Li Magazine 42nd edition

LANDLORD INVESTOR

WRITTEN BY INDUSTRY EXPERTS COVERING ALL ASPECTS OF BUY-TO-LET

LANDLORD | PROPERTY | INVESTMENT

42ND EDITION | 2019

IN THIS ISSUE...

What Brexit means for the property market

Buy-to-let mortgage market update

BTL a game changer for business owners

Where to invest in 2019

Property market prediction for 2019

Government Panel Debate WITH BREXIT LOOMING OUR PANEL OF EXPERTS ANSWER YOUR QUESTIONS ON THE KEY ISSUES FACING LANDLORDS IN 2019.

NATIONAL LANDLORD INVESTMENT SHOW, OLYMPIA LONDON, 21 MARCH. FOR THE FULL STORY TURN TO PAGE 4

CHAIRED BY ANDREW NEIL & FEATURING RT. HON. IAIN DUNCAN SMITH MP

Make your money work harder Consistently delivering up to

7-11% 3 year £7,000 Per Annum Return *

Investment

Minimum Investment

The simple way to grow your savings.

If you’re tired of seeing poor returns on your savings and investments - Think Big! An investment with Buy2LetCars will fund a lease car for a UK driver and deliver 7-11% returns for you, paid in monthly instalments over 36 months, with a final lump sum exit payment.

Buy2LetCars Car leasing funded by people for people

0208 289 6667 | buy2letcars.com

11

%

Returns per annum since launch in 2012

Since launch, 100% of our investors received the returns they were expecting when investing with us.

* Interest amount will vary based on your

investment amount. This figure is the expected interest amount. Please note, in certain circumstances the amount returned to you may be less than you invested.

I'm thrilled to welcome you to the 42 Edition of Landlord Investor Magazine.

IN THIS ISSUE...

ND

4

SHOW UPDATE Landlord Investment Show 2019 kicks-off in London

How can it be February already? Time waits for no woman, man or buy-to-let landlord, and as we hurtle into 2019 the big question on everyone’s mind is how will Brexit impact the property market? The short answer is that no one really knows.

The Political indecision certainly isn’t helping, but regardless of the outcome people will still need homes (wasn’t that in a TV advert?), plus there's still a significant shortage of housing in the UK; and as such I fully believe we have sound reason to remain optimistic. I look at what we think Brexit means for the property market in greater detail on page 12. I’ll also be chatting to Jackie Houguez-Simmons and Ellie Broadhurst from Baya Financial, the National LIS Awards Best Buy-to-Let Broker winners. I'll also be looking at what’s available in terms cheap rate BTL mortgages, and inspecting some hot UK property investment locations for the coming year.

On top of that Simon Zutshi shares his 2019 market predictions, Paul Mahoney discusses why buy-to-let can be a game changer for business owners and Peter Littlewood recaps on the salient points from 2018 and looks at what’s coming down the pipe in the next 11 months.

We also set-out the stall for this year’s National Landlord Investment Show calendar which will see a hat-trick of exhibitions at Olympia London and major shows at Aston Villa Football Club in Birmingham and Manchester United's Old Trafford. The season kicks-off at Olympia London on March 21st with a Government Panel Debate chaired by Andrew Neil and featuring the Rt. Hon Iain Duncan Smith MP (sorry have we mentioned that yet?). Full details of show dates, locations and seminars can be found on the freshly redesigned show website: www.landlordinvestmentshow.co.uk.

Our designer Marc Riley also discusses what constitutes a good website on page 16.

Finally Marie Parris shares her tips for what could be a challenging year and we take one last look at the category winners from the National LIS Awards 2018. We return to the Grosvenor Park Hotel on November 21st for the 2019 Awards, so start thinking about your submissions as it'll be here in no time.

8

BUY-TO-LET HOTSPOTS Where to invest in 2019

10

MARKET UPDATE The latest market news

12

BREXIT UPDATE What does it mean for the property market?

14

FEBRUARY SPOTLIGHT Tracey Hanbury speaks to Baya Financial

16

MEDIA CORNER How to create a great digital experience

17 INVESTMENT

All the very best for the year ahead.

Property market prediction for 2019

Tracey Hanbury

20

INVESTMENT Why buy-to-let can be a game changer for business owners

LANDLORD INVESTOR MAGAZINE Editor Tracey Hanbury

Editorial Contributors

Design Marc Riley

Paul Mahoney Peter Littlewood Marc Riley Baya Financial

Advertising Beverley Meliniotis

Contact

Follow us

Telephone: 020 8656 5075 landlordinvestmentshow.co.uk

@LandlordInShow

Tenants History Ltd, 27 Stafford Road, Croydon CR0 4NG

@LandlordInvestmentShow

22

MORTGAGE UPDATE Buy-to-let mortgage market update

24 - 36

NATIONAL LIS AWARDS National LIS Awards 2018 review... and some thoughts on the coming year

Statements and opinions expressed in articles, reviews and other materials herein are those of the authors; the editors and publishers. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. Tenants History Limited and our contributors will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through the promoted links.

Meet the team TRACEY HANBURY EDITOR & SALES DIRECTOR

SUBSCRIBE TO

Li MAGAZINE

T: 0208 656 5075 M: 07931 308 875 tracey@landlordinvestmentshow.co.uk

INVE STME NT

STEVE HANBURY

PROP ERTY |

DIRECTOR

LAND LORD |

T: 0208 656 5075 M: 07429 683 046

TH

ION

| 20 17

PR OP REFO ER TY PA NE L RM / / HO SP W TO PO LITI CS AR KS LO NOT GE TO GE T YOUR & PROP ER BB YI NG MORE FO R TY AR ?

NE XT PROP / TH E HO CH AN SPOT RED TAPE / PORT GE / FO ER ME LIGHT / : THAM AN ECON LIO LAND TY DE AL LE SS NE SO CI AL SS HO TH LO OMIC ES W ATER EXPE RDS’ CH IS SU MM REDU CT US IN G IO ECKL & LO RT W ER / FT IN IST / E SH TO GE N AC T TERI OULD LE AR OR ORS LISTE SS TAX RE N TO / INDU LIEF, STRY

steve@landlordinvestmentshow.co.uk

ALICIA CELA

LAN DLO RD IN VES TOR MAG AZIN 29 E EDIT

THE RT H ON IA IN DUN CAN S M IT H M P J O IN S US TO D IS C USS

ACCOUNTS T: 0208 656 5075

Socia l hou sing r eform

accounts@landlordinvestmentshow.co.uk

KIERAN McCORMACK BUSINESS DEVELOPMENT MANAGER T: +44 (0)20 8 656 5075 M: +44 (0)7950 284 615 kieran@landlordinvestmentshow.co.uk

#LIM AGA ZINE

COVE WRITT EN BY RING INDU ALL ASP ECTS STRY EX PERT OF BU S Y-TO -LET

BEVERLEY MELINIOTIS ADVERTISING SALES MANAGER T: 0208 656 5075 beverley@landlordinvestmentshow.co.uk

MARC RILEY DESIGN MANAGER T: 0208 656 5075 marc@landlordinvestmentshow.co.uk

LES HANBURY NON- EXECUTIVE DIRECTOR

OLLIE HANBURY HEAD OF SECURITY AND ENTERTAINMENTS MANAGER

Landlord Investor Magazine gives property professionals, landlords and investors monthly advice and information on the topics, news and legislation that matter to the industry.

Your subscription gives you the latest industry information in 10 issues per year.

Subscribe today for just £65.00 per year to get news, advice and comment on all areas of buy-to-let: • legal services & tax • insurance • investments • deposit schemes & landlord associations • property hotspots Call the subscription hotline on 020 8656 5075 today or visit landlordinvestormagazine/subscribe Published by LI Media, organisers of National Landlord Investment Show

2

LANDLORD INVESTOR 42ND EDITION

Short Term & Refurbishment

Short-term finance.

Long-term relationships.

Whether you are looking to refurbish a property for a quick turnaround, or simply replace current development finance awaiting sale, we can help you maximise returns in a time frame to suit across light and heavy refurbishment projects.

This award-winning range can also give you access to 100% of the refurbishment costs up to 85% LTV, with funds available on day one to help you realise your property ambitions.

Contact us today

0330 123 4522 salesdesk@shawbrook.co.uk shawbrook.co.uk

ANY PROPERTY USED AS SECURITY, INCLUDING YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. A BROKER FEE MAY APPLY

SHOW UPDATE

TRACEY HANBURY

Show time G OV E R N M E N T PA N E L D E B AT E M A R K S T H E N AT IO N A L L A N D L O R D I N V E S T M E N T S H OW ' S R E T U R N TO LONDON.

