Nigel Terrington, chief executive of Paragon Group, said: "Student yields typically outperform the wider market because they are let on a per room basis, which can generate higher rental income."
But remember, these high yields can come at a price. Mr Torrington added: "On the downside, they tend to require a higher degree of maintenance, so landlords have to factor that cost into their overall business models."
Use the Myfinances.co.uk comparison tables to find the best deal on a buy-to-let mortgage
Thursday, July 07, 2011
No double beds in HMOs
Lots of sharers looking at our bigger houses ask us why there are no double beds in the bedrooms. This is why!
HMO regulations specify how many people can safely live in one house. If you have five double beds in a house with five bedrooms you could end up with an Iggle Piggle and an Upsy Daisy in each bed, making ten occupants and therefore breaking the HMO regulations.
Wednesday, July 06, 2011
10 ways to spot the next up-and-coming area
10 ways to spot the next up-and-coming area
Make sure you know where to make your next property investment
With some areas experiencing a slowdown or even fall in property prices, investing in property is becoming a more risky business. But there is still money to be made from buy-to-let and property investment. According to Paragon Mortgages, average rental incomes are up nearly seven per cent in the past year.
In a more turbulent property market, investing in a location that is up-and-coming rather than already popular will give you the biggest return on your investment. Here are ten key indicators to identify a soon-to-be desirable area before everyone else does.
1. Desirable neighbouring postcodes
Look for an area that borders an already popular location. Buyer and rental demand for property will usually spill over from highly desirable areas to neighbouring districts, and these areas can become more popular themselves in the long-term through this association.
In particular, look for neighbouring postcodes that have a similar housing stock and roughly the same transport links, neighbourhood demographic and local amenities. A rise in popularity of the less fashionable area should be realised once people see the advantages it shares.
2. Future transport extensions
Good transport links are one of the biggest factors drawing buyers and renters alike to a location, and automatically add a premium to a property's price tag. Look for areas where there are plans to improve local transport - extra rail or underground links, a new bypass or road extensions. Transport plans are publicly available at your local council.
Be sensible when it comes the exact location of your investment. While proximity to transport links is important, buyers and renters will be put off by a busy bypass or noisy train station on their doorstep.
3. New development
Investing in an area about to undergo regeneration is a no-brainer - the biggest return will come from successfully identifying the local areas that will benefit the most, says Pierre Williams, of property investment experts Inside Track:
"Everyone knows that the Thames Gateway is destined for massive growth. But it's a big area. So you must consider which specific locations in it might perform best. The areas adjoining the Olympic site and Ebbsfleet, because of its new high-speed rail link station, should do very well."
4. Emerging student areas
The buy-to-let market is perennially healthy in university towns. Paragon estimate that landlords letting property to students achieve a return 25% greater than other buy-to-let properties, and highlight Middlesbrough, Chester, Huddersfield, Leicester, Hatfield, Ipswich and Canterbury as the areas with the strongest buy-to-let potential, based on student demand and current average prices.
Even better is finding a student location that hasn't been cornered by other investors. Keep an eye out for new university campuses or colleges opening in different parts of town.
5. Modest price growth
It can be tempting to invest in an area with a strong track record of property price growth, but this also means it could have reached the ceiling of its price potential. You'll make a bigger profit investing in an area experiencing average, rather than explosive, growth. With property more reasonably priced, your up-front investment is lower, and there's still the potential for prices to grow if you pick the right location.
Thursday, June 30, 2011
The Independent re Abingdon Hot Spot! By Robert Liebman
Hot Spot: Abingdon, Oxfordshire
The wilds of Oxfordshire? Hardly. This is one satellite town that can claim few drawbacks but all the benefits of country living. Such as history, rural amenities, great schools
Saturday, 14 April 2001
The wilds of Oxfordshire? Hardly. This is one satellite town that can claim few drawbacks but all the benefits of country living. Such as history, rural amenities, great schools
Low down
| Quick and easy online searches for all yourmortgage needs |
Many people discover Abingdon only after being scared away by the high prices or abysmal traffic in the university town. "People in Oxford know about Abingdon but Londoners are probably unaware of it," says Jenny O'Sullivan of Allen & Harris estate agents. "We are surrounded by lovely villages and golf courses, and there are plans to open a large sports complex. We also have a great amateur opera and dramatic society, and a monthly farmers' market." There is also a local employment base, much of it concentrated in Abingdon Science Park, Abingdon Business Park and several other business parks.
