Wednesday 29 March 2017

Renting in Falkirk good: home-ownership in Falkirk bad? More evidence says yup!


Regular readers of The Falkirk Property Blog will have heard me bang on (and on and on I am sure some of you are thinking!) about the UK’s obsession with home-ownership being a thing of the past and how far more people are renting by choice these days.

I appreciate that at times this view could be questioned particularly when you see the number of TV programmes, social media posting, magazines etc about the wonders of home-ownership but these people have to sell their shows/writings somehow!  I remain a strong believer that the market is moving more towards renting rather than home-ownership and some new research out suggests that I have a point.

This new research shows that the financial benefits of renting rather than owning have been under-rated.   A financial researcher at the University of Stirling, Dr Isaac Tabner, notes that the cost of renting includes many additional expenses incurred by home-owners, such as building insurance and property maintenance.

He says a simple comparison between rent and mortgage costs overlooks these additional hidden costs and can lead to an overestimate of the financial benefits of owning rather than renting.

The new research, published in the International Review of Financial Analysis, provides a detailed explanation of how costs of renting versus buying a home can be compared, while taking tenants’ and owners’ own personal circumstances and macro-economic conditions into account.

In reviewing transaction costs, rental yields, opportunity costs, inflation and the length of time owning a home, the study also shows that – during periods of deflation or zero inflation – people who rent are typically better-off financially than those who own their home.

Even when economic conditions are favourable, households may need to own their home for between five and 10 years before returns from the rent they are no longer paying are sufficient to compensate for the high transaction costs of buying.  However, increases in inflation and rent can tip the balance in favour of ownership.

“It is often thought that buying a house makes more financial sense in the long run.   However, renting is frequently more worthwhile than buying for financially-constrained households, as well as households likely to relocate within 10 years” explains Tabner.

“As well as a reduced ability to recover transaction costs, households relocating within a few years face a higher risk that medium-term prices will move against them, thus reducing or eliminating their equity, while financially-constrained households face much higher mortgage costs” he adds.
The study shows that, for someone purchasing a home with no mortgage, deflation of just one per cent per year can result in an equivalent loss of half the present purchase value of their home if they hold it for 45 years.   By contrast, inflation – including wages – of two per cent per year, results in the same individual gaining 50 per cent of the present purchase value of their home if held for around 28 years.

You can see the research here.

If you are looking to invest in buy-to-let or need assistance letting a property please give me a call on 01324 469840 and I’ll be happy to offer you my time and experience of buying and letting in and around Falkirk’s property market.



# Falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning

Wednesday 22 March 2017

Falkirk letting agents save you £1,910 per year – some mistake surely?



A recent survey by Endsleigh Insurance has found that using a letting agent can save a landlord approximately £1910 per year.

The research reveals that it is a common misconception by landlords that letting agents do not offer value for money. Whilst not using an agent may result in ‘savings` of around £159 per month, when rental income and voids are taken into account it was found that agents actually saved landlords an average of £2000. Most of the savings were made through agents minimising void periods, compared to landlords who deal with the rental of their property themselves. The majority of those surveyed stated that costs were reduced as the agent found tenants quickly, and were able to help with legal and financial matters resulting in savings there.

The survey also found that it was important for landlords to have a good relationship with their letting agent, and this relationship was not just to do with finances. 50% of landlords use an agent because of their local knowledge, and 2 in 5 said that excellent service was a deciding factor.

41% of landlords stated that the main benefit of using an agent is peace of mind. In today’s climate of increasing legislation within the Private Rented Sector, unless you know what you are doing, consider using a letting agent. A good agent will be able to do more than just rent out your property for you, they will give you advice as to how to achieve the best rents, how to increase the capital value of your rental property, how to add to your portfolio, and how best to handle your growing portfolio in today’s market.

So what are the benefits of using a letting agent?

Market Appraisal

A local letting agent will be able to give a rental valuation based on their expertise of renting in that area. It is important you get this right in order to maximise the rent achieved whilst minimizing vacant periods. Letting agents have an incentive to negotiate the best rent for you.

Marketing

Most letting agents will have accounts with the big name property portals, such as Zoopla, Citylets, Lettingweb, Prime Location, giving your property the best possible exposure to prospective tenants. They may also advertise locally, including ‘To Let’ boards. Remember letting agents have a vested interest in letting your property, as they are not getting paid as long as it is sitting empty. Letting agents should advertise your property before tenants leave, minimising vacant periods.

Viewings

Letting agents will provide accompanied viewings at times to suit the viewer. This helps find the best tenant in the fastest time, again minimising voids.
 

