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Specialist Insurance can help landlords profit from property

Specialist Insurance can help landlords avoid tenant rent default

In the UK private rented sector, the average rent for a residential property now stands at a staggering £777 (GBP) per month across the whole of the country but there are some regional differences.

Private sector rents in Greater London rose by 6.7% during the last 12 months to reach a regional average of £1,224 (GBP) per calendar month (pcm).

In stark contrast, PRS tenants in the North-East living in similar sized properties are paying an average rent of just £512 (GBP) pcm.

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North East Property ForumOur next North East Property Forum event will be held on Wednesday 13 February and our speakers for this event are John Lee and Vincent Wong from Wealth Dragons

John is a self-made multi-millionaire, co-founder of Wealth Dragons

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UK Property Prices Increase

UK Property Prices Increase

According to one of the UK’s leading mortgage lenders, residential property prices in the UK rose by more than economists had expected in January putting a halt to the annual decline.

Nationwide say that residential property prices in the UK actually increased by 0.5% in January 2013, a further sign that the two years of static residential property prices and historically low property sales across the UK may soon be coming to an end.

Nationwide have published data that states that the average residential property price in the UK is now £162,245 (GBP).

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Council Tax Exemption For Landlords To Be Abolished in 2013

Council Tax Exemption For Landlords To Be Abolished in 2013

Thanks to the Government welfare reforms and austerity measures the rules for Council Tax exemption on empty rental properties will soon be abolished.

From the 1st April 2013 new legislation being proposed by the government means that landlords will become solely responsible for the Council Tax on all void rental properties.

Some local authorities, such as Durham, have already jumped the gun and have begun charging landlords the full Council Tax amount for any property that is currently untenanted, leaving many landlords confused and severley out of pocket.

If the new legislation is still at the proposal stage and is not yet law, why are some local authorities allowed to do this?

I happen to own several properties around the North East of England and have been billed for void periods over the last 6 months even if a property was empty for only a couple of weeks.

Durham are wrongly charging the full council tax on all empty rental properties despite the fact that no council run services are being used.

I have contacted Durham borough council and attemted to argue the toss and following lengthy discussions I was eventually told by an advisor to complete a form to apply for Council Tax exemption for any property that I had been charged for, however, the local authority in Durham flatly refused to post a form out to me and insisted that I get the managing agent to request one.

The only way that landlords can affect change is to use the current legislation set by Government against any greedy local authority and point blank refute any charge made against them especially if the charge is unwarranted.

Information taken from the Gov.uk website…

A full Council Tax bill is based on at least 2 adults living in a home.

If you count as an adult for Council Tax and live on your own, you’ll get 25% off your bill.

You’ll also get a discount if you live with people who don’t count as adults for Council Tax.

These people are not counted as adults for Council Tax purposes:

  • children under 18
  • people on apprentice schemes
  • 18 and 19-year-olds in full-time education
  • full-time college and university students
  • young people under 25 who get funding from the Skills Funding Agency or Young People’s Learning Agency
  • student nurses
  • foreign language assistants registered with the British Council
  • people with a severe mental disability
  • live-in carers who look after someone who isn’t their partner, spouse or child
  • diplomats

To work out if you should get a Council Tax discount:

  1. Count the number of adults who live in your home as their main home.
  2. Discount anyone in the list above.
  3. If you’re left with 1 person who counts as an adult, your Council Tax bill will be reduced by 25%.
  4. If you’re left with no-one who counts as an adult, your bill will be reduced by 50%.

If there’s no discount listed and you think you should get one, write to your council.

The council has 2 months to respond. If you disagree with the council’s decision or don’t hear back within this time, you can appeal to the Valuation Tribunal.

Residential property prices increase by 0.8% say Land Registry

Property Values Rise Again...Just!

Property Values Rise Again…Just!

Property prices across England and Wales grew by an average of 0.8% in July 2012 to stand at £162,900 (GBP), the Land Registry has reported.

Meanwhile, Nationwide reported that residential property prices shot up by 1.3% in August 2012.

Although the uplift sounds sizeable, it translates into a £340 (GBP) difference between July’s average price of £164,389 (GBP) and August’s £164,729 (GBP).