"The lettings market is good, especially for first-time buyers looking to get onto the ladder. There is a bus route between Abingdon and Oxford, and we get overspill from Oxford," says Ms O'Sullivan. "Many of our buyers are families attracted to the many highly regarded schools here and in Oxford such as Josca's Preparatory, Abingdon, St Helen's, St Katherine's, Our Lady's Convent and the European School at Culham," she adds. "We also sell to many first-timers, investors and older retirees moving from a village back to town to be nearer amenities. Sellers tend to be upsizers or downsizers moving around within the local area."
Disenchanted Londoners comprise much of Hampton's customer base: "We have a niche market in which most of our clients are motivated by their children's education," says Gavin West. "Many of them are from Fulham, Kensington and Wimbledon, that sort of place, looking for the better quality of life associated with rural living. They also want a better quality of education to be available, but combined with the ease of being able to commute into London."
Low-Down
TransportDidcot to Paddington is 40 minutes, but many commute between Abingdon and Oxford and London by bus. The A34 skirts the eastern edge of Abingdon and connects to the M4 10 miles south.
Prices
Prices start at less than £100,000 for studio flats and extend to seven figures for country estates. But a three-bed terrace can cost £125,000 in one part of town, and twice that in another. Cheaper houses are in mass-built modern estates north and south of the town. "The market was manic at some points last year, but it is quite balanced at the moment and we have a steady flow of sales," says Ms O'Sullivan.
Properties
Allen & Harris are selling a diverse range of mostly modern flats and houses, but their list includes a two-bed town centre cottage overlooking the Thames for £119,950, and a barn conversion in Frilford four miles from Abingdon for £525,000. Retirement Homesearch has homes for the over-sixties, from £105,000. Call 0870 6005560.
Heady homes
The erstwhile Morland brewery in the town centre near the River Ock is now Berkeley's The Brewery, 130 new and renovated units, including cottages, houses, townhouses and apartments when completed. The malt house, brewery and other outbuildings have been refurbished; £157,500 and £384,500 (01235 530816).
Auction
John D Wood is auctioning Dee Cottage on 9 May (unless sold previously), either as a whole (in excess of £500,000) or in two lots: £425,000 to £450,000 for the cottage, and up to £60,000 for the potential building plot. Dee Cottage is a five-bed house on 0.33 acres in Headington Hill.
Still prancing
The Uffington White Horse and 16 other figures are carved into the chalk downlands near Abingdon. The Horse has been there since at least 1084.
New
Oxford has greater choice for new homes. Near the Oxford Canal in North Oxford are Berkeley's Waterways (from £232,000; 01865 513555), and Laing's Canal Walk (townhouses from £325,000, houses from £700,000; 01865 514229 or selling agent Thomas Merrifield, 01865 515000). The same developers are building outside the city centre in Summertown. Westbury is building townhouses from £295,000.
Estate Agents
Allen & Harris, 01793 513224; Hamptons, 01865 240240; John D Wood, 01865 311522.
Blue Door Sales 01235 524800.
Thursday, June 16, 2011
Mmmmm Tax from propertytalklive.co.uk
Landlords are being urged to ensure they are fully tax efficient after research shows many are failing to claim for the full range of tax allowances.
Buy-to-let mortgage specialist Paragon said landlords could offset many of the costs incurred through letting property against their income, but many were unaware of the full range of costs they could claim.
For example, Paragon's research shows that more than one in 10 landlords (13%) are not claiming for mortgage interest, despite it being a major cost for landlords.
Meanwhile, a third of landlords don't claim management or letting agent fees, with 55% of landlords not claiming for advertising costs incurred in letting their property.
Paragon's Tax Guide (prepared in association with Perrys Chartered Accountants), which can be downloaded from www.paragon-mortgages.co.uk/, helps landlords from purchase through to sale and provides comprehensive information on income tax, limited companies and Capital Gains Tax, in addition to the list of tax reliefs available to landlords and top tax tips.
Nigel Terrington, Paragon Group Chief Executive, said: "Good tax planning is key. How landlords implement, manage and run their tax affairs could have a major impact on landlords' property investments and their overall performance.
"Tax is a complex area and we are confident that our Tax Guide will help landlords obtain a better grasp of tax matters. It's vital that landlords take advantage of the allowances open to them to maximise their return on investment."
He added: "I'm sure when landlords take all of these costs into consideration it could generate a significant saving on their tax bill."