Finding the Best Tenants

Getting the right tenant is essential, as you want someone who will pay their rent, and look after the property. Most letting agents will use a reference checking agency, and as long as the landlord agrees, will take up comprehensive references, including credit checking, to find you a good tenant. The Key Place has local staff who often know tenants in the area, and can therefore advise on who to accept, and who to avoid!

Inventories
 

It is essential that you have a comprehensive inventory which fully evidences the state, condition and cleanliness of your property at the start and end of every tenancy. If you do not have this, it may not be possible to retain money from the deposit to cover any damage, cleaning etc. The Key Place use bespoke inventory software to provide detailed and accurate inventories embedded with photographs. We would urge all landlords to agree to an inventory being carried out at their property at the start of every tenancy. It is essential that you safeguard your investment, and we will do everything we can to help you.

Legal Requirements

The rental industry is becoming increasingly regulated to ensure properties meet acceptable standards. Landlords have a responsibility to ensure legal requirements are being met. There are large fines for non-compliance. Letting agents will be able to advise on all requirements. They will also have good trades contacts who can carry out necessary safety checks, including landlord gas safety certificates, electrical safety certificates, heat and smoke alarms, and legionella testing. New legislation is being introduced to this industry the whole time, and so it is essential you have somebody who is in the know keeping you updated, and dealing with this for you.

Paperwork

Letting agents will deal with all legal contracts (AT5, lease, tenant information pack) on your behalf. These must be completed correctly in order to protect your investment.
 

Rent and Deposit

The letting agent will collect the deposit and submit it to the tenancy deposit scheme for you. They will then deal with the deposit return at the end of the tenancy. They will collect the rent and make monthly rental payments to the landlord, with a statement of account. They will advise on rent increases throughout the tenancy.
 

Repairs

Letting agents will deal with all repairs promptly on your behalf. As they can provide a regular stream of work, they have access to the best and most reliable tradesmen. It is important to keep good tenants, and good tenants do expect a reactive repairs service. Letting agents can also advise on repairs and a maintenance schedule to ensure that your property holds its value.

Inspections

A letting agent will carry out regular inspections to make your property is being well maintained, and will take action if it is not. Protecting the value of your asset should be a key consideration, which is why receiving regular inspection reports are necessary.
 

Dealing with Tenancy Problems

Tenancies do not always run smoothly. Letting agents are experienced in dealing with all sorts of problems, from anti-social behaviour, to non-payment of rent. If needs be, they know the legal process for getting tenants out and will deal with this for you.

Ending the Tenancy

The letting agent will deal with everything at the end of a tenancy, from check out inspections to deposit returns. They will also source a new tenant for you as quickly as possible.
 

Landlord/Tenant Relationships

Letting agents provide a buffer zone between landlord and tenant. Landlords who manage their own properties can run into all sorts of problems if things go wrong with the tenants. You risk having them on the phone to you at 3am, demanding their toilet is fixed. By using a letting agent, the relationship is kept on a business footing, allowing you to relax, knowing your property is in safe hands. Reputable letting agents undoubtedly have experience with almost every issue you may encounter. They will be able to guide you through the vast amount of legislation that landlords must deal with, as well as dealing with the complexities of lettings, and offering solutions to practical issues. Not everyone is suited to being a landlord. Your rental property needs to be managed, and if you don’t have the time or the skill to do this, they you need to find a letting agent who does. Delegating the work to someone who knows what they are doing makes sense, in that it saves times and shifts the responsibility to someone you can trust to do a good job.

Choose a letting agent who is a member of a registered body, such as the Council of Letting Agents, and Landlord Accreditation Scotland. The Key Place is one of Scotland’s leading letting agencies, managing properties throughout Falkirk as well as further afield throughout Central Scotland, Edinburgh, Midlothian, East Lothian, and the Scottish Borders. Please contact me if you would like any advice on your rental property or if you are interested in becoming a landlord.

# falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning

Wednesday 15 March 2017

Top 5 reasons a Falkirk property beats a pension


I regularly chat with Falkirk people who have money to invest to discuss how they could put this to work in the Falkirk property market. Whilst for some this forms part of a larger investment portfolio, for many property has become an alternative to a private pension.

I believe there’s many good reasons that people are making this choice. Here’s a few of them:

5) Accountability to yourself

Frankly I, and many others, would rather keep their money where they can see it. I don’t like giving it away to a faceless fund manager to play with (whilst paying them fees, often regardless of performance).

