Can You Still Make Profits in Buy to Let?
March 13, 2008
In recent years, more than 400,000 people have become landlords through buy to let, benefiting from great profits. Some experts say that it is too good to last, and the UK property market is finally set to get its reprisal. So should you stay away from buy to let opportunities, or should you take advantage of the current weakened property market to pick up cheap property?
State of the property market
According to recent figures buy to let gross profits rose over 16 per cent last year, a positive increase comparing to 13.5 per cent in 2006.
Due to interest rates hikes in the last six months of 2007, buy to let property price growth slowed down to 1.6 per cent.
Many experts warned against investing in buy to let property because property prices are likely to fall in the next two years or so. And that you should get ready to pick up some good property bargains then.
If you thinking of becoming a private landlord for the first time, you should be cautious because you need a high mortgage to cover current high property prices, and therefore you may not earn enough from the rental income to cover your mortgage monthly repayments.
Be cautious of new properties
The oversupply of newly-built properties has made finding new tenants difficult, buy to let investors should be cautious. Some property investors were forced to sell their properties under tens of thousands of their market value because they couldn’t find tenants. Some lenders have even cancelled buy to let mortgages on new properties.
Some experts say that buy to let landlords are now divided in 2 distinct classes. Amateurs who started investing recently, or got themselves financially stretched out, will not survive. Professional buy to let landlords benefit from their crunch and pick up bargain properties.
Evaluate your long term situation
The key to succeed in buy to let is to see the picture years ahead, if you want to make good money in buy to let make long term plans. Interest rates are expected to fall at some point but you need to make sure that you can still afford your monthly repayments if they rise in the future.
Take everything into consideration when doing your sums, including solicitor’s fees, mortgage arrangement, Stamp Duty, plus other expenses such as maintenance, or insurance.
And don’t forget to declare your income to the HM Revenue & Customs. You can claim tax relief most outgoing costs such as maintenance, advertising, and mortgage interest. But not on the capital borrowed.
Popularity: 29%
Low Income Buyers Exempt of Stamp Duty
March 12, 2008
The Chancellor Alistair Darling has announced today in his first budget that low-income property buyers will not pay stamp duty, if they buy a home through a government sponsored scheme.
The Chancellor has revealed low-income home buyers would only have to pay stamp duty once they own 80 per cent or more of the property.
Mr Alistair Darling also exposed that more resources will be made available for other government schemes, to increase the supply of inexpensive housing. The shared-equity schemes will help key workers such as police and teachers, who may now get a low-cost loan if they wish to buy a property.
It was also revealed that around 95,000 households have been helped by these schemes; however there was little support for first time buyers who earn too much to be eligible for these schemes.
Popularity: 12%
Underfloor Heating Systems Installation
March 11, 2008
Underfloor heating systems gently warm your floor tiles and the room air creating natural heat with little variation of temperature in comparison to conventional central heating systems. Underfloor heating is efficient and healthy because the air temperature can be set at much lower levels which also contributes for saving energy.
Underfloor heating systems are installed seamlessly allowing more flexibility for the room’s layout. The 2 most popular forms of underfloor heating are:
- Underfloor heating cables and
- Underfloor heating mats
Heating mats are much simpler to install comprising of a self adhesive mesh with the heating cables attached. However heating cables are more flexible as allow you to install in irregular shaped rooms, and it is also possible to control the heat in different areas of the room by changing the heating cable density.
Installation
You’ll need to cut a groove on the floor to house the temperature sensor. This sensor needs to be positioned about 500mm from the walls. You should prepare the floor normally and must be smooth, free of sharp bits to avoid damaging the underfloor heating mat or underfloor heating cables.
Lay the heating mat on the floor (check if there’s no nasty surprises before you actually fix it). Roll out a test strip of the mat over at each end, when cutting through the mesh be carefull not to cut through the heating cables (red or orange). Start over at the other end turning the mat 180 degrees and lay it back alongside the previous one, the minimum distance between cable loops should be about 50mm.
When you’re happy with the mat layout you can fix it to the floor using the self adhesive pads. If there are which can’t be reached, it’s ok to cut the cable from the mesh and stick it to the floor, keeping the loops in pattern.
To prevent lifting use a hot glue gun to glue any edging pieces without adhesive.
Contact a qualified electrician to test the resistance, to connect the underfloor heating system to the mains supply and install the thermostat. Finally ask him to test the resistance and continuity.
With the current turned on use covering tile adhesive, you should pay special attention to the cables, you don’t want to damage them as you lay down the tiles.
To complete the job you should protect the underfloor heating installation with an RCD for safety reasons. Allow the adhesive to dry before you heat up the system.
Popularity: 11%
Northern Rock to Stop Sub-Prime Mortgages
March 11, 2008
The bank Northern Rock will stop offering sub-prime mortgages in the first of a predicted sequence of pull-backs ordered by the new “owners” at the Treasury.
Ron Sandler, Northern Rock’s new boss, is likely to introduce further measures in order to repay the £25bn emergency loan such as cutting down jobs and reduce the over £100bn lender’s mortgage book. He has already set very uncompetitive levels for Northern Rock’s mortgage rates to reduce new business.
Popularity: 8%
UK Property Market Benefiting from High Profile Overseas Investors
March 9, 2008
Affluent foreign investors are turning into the UK’s property market, accounting for over nearly a third of London’s high-value property buyers.
The UK’s property investment potential is being boosted by increasing worldwide wealth, mainly from East European countries and Russia.
Research by property company Frank Knight revealed that 37 per cent of London properties in the £1 million to £2 million price range were purchased by overseas investors.
Frank Knight also revealed the UK property market is benefiting financially from high profile individuals investments.
Popularity: 7%