Buy-to-let mortgage specialist Paragon said landlords could offset many of the costs incurred through letting property against their income, but many were unaware of the full range of costs they could claim.
For example, Paragon's research shows that more than one in 10 landlords (13%) are not claiming for mortgage interest, despite it being a major cost for landlords.
Meanwhile, a third of landlords don't claim management or letting agent fees, with 55% of landlords not claiming for advertising costs incurred in letting their property.
Paragon's Tax Guide (prepared in association with Perrys Chartered Accountants), which can be downloaded from www.paragon-mortgages.co.uk/, helps landlords from purchase through to sale and provides comprehensive information on income tax, limited companies and Capital Gains Tax, in addition to the list of tax reliefs available to landlords and top tax tips.
Nigel Terrington, Paragon Group Chief Executive, said: "Good tax planning is key. How landlords implement, manage and run their tax affairs could have a major impact on landlords' property investments and their overall performance.
"Tax is a complex area and we are confident that our Tax Guide will help landlords obtain a better grasp of tax matters. It's vital that landlords take advantage of the allowances open to them to maximise their return on investment."
He added: "I'm sure when landlords take all of these costs into consideration it could generate a significant saving on their tax bill."
Wednesday, June 15, 2011
There's a man waving not drowning
I was out doing a take on this morning and popped out in the garden to take some photos when I heard a shout from high up. Actually it was more of an "Oi, oi!" which made me think I might see someone mooning on a roof.
Thank goodness it was just this guy waving at me to take a picture of him and make him famous. I didn't catch his name......
Thank goodness it was just this guy waving at me to take a picture of him and make him famous. I didn't catch his name......
Friday, June 03, 2011
Apples with Apples eh?
A local agent is clutching at straws with a new advertising doo dah.
Have a look at this
I think what they are saying here is "We have no USP and we can't think of any way to improve our service to you and the discounts we've offered haven't worked so we are just going to pretend that all agents are the same and the only thing you (the customer) will respond to is a bribe"
Apples with apples? Try this simple test.
Call a few agents and ask them these three questions:
Is the cost of you managing a property much different for a large house or a smaller flat?
Do you charge for renewing tenancy agreements to existing tenants?
If I call you at the weekend can I speak to someone who knows me?
The answers to these questions and more will reveal that all agents are not apples. Some are much more than just an apple and one is very special because it is a BLUE fruit. You know who I mean don't you?
Call us on 01235 524800
Have a look at this
I think what they are saying here is "We have no USP and we can't think of any way to improve our service to you and the discounts we've offered haven't worked so we are just going to pretend that all agents are the same and the only thing you (the customer) will respond to is a bribe"
Apples with apples? Try this simple test.
Call a few agents and ask them these three questions:
Is the cost of you managing a property much different for a large house or a smaller flat?
Do you charge for renewing tenancy agreements to existing tenants?
If I call you at the weekend can I speak to someone who knows me?
The answers to these questions and more will reveal that all agents are not apples. Some are much more than just an apple and one is very special because it is a BLUE fruit. You know who I mean don't you?
Call us on 01235 524800
Friday, May 27, 2011
We need more lending to first time buyers!
The annual growth of the banks’ net mortgage lending was 2.2% in April, remaining substantially ahead of the 0.7% for the whole mortgage market in March.
BBA statistics director, David Dooks said:
"Individuals and businesses continue to save more, pay off debt and borrow less as uncertainty about the economy has entrenched a 'wait and see' attitude. However, banks are still able to meet the need for home loans even though demand remains weak. Businesses - SMEs in particular - are using cashflow and deposits to fund expenditure rather than taking on more borrowing.”
Commenting on the figures, Nicholas Leeming, business development director of Zoopla.co.uk, said:
“Weak mortgage lending is causing the numbers of buyers to fall and falling demand from buyers is putting downward pressure on house prices. Downward pressure on prices is making owners reluctant to put their property on the market and lack of property on the market is deterring buyers. It’s a vicious circle, but it can be broken if the lenders want to tackle the problem and the key is to feed from the bottom up. First-time buyers need to be encouraged to take advantage of low prices by offering them finance that is appropriate to their situation. When there is more energy at the bottom of the market the rest of the ladder can feed off it. But until the first-time buyer problem is addressed the property market will continue to bump along going nowhere fast.”
