Property market « PropertyQuoteDirect – Landlords & Buy to Let Insurance Blog

Posts Tagged ‘Property market’

UK Property Prices Decline

Wednesday, December 7th, 2011

A house pricing report released by Halifax recently has shown that house prices, on average, fell by 0.9% in November and the average house price now stands at around £161,700. This is positive news for prospective homeowners, and for landlords looking to expand their property portfolios!

Housing Market

The housing market has been looking increasingly difficult to get on to in recent months as the economic crisis deepens as many of us Brits struggle to raise enough funds to afford a decent mortgage, or any mortgage whatsoever.

Housing Economist, Martin Ellis, has been commenting: “House prices have remained remarkably stable in 2011 despite the difficult and deteriorating economic climate and the substantial pressure on households’ finances. We expect the market to remain broadly unchanged in the coming months.”

It is also now expected that the Bank of England, which is meeting tomorrow, will leave the base rate unchanged at 0.5% due to their own continually decreasing confidence in the UK housing market. Meanwhile, Nationwide published a report that suggests that the prices of UK property will decline during 2012.

If house prices do further decline, it could actually lead to more and more people being able to afford new properties, which could in turn spark the housing market back into life. This could, in the long run, only be a good thing. I would personally love to be able to get on to the property market, but like thousands of other people in the UK, renting is the only affordable option at the moment.

Fancy becoming a landlord?

The idea of becoming a property developer and a landlord is definitely an appealing one however. Of course, it cannot all be easy money though. An incredible amount of risk, hard work, and dedication has to go into each and every property in order to turn it into a success. Becoming a landlord is also a rather long term investment – it would be wrong to expect to see short term gains.

Landlords have to be very careful also about the tenants they take on; there have been cases of abusive and anti-social tenants destroying properties. It would be wise for landlords to request a landlord insurance quote in the event of any unfortunate damages befalling a property, particularly if anti-social tenants are occupying the property!

Furthermore, landlords are often expected to be able to respond to any maintenance issues as quickly as possible. This can be stressful as nobody wants their spare time eaten into by a cracked pipe at a property 20 miles away, for example. However, that’s kind of the point of a landlord; it is a full time undertaking, and not something anyone can do half-heartedly.

Tags: housing market, Landlord Insurance, Landlord Insurance Quote, Property market
Posted in Housing Market, Landlord Insurance Quote, Property Market | 1 Comment »

Is Now the Time for Landlords to Expand?

Wednesday, November 30th, 2011

According to recent researched commissioned by Paragon Mortgages, a fifth of all landlords in England are looking to expand on their property portfolios in the next 12 months, but is it the right time for them to be investing in more property?

With the reported risk of another fall into recession, the value of property could start to fall dramatically once again and so a newly bought property could lose a lot of its value. The other worry for landlords during recession is tenants not being able to pay their rent, and if they can’t, a mortgage on a new property may be an annoying cost!

However, 57% of the landlords surveyed by Paragon believe that the immediate future looks bright for the private rental sector, and there are a lot of good reasons for this:

Struggling First Time Buyers

With first time buyers finding it incredibly difficult to secure mortgages, given the high level of deposits they need, the rental market is booming. This means that landlords are finding it easier to fill their properties with tenants, and given the rise in competition for rental accommodation, can even charge slightly more for the properties.

Low Interest Rates

Although first time buyers are finding it difficult to secure mortgages, if you have capital behind you and the funds available for a deposit you will find some excellent bargains on the property market. The economic turmoil and lack of new buyers has seen property prices fall over the last year and so if you can afford the deposit on a new house, you may find a bargain on the property market and end up with a very low mortgage.

Government Schemes

We are all aware of recent cuts in Government funding, but there are still many new housing schemes coming into affect that can secure additional income for landlords. New green housing and social housing schemes can bring in additional income for landlords, making the property a more profitable investment.

With the current economic problems, there is a risk that tenants may default on rent payment, but with a comprehensive Landlord Insurance policy this risk is covered and you can enjoy the perks of a booming rental market, low house prices and Government funded schemes.

Tags: Landlords Insurance, Paragon, Property market, Renting Market
Posted in Property Market | No Comments »

“Generation rent” draws ever closer

Thursday, July 21st, 2011

The prospects of the UK becoming a nation of renters instead of buyers seems to be becoming ever more a reality as yet another crop of figures show just how difficult it is for first time buyers to find an affordable mortgage. At the same time property investors with an interest in landlord insurance are being wooed by banks and other lenders as they target the buy-to-let market.

