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Em Morley

Letting agent warned to be vigilant over identity theft

Published On: August 31, 2017 at 11:59 am

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Categories: Property News

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A concerning new report has suggested that the identity theft of letting agents is currently at ‘epidemic levels.’

The research, carried out by UK anti-fraud organisation Cifas, reveals that people in their 30s were the most targeted, with most identity fraud taking place online.

Fraud

In all, a whopping 89,000 cases were recorded during the opening 6 months of the year – a 5% rise in the same period 12 months ago and a new record high. The report states that there has been a considerable rise in ID fraudsters applying for insurance, telecoms and online retail.

Now, Rent4sure is urging letting agents to be very vigilant.

IT and Products Director, Jack Webb-Heller, noted: ‘At Rent4sure we follow stringent procedures to make sure an applicant is genuine.’

‘If a letting agent uses our checks appropriately, and uses all the guidance and recommendations we offer plus their usual checklist, it would be a big step forward in the battle to stop people fraudulently renting properties.’

Letting agent warned to be vigilant over identity theft

Letting agent warned to be vigilant over identity theft

‘Our system not only checks the address and name that applicants provide but also cross matches these against all the previous addresses and relevant information linked to that credit profile.’

‘We have a specially designed range of referencing services that work in tandem to ensure an identity isn’t stolen, which allows agents to choose the right product to cover any situation.’[1]

 

[1] http://www.propertyreporter.co.uk/finance/letting-agents-warned-after-identity-theft-hits-epidemic-levels.html

 

 

Where are London’s next buy-to-let hotspots?

Published On: August 31, 2017 at 10:08 am

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Landlords have moved to highlight where they believe to be London’s next buy-to-let hotspot, with regions such as Woodford, Leytonstone and Redbridge proving popular.

The research from Direct Line for Business found that North East London proved a popular pick, with 30% of landlords highlighting this as the best region. This was followed by South East and East London.

Going Underground 

Properties located in close proximity to underground stations were found to be the most desirable for landlords. Home located on the Central Line stations were ranked as offering the best investment opportunity, followed by those on the Jubilee and Piccadilly line.

The most attractive London Underground lines for buy-to-let property investment were found to be:

 

Top 3 Tube Lines

  

Bottom 3 Tube Lines
  1. Central line
  1. District line
  1. Jubilee line
  1. Circle line
  1. Piccadilly line
  1. Bakerloo line

72% of landlords rank properties with national rail connections as attractive to would-be tenants. London Overground links were seen as desirable by 71% of those questioned.

Bus and tram routes were both seen as less desirable, at 68% and 60% respectively. In addition, landlords were seen about the impact of the HS2 on London’s property values, with 63% of those asked stating that the new transport link will see prices in the capital to rise.

Where are London's next buy-to-let hotspots?

Where are London’s next buy-to-let hotspots?

Confidence

What’s more, the survey revealed that confidence amongst investors in London and the South East is high, with 78% of landlords in these regions planning to expand their property portfolios.

Christina Dimitrov, Business Manager at Direct Line for Business, noted: ‘Landlords across the capital will always be looking for the ‘next big thing’ in property, as there are always trends in demand with people wanting to rent in the latest up and coming area.

“We have seen this before with the likes of Tooting, Bethnal Green and Walthamstow suddenly becoming ‘hot spots’”.

“It’s great to see confidence amongst landlords in the capital at a high, and even more reassuring to know that more than half think Brexit will have a positive influence on the property market.”[1]

 

[1] https://www.landlordtoday.co.uk/breaking-news/2017/8/landlords-identify-londons-next-buy-to-let-hotspots

 

 

Landlords Mustn’t Let their Heart Rule their Head when Purchasing Property

Published On: August 31, 2017 at 9:45 am

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Landlords Mustn't Let their Heart Rule their Head when Purchasing Property

Landlords Mustn’t Let their Heart Rule their Head when Purchasing Property

Buying a property as a landlord requires a completely different mindset to purchasing as a homeowner – the key difference being that, as a landlord, you must not let your heart rule your head.

Becoming a buy-to-let landlord is a business move and the objective of your investment is to make a profit. As with any business decision, it’s important to leave your emotions at the door – something that can be particularly difficult when purchasing a property.

Of course, it is important that you are happy with the location of the property, the layout of the interior and think it is a suitable place to live, but it shouldn’t be your ideal home. As long as the property is likely to be someone’s ideal home, that is all that matters. Although this mindset can be difficult for first time landlords, it is the key to a stress-free and successful let.