BBA statistics director, David Dooks said:
"Individuals and businesses continue to save more, pay off debt and borrow less as uncertainty about the economy has entrenched a 'wait and see' attitude. However, banks are still able to meet the need for home loans even though demand remains weak. Businesses - SMEs in particular - are using cashflow and deposits to fund expenditure rather than taking on more borrowing.”
Commenting on the figures, Nicholas Leeming, business development director of Zoopla.co.uk, said:
“Weak mortgage lending is causing the numbers of buyers to fall and falling demand from buyers is putting downward pressure on house prices. Downward pressure on prices is making owners reluctant to put their property on the market and lack of property on the market is deterring buyers. It’s a vicious circle, but it can be broken if the lenders want to tackle the problem and the key is to feed from the bottom up. First-time buyers need to be encouraged to take advantage of low prices by offering them finance that is appropriate to their situation. When there is more energy at the bottom of the market the rest of the ladder can feed off it. But until the first-time buyer problem is addressed the property market will continue to bump along going nowhere fast.”
Thursday, May 26, 2011
Set up a limited company for my buy to lets?
The UK has become a nation of landlords! Before the economic downturn began, low inflation, stock market volatility, uncertainty over pensions, dramatic house price rises and less risky housing laws had combined with the success of buy to let to allow people to invest in property on a scale never seen before in the UK. Many of these investors need to seriously consider the benefits of holding property in a limited company, or if that is not possible, putting the assets into a property management company.
There are numerous ways to reduce tax by setting up a limited company for a property portfolio. Corporation tax rates are simply much lower than personal tax rates. Rental profits can be taxed at rates as low as 0%.
Higher rate tax payers in particular benefit enormously. If you set up a limited company for your properties, the first and most immediate benefit is that the first ten thousand pounds of profit is tax free because the corporation tax band is nil up to £10,000. For example, there would be no tax to pay on, say £9,000 profit, whereas the Inland Revenue would demand £3,600 in tax from a sole trader who pays higher rate tax.
After the first £10,000 of profit corporation rates rise to 19% on the first £300,000 of profit. Above that there is a sliding scale to a maximum of 30%. Without the protection of a limited company there would be 40% tax to pay on all profit and gains.
Another attraction of limited company status is that ownership can be transferred without incurring an immediate capital gains tax liability. If the property is inside a limited company a family member, for example, can subscribe some shares and ownership can pass to that family member tax free, as the value of the transfer can be held over for capital gains purposes.
A limited company can also pay out profits in the form of dividends, which do not attract National Insurance contributions at present. Although there is extra tax to pay if you extract dividends, a company can be an extremely powerful tax shelter if you can afford to keep reinvesting profits for many years.
Of course you need to consider the difficulties of extracting funds from the company. The company is a separate legal entity. It pays its own tax on profits and gains, can be sued for its debts and is the legal owner of the money it makes. If the shareholders want to take money out, there will be a tax charge. Wages, salaries and bonuses are the most expensive way to get money out of a company, but even so there can be a very significant tax saving and accumulation effect by using a limited company and this can, over time, lead to a fair difference in the size of portfolio held.
Apart from the tax issues there is also the valuable attraction of limited liability. For example if a tenant trips over a faulty rug supplied by you and decides to sue, your personal assets are outside the company and are protected.
Landlords and property investors can also form UK Limited Liability Partnerships for UK property transactions. An LLP is a body corporate with limited liability and legal personality. It is therefore a legally a type of limited company (but without a conventional share capital) which can function like a partnership in practice and which is deemed to be transparent for UK tax purposes, with the members of the LLP being treated as if they were partners in a partnership (which strictly they are not).
The advantages outlined above need to be weighed against those of being a sole trader. Sole traders purchase property as an individual in the hope of obtaining the capital gains benefits, but face a higher rate of income tax on net rental income, which can make capital repayment of borrowings seem expensive.
property management companies
Where it is not possible (or desirable) to hold properties within a limited company, the use of a property management company can also save vast amounts of tax. Property investors can consider a relatively new type of company, a right to manage (RTM), which is often now used in place of a Flat Management company. The RTM represents the interest of owners of dwellings that share common areas or rights, typically flats, to participate in the running of the common areas or exercising their rights of access.