Big increase in buy to let figures

A collation of figures for the first quarter of 2011 shows that lending to landlords went up by 25% compared to 2010 levels, with the same period showing a decline of 17% for first time buyers purchasing a property to live in. Although there are still at least double the number of people buying homes to live in rather than rent out, the gap is closing all the time and experts believe the second quarter of 2011 will show an even greater rate of properties being purchased under buy-to-let arrangements.

Banks targeting investors

There is little doubt that lenders are currently looking to property investors to keep the market going. Not only are they cutting rates on buy-to –let mortgages, the number of products available seems to be growing on a daily basis. At the moment landlords have the choice of almost 500 mortgages designed to facilitate the buy-to-let investor, and not only that, more and more property insurance brokers are offering cheap property insurance to go with their property purchase. There is no doubt that 2011 is rapidly becoming the year of the landlord.

First time buyers given a poor choice

In contrast to the acceleration of products available to landlords looking to expand their portfolios, the poor old first time buyer is left with a much sparser choice of mortgage. Approximately 270 products are on offer to first time buyers with a 10% deposit and even then the terms are not good. It is only when first time buyers can stump up a 25% deposit that deals become similar to the ones that many established homeowners find themselves with.

Average deposit around £40,000

It is also worth remembering that a 25% deposit on the average priced home in the UK works out at £40,000, not exactly the kind of sum young couples can easily find. No wonder then that landlords are seeing rental yields hitting all time highs, and of course the cruel fact for many prospective buyers is they are paying record rents to a landlord who has bought the sort of house they wanted but could not afford.

Tags: first time buyers, Landlord Insurance, Property market, Rent Market, Renting Market
Posted in Property Market | No Comments »

House prices still not up to last year’s levels

Tuesday, June 7th, 2011

Landlords considering purchasing property insurance on new properties as they take advantage of the demand for rented housing will not have been disappointed with the latest house price report released by the UK’s largest lender this morning.

Slight increase masks overall trend

The Halifax which is now part of Lloyds banking group announced that house prices showed an infinitesimal rise of 0.1% in May compared to April but more in depth figures suggest that purchasing new property is still getting cheaper. Analysis of the figures shows that the average price of a home in the UK today is £160,000, which is over 4% lower than this time last year, and in effect a landlord is saving well over £6,000 on the purchase of an average property. The year on year drop is actually the biggest fall since October 2009 which may well set alarm bells ringing in some quarters of the industry. The three monthly figures also showed a drop but only by 1.2%.

Steady year ahead

The forecasters at the Halifax don’t believe that house prices will move much at all in the present year, saying that the continued low interest rates will prove attractive to those who can find a deposit but inflation, higher taxes and uncertainty in the job market will act as a deterrent to many who are thinking of taking the plunge into house ownership.

Once more this is good news for the prospective landlord. Lenders appear to be turning away from the traditional target of first time buyers trying to get onto the property ladder and instead are focusing on property investors with a little more money to deposit and a professional outlook on their investment. The £6,000 drop of the average property price will enable landlords to pay for such essentials as business property insurance, health and safety checks, energy efficiency ratings and upgrading of the new purchase without compromising their borrowing. It will also help cover the initial void period between purchase and the placement of the new tenant. The overall picture suggests tenants will still be in plentiful supply while forecasts of modest increases in interest rates over the next 12 months should give a landlord time to settle his finances and plan for the future.

Tags: Interest rates, landlords, Property insurance, Property market
Posted in Housing Market, Interest rates | No Comments »

Identify your costs

Thursday, June 2nd, 2011

Although the overwhelming body of opinion in the private letting sector suggests the opportunities for those thinking about entering the market have never been better, those who have been persuaded to dangle their feet in the choppy waters of the landlord business would be well advised to think about exactly what they aim to get out of the business before they even arrange business property insurance.

Opportunity knocks

It may seem straightforward at the moment. Young couples looking to buy a home of their own can’t afford a mortgage, homeowners looking to sell their property are having to bring their prices down because of the paucity of prospective buyers out there and tenants looking for a decent place to live are saturating the market. It would seem that all one needs is a hefty deposit, although even that requirement is dropping slightly on buy to let loans, and a clear idea of what you want to achieve.

Rental yield not easy to understand

There are plenty of places where you can get advice and good financial advice is paramount. Any financial advisor will tell a landlord new to the business to work out his rental yield before he buys a property, but that is somewhat easier said than done and is a calculation that is susceptible to dramatic change. It is basically the amount of money you make from your property divided by the cost/value of the property.

It is the value of a property that often makes the rental yield figures susceptible to change. A property bought for £100,000 in today’s stagnant market will probably shift very little over the next 12 months however, in a volatile market the value can change quickly and dramatically. Landlords who bought property at the turn of the century were looking at vastly changed yields when their properties doubled in value by 2007.

Factor in costs

The other side of the equation is easier to understand, easier to manage but absolutely imperative to get right. You must take into account any costs you are likely to incur and offset them against the amount of rent you expect to achieve. Taking costs as a percentage of the rental income you expect to bring in, then first and foremost comes your mortgage and that may well be anything upwards of 70%. No landlord should be without residential property insurance which usually costs around 3% of the rental value. Take out 10% for the upkeep of the flat i.e. replacing damaged fixtures and fittings and factor in 8% for the void periods that no landlord wants but must allow for.

Forewarned is forearmed

Once you start adding these things up it soon becomes apparent the importance of keeping your finger on the pulse of your business and how susceptible it is to fluctuations in the housing market that you have little power over. Starting off with this knowledge though will help any prospective landlord understand the subtleties of the business and not to expect easy pickings without putting in the hard work.

Tags: first time buyers, homeowners, Landlord Insurance, letting sector, Property insurance, Property market
Posted in Landlord Insurance, Landlords Insurance | No Comments »

What does the future hold for landlords?

Thursday, September 30th, 2010

A question that must be on the lips of many residential landlords as well as the employees of huge housing associations.

Buy to let mortgages are available but the constant cry from landlords looking to increase their portfolio is that the deposits required are just too high. With home loans dropping to their lowest in years during August 2010, it would seem that private landlords will have a big part to play in getting the UK through the austerity years. There does not, however, seem to be any well thought out plan by those in power to alleviate the housing shortage. After all someone has to buy property.

At the moment landlords are having a good time of it; rental income is slowly creeping up as the laws of supply and demand take hold, but for how long? It would appear that for the near future at least, landlords who can afford to extend their portfolios and buy landlord insurance for the properties, will have tenants queuing up to sign agreements as they can’t get on the housing ladder. There is, however, one very big blot on the landscape.

The government cuts in Local Housing Allowance will come into play next month. Many landlords especially those in the South East who provide housing to benefit claimants will soon have to make a decision. Do they allow the tenant to get into arrears when their allowances are cut, or do they cut the rents to suit the benefit allowance? Already many have said they will evict tenants who fall in arrears, but in all seriousness no landlord wants to do this, it creates bad feelings, bad press and, at the end of day leaves the landlord with a void period.

Housing associations who often get access to public funds will also have tenants who suddenly find that they have a black hole between their rent and their income. The pressure on these landlords will be immense as social housing also attracts workers on low wages, the sort of workers who may well find their jobs disappear when the government cuts take hold. Already employees of one contractor to social housing schemes have found themselves out of work as the firm collapsed. Will the pressures of government cuts cause the housing associations to lower their rents, and will this then put pressure on their finances in other areas?

The UK landlord awaits the future months with interest.

Tags: Advice for Landlords, Landlord Insurance, Property market, rental market
Posted in Advice, Landlords Insurance | No Comments »

Buy to let still a good option

Tuesday, May 18th, 2010

With the Bank of England keeping the interest rates on 0.5% for the 14th consecutive month the status quo in the mortgage business seems set to continue.

So with the immediate future still promising to prove very difficult for the first time buyer to get onto the property ladder, without which property sales will stagnate, the opportunities in the letting sector of the housing market appear to be as attractive as ever.

The buy to let mortgage from its inception in the mid 1990′s has really opened up the rental business to a new type of Landlord, the sort of person who is looking for a single property or maybe a couple that can provide a very tangible means of providing a pension for later life. Buy to let mortgages are somewhat different to residential mortgages with the qualifying criteria usually being the amount of rental income the property can generate as opposed to the proof of salary required from a residential mortgage. It is not unusual for a lender to require up to 25% more than the rental income per month to cover periods when the property may lie vacant. There are however, plenty of choices of mortgages available, fixed rate, tracker, discounts and flexible rate are all now offered in the buy to let market just as they are in the residential sector. One difference being that the services of a mortgage broker will be usually required as the High Street Banks don’t always have the best choice.

The opportunities available in the rental business have also been widely advertised to the public at large by a large number of TV programmes such as Property Ladder, House Auction and Homes under the Hammer which give the would be landlord tips on how to buy property at an auction, how to cost a project, the savings to be made on DIY and the benefits of getting good, cheap landlord insurance. With the demand for accommodation in the private rental sector being fuelled by the dramatic increase in students particularly those attending universities and also the integration of East European countries into the EC creating a large increase in immigration the prospects for the buy to let landlord in the short term at least look good.

Tags: Property insurance, Property market
Posted in Landlords Insurance | No Comments »