With tenants spending longer periods in rental housing than ever before, amenities such as local schools, transport links and employment opportunities are becoming more and more important.

Before investing in a property, it’s essential that you research what tenants want, which locations are in high demand and where you can achieve the highest rental yields. It is also a good idea to speak to local letting agents, as they are in the best position to advise you of not only what types of properties tenants are looking for, but also if there are any gaps in the market.

Investing in property is a long-term investment and does not always give off instant rewards. Therefore, you should make sure that the property you buy is aligned with the wants and needs of the tenants you are hoping to attract, and that there is sufficient demand for rental housing in that area – this way, you will minimise the risk of costly void periods!

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Commercial Property Investment: The Essentials

Published On: August 31, 2017 at 9:22 am

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Categories: Finance News

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By Karl Griggs, Director, CPC Finance

With increases to Stamp Duty and the new mortgage tax relief regime introduced for residential buy-to-let landlords, there is speculation that some investors are looking at commercial property in addition to, or rather than, residential property as a potential investment. Since commercial investment is not subject to the recent changes in taxation, is the market experiencing a new trend? If so, what questions should potential investors consider before making the move?

What kinds of commercial properties are popular?

Commercial Property Investment: The Essentials

Commercial Property Investment: The Essentials

The Royal Institution of Chartered Surveyors [RICS] UK Commercial Property Market Survey showed that investor demand has risen for UK commercial property across all sectors in the first quarter of 2017. Commercial property encompasses a wide range of buildings, including office blocks, warehouses, retail, and mixed-use semi-commercial properties (shops with flats above, for example). Some investors looking to make the move from residential buy-to-let are initially looking into retail spaces and small offices. But some are also utilising their experience in the residential market to evaluate mixed-use properties, which balance residential and commercial property business models, but are taxed as commercial buildings, if the commercial space is the dominant part of the building.

How are commercial buy-to-let mortgages calculated?

Commercial mortgages are assessed differently than residential buy-to-let. They are based upon on the market value of the property, the current (or potential) rental income, but also the business that occupies the property. The robustness of any sitting tenant’s finances, as well as the duration of any current leases, are factors that affect how likely a landlord is to prove affordability and secure mortgage finance. And mortgages for semi-commercial buildings may have different rates than residential mortgages and require different terms than residential landlords are accustomed to. For those considering investing in commercial property, particularly for the first time, it will be essential to seek specialist advice.

What to consider when investing in commercial property? 

Given the differences between residential and commercial buildings in areas of taxation, availability of finance and building occupancy, there are many points for landlords to consider when evaluating an investment in a commercial or mixed-use property:

  1. Leases: Think about how the terms and conditions of leases you will be negotiating (or inheriting when you buy the property) differ between standard residential tenancies and commercial tenants. Commercial leases generally have longer terms, but could potentially have longer vacancy periods after a tenant decides to move. How could this impact your business model?
  1. Occupancy: You will be purchasing a commercial building which likely will already occupied by one (or multiple) business tenants with differing lease terms. The length of existing leases and creditworthiness of your potential tenants will likely be a key factor in negotiating your finance product with the lender. Make sure you know your occupants; after choosing a building that meets your criteria, download the tenants’ accounts from Companies House – you should take into account information such as whether your proposed tenant is a sole trader, limited company with or without experience.
  1. Yields: Consider how the potential rental yields will compare with a standard tenancy agreement. Yields are generally seen as higher in commercial property, but capital appreciation is less well understood in commercial buildings compared with residential property.
  1. Economic cycles: Consider the impact of economic cycles on commercial rents. Undertake your financial analysis by considering different levels of rent (and potential periods of vacancy) in the future, as this could be impacted by economic recession, potentially more so than in the residential sector. Identify how you will hedge against these risks, e.g. multi-let offices against one lease premises.
  1. Property type: Identify what type of commercial premises you would want to buy. You will want to drill down your search to compare potential investments in a specific sector, for example, large commercial buildings compared with smaller shops, or mixed-use.
  1. Business sector: Identify what business sector you want to invest in. Options include industrial, business, leisure and retail, and tenants in certain categories may be viewed more favourably by your lender. Evidence points to stable retail and business/trade operations as more favourable, so do your research and speak with your broker first.

In addition to a strong business plan, lenders prefer when potential investors can demonstrate experience managing commercial property or at least large portfolio of residential. If this is not something that you have, then it is vital to build up a strong team of specialists who can guide you. This will also demonstrate to the lender that you are taking this endeavour seriously.

Potential investors have much to consider before choosing to purchase commercial property. Determine if the benefits outweigh the costs, and speak to a specialist broker to find the best finance for you.

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A Landlord’s Guide to the PRA Portfolio Underwriting Changes

Published On: August 31, 2017 at 8:05 am

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Earlier this year, the Prudential Regulation Authority (PRA), which is part of the Bank of England (BoE), launched phase one of its underwriting changes for buy-to-let mortgages. The upcoming phase two will include portfolio underwriting changes for landlords who own four properties or more.

Phase one introduced stricter affordability tests for lenders to impose on landlords, including a stress test on interest rate rises.

A Landlord's Guide to the PRA Portfolio Underwriting Changes

A Landlord’s Guide to the PRA Portfolio Underwriting Changes

All those in the mortgage and property investment markets must be aware that, from 30th September 2017, phase two will be launched.

The PRA will require changes to the way that mortgage applications are underwritten for portfolio landlords – those with four or more mortgaged buy-to-let properties. The reason for this measure is that the PRA has found that mortgage arrears rates increase as landlords’ portfolio sizes grow.

Any borrower that falls into the portfolio landlord category will be required to pass specialist affordability checks when the portfolio underwriting changes are introduced.

The PRA has not outlined a specific requirement for lenders, but has detailed that they should take the following into account: a landlord’s experience; their full portfolio; their rental income; any outstanding mortgages; their assets and liabilities. They should also take into consideration the merits of any new lending in accordance with the landlord’s business plan, alongside historical and future expected cash flow.

The PRA is not concerned with recent landlord tax changes.

If you’re a portfolio landlord, lenders will need to make sure that you are not over-exposed and will therefore stress your background portfolio from 30th September. This means that they will take your entire property portfolio into account when making a decision on your mortgage application.

At present, not all lenders have outlined how they will apply the PRA’s guidelines, but you can expect them to assess the following:

  • Your property investment experience
  • The total amount of mortgage borrowing you have across your portfolio
  • Your assets and liabilities – including tax liability
  • The merits of any new lending in context of your existing buy-to-let portfolio, along with your business plan
  • Historical and future expected cash flow from your portfolio
  • Your income – both from your portfolio and elsewhere

When applying for another buy-to-let mortgage, you should be prepared to be asked for the following: your up-to-date property portfolio spreadsheet; a business plan; cash flow forecasts; your last three months’ bank statements; submitted tax returns; and potentially income and expenditure statements for your portfolio.

If you are a portfolio landlord and plan to take out another buy-to-let mortgage, you must be ready for the additional tests.

To be in the best position, we advise getting your paperwork in order and ready for the application process. As ever, it’s important to keep your property portfolio spreadsheet updated.

If you are planning to review your portfolio, it’s probably a good idea to do this sooner rather than later.

Whatever your plans, be aware and ready for the portfolio underwriting changes!

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New buy-to-let lender aiming at professional landlords

Published On: August 30, 2017 at 11:45 am

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A new business lender is now officially in the market having completed its mobilisation phase yesterday.

Redwood Bank is now up and running, having obtained its primary banking licence in April this year.

Lender

The lender, owned by Redwood Financial Partners (RFP) is targeting professional portfolio landlords.

Redwood Bank has a 100% cloud-based infrastructure and offers mortgages for business owners, alongside commercial and residential property owners. It is to lend from £50,000 up to £1.5m for landlords either buying or remortgaging, all up to 70% LTV.

These loans can be fixed from 2 to 25 years, or up to 20 years for HMO properties. However, rental income must be at least 130% of monthly repayments, as the lender prepares for tighter lending rules to come into force next month.

Eligible landlords must have the minimum two years experience and at least four properties in England, Scotland or Wales.

New buy-to-let lender aiming at professional landlords

New buy-to-let lender aiming at professional landlords

Gary Wilkinson, co-founder and Chief Executive of Redwood Bank, observed: ‘We are delighted to be open for business so soon following the issuing of our initial banking licence. We aim to offer a real alternative for small and medium sized organisations, providing them with simple transparent loans and savings accounts, great service and a promise that our money is being invested into British businesses and our local communities.’

‘As many traditional banks are hampered by poor lending practices from their past and their legacy systems, we are perfectly positioned to help British SMEs take advantage of property opportunities by offering a highly-tailored service for clients that is built around our very experienced regional managers.’[1]

 

 

[1] https://www.landlordtoday.co.uk/breaking-news/2017/8/new-buy-to-let-lender-targets-professional-landlords