The data from the Land Registry means that UK residential property prices are now just 0.3% ahead of where they were in July 2011.

But the UK statistics were boosted by a monthly price rise of 2.7% in London, bringing annual house price inflation in the capital to 6.5%. The average house price in London now stands at £367,785 (GBP).

In Wales residential property prices also went up 2.3% during July, and there were also rises in East Midlands (1.2%) and theSouth-East and East (both 0.4%).

Contrastingly, property values fell by 0.1% in Yorkshire & the Humber , 0.6% in the South-West , 1.7% in the North-West  and 2.1% in the North-East during July.

The Land Registry’s latest data also shows an increase in property sales transactions. From February to May 2012, there was an average of 49,343 sales a month, up from 46,531 for the same period in 2010.

The North-South divide in UK residential property prices look set to widen further by the end of 2013, according to a new study by the Centre for Economics and Business Research (CEBR).

London property prices are expected to grow by up to 2.4% in 2012, while properties in the North-East will see values fall 2.7%, as the capital remains relatively unharmed by the wider impact of the double-dip recession.

Wales, the North-West, Scotland and the North-East will see the values of their properties fall in each of the next two years. By contrast, London and the South East will grow by at least 2% in both 2012 and 2013.

London remains a safe haven for wealthy overseas investors. But this does little to protect other areas of the UK where demand from overseas investors is slight.

Even low interest rates and a lack of suitable housing supply have failed to prevent property slumps in other regions.

The UK average house price change is expected to be an increase of just 1%– an improvement on last year’s 1.5% fall, but way down on the 2007 pre-crash boom of 11%.

Douglas McWilliams, the chief executive at CEBR explains: “Demand in the London market remains resilient with the ongoing Eurozone drama piquing international interest in the capital. Furthermore, we can expect an abundance of affluent French citizens shopping for London homes if President [Francois] Hollande’s proposed 75% top rate of income tax is enacted.”

Private Rental Sector (PRS) Tenants are finding Buy To Let rents are unaffordable as many are handing over more than half of their take home pay to keep a roof over their heads according to the property website – Rightmove.

The average pay to rent ratio across the UK is 38% – but up to a 1 million of the country’s 3.4 million Private Rented Sector tenants are paying much more, say the online property portal.

Tenants paying out the most rent from their pay packets:

  • South East – 41%
  • London – 40%

Paying the least rent from gross wages:

  • Scotland – 35%
  • North East – 36%

Some tenants pay even more – with 16% in London and 19% in the South East forking out 60% of their net income.

Despite demand far outpacing the number of properties available to rent, Rightmove Director, Miles Shipside reckons tenants cannot afford to pay any more.

Searches for buy to let properties have soared by 43% in the past 12 months, while the number of properties to rent has only nudged up by 3% according to Rightmove’s latest quarterly consumer confidence report.

61% of tenants and 47% of landlords predict higher rents in the next 12 months, but 43% of landlords expect rents to hold steady.

Mr Shipside said: “While the rental bubble is unlikely to deflate as there is no readily acceptable alternative to the rented roof, it does appear to be approaching a limit in some areas. Agents report that the seemingly incessant demand is causing rental price pressure to spill over into other previously less sought-after areas and some tenants are attempting to negotiate lower rent. This is a clear sign that rents may be hitting an affordability ceiling in some locations. It is an early warning of some overheating and, as well as raising demand in cheaper locations, it will force some to find alternatives such as stay with parents or squeeze more people into smaller spaces.”

Residential property affordability is at its most favourable in almost a decade, according to the latest Lloyds TSB Affordable Cities Review.

My home town of Salford, in the North West, is the most affordable UK city with an average property price of £102,391 that is 3.81 times the average gross annual earnings.

This partly reflects a 32% fall in house prices in this part of Greater Manchester since 2008.

The average price for a home in a UK city is £173,202 equating to 5.5 times the average gross annual earnings.

This is an improvement on 5.7 times the average gross annual earnings in 2011 and is significantly below the peak of 7.2 times the average gross annual earnings observed in 2008.