Unlike a Flat Management Company there are no shareholders, but instead rights of membership are conferred on the parties concerned. The flat owners may force the managers of the building to accept the setting up of such companies. The Commonhold & Leasehold Reform Act 2002 came into effect three years ago and provides a right to leaseholders in flats to force a transfer of the landlord’s management functions to a company of their own – an RTM. Landlord consent is not required as long as relevant criteria are met. The right is exercised by serving a formal written notice upon the Landlord who may, after the appropriate periods of time have elapsed, become a member of the new company themselves once the right to manage has been acquired. Specialist advice should be sought if there is a dispute. The following criteria must be satisfied:
* The building must be self- contained ( or if part of another building , be capable of being redeveloped independently)
* It must include at least two flats
* At least two-thirds of the flats must be let to ‘qualifying tenants’ (i.e a leaseholder whose lease was originally granted for an original term of more than 21 years). There is no requirement for any past or present residence in the flats, or any limit on the number of flats which can be owned by one person.
* It can be part-commercial but the non-residential part must not exceed 25% of the total floor area
* The right to manage may only be exercised by a RTM company and the members of the RTM company must comprise a sufficient number of qualifying tenants. (The required minimum number of qualifying tenants must be equal to at least half the total number of flats in the building)
* The right relates to a building, so in an estate of separate blocks, each block would need to qualify separately and an individual RTM served.
Once formed, the company must formally invite any leaseholders that did not participate in the formation of the company to become members. The company itself must be limited by guarantee and not have a share capital and its Memorandum & Articles of Association must follow a specified form laid down by legislation. These companies are normally set up on the advice or under the guidance of a solicitor familiar with property law. Formation agents like Duport can form such companies quickly and easily.
flat management company
Developers in particular often turn to flat management companies, especially if they own blocks of flats where an arrangement needs to be made to deal with the running, maintenance and repair of the common parts of the building. The leaseholders of the flats are the members of the company. They may appoint a management agent to carry out the day to day work, or one may be specified in the leases with the freeholder. A flat management company is normally incorporated to manage a property or group of properties where there are multiple tenants. It is normally used to protect the interests of the leaseholders.
A Flat Management company has its Memorandum and Articles of Association specially drawn up to allow the company to own, manage and administer a leasehold or freehold property, which is normally divided into several dwellings units or flats, with each leaseholder owning a share in the company. The leaseholder will be obliged to transfer the ownership of the share to the new leaseholder when disposing of the property.
Flat management formation packages are often a solution for developers. The company can be tailored to the client’s specific requirements - for example with enough copies of Memorandum and Articles of Association for each leaseholder. Developers can choose between a company limited by shares or limited by guarantee. Either of these forms of incorporation provides limited liability for its members. Each company can also collect maintenance charges and any ground rents, arrange security, decoration, insurance etc.
The company limited by guarantee intends to provide a form of incorporation with limited liability suitable for a group of members with a mutual interest of a not-for-profit nature. The main advantage of using a guarantee company rather than a company limited by shares is that no stamped transfer is needed on changes of members (on sale of the related lease). The articles can simply provide for the membership of the outgoing lessee to terminate automatically when they cease to hold the lease, without the need for signatures.
Whatever the size or complexity of a property portfolio, limited company status deserves serious consideration. For top rate tax payers, especially those who want to reinvest some profits to grow the business rather than taking them all for personal use, the use of a limited company is probably a very wise move. The 19% rate of corporation tax is a real advantage in such cases and will make a difference to the bottom line. However, there are numerous issues to consider and because each business is unique it is important to speak to a qualified accountant and get specific advice.
There are numerous ways to reduce tax by setting up a limited company for a property portfolio. Corporation tax rates are simply much lower than personal tax rates. Rental profits can be taxed at rates as low as 0%.
Higher rate tax payers in particular benefit enormously. If you set up a limited company for your properties, the first and most immediate benefit is that the first ten thousand pounds of profit is tax free because the corporation tax band is nil up to £10,000. For example, there would be no tax to pay on, say £9,000 profit, whereas the Inland Revenue would demand £3,600 in tax from a sole trader who pays higher rate tax.
After the first £10,000 of profit corporation rates rise to 19% on the first £300,000 of profit. Above that there is a sliding scale to a maximum of 30%. Without the protection of a limited company there would be 40% tax to pay on all profit and gains.
Another attraction of limited company status is that ownership can be transferred without incurring an immediate capital gains tax liability. If the property is inside a limited company a family member, for example, can subscribe some shares and ownership can pass to that family member tax free, as the value of the transfer can be held over for capital gains purposes.
A limited company can also pay out profits in the form of dividends, which do not attract National Insurance contributions at present. Although there is extra tax to pay if you extract dividends, a company can be an extremely powerful tax shelter if you can afford to keep reinvesting profits for many years.
Of course you need to consider the difficulties of extracting funds from the company. The company is a separate legal entity. It pays its own tax on profits and gains, can be sued for its debts and is the legal owner of the money it makes. If the shareholders want to take money out, there will be a tax charge. Wages, salaries and bonuses are the most expensive way to get money out of a company, but even so there can be a very significant tax saving and accumulation effect by using a limited company and this can, over time, lead to a fair difference in the size of portfolio held.
Apart from the tax issues there is also the valuable attraction of limited liability. For example if a tenant trips over a faulty rug supplied by you and decides to sue, your personal assets are outside the company and are protected.
Landlords and property investors can also form UK Limited Liability Partnerships for UK property transactions. An LLP is a body corporate with limited liability and legal personality. It is therefore a legally a type of limited company (but without a conventional share capital) which can function like a partnership in practice and which is deemed to be transparent for UK tax purposes, with the members of the LLP being treated as if they were partners in a partnership (which strictly they are not).
The advantages outlined above need to be weighed against those of being a sole trader. Sole traders purchase property as an individual in the hope of obtaining the capital gains benefits, but face a higher rate of income tax on net rental income, which can make capital repayment of borrowings seem expensive.
property management companies
Where it is not possible (or desirable) to hold properties within a limited company, the use of a property management company can also save vast amounts of tax. Property investors can consider a relatively new type of company, a right to manage (RTM), which is often now used in place of a Flat Management company. The RTM represents the interest of owners of dwellings that share common areas or rights, typically flats, to participate in the running of the common areas or exercising their rights of access.
Unlike a Flat Management Company there are no shareholders, but instead rights of membership are conferred on the parties concerned. The flat owners may force the managers of the building to accept the setting up of such companies. The Commonhold & Leasehold Reform Act 2002 came into effect three years ago and provides a right to leaseholders in flats to force a transfer of the landlord’s management functions to a company of their own – an RTM. Landlord consent is not required as long as relevant criteria are met. The right is exercised by serving a formal written notice upon the Landlord who may, after the appropriate periods of time have elapsed, become a member of the new company themselves once the right to manage has been acquired. Specialist advice should be sought if there is a dispute. The following criteria must be satisfied:
* The building must be self- contained ( or if part of another building , be capable of being redeveloped independently)
* It must include at least two flats
* At least two-thirds of the flats must be let to ‘qualifying tenants’ (i.e a leaseholder whose lease was originally granted for an original term of more than 21 years). There is no requirement for any past or present residence in the flats, or any limit on the number of flats which can be owned by one person.
* It can be part-commercial but the non-residential part must not exceed 25% of the total floor area
* The right to manage may only be exercised by a RTM company and the members of the RTM company must comprise a sufficient number of qualifying tenants. (The required minimum number of qualifying tenants must be equal to at least half the total number of flats in the building)
* The right relates to a building, so in an estate of separate blocks, each block would need to qualify separately and an individual RTM served.
Once formed, the company must formally invite any leaseholders that did not participate in the formation of the company to become members. The company itself must be limited by guarantee and not have a share capital and its Memorandum & Articles of Association must follow a specified form laid down by legislation. These companies are normally set up on the advice or under the guidance of a solicitor familiar with property law. Formation agents like Duport can form such companies quickly and easily.
flat management company
Developers in particular often turn to flat management companies, especially if they own blocks of flats where an arrangement needs to be made to deal with the running, maintenance and repair of the common parts of the building. The leaseholders of the flats are the members of the company. They may appoint a management agent to carry out the day to day work, or one may be specified in the leases with the freeholder. A flat management company is normally incorporated to manage a property or group of properties where there are multiple tenants. It is normally used to protect the interests of the leaseholders.
A Flat Management company has its Memorandum and Articles of Association specially drawn up to allow the company to own, manage and administer a leasehold or freehold property, which is normally divided into several dwellings units or flats, with each leaseholder owning a share in the company. The leaseholder will be obliged to transfer the ownership of the share to the new leaseholder when disposing of the property.
Flat management formation packages are often a solution for developers. The company can be tailored to the client’s specific requirements - for example with enough copies of Memorandum and Articles of Association for each leaseholder. Developers can choose between a company limited by shares or limited by guarantee. Either of these forms of incorporation provides limited liability for its members. Each company can also collect maintenance charges and any ground rents, arrange security, decoration, insurance etc.