4

LANDLORD INVESTOR 42ND EDITION

SHOW UPDATE

The 2019 show season kicks-off on March 21 at Olympia London with a landmark Government Panel Debate chaired by Andrew Neil and featuring Rt. Hon. Iain Duncan Smith MP; followed by a Legal Debate chaired by Paul Shamplina and a Beginners in Property Seminar chaired by Simon Zutshi.

As I'm writing the Landlord Investment Show team are working round the clock preparing for the first event of the year. The exhibitor floor will be brimming with all kinds of products and services to help you on your

landlord investor journey, and given the huge success of our expert panels at the 2017 and 2018 shows, we are delighted to announce their return with an excellent variety of subjects and industry experts. Details of the

March 21 Olympia Show panels and panelists are below, for a full list of all speakers please visit www. landlordinvestmentshow.co.uk – and don’t forget to resister for your free show admission.

G OV E R N M E N T PA N E L D E B AT E A U D I TO R I U M , 1 0 a m - 1 1 . 1 5 A M As it says in the leader, our Government Panel Debate really is a landmark event. At the time of going to press it’s still anyone’s guess as to what will happen on the 29th, and with the show on the 21st our Government Panel Debate will be right in the eye of the Brexit storm.

In terms of quorum we’ve had quite a coup. Our Chair Andrew Neil needs no introduction, we’re all huge fans of his political broadcasting and he’s the perfect choice to keep things on track. The Rt. Hon. Iain Duncan Smith

ANDREW NEIL Publisher and Broadcaster

RT. HON. IAIN DUNCAN SMITH MP Former Conservative Party Leader

MP is also taking time-out from his busy agenda to (re)join the 2019 panel.

As a current Member of Parliament and former Conservative Party Leader his insight will be invaluable.

As Knowledge and Product Editor of MailOnline's Money section, Sarah Davidson will be better equipped than anyone to offer opinion on the challenges of the BTL market.

Another new addition to the panel is Simon Wilson, Executive Business Development Manager of recovery specialists Collect Your Rent. Being at the coalface of the private rented

market Simon is in an excellent position to offer advice upon based upon his own experiences. If you’ve visited our shows before you’ll know our regular panelists Paul Mahoney, Founder & MD of Nova Financial Group and Tony Gimple, Founder of Less Tax 4 Landlords. Being experts on all subjects connected to Finance and Taxation, Paul and Tony will be able to offer some hugely helpful input from their vast wealth of knowledge and experience. I can say without hesitation that the Auditorium will be packed to the rafters, so we’d advise arriving early to secure your seat.

SARAH DAVIDSON

PAUL MAHONEY

TONY GIMPLE

SIMON WILSON

Founder & MD, Nova Financial Group

Founder, Less Tax 4 Landlords

Executive Business Development Manager, Collect Your Rent

Knowledge and Product Editor at the MailOnline's money section, This is Money

For a full list of speakers and subjects please visit www.landlordinvestmentshow.co.uk – and don’t forget to resister for your free show admission.

LANDLORD INVESTOR 42ND EDITION

5

SHOW UPDATE

L E G A L D E B AT E A U D I TO R I U M , 1 . 3 0 p m - 2 . 3 0 p m Paul Shamplina, Founder and Director of Landlord Action, and star of Channel 5’s ‘Bad Tenants, Rogue Landlords’, will host our first live legal panel debate, featuring Russell Conway: Partner of Oliver Fisher Solicitors, Sean Hooker:

PAUL SHAMPLINA (CHAIR) Landlord Action

Head of Redress for The Property Redress Scheme and David Asker of recovery specialists The Sheriffs Office. The Panel, with many years’, experience in the legal field of buy-tolet, will debate and answer questions

from the audience on the latest changes in the Private Rental Sector.

Topics Covered will be Section 21s, AST’s, Longer Term Tenancies, HMOs, Housing Courts plus much more.

Not to be missed.

RUSSELL CONWAY

DAVID ASKER The Sheriffs Office

Oliver Fisher Solicitors

SEAN HOOKER The Property Redress Scheme

BEGINNERS IN PROPERT Y SEMINAR A U D I TO R I U M , 3 . 3 0 p m - 4 . 3 0 p m Chaired by Simon Zutshi, Founder of property investors network and author of Property Magic, this seminar is perfect for anyone just entering or considering entering the buy-to-let market. So if you’re thinking about getting into property, have inherited

some money, wish to increase your portfolio, have questions about a strategy or the best finance options - then this is the seminar for you. The debate will cover and offer advice on; where to buy, finance, HMO's, legal/ evictions, training, tax, plus much more.

In addition to Simon Zutshi, panelists include Gavin Seaholme of Shawbrook Bank and Kam Dovedi Premier Property Education; plus other guest speakers who (at the time of going to press) are still to be announced. Again we advise arriving early to avoid disappointment.

MORE PA N E L I S T S TO B E ANNOUNCED

SIMON ZUTSHI (CHAIR)

GAVIN SEAHOLME

property investors network

Shawbrook Bank

KAM DOVEDI Premier Property Education

In addition we have 5 rooms full of expert speakers brimming with helpful and insightful seminars. For a full list of speakers and subjects please visit www.landlordinvestmentshow.co.uk – and don’t forget to resister for your free show admission.

6

LANDLORD INVESTOR 42ND EDITION

UK’S LEADING PROPERTY INVESTMENT EVENT The National Landlord Investment Show connects 1000s of property professionals at venues throughout the country and is the UK’s leading buy-to-let event. The shows give landlords and investors the chance to connect with suppliers, network and increase their knowledge.

21 MARCH OLYMPIA LONDON 15 MAY ASTON VILLA FC 13 JUNE OLYMPIA LONDON 8 OCTOBER MANCHESTER UTD FC 5 NOVEMBER OLYMPIA LONDON

* BOOK NOW FOR FREE ADMISSION *

National Landlord Investment Show exhibitors include:

+ Build your knowledge through seminars from property experts + Source leading products & services from throughout the property market + Share best practice and keep up to date with UK landlords and investors + Expand your business networks via the Morning Networking Event 00

To find out more and register for your FREE tickets go to landlordinvestmentshow.co.uk Follow us: @LandlordInShow

@LandlordInvestmentShow

BUY-TO-LET HOTSPOTS

TRACEY HANBURY

Where to invest in 2019 PR OPE R T Y HO T S P O T S R E V E A L E D

8

LANDLORD INVESTOR 42ND EDITION

BUY-TO-LET HOTSPOTS

With 2019 now well underway, it's time to look at where the best property investment hotspots might be in the year ahead – those locations offering the dream combo of strong rental yields and solid capital gains.

Despite the ongoing uncertainty caused

by Brexit, there are still numerous opportunities out there for canny property investors to make good returns on their investment.

Equally, the city's strong price growth is great news for those with one eye on capital gains.

Property remains a stable, reliable asset class – and has proved more profitable than stocks, shares and bonds in recent times. In times of uncertainty, people like certainty – and property investment fits that bracket.

In times like these, investors will be looking for Brexit-proof investments – the opportunity to buy homes in areas where a profit can be made regardless of external factors such as political uncertainty.

But where are the property hotspots to look out for in 2019?

One such area is Liverpool, which has emerged from its post-industrial slumber to become one of the UK's most dynamic, exciting cities to live and work in.

Newcastle upon Tyne The popular student city has long been a hotbed for those seeking a great night out, but in recent years it's also become increasingly appealing to investors.

It's experienced rapid population growth since the turn of the new millennium – with the number of people residing in the city centre increasing by 112% between 2002 and 2015, according to think tank Centre for Cities.

Significant regeneration has played a part in Newcastle's growing appeal, with a number of property and commercial developments being built, big improvements to the city centre and the construction of various new student accommodation blocks.

For those investors seeking a slice of the lucrative student market, there are few better places than Newcastle, which is home to a large and lively student population. In total, the city is home to approximately 50,000 students studying at two different universities (Northumbria University and Newcastle University).

Roughly a sixth of Newcastle's population is made up by students, giving the city a very youthful vibe. In addition, young professionals and families are likely to be drawn by rental prices that are more affordable than other parts of the country.

For investors, though, the relatively low initial investment costs (the current average price, according to Rightmove, is just over £200,000) means the chances of achieving strong rental yields are good.

LANDLORD INVESTOR 42ND EDITION

Liverpool

The city famous for The Beatles has experienced huge investment and regeneration in recent years, leading to a wide range of new developments, a thriving local economy and a strong jobs market which allows it to compete with other major northern cities such as Manchester, York and Leeds.

This, along with its unparalleled music scene, cultural heritage and fascinating history, makes it a popular location for a diverse range of tenants.

What's more, its three universities and the Liverpool Institute of Performing Arts ensure it has a large student population, while the ongoing work to develop and regenerate the city's Baltic Triangle area – Liverpool's creative and digital quarter and a night-time hotspot – continues to draw creatives, startups and young professionals.

Liverpool was one of only a handful of major cities to record faster growth in 2018 than in 2017, according to Hometrack, but its house prices are still the right side of affordable. This makes bagging a bargain a very realistic possibility.

In fact, house prices in the city centre score very highly on affordability – with Rightmove putting the overall average asking price at just over £135,000.

This, when coupled with strong and consistent demand from renters, ensures Liverpool is an ideal location for all kinds of investors.

Coventry The Midlands has plenty of locations for investors to get excited about in 2019, including Birmingham, Leicester and Nottingham – all thriving regional hubs with strong local economies, large student populations and excellent transport links.

Coventry, though, is outdoing its betterknown regional rivals. The city's been earmarked as one of the best places to invest in UK property in the year ahead, fuelled by strong yields and impressive house price growth.

Demand and occupancy rates are both high, aided by a thriving student population. Coventry is home to two universities and around 50,000 students, while its status as the UK's City of Culture 2021 is putting it in the spotlight more than ever before.

For those interested in capital gains, research by HouseSimple recently revealed that house prices in Coventry have risen by 250% since 2000 – making it one of the best places in the UK in terms of price growth.

The above are just three possible hotspots in 2019, with Newport, Swansea, Edinburgh and Northampton also expected to perform well, while Manchester – the beating heart of the Northern Powerhouse – is expected to further cement its position as an investment hub.

Tracey Hanbury

In times of uncertainty, people like certainty – and property investment fits that bracket.

9

INDUSTRY MARKET UPDATE UPDATE

PETER LITTLEWOOD iHowz

Market update What a year we had in 2018, in case you have forgotten...

•

changes to Mandatory Licensing, bringing in all HMO’s with 5 (or more) occupants.

•

Also includes introduction minimum room sizes, and the need to adhere to Local Authority waste rules;

•

restrictions on a new let for any property with an EPC rating less than E (unless exemption has been granted);

•

a new How to Rent Guide, twice!!

•

Complete introduction of the new Section 21 (form 6a), and the need to ensure any gas certificate is served before the tenants occupy the property – else a Section 21 can never be used;

•

•

•

the introduction of new Data Protection rules (GDPR) requiring all landlords to inform their tenants of the data they are holding; more restrictions on mortgage rules, especially for portfolio landlords (4 or more Buy to Let properties); tax changes, through Section 24 of the Finance Act.

Some separate matters being considered are:

tenancy and then dropping it down afterwards. This is to prevent landlords or agents trying to offset the ban on fees by artificially increasing the rent for the initial period to make up the costs.

•

Security deposit of no more than six weeks’ rent (refundable).

the possibility of landlords having to join a Property Redress Scheme, as Agents currently have to;

•

Holding deposit of no more than one week’s rent (paid to reserve a property).

introduction of mandatory Client Money Protection for all agents;

•

further regulation for agents, including:

Payments in the event of a default, i.e. a failure by a tenant to perform an obligation or discharge a liability, provided this is no more than the landlord’s loss.

a single, mandatory and legallyenforceable Code of Practice for property agents; a system of minimum entry requirements and continuing professional development for property agents;

Payments for variation, assignment or novation of a tenancy capped at £50 or the reasonable costs incurred if higher.

an independent property agent regulator;

Payments on termination of a tenancy at the tenant’s request, capped at the landlord’s loss.

•

the possibility of public access to the Rogues Database;

Council Tax payments.

•

Payments for the provision of utilities, e.g. gas, electricity, water as long as the tenancy agreement provides for these payments.

introduction of mandatory 5 year electrical checks for all lets;

•

continuing tax changes, through Section 24 of the Finance Act.

•

And if that wasn’t enough the Government are carrying out these consultations:

And already we have even more lined up for 2019:

Payments towards energy efficiency measures under a green deal plan if the tenancy agreement provides for this.

•

Payments for a television licence.

consideration of Housing Courts;

Payments for communication services, e.g. telephone, internet, cable/satellite television.

the possibility of longer term tenancies;

•

the Tenants Fees Bill (applicable to agents and landlords), announced to become live June 1st.

Broadly, permitted payments would include: Rent. Additionally there will be a ban on setting rent at a higher level for the first portion of the

10

The full list of allowable fees will become clearer when it becomes an Act in the next couple of months.

review of Selective Licensing;

the Housing Health and Safety Rating System (HHSRS).

It is critical you keep informed during 2019, especially if you are an agent!

LANDLORD INVESTOR 42ND EDITION

MARKET UPDATE

Homes (Fitness for Human Habitation) Act This act has passed into law on December 20th. It is scheduled to come into force from 20th March 2019 and will affect new and renewed fixed-term tenancies in England from this date. New and renewed periodic and secure tenancies will be brought under the scope 12 months’ from today (December 20th 2019).

The Act amends the Landlord and Tenant Act 1985 Act to ensure that the dwelling is fit for human habitation at the time of the grant and kept in this condition thereafter.

A property will be unfit for habitation if there are serious defects in any of the following: Repair Stability Freedom from damp Internal arrangement Natural lighting Ventilation Water supply Drainage and sanitary conveniences; and Facilities for preparation and cooking of food and for the disposal of waste water.

The Act creates an obligation on the landlord to make sure that the property is fit for habitation at the start of the tenancy and is kept so throughout. If the landlord fails to do so, the tenant can bring a claim to make the landlord carry out works and for compensation.

Tenants can take action against hazards like condensation mould, inadequate or no heating, and fire risks where the council won’t or can’t.

And for the first time tenants will be able to take action against Council owned properties.

It further extends a landlords obligation so it now applies to all areas of a building “in which the landlord has an interest”, including communal areas of leasehold flats and HMO's.

If you already supplying well maintained properties you have nothing to worry about. This is aimed at the minority of landlords who won’t maintain their properties, giving the rest of us a bad reputation.

LANDLORD INVESTOR 42ND EDITION

The end of the Section 21?

In a recent Report, Shelter has called for all private renters to be given permanent tenancies as a legal minimum. The calls come in Building for our future: A vision for social housing which makes 23 recommendations designed to shake up the social and private rented sectors.

The report says: “Social renters are more protected from eviction but they face stigma and indifference – and their complaints go nowhere.”

“Too many private renters are stuck in insecure, unaffordable tenancies, too frightened to complain about poor conditions or rent increases for fear of eviction.”

It goes on to say “Unless we act now, we face a future in which a generation of young families will be trapped renting privately for their whole lives, where more and more people will grow old in private rentals, where billions more in welfare costs will be paid to private landlords – and hundreds of thousands more people will be forced into homelessness.”

THURSDAY 21ST NOVEMBER G rosve n o r H o u se H otel , Pa rk L a n e, Lo n d o n W 1 K 7 TN

It further recommends: •

All private landlords with over 25 homes would have to register with a new consumer regulator

•

This body would set consumer standards for all private rented housing

•

The Government should increase resources for local enforcement to tackle bad landlords and poor housing conditions, in line with the growth in the number of households renting privately

•

The Government should end Section 21 – so-called no fault eviction, so that permanent tenancies are the legal minimum for all private renters

•

Private renters should be protected from above-market rent increases and the Government should make available information on rent prices for different property types at local government ward level.

This follows on from Jeremy Corbyn calling for an end to the Section 21 in an article in the Independent December 2017. This was echoed by Croydon Council last October.

www.national-lisawards.co.uk

Peter Littlewood

11

BREXIT UPDATE

TRACEY HANBURY

Brexit update W H AT D OE S I T M E A N F OR T H E PR OPE R T Y MARKET?

12

LANDLORD INVESTOR 42ND EDITION

BREXIT UPDATE

Indecision over Brexit is having an impact on the property sector, but what are the biggest issues affecting the market and landlords in particular?

Despite a planned exit date of March 29, Britain’s proposed departure from the European Union remains very much up in the air.

third of respondents expressed concerns about the potential implications of Brexit.

and a lack of demand for landlords with available properties to fill.

Empty homes during a housing crisis

At the time of writing, Theresa May is meeting with other party leaders following the emphatic rejection of her Brexit deal in the House of Commons.