10 most affordable UK cities, 2012

UK cities

Region

Price to Earnings ratio

Salford

North West

3.81

Londonderry

Northern Ireland

3.87

Bradford

Yorkshire and the Humber

3.98

Lancaster

North West

4.00

Stirling

Scotland

4.04

Belfast

Northern Ireland

4.08

Durham

North

4.08

Lisburn

Northern Ireland

4.09

Hereford

West Midlands

4.26

Birmingham

West Midlands

4.43

UK cities average

 

5.51

Sources: Lloyds Banking Group, ONS

The marked improvement in affordability in UK cities over recent years has been driven by the significant fall in residential property prices.

Since 2008, the average house price within a city has fallen by 18% (£37,403) from £210,605 in 2008 to £173,202 in 2012.

  • 7 out of the 8 most affordable cities are in Northern Ireland and the North of England.
  • Ely in the East of England is the most affordable city in the south of England (4.60).

The least affordable city in the UK is Truro in the South West where the average property price (£250,489) is nearly ten times (9.71) the average gross earnings in the area. The benefits to the quality of life associated with living in this picturesque part of Cornwall have supported residential property prices in this area for the past decade.

Oxford (8.80) is the second least affordable city, followed by Winchester (8.76). Inverness (5.97) and York (5.95) are the least affordable cities outside Southern England.

Suren Thiru, housing economist at Lloyds TSB, commented: “The improvement in housing affordability within many of our major urban conurbations has been significant during the past few years and reflects the decline in house prices over the period. There is, however, a distinct north-south divide to the locations of the most affordable UK cities. Looking forward, the marked improvement in city affordability is likely to help support demand for those able to enter the housing market. Much of this benefit, however, maybe offset by the continuing difficulties many households face in raising a deposit and uncertainty over the outlook for the UK economy.”

Many UK homeowners traditionally plan to do major DIY projects to their properties during the extended Easter break, in a bid to improve living conditions and also in the hope of increasing the perceived value of their homes.

However, a new survey from HSBC claims that DIY improvements are not worth it anymore as DIY projects were adding less value to a property than they were a year ago.

According to HSBC’s valuation experts, a loft conversion is the safest investment, typically increasing the value of a residential property by £16,152, although the gain is 23% down on 2011.

An extension could add £15,665 (3% down), while a new kitchen may boost the value of a home by £4,577 (19% down).

The only major home improvement work to increase the relative return-on-investment in the past year is a new conservatory, putting on an average £9,420 in value to the property, up 14% on 2011 figures.

The survey also highlights that regional variations need to be considered when tackling home improvements.

For example, a residential property fitted with a new kitchen in London should increase the property’s value by an average of £9,125 (GBP), compared with £4,300 (GBP) in North-East England and £2,333 (GBP) in Scotland.

Paul Cutbill, Valuation’s expert at Countrywide Surveying Services, says: “Whilst sensibly improved and well presented homes will generally be attractive to potential purchasers, rising labour and material costs mean that the gap between the cost of improving and monies realised at the point of any sale has been reduced. Poor quality work and a lack of proper design, usually resulting from inadequate project budgeting and planning, can have a significant negative knock on effect to any added property value”.

An excellent opportunity to purchase this BMV investment property which is in good condition throughout.  Was marketed at £66,950 and we have secured a deal at £52,000.

Over the past 2 weeks we have been inundated with investment property which have sold within hours of being available. 

As we have a waiting list of investors the properties are sold on a first come first served basis and to clients who are serious about expanding or building a portfolio.  I therefore strongly advise you to register your interest if you are looking to purchase Buy to Let property with yields of 10% +.

This is the deal:-

Purchase Price          £52,000

Rent                         £485pcm

Market Value           Around £65,000

Yield                       11.1%

For photographs and further details please email lisa@thecastledenegroup.com

 For recent sales click here

If you would like to discuss this property further please do not hesitate to contact me on 0191 527 4007.  Quoting MPPT

Alternatively you can reserve this deal by e-mailing me lisa@thecastledenegroup.com Quoting MPPT

I would strongly advise that you are quick to secure as good BMV properties in good letting areas are selling fast.

 

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