The company limited by guarantee intends to provide a form of incorporation with limited liability suitable for a group of members with a mutual interest of a not-for-profit nature. The main advantage of using a guarantee company rather than a company limited by shares is that no stamped transfer is needed on changes of members (on sale of the related lease). The articles can simply provide for the membership of the outgoing lessee to terminate automatically when they cease to hold the lease, without the need for signatures.
Whatever the size or complexity of a property portfolio, limited company status deserves serious consideration. For top rate tax payers, especially those who want to reinvest some profits to grow the business rather than taking them all for personal use, the use of a limited company is probably a very wise move. The 19% rate of corporation tax is a real advantage in such cases and will make a difference to the bottom line. However, there are numerous issues to consider and because each business is unique it is important to speak to a qualified accountant and get specific advice.
Tuesday, February 01, 2011
job losses and pay cuts are beginning to take hold
According to latest research from the Association of Residential Letting Agents (ARLA) in the fourth quarter 2010, 40% of ARLA members reported an increase in tenants struggling to meet rental payments in the preceding six months - a rise from 35.9% in Q3 2010.
This is the first time the number has increased in 18 months, suggesting that job losses and pay cuts are beginning to take hold, causing tenants to have difficulties.
The situation was least noticeable in central London, where just under a third (27.9%) of members reported an increase, compared with the rest of the UK (46.4%).
Ian Potter, Operations Manager at ARLA, said: "At the beginning of last year we predicted that the number of tenants having difficulties paying rent would increase and unfortunately, this seems to be the case today. It is a situation which can have serious repercussions throughout the PRS as, without guaranteed rent income, landlords may also have problems paying mortgages. At worst, it may result in a rise in repossessions.
"While it is difficult for landlords to predict whether current or prospective tenants will hit financial difficulties, our research highlights the importance for landlords or agents to implement a thorough selection process and to conduct reference checks on potential tenants - and to consider the benefits of rental protection insurance.
"The same is true for anyone looking to rent a property - do your research before signing up with a new landlord. And if letting or renting a property through an agent, make sure the agent is a member of an organisation such as ARLA, which ensures landlord and tenant money is protected by a client money protection scheme.* Many agents do not have this consumer protection. ARLA agents are also required to be members of an ombudsman scheme which can offer redress if things to go wrong."
ARLA's research also showed a rise in the number of tenants haggling with landlords over rents, from 44.5% to 47.1%, further indicating the financial pressures on tenants.
This is the first time the number has increased in 18 months, suggesting that job losses and pay cuts are beginning to take hold, causing tenants to have difficulties.
The situation was least noticeable in central London, where just under a third (27.9%) of members reported an increase, compared with the rest of the UK (46.4%).
Ian Potter, Operations Manager at ARLA, said: "At the beginning of last year we predicted that the number of tenants having difficulties paying rent would increase and unfortunately, this seems to be the case today. It is a situation which can have serious repercussions throughout the PRS as, without guaranteed rent income, landlords may also have problems paying mortgages. At worst, it may result in a rise in repossessions.
"While it is difficult for landlords to predict whether current or prospective tenants will hit financial difficulties, our research highlights the importance for landlords or agents to implement a thorough selection process and to conduct reference checks on potential tenants - and to consider the benefits of rental protection insurance.
"The same is true for anyone looking to rent a property - do your research before signing up with a new landlord. And if letting or renting a property through an agent, make sure the agent is a member of an organisation such as ARLA, which ensures landlord and tenant money is protected by a client money protection scheme.* Many agents do not have this consumer protection. ARLA agents are also required to be members of an ombudsman scheme which can offer redress if things to go wrong."
ARLA's research also showed a rise in the number of tenants haggling with landlords over rents, from 44.5% to 47.1%, further indicating the financial pressures on tenants.
Thursday, January 27, 2011
Dude! What did you do to my car?
I drove the car to Witney and look what they did.
I can't go anywhere incognito ever again; I will never lose it in a car park; never drive above the speed limit; never forget the name of my business and never stop loving that logo!
If you spot the car out and about give me a wave and if you get stuck behind me please make a mental note of our web address and pass it on to anyone who you think might love our service as much as our existing landlords do. There's £50 in it for you if we let their property so this little memory test could be worth it.
www.bluedoorlettings.com
Car graphics by Sign Language Ltd.
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