According to an asset protection specialist, the uncertainty around Brexit is likely to lead to a rise in vacant properties. This is something which could be damaging to the housing market when there is already a nationwide shortage of homes to buy or rent.

There is also the concern that if the Brexit fallout causes significant damage to the UK economy, this could have a knock-on effect on employment levels which could subsequently bring about a rise in rent arrears.

After the Commons defeat, May then overcame a no confidence vote tabled by Labour counterpart Jeremy Corbyn and she has since been working to propose a viable alternative which gains support from MPs. Discussions of a second referendum and the consequences of a ‘no deal’ Brexit abound. However, with the House of Commons in disarray, the latest option gaining popularity seems to be an extension of Article 50, providing the government with more time to establish a deal which has political and public support.

Whatever the outcome, the Brexit saga has unsettled the property market and will likely continue to do so for the remainder of 2019 and possibly beyond.

With this in mind, it’s time to take a look at some of the property market issues and talking points being caused by Brexit…

More tenants if the sales market suffers?

One of the country's best-known tenant referencing providers, HomeLet, has said that Brexit uncertainty could provide an unexpected boost for landlords as consumers opt to rent instead of purchasing a property in an unstable market.

Martin Totty, the firm's chief executive, says that low-level house price growth and expected interest rate rises, combined with Brexit, will continue to discourage people from buying imminently. He expects the trend of rising rents and demand for rental homes to continue throughout 2019, despite the current political situation.

According to a HomeLet study of over almost 3,000 landlords, nine out of 10 intend to keep their existing portfolio or expand it over the next year. However, a

LANDLORD INVESTOR 42ND EDITION

VPS Security Services says that property investors and developers will be reluctant to move forward with their strategies while the prime minister continues to deliberate on a final Brexit plan.

It says that there are currently over 200,000 homes that have been empty for six months or more and that this number could increase over the coming months.

"Empty properties of any type can be a significant cost to the owners, local authorities and to the environment," says Phil Bunting, director of VPS Security.

"They attract vandalism, metal thieves, arsonists and squatters far more than occupied premises."

Could the wait and see approach affect landlords too?

Certainty is needed soon for all market stakeholders For the nation’s landlords, investors, letting agents and tenants, the sooner the Brexit deal is sorted or otherwise, the better. The market can then look to resume normal service and grow at the levels seen over the last few years.

Despite the doom and gloom currently circulating, it’s important to remember that property remains one of the most profitable asset classes and that the private rental sector has grown to account for around a fifth of all households.

What’s more, the market has learnt to deal with unpredictability and instability in recent times and people will always need somewhere to live and move around accordingly, regardless of what is going on in Westminster.

Tracey Hanbury

Although, like Martin Totty, many industry suppliers are predicting a lull in property buyers to provide a boost to rental demand over the next few months, it may not be all plain sailing for the rental market.

There is the obvious conclusion that Brexit will discourage EU tenants - who make up a significant proportion of the rental population in London - from moving to the UK. On top of this, some EU residents currently residing in the UK may look elsewhere once Brexit becomes a reality.

What's more, the wait and see approach adopted by home movers due to Brexit uncertainty could also be mirrored by those already residing in rental properties.

This, combined with tenants waiting until June when they no longer have to pay upfront fees to agents, could bring about a quiet few months for the market

Brexit uncertainty could provide an unexpected boost for landlords as consumers opt to rent instead of purchasing a property in an unstable market.

13

FEBRUARY SPOTLIGHT

TRACEY HANBURY

FEBRUARY SPOTLIGHT

Tracey Hanbury speaks to Baya Financial Jackie HouguezSimmons (left) and Ellie Broadhurst (right).

14

LANDLORD INVESTOR 42ND EDITION

FEBRUARY SPOTLIGHT

I’m here with Jackie Houguez-Simmons and Ellie Broadhurst from Baya Financial; our Best Buy-to-Let Broker winners from 2018. We will be discussing the concerns and potential opportunities surrounding Brexit from an Investors perspective, as well as other industry updates.

Jackie set up Baya financial after 20 years in the finance market. She is committed to running a business which can support investors both coming into the market and looking to expand their portfolio and expertise, achieving this by working with high integrity, unparalleled industry knowledge and fantastic customer service. Ellie has been working with Jackie for 3 years; she was previously a bank manager for a high street bank and has 15 years of experience in the mortgage market.

So, Jackie, how are you finding business with the build up to Brexit?

JHS I believe the most important thing is to separate our business area from Brexit as a whole. In all challenging situations there will be winners and losers, it is essential for our investors to do their ground work, so they move forward with confidence and their eyes firmly open.

Business is as busy as ever. We have a variety of investor types, but our clients tend to be professional property investors who are seeing the advantages and opportunities in a slower market.

Prices in the South are dipping, with much longer sales times; therefore, when purchasing is chain free, bargains can be achieved. Our investors are finding that sellers are currently more motivated to sell, which means they are usually people who are only selling for genuinely necessary reasons. Investors can take advantage of their chain free status, allowing house moves to happen more easily.

EB We are finding that valuers are becoming nervous around Brexit, therefore prices and timescales can, and are negatively affecting lender reports. As lenders rely quite heavily on demand and rent/sale timescales, this can influence the figures that lenders will use. To try and avoid this, we are spending more time with our clients to ascertain a realistic price and timescales to reduce surprising reports.

During our discussions with clients we help them build in contingencies when using refurbishment to term products.

There has been a change in approach by our customers; with most of our

LANDLORD INVESTOR 42ND EDITION

mortgages on HMOs /multi lets, freehold blocks, commercial and semi commercial properties; yields tend to be higher and clients can grow their portfolios through their cashflow, rather than always relying on capital growth.

I believe we will see more of this, as investors must be more creative to achieve higher returns on investment.

As a specialist mortgage broker, our clients are usually aiming to add value initially to their purchases, to allow a buffer against a potential downturn in the market.

JHS So, in summary, and keeping things simple – challenges, are as always, interest rates, property prices and rental yields. With or without Brexit, this will not change. What investors need to do is to see the opportunities where others see threats.

TH You mentioned that your clients are professional or semi-professionals. Are you finding that more clients are taking the plunge to take this on as a full-time job?

EB Some are, yes; and for a number of reasons. There has been a rise in property mentoring companies, which allows people to become more educated and supported in this area.

With the correct choice of mentor, investors spend less time and money getting it wrong before they get it right. Ultimately, it has become a more achievable career. With the help of mentors and coaches, investors can see beyond their local area and start investing in more profitable markets. Even though we are based in Hertfordshire, we are seeing investors look at all areas of the country for the right deal.

JHS We are also finding more of our clients focusing on a property portfolio above a pension and savings pot to service their retirement. As savings rates are so low, they are forced to think outside the box to achieve a return which matches inflation. There is of course more risk attached to property investment, but potentially greater rewards.

EB Clients are also aiming for a better work life balance around family; which this type of career choice can afford them.

TH How do you see the market evolving over the next 12 months and what were the greatest challenges last year?

EB We saw a great deal of worry over how the September 2017 PRA changes would affect business; but in response there has been an increase in new lenders, as well as a more flexible approach from several existing lenders.

Clients must be more open to higher rates to achieve their goals, but those goals are still very much achievable.

There has also been a shift in what is available, where we are seeing more non-PRA lenders entering the market.

Settling into these regulation changes, we don’t have so many rate conscious clients. Instead, they are focusing on the route of least resistance to get to their prize, whether that is speed of return on investment, cashflow or yield.

Over all, we have found it hasn’t made as bigger impact as we had perhaps anticipated. Business has continued to grow in the specialist market, which has meant that clients are thinking more about the spread of their portfolio. This can only be a good thing given the possibilities in the foreseeable future.

JHS Looking forward, Investors are a tenacious group in a very robust market, which is used to being a cyclical industry. We still have very low interest rates and with a down turn in property prices, it is still an investors market. The competition between lenders is also high, both specialist and high street, which again benefits the borrower.

Thanks so much for your time, both of you. Baya Financial will be speaking at all 3 of our Olympia London Shows and Manchester, visit landlordinvestmentshow.co.uk to find out more.

Tracey Hanbury

15

MEDIA CORNER

MARC RILEY

Landlord Investment Show designer Marc Riley has created everything from car adverts to beer bottles and having just re-crafted the Landlord Investment Show website shares his thoughts on how to create a great digital experience.

The best design is always inconspicuous.

Its genius being its invisibility. Great design simply melds into your world, whether it be a petrol pump or a website it should be inherently instinctive to use.

Even in situations where brands have to scream against each other for attention it’s the ones which feel like they’ve been there forever which are the most effective.

As a business tool your website is invaluable. Regardless of who you are or what you do, your website is your market stall. It’s your window to the world and the conduit through which your customers engage with your brand, products or services. In most instances it’s the first point of contact and as such it has a hugely important job to do.

Whether global conglomerate or one man band, creating your website can be an onerous task. Deciding what to include or omit is a big decision and I’ve seen many a boardroom battle played out on a website landing page. Next up is how it looks. Again everyone will have an opinion and achieving consensus can be tricky. Finally there’s the tech: there's a mind boggling array of platforms, hosting packages and build options.

If the above is enough to make you run for the hills screaming like an Edvard Munch painting then help is at hand. Here are 4 basic points I ask clients to consider before diving head-on into a new website. It is by no means exhaustive, but it is based upon many years of practical experience. Follow these simple rules and you’ll find the process less of challenge.

Purpose Before writing a word or designing so much as a pixel you need to identify what your website needs to do. This may sound obvious but misunderstanding a website’s purpose is the single biggest problem I encounter with clients.

16

When considering this crucial stage people often cite examples from other websites without really understanding why. ‘We want it to be like X website’ is something I hear regularly, and that’s a great aspiration, but you need to identify why.

Try putting yourself in the shoes of your clients or service users. What information or features do they really want or need?

If you’re not sure then ask. People will appreciate being asked and feel valued.

Create a shortlist of popular comments and compare to your own, you may be surprised. If you already know then that’s brilliant, but whatever you do don’t assume. On the new LIS site the focus is placed squarely upon ease of access to information, distilling it down to what’s really needed and taking the user on a smooth journey which also takes the them past other helpful or relevant content.

Content No matter how good your visual design is, if your content doesn’t hit the mark it’s a wasted opportunity. Create a simple ‘wireframe’ on paper listing all the menu headings and subheadings with notes about what goes where. Arrange content in groupings which make narrative sense.

In the industry we call this 'heuristics' and think of it as being similar to the way supermarkets arrange and group products by aisle and shelf. It doesn’t have to be anything elaborate, but no one knows your business like you and agreeing this before you approach a designer will save huge amounts time, money and energy.

When it comes to your verbal narrative keep it lean and focused. Use it as a space to reinforce your key messages. Tempting as it is to create reams of background info viewers’ attention span is highly limited and if they have to work too hard to get what they need they’ll likely go elsewhere.

Be ruthless when editing: modern viewing habits have a tendency towards ‘snacking’ so try to be mindful of this. Utilise

technology to leverage this too: video is the most popular communication format and is easy to share on social media.

Design No matter how good your content is, it will be inhibited by poor design. Design is subjective and again everyone involved will have opinion, but my advice would be to shelve the emotion and try to keep it businesslike. Design is, after all, a construct.

It’s a reaction to content not the impetus.

If you already have a strong visual brand then your site should be an extension of this; celebrate and leverage any existing brand equity. Navigation should be clear and intuitive, but there's a fine line between legible and clunky. Follow a consistent approach to layout and hierarchy of information - there's nothing worse than feeling like you're visiting a different site once you get beyond a homepage. This will really help given the myriad devices your site will be viewed upon.

Technology In addition to the aforementioned your website will need to be built and somewhere to live. There are a plethora of options available here. If your site is relatively small then a packaged solution which includes hosting, templates and an interface for uploading content is appealing. You'll still have plenty of control and it'll keep it all neatly in one location. If your site requires external feeds of data - say you have regional housing stock or tenant data coming from various sources - then you'll almost certainly be looking at a bespoke solution built to handle the incoming data and present in a desired manner. Again this really links back to your site's purpose as discussed in the first point.

Visit www.landlordinvestmentshow.co.uk to see how we applied the above to the new Landlord Investment Show website.

Marc Riley

LANDLORD INVESTOR 42ND EDITION

INVESTMENT

SIMON ZUTSHI

Property market prediction for 2019 LANDLORD INVESTOR 42ND EDITION

17

INVESTMENT

Whilst there is massive uncertainty in the UK property market right now, many investors are unsure of which strategies would be best to use in 2019, so this month Landlord Investor have asked Simon Zutshi to share his prediction for 2019, which strategies to use, and which ones to avoid.

When I first started to invest in property back in 1995, I like most people, thought that a falling property market was a bad thing for property investors. But now that I have experienced a market boom, crash and boom again, over the last 23 years of investing, I know that actually, for those of us who are educated, there is a huge opportunity this year, maybe even the buying opportunity of this Decade.

submitted their personal tax return for the 2017-18 tax year. This will be the first time that many landlords realise the true effect of Section 24 and will be surprised that they are paying more tax despite earning the same rental income. When they ask their accountants, “Why am I paying more tax”, they will be told, “It’s because of Section 24, and it will only get worse over the next three years”.

First of all, I would like to share with you my prediction for the 2019 property market. In my opinion, there is no doubt that house prices will, on average, fall in 2019. Of course, I can’t say how much they will fall, but I feel that this will be more likely to be a dip in prices, rather than a crash like the one we saw in 2008.

We are already seeing lots of long term landlords deciding to retire early and so sell up their portfolios. I believe that there might be hundreds of thousands, of accidental landlords, who are higher rate tax payers, and have had great capital growth on their property over the last 10 years, who decide that now might be the time to sell their property and invest the money elsewhere.

If this happens then the property market could be flooded with ex-rental property for sale, with not that many people looking to buy, and so house prices will fall.

There are three main factors that will cause this fall in house prices in 2019.

The first is due to the uncertainty caused

by BREXIT. No one really knows what will happen after March 29th when the UK leaves the European Union. I think many of the potential buyers have decided to wait and see what happens, and so they are not looking to buy right now, because they worry that property prices could fall further. This means there are less buyers in the market than there might otherwise be.

The second main factor is the effect caused by Section 24, which is where higher rate tax payers, who own properties in their own name, will now be paying more tax on their rental property income. By 31stJanuary 2019, all of the 1.75 million UK landlords should have

18

The final and third factor that will cause house prices to dip further in 2019, is the fact that many property surveyors are being very cautious and down valuing property when conducting valuations for mortgage companies.

The Royal Institution of Chartered Surveyors (RICS), has publicly said that they believe the property prices will fall in 2019 and have advised their members to be cautious. Unfortunately, this becomes a self fulfilling prophecy.

Property prices are based on the valuations by surveyors on behalf of the banks, and so if surveyors are over

cautious and down value properties, this actually causes a drop in house prices.

When should you be buying property?

Should you wait until the market bottoms out before you buy your next property?

Absolutely not. As long as you know what you are doing, now is one of he best times to be buying, probably the best buying opportunity of this Decade.

But what happens if you buy a property now, and then prices continue to fall so that it is worth less in six month’s time?

Well that could happen, but if prices fall, that does not mean you have actually lost any money. You would only lose money, if for some reason, you had to sell for less than you purchased it for. As long as you can afford to hold the property until prices have a chance to rise again, then you have not lost any money. It is important to remember the 5 Golden Rules from my book Property Magic.

Three of these rules are particularly relevant here. Rule No 2: Always buy in an area of strong rental demand. Rule No 3: Always buy for positive cash flow.

And Rule No 4: Always invest for the long term. If you follow these then you should be able to hold the property until prices recover, and should have no need to sell and won't lose money if the market drops.

The property market is cyclical. Prices go up and they come down, but the long term trend in the UK is up because we live on an island, with a limited supply of accommodation, and an increasing population. Given enough time property prices will recover.

LANDLORD INVESTOR 42ND EDITION

INVESTMENT

A great time to negotiate discounts If the general public believe that property prices are coming down, it puts you in a much better position to negotiate a good discount off your next few property purchases. There will be some sellers who believe that the property market may be about to crash, and so will be prepared to sell their property at a good discount, just to get it sold quickly, because they think they prices could fall much further as they did in 2008.

No one can accurately predict when the property market will hit the bottom. If you postpone your investing until you think it has hit the bottom, and everyone else also believes it is at the bottom, which means prices can only go up, then all sellers hope that someone will come along and pay more for their property.

This means that it is actually harder to get discounts at the bottom of the market. Right now really is a great time to be buying, as long as you know what you are doing.

will happen to the mortgage market, or the extent of property price falls after BREXIT, and so I suggest you release equity now, whist you still can, so that you have funds ready, to move quickly and snap up some great deals this year.

No one really knows what will happen after March 29th when the UK leaves the European Union.

What about the rental market?

If lots of landlords decide to put their property on the market for sale then that means there will be less rental stock available and so I expect rents will rise in 2019. This is good news for those of us who stay in the market.

If the UK goes into recession after BREXIT, which some people have predicted, then the population in general may become more careful how they spend their money. Instead of younger people looking to live on their own in an apartment, they may decide that living in shared accommodation, such as an HMO, is more cost effective for them. I believe we will see the demand for rooms in HMOs increase this year.

Get your funds ready for 2019 If you have equity in your home, or other investment properties, which you plan to use to buy property in 2019, then I recommend you release the equity as soon as you can. We don’t know what

LANDLORD INVESTOR 42ND EDITION

Strategies to avoid in 2019 If you believe that the market is falling in 2019, then there are two strategies which you should avoid. The first one is buying property off plan, which you should only really do in a rising market.

The second strategy to avoid in a falling market is flipping property. This is where you buy a property with the intention of adding value, and then selling it on for a profit. This can be a great strategy, but only in the right market conditions. There is a risk that if you buy a property now, spend money on it and then try to sell it in a falling market, then it could be worth less than you paid for it. The only way to do this strategy, is to make sure that if you can’t sell it, you could easily rent it out to cover all the costs, until the market rises and then you can sell at a profit.

The best strategy for 2019 I believe one of the best strategies you should be using in 2019 is Purchase Lease Options (PLOs). This is a massively misunderstood but very powerful strategy. The main problem is that PLOs only work in very specific circumstances and most investors really don’t know how to use them correctly.

The basic idea of a PLO, is that you take control of someone’s property (or entire portfolio), rent it from them for a period of time, and then have the right, but not the obligation, to purchase the property within a certain time period, for a price which you fix at the beginning of the option period. PLOs work with property that can be used for Single Lets, HMOs, Serviced Accommodation, and Commercial to Residential conversion.

They really are very versatile and can be whatever you and the seller agree. You should always make sure that you use solicitors to put the paperwork together for you, and of course they need to understand PLOs, which is another issue because most solicitors don’t understand them.

The reason that PLOs are such a great tool to use in the current market conditions, is because there are so many landlords who are considering retiring early. The landlords can benefit from maximising their personal capital gains tax allowance by spreading the sale of their properties over a number of different tax years. By using PLOs, you can take on the responsibility of managing the properties for them so they can walk away from the hassle of managing the properties.

Over the next few months my monthly articles in Landlord Investor will focus on how you can use this powerful strategy in your investing this year.

Invest with knowledge, invest with skill.

Simon Zutshi Founder property investors network Author of Property Magic

19

INVESTMENT

PAUL MAHONEY NOVA FINANCIAL GROUP

Why buyto-let can be a game changer for business owners 20

LANDLORD INVESTOR 42ND EDITION

INVESTMENT

At Nova we find a lot of our clients are business owners, their business is doing reasonably well to the point where they've been able to accumulate spare funds. Which probably starts out as a bit of a buffer to their business, but then grows beyond what is needed for working capital plus a buffer.

The size of this financial cushion obviously depends on their business.

But it grows to the point when it is essentially sitting there achieving very little, under-utilised, sometimes in a UK business bank account achieving only 1% interest, if that. What is interesting is that Lord Alan Sugar recently stated that property investment was the best hedge against business, meaning that property investment is a great way of diversifying. He also said “You make money from property and do business for fun”, meaning that once you do diversify, you can often make more money from property than your original business. This has certainly been the case for Lord Sugar as although he started out in consumer electronics, the vast majority of his billionaire wealth these days was made from and is stored in property. I think we can all agree that Lord Sugar knows a thing or two about business and making money so we should probably heed his words.

Business owners can convert proactive business profits or income into passive income; to the point where you have a portfolio of properties either within your existing company or a company that is separate to it, but associated with it that is providing you with income and ideally capital growth on your investment asset base. Therefore, if there is an economic downturn and your business slows, or even folds, you will have something else that you have created through your proactive business activities. This is referred to as diversifying or a hedge to your business.

It’s quite a common strategy to move profits or your proactive income into passive investments that give a good return. And the interesting thing about leveraged property investment (property with mortgages) is that by achieving relatively average returns on the asset value (the property) of; 10% cash flow return on investment (ROI) 5% capital growth And a 75% loan to value (all very achievable)

LANDLORD INVESTOR 42ND EDITION

You can be achieving 30% plus total returns on your cash, given the benefits of cheap debt allowing you to better utilise your funds - which in some cases might be a better return than your actual business generates. So it is considered a supplement or a hedge to your business, and it might get to a stage where actually, property investment is a more viable and flexible business than your original business activities.

What makes this strategy even better for some is that you don’t need to take the funds out of your company to do it and, therefore, avoid extra taxes and retain profits in the tax effective limited company structure.

As a successful business owner, you probably already have a commercial mindset simply because you are operating a business. That’s because running a business requires you to be commercially-minded and unemotional about what you are doing, generally to be successful. You are probably used to the idea of putting in place goals, a strategy, and then implementing that strategy. This is a process that is probably more familiar to business owners than to others in general terms. So, a business owner who doesn’t diversify and utilise their excess profits is not doing themselves any favours. In fact, they are shooting themselves in the foot. It’s very easy to get complacent when you’ve been successful but what happens if, for whatever reason, there is a downturn in your business. You see, while you are successful that is when you need to use your extra resources for property investment otherwise you are wasting a valuable opportunity.

It’s important to note that lending for buy-to-let mortgages through limited companies has become a lot more cost effective and a lot more competitive.

There are many more products available on the market now. This has been somewhat driven by Section 24 since it was announced in 2016. Section 24 has resulted in many more people investing through limited companies. This is for various reasons but quite often for tax reasons. And it’s not just business owners who are doing it, but people who are

higher rate tax payers who are trying to avoid Section 24. So this does work in the favour of business owners utilizing the strategy of investing their extra funds within their business because it means that there are a lot more options available.

We frequently get asked about mortgage options by business owners who want to diversify into property investment.

Although you may be a savvy and successful business owner, when it comes to investing your profits in property, it is still important for you to seek advice on the implementation of a strategy, investment selection and the right ownership and financing strategy that's suitable for you. That is because if you are a successful plumber, for example, you are probably a very good plumber, but you probably don't have all the knowledge you need about finances and investments as that is a different profession to yours.

Therefore, my advice is to get an expert’s specialist advice in this area. The same goes for property selection and on implementing a mortgage. It makes sense to seek advice from people who may know what you may not know.

There are a number of strategies, ownership structures and fundamentals to consider to make this work for you but if you would like to find out more then contact Nova Financial Group on 0203 8000 600, at info@nova. financial or www.nova.financial

What makes this strategy even better for some is that you don’t need to take the funds out of your company to do it.

21

MORTGAGE UPDATE

TRACEY HANBURY

Buy-to-let mortgage market update C H E A P R AT E S A R E S T I L L AVA I L A B L E

22

LANDLORD INVESTOR 42ND EDITION

MORTGAGE UPDATE

With Brexit and further interest rate rises on the horizon, is now still a good time for investors to pick up a buy-to-let mortgage bargain?

As the buy-to-let market has continued to expand in recent years, so has the specialist buy-to-let mortgage sector. It’s estimated that over 50% of landlords have a buy-to-let mortgage and it’s therefore no wonder lenders continue to reduce rates and launch new products to cater for rising demand.

Figures from Mortgage Brain show that the number of buy-to-let mortgage products rose by 28% over the 12 months to December 2018, reaching a record high of 3,652.

It’s been well-documented that this increased competition between lenders, combined with record low interest rates, have made the last few years a great period in which to take out a buy-to-let mortgage.

But will these favourable conditions continue in 2019 and are there still deals to be had for savvy investors?

Mortgage market overview Throughout last year and now in the early stages of 2019, the buy-to-let mortgage market appears to have continued to favour property investors with low rates and an increasing range of free products.

According to analysis by Property Master, the typical rates of two, three and five-year fixed-rate buy-to-let mortgages for an interest-only loan of £150,000 have fallen consistently over the last year.

The online mortgage broker reports that year-on-year savings for some landlords could be worth up to £350 on an average £150,000 interest-only buyto-let mortgage.

Due to market uncertainty and ongoing Brexit issues, many landlords are opting for five-year fixed deals to protect themselves against unexpected or significant rate rises.

Interestingly, Property Master’s research shows that the average rates for these mortgages have been falling most consistently. In January, the average five-year fixed-rate offers for 50%, 65% and 75% Loan-to-Value (LTV)

LANDLORD INVESTOR 42ND EDITION

mortgages offered monthly savings of £8, £29 and £21 respectively.

Turner, chief executive of specialist buyto-let firm Commercial Trust Limited.

Meanwhile, Mortgage Brain analysis found that the costs of 70% LTV two and three-year fixed mortgages and 80% LTV five-year fixes all came down by 2% over the final quarter of 2018.

"My view is that the overall picture for the next decade is a gradual upward trend in rates."

Lenders continue to cut rates So far already this year, a number of high-profile lenders have announced rate cuts to their buy-to-let mortgage products.

NatWest has cut its remortgage rates on two and five-year fixed-rate deals.

It has also reduced rates and fees on selected 60%, 70% and 75% LTV deals.

Leeds Building Society, meanwhile, has doubled the cashback incentives available on selected two and five-year fixed-rate buy-to-let mortgages from £500 to £1,000.

On top of this, in early January Barclays Mortgages announced that it had made a number of rate reductions across its range of buy-to-let mortgage products.

The rates for the lender's fee-free 75% LTV purchase and remortgage products have been cut to 2.66% for a two-year fix and 2.99% for a three-year fix.

How long will cheap rates last?

Rates have remained competitive in recent years predominantly thanks to the Bank of England's base interest rate hovering at record low levels.

He says that landlords who are concerned about long-term rental market conditions should fix now at a competitive low rate in order to give themselves a significant level of security through 'turbulent times'.

Turner says that while increased competition has pushed the costs of buyto-let mortgage products downwards, the headline discounts on rates and free incentives do not always offer the 'full picture'.

He adds that the huge increase in available products has made the market more complex for investors to navigate.

As we move through 2019, it does however remain a beneficial time to take out a buy-to-let mortgage or remortgage any existing deals. Industry experts are still advising investors to take advantage of low rates on long-term fixes while they can as further interest rate rises in the next few years are inevitable.

Before committing to any mortgage deal, it's important to assess all the options available and do your research on every aspect of the deal from its upfront and monthly fees to its overall term and cost.

Tracey Hanbury

The current base rate is 0.75%, following 0.25% increases in November 2017 and August 2018.

Experts believe that while many lenders were able to absorb two small, incremental interest rate rises in a year (and in some cases offer lower rates), if the base rate continues to move upwards, lenders' buy-to-let mortgage rates may well follow suit.

"The bumpy road of Brexit may see the base rate brought down slightly, once things settle, but I think it is unlikely and, in any event, there is not too much scope for reduction," says Andrew

A number of highprofile lenders have announced rate cuts to their buy-to-let mortgage products

23

NATIONAL LIS AWARDS

MARIE PARRIS

'I just bought a house. Sorry!'

The hilarious Rob Beckett in full swing at the 2018 LIS Awards.

Pic by Aneesa Dawoojee

National LIS Awards 2018 review A N D S O M E T HOUG H T S ON THE COMING Y E A R 24

LANDLORD INVESTOR 42ND EDITION

NATIONAL LIS AWARDS

The 2018 National LIS Awards seem some distance away now, but it’s never too late to celebrate the very best our industry has to offer and over the following pages we'll take one more look at the category winners, but first LIS Awards's Panelist Marie Parris shares her tips for the year ahead.

Congratulations to all the landlords, agents and property professionals who survived 2018, but you will need to tighten your belt because 2019 is likely to be a steeper hill to climb.

I was invited to be a judge at the inaugural awards of Landlord Investment Show, held at the prestigious Grosvenor House Hotel in November 2018 and what I can say is that there are a lot of passionate people in our industry that work really hard for their clients. The stories of triumph over adversity, perseverance to the end, to those who go way above their normal role to make the “deal” work whatever that may be – I salute you! All of the nominations were of a high standard that made my job and those of my fellow judges even more thought-provoking. I look forward to reading the remarkable things that we will continue to do in our industry for their 2019 awards. Which we should all be collectively proud of. Despite perhaps being competitors in certain fields the need to do more collaborations together is what I identify becoming a trend in 2019.

The private rented market has seen a plethora of changes, the most significant were, tax reforms, lending changes, energy, universal credit, change to mandatory HMOs requirements amongst others. The implication of these have undoubtedly seen a slowdown in the rental markets.

Properties for rental have been slower to attract the right calibre tenants. Tenants have become very price sensitive and the selling market is flat. However, most in our industry are entrepreneurial people who have a penchant for surviving the numerous changes that will continue to plight our industry.

The private rented sector always seems to be constantly under attack by the media, which tends to portray landlords and agents in a bad light - either you are a “greedy landlord” or an “unscrupulous agent”. To add to the mix certain organisations whose goal seems to be geared around the same rhetoric, does nothing to dispel these highly damaging and negative thoughts. The result is a lot of people immediately do not respect letting agents as they think of us as unprofessional and not fit for purpose. Indeed our own government obviously thinks the same because how tenant fees could ever be considered to be banned is beyond me. (I wonder if our governments will LANDLORD INVESTOR 42ND EDITION

do an outright ban on fees that financial services charge. I suspect not) Just like any business we have costs and who will now pay for the credit checks, references, inventories all vital services that must continue to be done. The very same people they were trying to protect – the tenants through higher rents. How so very clever of them! The private rented market in the UK accounts for about 20% of the housing market. Yet we get 80% of the flak. So it is nice to know that LIS media promotes very positive messages of unity, education and those good things we should celebrate in our sector. Even with this in mind, we all know 2019 will be a tough year as the recent changes start to take hold. The threat of an increase in interest rates with the uncertainty whether Brexit will happen or not, does nothing, to the confidence of the economy, especially considering the 3million Europeans that live here not wanting to make decisions about their living arrangements among other things.

I think for those landlords who wish to hold on to their buy-to-let investment(s) to hold their nerve. Avoid voids and avoid substandard letting and management agents.

If you have to sell, I wish you an abundance of luck with getting your achieved price and for those who have funds or access to finance there will be some great deals to have.

and procedures to ensure they keep you compliant at all times. This is not an area I recommend landlords should cut if you already receive management. Fees to landlords will likely increase from agents as the Tenant Fee Ban becomes law from 1 June 2019.

•

Be flexible on the type of tenants, your trusted agent puts forward to you. It does not mean dropping standards but considering having a tenant who is on housing benefit. They do tend to stay in accommodation longer and remember stigma is not truth

•

If you are a self-manage landlord get a “MOT” on all your paperwork – have you done everything correctly and continue to do so. This should include your lease and term if you have one.

•

Join a landlord association. Every landlord should be a member of one – ridiculously low annual fee (which is tax deductible) and ensure your association is supporting you

My Tips for Agents: •

Act to safeguard your business to compensate for the loss of tenant fees. This should not necessarily mean increasing fees to landlord, but consider getting into other areas of business that may complement existing areas, like block management (steep learning curve).

•

Get all team members qualified and be knowledgeable about what you do or quit the industry. The sloppy agents demean what the good ones do.

•

Look at your services and think creatively. Be prepared to negotiate if possible and add value. We won a client from one of the “big boys” recently all because they could not be honest and hold their hands up about a mistake and say sorry.

•

Check your terms and conditions of business – make sure they do what they should do – so every client knows the expectation.

My Tips for Landlords: •

•

•

If your property is in the need of repair, maintenance or an update have a clear strategy on how you will achieve that. If you have to sell quickly, you do not want your price reduced even further for things you could have sorted beforehand. We are currently working with one of our landlords to have the entire windows replaced in one of her buy to lets, but we are doing a couple of windows at a time each month as she does not have all of the funds up front.

Consider ways you could cut some of your monthly outgoings – look at your insurance (not online) speak to brokers - are you paying a good rate for the level of cover. Look at your energy bills (if you pay them).

Choose your management agent carefully. They need to have applied knowledge and proven processes

Marie Parris © Marie Parris @ George Ellis Property Services 2019

25

NATIONAL LIS AWARDS

Best Buy-to-Let Mortgage Broker

Best Property Investment Provider

BEST BUY-TO-LET MORTGAGE BROKER SPONSORED BY RLA

Developer of the Year

Best Online Agency

Baya Financial is a highly experienced finance broker specialising in commercial, buy to let, bridging and development finance. We are dedicated to giving time and excellence to each case. Experience has shown us that all cases are as individual as you, there is very little ‘one size fits all ’in this game. Our loyalty is with you, our client, we have no affiliation with any lender. We would be happy to discuss any enquiries you have. www.bayafinancial.co.uk 07802 506279

Specialist Finance Provider of the Year

26

LANDLORD INVESTOR 42ND EDITION

NATIONAL LIS AWARDS

Best Buy-to-Let Mortgage Broker

Best Property Investment Provider

Best Landlord Insurance Provider

BEST PROPERTY INVESTMENT PROVIDER SPONSORED BY LANDLORD TODAY

Developer of the Year

Best Online Agency

Best Products for Landlords

Cogress is a unique private equity firm connecting qualified investors with leading property developers.

With investment units starting from £20,000, our model provides access to property development opportunities usually reserved for the largest investors. Each opportunity is carefully vetted and aimed at sharing profits on exit.

Since 2014, Cogress has raised more than £130m in equity, invested in more than 40 UK projects with a gross development value of more than £800 million.

Specialist Finance Provider of the Year

www.cogressltd.co.uk 0207 100 9744

Best Buy-to-Let

Best Property In

Best Landlord In

Best Landlord L

Best Lettings A

Developer Of T

Best Online Age

Best Products F

Best Property E

Specialist Finan LANDLORD INVESTOR 42ND EDITION

27

NATIONAL LIS AWARDS

Best Property vestment Provider

Best Landlord Insurance Provider

Best Landlord Legal Services Provider

BEST LANDLORD INSURANCE PROVIDER SPONSORED BY HERITAGE

est Online Agency

Best Products for Landlords

Best Property Education Provider

Alan Boswell Group is a well-established Top 25 UK Independent Insurance Broker and have served the let property sector for close to two decades! Â Being fully independent means we are not tied to any one insurance company and can be totally impartial in our advice, something that Mortgage Broker is very important to Best us. Buy-to-Let As well as looking after thousands of direct landlords, provide tailored Best Propertywe Investment Provider solutions for Landlord Associations, Letting & Best Landlord Insurance Provider Managing Agents. Â Our clients also benefit from our added value services including our in-house Best Landlord Legal Services Provider Claims Team and Loss Adjuster and access to Best Lettings Agent expert Risk Management advice.

Developer Of The Year

www.alanboswellgroup.co.uk Best Online Agency 01603 218 000 Best Products For Landlords Best Property Education Provider Specialist Finance Provider Of The Year 28

LANDLORD INVESTOR 42ND EDITION

NATIONAL LIS AWARDS

Best Landlord Insurance Provider

Best Landlord Legal Services Provider

Best Lettings Agent

BEST LANDLORD LEGAL SERVICES PROVIDER SPONSORED BY AUCTION HOUSE LONDON

Best Products for Landlords

Best Property Education Provider

Proptech Company of the Year

High Court Enforcement Group helps landlords to quickly and efficiently evict tenants to regain possession of their property, as well as recover rent arrears. We are the largest independent enforcement company in England and Wales, and in addition to our possession services, we provide Best Buy-to-Let Mortgage Broker a comprehensive range of recovery solutions.

Best Property Investment Provider Best Landlord Insurance Provider

www.hcegroup.co.uk 08450 999 666

Best Landlord Legal Services Provider Best Lettings Agent Developer Of The Year Best Online Agency Best Products For Landlords Best Property Education Provider Specialist Finance Provider Of The Year LANDLORD INVESTOR 42ND EDITION

29

NATIONAL LIS AWARDS

Best Landlord Legal Services Provider

Best Lettings Agent

BEST LETTINGS AGENT SPONSORED BY ALAN BOSWELL GROUP

Best Property Education Provider

Proptech Company of the Year

Portico is a residential estate agent with 17 offices throughout London, specialising in flats and properties to rent and for sale and offering a Portico Host Airbnb Management Service and a Portico Handyman Service. www.portico.com 020 7099 4000

30

LANDLORD INVESTOR 42ND EDITION

NATIONAL LIS AWARDS

Developer of the Year

Best Online Agency

DEVELOPER OF THE YEAR SPONSORED BY NOVA FINANCIAL GROUP

Specialist Finance Provider of the Year

Inspired Homes is a leading micro-apartment developer targeting well-connected, emerging locations that are in reach of young professionals. We adopt an innovative and lifestyle-led approach to layout that makes the most of every inch of space to offer some of the bestvalue living in town. Every home offers hallway-free design and light-filled open-plan interiors to look and feel more spacious. We also throw in the latest technology, including smart thermostats by Nest and Hyperoptic, the UK’s fastest broadband. Every fixture, fitting and finish is both durable and beautiful from the granite worktops to the low maintenance gloss kitchen units. And from the German-made Hansgrohe taps to the engineered hardwood floors, our apartments reflect quality, finessed for urban living, throughout. www.inspiredhomes.uk.com 020 8688 6552

LANDLORD INVESTOR 42ND EDITION

31

NATIONAL LIS AWARDS

Developer of the Year

Best Products for Landlords

Best Online Agency

BEST ONLINE AGENCY SPONSORED BY LOFT

Best Buy-to-Let

Best Property In

Best Landlord I

Best Landlord L

Best Lettings A

Developer Of T

Best Online Age

Specialist Finance Provider of the Year

Best Products F

Housesimple, Online Estate Agent of the Year 2018, operates a nationwide estate agent and lettings service from our headquarters in Colchester, Essex.

We provide a full estate agency service from valuation, through the house selling process, to completion for a fixed fee of only ÂŁ995, no sale, no fee. Our proposition is also an industry leader; we are the only online estate agent to not ask for payment upfront and charge half the price of traditional estate agents with all the benefits of being online.

Best Property E

Specialist Finan

Find out more at www.housesimple.com

32

LANDLORD INVESTOR 42ND EDITION

NATIONAL LIS AWARDS

Best Products for Landlords

est Online Agency

Best Property Education Provider

BEST PRODUCTS FOR LANDLORDS SPONSORED BY BRITISH GAS

Best Buy-to-Let Mortgage Broker Best Property Investment Provider Best Landlord Insurance Provider Best Landlord Legal Services Provider Best Lettings Agent Developer Of The Year Best Online Agency Best Products For Landlords Best Property Education Provider

Has your property suffered damage and you need to make an insurance claim? Aspray could help Financenegotiations Provider Of The Year by handling the claimSpecialist settlement on your behalf. There is no charge for the service, provided Aspray can also appoint their own vetted contractors to reinstate the property to its pre-loss condition. ​ www.aspray.com ​0800 077 6705

LANDLORD INVESTOR 42ND EDITION

33

NATIONAL LIS AWARDS

Best Products for Landlords

Best Property Education Provider

Proptech Company of the Year

BEST PROPERTY EDUCATION PROVIDER SPONSORED BY LESS TAX 4 LANDLORDS

Best Buy-to-Let Mortgage Broker

Best Property Investment Provider Best Landlord Insurance Provider Best Landlord Legal Services Provider Best Lettings Agent Developer Of The Year Best Online Agency Best Products For Landlords Best Property Education Provider

Cats Protection is the UK’s leading cat welfare charity. For many people cats are the purring Specialist Finance Provider Ofheart The Year of a home so Cats Protection has launched its Purrfect Landlords campaign to encourage more landlords to accept cats and to have responsible and reasonable pet tenancy clauses.

To find out more about the benefits of being a cat-friendly landlord come to our stand. www.cats.org.uk/purrfectlandlords 01825 745 096

34

LANDLORD INVESTOR 42ND EDITION

NATIONAL LIS AWARDS

Best Property Education Provider

Proptech Company of the Year

PROPTECH COMPANY OF THE YEAR SPONSORED BY COGRESS

Spotahome is a mid- to long-term residential rentals platform that offers the most complete property and room listings for stays above 30 days, bookable exclusively through online viewings which saves tenants and property owners time and money. Listing is free and the company creates the listing including photos, video tours, detailed floor plans and property descriptions. ​ www.spotahome.com 0203 808 6521

LANDLORD INVESTOR 42ND EDITION

35

NATIONAL LIS AWARDS

Specialist Finance Provider of the Year

SPECIALIST FINANCE PROVIDER OF THE YEAR SPONSORED BY NOVA FINANCIAL

At mtf, we believe a bridging loan should either make or save a borrower money. As the UK’s leading non-status finance lender, we don’t require evidence of credit history, accounts, or proof of income. There are no application forms, no early repayment penalties, or exit fees, and our quick and effortless process means we can deliver funds at speed, with minimum fuss. ​ www.mt-finance.com ​0203 051 2331

36

LANDLORD INVESTOR 42ND EDITION

LANDLORD INVESTOR CLUB COMING SOON

w w w. l a n d l o r d i nve s t m e n t s h ow. c o . u k