PROPERTY NEWS
RENTAL OPPORTUNITIES
OLIVER HURREN YOUR MOVE OLIVER JAMES 01493 600005 | WWW.YOUR-MOVE.CO.UK
SHOULD YOU BUY TO RENT?
OLIVER HURREN, DIRECTOR OF YOUR MOVE OLIVER JAMES, LOOKS AT THE INCREASINGLY POPULAR CHOICE OF BUYING TO RENT
e seem to be moving closer to our European neighbours by becoming a nation of renters as home ownership follows a downward trend. Statistics show that more than 15 per cent of all UK homes are now in the private rented sector. Over the next eight years some government estimates expect a further 33 per cent rise in the residential rental market, taking the private rented property to a fifth of all UK homes by 2021. With property prices and mortgage lending predicted to rise, I expect to see the re-emergence of more investment minded landlords looking to capitalise on this trend. Prior to 2008 landlords hoped for an increase in capital growth as well as rental returns. This strategy is likely to be adopted again over the next three to five years or longer, thus ‘buy to lets’ are becoming more attractive and accessible. It may be worth considering this option alongside your existing savings and pension schemes. Rents in the UK currently equate to £48 billion and analysts predict the sector will be worth £70 billion by 2016.
Interestingly, a considerable number of my new clients who entered the rental sector in the last five years were ‘accidental landlords’ – property owners who couldn’t sell for one reason or another so decided to rent out their properties instead. With property prices increasing, some owners are returning to positive equity and even making modest gains. Those worried about interest rates possibly rising should seek advice to see if they should exit the market before they go up or hang on, potentially paying a higher mortgage in return for extra capital growth. For those new to ‘buy to let’ investments or looking to expand their current portfolio, make sure you get the right advice. Our in-house mortgage brokers are able to advise whether a property is financially viable or not. To all landlords, I would advise that a detailed inventory is carried out before the check in of a tenant so everything is completely transparent. With recent changes to the Housing Act and the introduction of the Tenancy Deposit Scheme (TDS), the rules and regulations governing deposits have been tightened. Yes, this has helped to root out rogue landlords, but it has put honest landlords at risk too, giving tenants more power to challenge the retention of a deposit even if they are wrong. To protect your investment, ensure your report includes in-depth information on everything from walls and ceilings, to light fittings and heating, and are written in non-technical language with digital photographic evidence as standard. Before picking a letting agent, make sure they are a member of ARLA (The Association of Residential Lettings Agents) as we are. This is an independent body set up to ensure agents maintain high standards. But what happens if your tenant is made redundant, becomes ill, or gets into unexpected debt and stops paying their rent? We work with Aviva to provide a unique and cost effective rental insurance product called ‘Rent Indemnity and Legal Costs Insurance Policy’, a policy which will protect your rental income against tenants defaulting. It pays out if the tenant doesn’t and will cover your legal costs up to £15,000 in the event that proceedings are required to evict them. With demand exceeding supply, vacant properties are soon occupied. Mortgage lending is increasing and mortgage costs remain at record lows. These two factors appear set to deliver an attractive rental yield with the added bonus of capital growth. Is it any wonder that two in every three landlords plan to add to their portfolios in 2014? Maybe you should as well!
For advice on first time buying and climbing the property ladder contact Your Move Oliver James on 01493 600005 or 01502 534998.
placesandfaces.co.uk | february 2014
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