I can touch my properties, I know the market and can make an informed decision as to what property I buy and how it is managed. It’s far easier to track how my properties are performing rather than relying on a pension scheme to ride the right waves to keep up with or outperform the market.

4) Short term income

Property can pay me straight away. Yields in Falkirk for sensible buy to let properties average six to eight percent which is far better than I can get from a savings account and eventually from an annuity, whilst rent normally increases over time in line with inflation. Hargreaves Lansdown suggest a 55 year old would now receive just 1.9% + inflation or 3.9% fixed for life from their pension fund.  And on top of yields there are long term investment returns ..... see 3) below.

3) Long term investment returns

Property has outperformed all the other main asset classes (which pension funds will track) over the long-term. Monies invested in 1996 would have grown two decades later by 292% in government bonds, 308% in the stock market, 479% in property and 1,305% in property leveraged with mortgage borrowing.

2) Flexibility

Owning property gives flexibility as to whether you use some of the income or equity at any time you need it, rather than it being locked away in a pension scheme with set rules as to when you can access your money.

1) Benefits on death

This is the big one for me and has really hit home as I wade through my late father’s financial affairs.
Many pensions pay outs stop on death whilst some transfer to a spouse at 50% of their original value until their death when they then stop completely. 
 
Property meanwhile will continue to yield rental payments even on the owner’s death. And perhaps more importantly, it can be passed down to the next generation, rather than vanishing into the pension provider’s coffers instead.

If you think there might be a better future for your money in property and you would like to discuss your options whilst using my knowledge and experience of investing in the local property market, please get in touch.



# falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning

Wednesday 8 March 2017

Falkirk’s Woodburn Road property market outperforms Queens Drive’s by 50%


Last week, a couple from Arnothill came in to the office to discuss potentially investing in property for Buy to Let. One of the most important things you will consider before investing is the balance between annual return/yield and the annual value increase/capital growth. 

Queens Drive, just along from Arnothill, is one of Falkirk’s premier roads to live on. It is one of the most sought after places to live near the centre of Falkirk. The average house sells at around £210,000 and rents are roughly £720 per calendar month.

With this in mind, it was a surprise to find that houses on Woodburn Road, which is just across the main road from the Forth Valley College in Falkirk, have outperformed those on Queens Drive. This is because a house in Woodburn can be bought for around £75,000 and the achievable rents can be around £515 per calendar month.


The yield which could be achieved from property on Woodburn Road is around 8.2% per year. When we compare this to the possible 4.1% on Queens Drive, it is nearly 51% higher in Woodburn Road.

However, we must remember that yield is not the sole consideration when investing in Buy to Let properties. The average value of a house in Woodburn Road in 2005 was £66,636, which has since risen by 12.5% in the last 12 years. A house on Queens Drive in 2005 was £145,750, meaning the value has increased by 47.5% in the same 12 years.

Having this detail of information at our finger tips, allows us to spot trends in the local market, which then enables us to give the very best advice to our clients. We don't charge for that advice.  If you want some advice, come and see me in our offices (6 Vicar Street, Falkirk), call me on 01324 469840 or email me on news@thekeyplace.co.uk.



# falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning

Wednesday 1 March 2017

Monopoly in Falkirk ... how would you play?


A couple of local landlords and I were having a discussion about the property market in Falkirk the other day, when the subject of risk against returns arose.

All landlords are different in the way they play the property game. Some landlords prefer to accept a modest yield/return on their investment for an increased certainty of finding a quality tenant. Other landlords are interested in high returns, with a greater risk with regards to the quality of the tenant. Before you start playing, it is a good idea to have a game plan.

For a low risk investment, you could buy property in the areas of Falkirk which are perceived as being more desirable, such as the Gartcows area, the High Station area and the Lionhorn area, where you may be able to achieve an annual yield of around 4-6%. If you don’t mind a slightly higher risk of void periods or a more varied quality of tenant, you are likely to be rewarded with a higher annual yield of 6-7%. This level of risk can be typically taken with New Carron Village and the Ewing Drive area. If you are after annual yields of 8% and over, you could take more of a risk with houses in the poorer areas of town which may attract tenants of a low quality.

If you would like to explore how we can help you with your property investments, or should you require any advice about investing in the Falkirk property market, wish to enquire about our Investment Analysis Reports, Property Sourcing, Residential Lettings or Property Management services, please do not hesitate to contact us on 01324 469840 or at on news@thekeyplace.co.uk.

Alternatively please feel free to pop in and see us at our offices at 6 Vicar Street, Falkirk for a chat, the coffee is always on.



# Falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning