• How to Climb the Property Ladder
    Posted on 12 January 2023

    How to Climb the Property Ladder

    What is the Property Ladder?

    The property ladder in the United Kingdom is a term traditionally used to describe the process of buying and selling property to make a profit. It involves the gradual acquisition of property at ever-increasing property prices.

    Starting property purchases usually begin with first-time buyers, who purchase residential property typically with the intention of living there. As their disposable incomes increase or the property value increases due to house price inflation, they may decide to invest in a larger property.

    Traditionally, a first-time buyer would first buy a flat, then move on to a 2-3 bedroom home and eventually buy a larger, semi-detached or detached family home with 3-5 bedrooms. It is essentially a process of buying and selling residential properties over time in order to move into a larger home or a better area to live in.

    Location Matters...Buying the Best House Doesn't

    When searching for properties to purchase in the UK, location matters.

    The purchase price of a property certainly has an impact on how attractive it can appear, but it's not the only factor to consider.

    In today's highly competitive UK property market, average house prices can vary significantly by neighbourhood and town, making it difficult for buyers to identify the perfect property within their budget.

    For this reason, it is often better to purchase the ‘worst house on the best street’ where possible; although more costly than an equivalent poor-quality house in a less desirable area, this type of purchase can offer superior long-term resale value due to strong demand from buyers keen to live in that sought-after locality.

    Don't Be Scared of Renovating

    An image of someone drilling wood

    For those looking to ascend the UK’s housing ladder, renovating a property prior to sale is an effective solution. Not only can modernising a home and freshening up decor increase sale price significantly  (giving sellers more leverage when negotiating on more expensive properties) but it also helps their property to stand out amongst the competition.

    Property experts have long understood that successful renovations can lead to higher sale prices, so making use of budget-friendly DIY renovations, such as painting and replacing fixtures and fittings, could prove a great return on investment for homeowners looking to tackle the housing ladder.

    Make Short-Term Sacrifices to Reach your Long Term Goals

    Purchasing a home in the UK is no easy feat and it can be discouraging to think about the average deposit you'll need to put down on a home. But for those with long-term goals of climbing up the property ladder, making short-term sacrifices now through careful budgeting and putting in the effort to do renovations yourself can yield big rewards later when house price growth is taken into account.

    Even if that means spending lots of late nights at home giving your property an upgrade, learning how to take on projects yourself or setting aside funds for a larger deposit. By doing this, it will give you much more house purchase options in the future along with other benefits. If you are willing to put in the extra effort, you may be able to create more capital which could mean access to better mortgage deals or buying your dream home.

    Although it won't be easy, by spending your time on renovations and controlling your expenses; you will be taking a great step towards achieving your property goals.

    Keep on Top of your Finances

    Having a good credit score is essential in making sure you get the best mortgage deals when looking to purchase a house in the UK. It is one of the first things that mortgage lenders assess, so it is important to make sure that your credit score is up to scratch.

    Building credit can be done by using credit cards or loans responsibly and little by little. Avoid taking out any kind of payday loan, as this could potentially bring down your credit score significantly. Furthermore, make sure to stay up to date with payments and register on the electoral roll.

    Lastly, if it has been some time since you've used credit it's useful to consult with a mortgage advisor before going ahead with anything as they can help understand where you stand credit-wise before starting the process of applying for a mortgage.

    Think About Future Costs

    When deciding to upsize your current home and relocate to a larger one in the UK, there are various costs to bear in mind. Prices in the UK housing market have been unpredictable and stamp duty costs (taxes paid when buying a property) can range from nothing to thousands depending on where you're located. If you are wondering how much stamp duty you will have to pay, take a look at our handy guide.

    Additionally, it's important to factor in solicitor fees for contracts and surveys, any additional moving costs incurred, and your monthly bills at the new residence such as council tax. Moving home is no small decision and should be carefully thought out before taking the plunge - ensuring that all potential costs are taken into account will help to realise a smoother transition.

    Key Takeaways

    • Buy the worst house in the best location that you can afford, you can always change and update the house that you live in, but you cannot change the area.
    • Buying a home that is in need of renovations can be a more affordable way to create the house of your dreams, and to increase it's value.
    • By investing time and budgeting your money for a short-term period can help you to achieve long-term goals and help you buy the property that you love.
    • It is crucial to keep on top of your credit, regularly check your credit score and ensure that you are on the electoral roll to have access to the best mortgage deals on the market.
    • Keep in mind the costs of buying a new home, and moving from your current one. You may have large stamp duty bills to pay and high moving costs, so it is best to prepare for these if you are considering getting on to the property ladder, or climbing it.
    Read more
  • How to Set a Budget for Buying your First Home
    Posted on 12 December 2022

    How to Set a Budget for Buying your First Home

    How much can you afford per month?

    An image of someone calculating their finances

    This may seem like it's an obvious question, but it's easier to get carried away.

    If you have completed any online mortgage calculators, you may have some idea on the amount of money you can borrow. Or perhaps you have a mortgage in principle that dictates the maximum purchase price.

    Either way, the repayments on that amount can sometimes be higher than what you might be comfortable paying.

    What can you comfortably spend each month?

    The first step in setting a budget for buying any home, is figuring out how much you can afford to spend. This can depend on your income, savings and other financial factors.

    It can also depend on how much disposable income you like to have each month and whether there are other factors that might affect your income in the future, like starting a family.

    There is a rule of thumb that your mortgage should not cost you more than 28% of your gross income per month. So, if your monthly gross household income is £3000 then your mortgage should not cost you more than £840 a month.

    To sum that up, you could borrow £187,000 with 3.5% interest paid over a 30 year mortgage term and pay £840 per month in mortgage payments.

    As a first-time buyer, it can be difficult to determine how much you can comfortably afford, especially if you have previously been living with parents.

    If you are currently renting, you may already be comfortable with calculating affordable monthly payments.

    Consider different areas

    The location, condition of the property and size of the home can hugely affect the purchase price. If your budget doesn't stretch as far as you'd like it to, you may have to compromise on one of those factors.

    Do you prefer city life or country life? Do you want to live near friends and family or do you prefer to be alone?

    Once you've worked out how much you can comfortably spend, you'll want to work out exactly where you would like to live.

    You'll need to factor this into your calculations when determining how much you can afford.

    How much deposit do you need?

    Once you have an idea of what amount you are happy to pay for monthly mortgage payments and you have an idea of how much you can lend, it's time to start looking at different properties.

    Generally, you will need a minimum of 5% deposit to buy a home in the UK, but you will usually have access to far better deals if you can save up a 10% deposit, although this can depend on the mortgage lender.

    Your credit score is important here, as your lender may require a larger deposit.

    If you can save more than a 5% deposit you will have access to a wider range of deals with different mortgage lenders, and lower interest rates. We recommend speaking with a mortgage broker for advice on which mortgage to choose.

    If you have found a house that you are interested in, speak to the estate agent if you do not have a mortgage in place yet. As a potential buyer, they may have someone in-house to help you find the right mortgage provider, so it is worth enquiring with the estate agent if you are in this position.

    What is LTV?

    When you start looking at different types of mortgages, you will come across the term LTV, or loan-to-value.

    To put it simply, it is a percentage figure of the amount you have borrowed to buy the property (loan) compared to the mortgage lenders valuation of the property (value).

    If you bought a home at £150,000 and had a deposit of £15,000, you would have a 90% LTV. This is because the amount you have borrowed (£135,000) is 90% of the properties value.

    Generally, the lower the LTV is, the lower interest rates you can get on your mortgage deal.

    However to do this, you tend to need to be able to have a large deposit which isn't always achievable for first-time buyers. (This is something that a mortgage broker will be able to advise you on.)

    Sometimes it can be better to have a higher LTV, and use any extra money to refurbish the property, invest or put into emergency savings.
    Use this time to keep an eye on your credit score too, ensure you keep up to date with all of your credit payments and ensure you are named on the electoral roll.

    These factors can help you get accepted for a better interest rate and have access to a wider range of mortgage deals.
    If you are unsure on how to check your credit score or how to improve your credit rating, you can find more information from the Money Advice Service.

    What about government help?

    There is a government-backed mortgage scheme that helps first-time buyers get on the property ladder with a deposit as low as 5%. This is applicable to homes up to £600,000 and helps make owning your own home become more affordable.

    There are a few different financial schemes with government funding available, head to the government website for more information.

    How much Stamp Duty will you pay?


    Firstly, you may be wondering; what is stamp duty?

    Stamp Duty Land Tax (SDLT) is paid when buying a residential property in the UK, this can vary depending on whether you are a first-time buyer, a home-mover or purchasing an additional property.

    The tax is charged at different rates, depending on the price of the home which you can find a full guide on here.

    All stamp duty is paid to HM Revenue and Customs (HMRC) when the property is purchased, and the buyer is responsible for paying the tax. Failure to pay stamp duty on time can result in penalties and interest charges.

    Stamp duty has recently changed, and as of September 2022, the new amount that first-time buyers will pay stamp duty on is £425,000.

    Previously stamp duty charges were charged for properties over £300,000, so this is a huge saving for first-time buyers.

    If you buy a property that is over £425,000, the standard rate of stamp duty will apply.

    For first-time buyers, stamp duty charges are 5% on the portion £425,001 and above but lower than £925,000. On the portion above £925,001 but lower than £1,500,000 a rate of 10% applies. If the home is £1,500,001 or more, than the rate of 12% of that portion applies.

    For example if you are buying your first home and the property is £300,000, you will pay no stamp duty land tax. If your first home is £600,00 then you will pay nothing on the first £425,000 and 5% on the remaining £175,000 which comes to a total bill of £8,750.

    What are surveyors fees, and how much will they cost?


    A house survey is important because it will highlight any major defects that the property might have and provides advice on repairs and maintenance.

    Basically, it helps to eliminate any unwanted surprises!

    The cost of property surveys vary depending on the type of house survey and the level of detail that you require in the report. The type of property and location can also affect the price.

    Usually, the surveyors fees can range anywhere from £400 to £1,425.

    But again, this largely depends on the type of survey you require.

    It is crucial to include this in your budget, as what will cost you money now, may save you a lot more in the future!

    How much are conveyancing fees?


    When buying a home, you will need to instruct a solicitor or licensed conveyancer to handle all of the legal parts to buying a property.

    This is called conveyancing.

    Some of the fees can include:

    • Legal fees - Your solicitor will usually charge you a flat fee, this can vary between £500 and £1000 depending on how complex the transaction is and the location.
    • Land registry fees - All homes need to be added on to the Land Register. This is a government register and the cost depends on the value of your home.
    • Money transfer fees - This is a fee to cover the charges of transferring money between mortgage lenders and conveyancers, lenders and buyers.

    These are all one-off charges when you are purchasing a home, and they are in place to keep every party involved protected.

    What is the difference between using a solicitor or a licensed conveyancer?

    You may be wondering which is the best option; a solicitor or a licensed conveyancer.

    You can save money by using a licensed conveyancer and they are specialised in this area, but if you have any complex legal issues then they will not be able to help.

    On the other hand, solicitors tend to be more expensive but they can assist you with other legal matters that may come up during the buying process.

    The cost of moving home

    An image of a couple looking around a house

    Yes, moving house can be expensive, but if you plan ahead then you can save a lot of headaches...and money!

    Need a hand with the heavy-lifting?

    Do you need to hire a moving van, or do you have some friends that are happy to pitch in - bonus points if they have a van themselves!

    If you have a lot to move, or you are moving a fair distance away, it might be best to hire professional movers to help you.

    Don't be afraid to ask if they have insurance either. Your valuables need protecting.

    You may have friends and family who can recommend someone, but if not, head to the National Guild of Removers and Storers for local operators.

    Stump up for storage

    You may have to bridge the gap between moving out of a property and moving into a new one.

    If so, take a look at local storage companies in the area.

    However, if you have previously been renting, it can be a good idea to end your tenancy a few days after your completion date. This way you don't have to pay for storage, and you can (hopefully!) reduce the stress of moving.

    Re-direct your mail


    If you don't want to miss out on important mail, it makes sense to re-direct your mail from your old property to your new one. Doing this can also prevent fraud because your mail won't land in the wrong hands.

    You can re-direct your mail for 3, 6, 9 or 12 months to an address in the UK or overseas from £33.99.

    Furnishing the property


    If you have previously rented, you may have all of the furniture you need for now.

    But, if you have been living with family, you may need to factor in a lot of costs for furnishing your new home.

    It can all add up, as even your first grocery shop will usually be a lot higher in price to fill your cupboards!

    To save money, this is where friends and family can help. If people want to buy housewarming gifts, let them know what you're desperately in need of or ask for a gift card instead.

    You'd be surprised about the things people have lying around in storage or appliances they have never used. This can save you a lot of money, and help you to have everything you need in your new home.

    Additional expenses to budget for

    An image of a monthly electric bill
    Now you have worked out some of your buying costs, many of which are one-off payments, you can take a look at what other extra costs you will have to budget for.

    These are all outgoings that you will have to consider, in addition to your monthly mortgage payments. Some you may already be aware of, whereas others may be completely new to you.

    Utility Bills

    When you move into a property, you become liable for the household bills. To keep on top of these additional costs, it is crucial that you get set up as the new liable party immediately so you aren't faced with a large bill.

    The main utility bills are:

    • Gas and Electric - These are with the same supplier on the same bill, but will have different charges.
    • Water Bill - You will receive an estimated charge for the year depending on the house you live in and how many people are in the property. This can then be paid in 12 monthly direct debit payments.
    • TV Licence - You need to have a TV licence if anyone in your property watches or records live TV, or streams any BBC programmes.
    In addition to this, if you have bought a flat or a property with communal areas, you may be liable to pay a service charge or ground rent.

    For advice on how to save money on your utility bills, take a look at the Money Saving Expert for advice.

    Insurance

    As a homeowner, there are three different types of insurance that are advisable to have:

    1. Buildings insurance - This type of insurance covers any damage to the structure of your home, many mortgage lenders insist that this be put in place.
    2. Contents insurance - This is to cover theft, loss or damage to your personal property whilst it is inside your home.
    3. Life insurance - You may decide to take out life insurance that will cover the sum of your mortgage.
    Although the mortgage lender may request that buildings insurance is in place when your mortgage begins, contents and life insurance is negotiable.

    However, for peace of mind and to protect yourself financially, it is definitely something that should be explored at the very least.

    Food Costs


    This cost is subjective and greatly varies from person to person. A single-person household will tend to have much lower food costs than a large family does.
    To be safe, it is best to have an idea of how much you are likely to spend per week or month, and try to set a budget. Costs like this can easily sky rocket if there is not budget in place.

    Council Tax

    When you buy or rent a home, you are liable for Council Tax. This is a local government tax and what you pay will vary depending on the area that you live and the 'banding' that your property is in.

    If you have found a property that you love, but you are not sure which council tax band it is in or what the charges are, head to your local government website to find out.

    Keep in mind though, if the previous owners have extended and improved the property, it could cause the property to move into a higher council tax band once the sale is complete.

    Ask the owners if they have had any structural work done to the property whilst they have owned it so you can factor this in to your calculations.

    Key Takeaways

    • Work out how much you can comfortably afford to pay out each month, and remember the rule - no more than 28% of your gross income should be spent on a mortgage.
    • When you have worked out how much you would like to spend each month and what property price you can afford - calculate how much of a deposit you need to save up, whether it's 5%, 10% or more.
    • Work out other buying costs - such as stamp duty land tax, conveyancing fees or solicitors costs and factor in the survey cost.
    • Budget for moving costs, furnishing the property, re-directing mail and storage, if you need it.
    • Consider your monthly ongoing costs and how much your new utility bills will be, council tax and if you have to pay for a TV license.
    Read more
  • 7 Things to Consider Before Overpaying Your Mortgage
    Posted on 9 December 2022

    7 Things to Consider Before Overpaying Your Mortgage

    What are the benefits to making overpayments on your mortgage?

    Having a mortgage can help you buy your first home or, if you're a home-mover, purchase a home with more much-needed space.

    However, the likelihood is that you're also counting down the days until you're mortgage-free!

    So, let's take a look at some of the benefits:

    • You could potentially pay off your mortgage sooner by reducing the outstanding mortgage balance.
    • You can save money! Paying off your mortgage earlier means that it will incur less interest, and in turn, you will pay less overall.
    • You could have access to better mortgage deals. Overpaying your mortgage means that when your renew your mortgage, you could get a better LTV (loan-to-value) mortgage deal.

    If you have the spare cash, then there can be savvier ways to manage your money than simply saving it.

    What is the maximum that you can overpay on a mortgage?

    Many mortgage lenders set a limit on how much you can overpay on your mortgage each year, and it will largely depend on your mortgage terms.

    Some mortgage deals are stricter than others, but as a rule of thumb, you can usually overpay 10% of your mortgage balance per year. If you go over this, your lender may charge you an early repayment charge (ERC).

    Before you make an overpayment, find out the fees and limits that are set by your lender. You can do this by checking your mortgage terms, or logging into your account and looking online.

    How much money can you save by overpaying a mortgage?

    An image of someone putting money into a piggy bank
    It can depend on different factors, such as the mortgage interest rate, the type of mortgage and the amount of debt remaining on the mortgage loan.

    However, let's take a look at an example to get a better idea of how much money you can save.

    If you have a 25-year mortgage with a 3.5 percent rate and £200,000 remaining on the mortgage term, by paying an extra £200 per month it could save you £26,000 in interest payments and clear the debt 6 years earlier.

    Overpaying by £100 a month could save you £15,000 and reduce the mortgage term by three years.

    If you decided you could only spare an extra £20 a month in addition to your regular monthly expenses, this could still save you £3,500!

    To find out how much you could save, why not enter your details into a Mortgage Overpayment Calculator and find out how much extra mortgage repayments could reduce your balance by.

    Ways you can overpay your mortgage


    You may be wondering, how can I overpay my mortgage? If so, there are two ways that you are able to do this.

    As long as you keep within the limits of how much you are able to repay each year, you won't incur any extra charges

    1. Lump-sum overpayment

    Some months you may be able to pay more than others, or perhaps you have come into some extra cash and you would like to put some of it towards your mortgage.

    By making a one-off payment, it is the most flexible way to make an overpayment on your mortgage. Some months you may decide to make an overpayment, and sometimes you won't want to make one at all.

    This is also a great option for people with varying monthly incomes, or want to make overpayments but cannot commit to it regularly.

    2. Increasing your monthly repayments

    Some lenders will allow you to change your monthly payments through online banking, whereas others will require you to make a bank transfer each month.

    It is worth checking with your lender first before making any overpayments to find out how you're able to set up a regular payment, and to double check on any fees.

    By paying the same amount each month on top of your normal mortgage payment, you can factor this into your monthly cashflow and be able to budget for this.

    Should you overpay your mortgage or invest money in other areas?


    There are many different ways that you can use your savings, or extra monthly cash flow to help you reach your financial goals.

    However, if you are thinking about overpaying your mortgage, you might want to consider how that disposable income might be better spent elsewhere.

    Before you start making any overpayments, ask yourself the following questions:

    • Do you have emergency savings?
    • Are you allocating money to pay off outstanding debts?
    • Are you paying into your pension?
    • Have you considered investing?

    If you answered no to any of those questions, perhaps look to see if your money could be better spent elsewhere before making extra payments on your mortgage repayments.

    It could be safer in the long run to have emergency savings, if you do not have an emergency fund to cover at least 3 months of living expenses (6 months is ideal), you could concentrate on this first.

    Perhaps you have outstanding debt that is gathering interest and stopping you from lending more finance in the future. You could also invest in your future by paying into your pension pot.

    Or, have you considered other investments?

    There are plenty of other places to put your money instead of repaying your mortgage faster. You could build up of portfolio of bonds, stocks and shares that could offer a potentially higher growth rate - although arguably riskier.

    If you would rather put that extra money into the house, you could look at ways to increase the value of your home instead. You could improve the value of your home whilst also improving your quality of life by adding an upgraded kitchen or a much-needed extra bedroom.

    Overpaying vs Paying Off Other Debts: Which is Better?


    If you have other debts looming over you, it may be worthwhile assessing which route would be better to take; paying off your mortgage or other debts.

    Ultimately, it depends on what type of debt it is.

    There are two types of debts, good debts and bad debts. A good debt will add to your future goals and improve your finance over time.

    Examples of good debt are:

    • Student loan
    • Mortgage debt
    • Finance that helps to build credit scores

    However a bad, or expensive debt are those that cost a lot of money to pay off over time. These are debts that have high interest rates and add no benefit to your long-term financial goals.

    Examples of bad, or expensive debts are:

    • Payday loans
    • High interest credit card loans
    • Borrowing money to pay off other debts

    If you have any of these bad debts, it can be more beneficial to focus on repaying these first rather than overpaying your mortgage debt, if you have extra money.

    Should I overpay on my mortgage if I can afford to?

    If the current savings interest rates are low, and you have the spare money then it could be more beneficial to make additional payments on your mortgage instead of putting that money into savings.

    But, if you have bad debts then take a look at those first if you can. Or at least try to reduce them.

    Don't forget there are other ways to invest in your future, like adding any spare money into a retirement pot or a rainy day fund.

    Consider whether you can afford to make a regular monthly mortgage payment, or if it makes more sense to make a lump sum payment as and when you can.

    Living costs are continuing to rise and many peoples financial situations have changed over the last few years, so seek financial advice first if you are unsure.

    Key Takeaways
    • By making mortgage overpayments you can potentially pay less money, pay off your mortgage earlier and save money when you come to remortgage by having a better loan-to-value (LTV).
    • It can vary by lender, but most banks will allow up to 10% of the outstanding mortgage balance to be paid off each year.
    • Extra payments can be paid by increasing your direct debit to make monthly overpayments, or by making a lump sum overpayment.
    • There may be other alternatives to make extra payments too, rather than to just your mortgage. Consider paying off bad debts first, adding to your pension pot, savings or investing instead.
    Read more
  • How to Calculate the ROI on a Rental Property
    Posted on 8 December 2022

    How to Calculate the ROI on a Rental Property

    So, What is Return on Investment (ROI)?

    The ROI measures how profitable or efficient an investment is and it can be used to compare a number of different investments. ROI can be used to calculate the profitability of bonds, investment stocks, savings accounts or buy-to-let property, amongst others.

    Calculating ROI on a buy-to-let property can prove more difficult as there can be many external variables, especially when it comes down to how an investor is paying for the property.

    To break it down, return on investment (or ROI) will basically tell you how much money you will make or lose on an investment.

    It will help to identify whether that investment is worthwhile.

    The Importance of ROI for the Rental Market

    Before you start investing, no matter which area you decide to invest in, you first have to do calculations to ensure that it is profitable.

    Ultimately, you don't want to lose money.

    If you are lending money from a bank, they will want to see that you have done your research and it is a worthwhile investment. Calculating the ROI will help you to become a more informed investor.

    Firstly, consider the following points:

    • How much is the property?
    • What is the monthly rent for this type of property in the area?
    • Will you have to make any improvements to the property?
    • What are the monthly outgoings for the property? (e.g. monthly mortgage payments, bills)
    • Will you be instructing a letting agent to manage the property?

    Once you have established those factors, you can determine the potential return from your investment. It can also help you calculate the point a property will become profitable if you have had to make a large investment, to begin with.

    The ROI can be the make or break of whether you invest in a property or not, so don't leave your calculations too late!

    Calculating ROI on Rental Properties

    ROI is a profitability ratio. This is why it is often represented in percentage terms, which can seem quite daunting to calculate at first.

    To calculate what the ROI is as a percentage, firstly you need to calculate what your annual rent income is. This is after mortgage payments, any bills, operating expenses, management fees, repairs etc.

    Then, divide that number by the amount of cash that was used for the investment. This would be classed as a deposit and not the mortgage amount, if you have undertaken finance.

    Finally, multiply by 100 to get the ROI percentage, and there you have the final figure.

    To break it down, the simplest way to calculate the ROI on a buy-to-let property is to:
    1. Calculate your annual rent income after an expenditure
    2. Divide that by the amount of cash invested in the property.
    3. Multiply by 100.
    If you would like to calculate the profit on an investment as an amount instead of a percentage, you need to take the total return on the investment and then subtract the cost of the investment.

    Calculating ROI with a Mortgage

    You may be in the lucky position to choose whether you buy your rental property in cash or take out a mortgage on the property. If you decide to go down the finance route, you usually need a 25% deposit as a minimum.

    If you decided to buy a property that was worth £100,000 and you chose to buy a property using a mortgage, you would likely put down a 25% deposit of £25,000.

    Using those figures, the calculations may look a little like this:

    Annual rent: £6,300
    Annual costs: £3,500
    Net annual profit : £2,800
    Purchase price: £100,000
    Mortgage used: £75,000
    Cash invested: £25,000

    ROI is the net annual profit of (£2800) divided by your cash invested (£25,000) x 100 = 11.2%

    Calculating ROI for a Cash Transaction

    If the property was bought in cash, the ROI can be calculated for the same figures of buying a property for £100,000.

    Annual rent: £6,300
    Annual costs without a mortgage: £1,000
    Net annual profit: £5,300
    Purchase price: £100,000
    Mortgage used: £0
    Cash invested: £100,000

    ROI is now net annual profit of (£5,300) divided by your cash invested (£100,000) x 100 = 5.3%

    As you can see, the ROI is far higher when taking out a mortgage (11.2%) compared with buying with cash (5.3%).

    Although it can be great to buy a property in cash, you could also use that same amount to buy several investment properties.

    What is Classed as a Good ROI for Landlords?


    An image of a couple shaking hands with a landlord

    As demonstrated in the above example, the ROI can dramatically change depending on the way that the property was bought.

    Both examples had great ROIs and were both creating a profitable return and positive ROI, but which one you choose can depend on your future goals.

    If you would rather have a higher ROI by taking out a mortgage on the property, you can use any extra capital to invest in additional properties.

    You will have a higher amount of borrowing that can incur it's own risks, but to counter this, the ROI will be at a higher rate.

    However, by paying for the property in cash then you will have a lower ROI, but if it's a long term investment then you may prefer this. You aren't at risk of being affected by rising interest rates or affordability and credit checks by going down the cash-only route.

    What ROI Should I Aim for?

    If you do not have an excess amount of cash, and you know you will have to undertake finance, you may be calculating the ROI purely to see if the property is a good investment or not.

    So the question is, what rental ROI should you aim to achieve?

    According to NatWest, a reasonable amount of rental yield is between 6% and 8%, but depending where you are in the country, the amounts can be higher or lower.

    Sometimes the rental yield is lower in areas where the house price growth is much higher, like in London and it's surrounding areas. This is due to the demand to buy being high and pushing up house prices, but rent is not increasing as quickly.

    Keep in mind that with a fully-managed letting agent, you do not have to search for investment opportunities in the area that you live in because you can instruct a property management company to look after the property on your behalf.

    This is also the best option if you are looking for a passive income, so it is worth considering adding a management fee into your monthly cash flow calculations.

    Things to Keep in Mind


    An image of keys to a new property

    As much as you can try to plan for every worse-case scenario and factor in interest rises. There are always things that you cannot predict.

    Take the last several years as an example, the economy had changed in ways that we would never have expected.

    Also, factor in other buying costs when it comes to calculating how profitable your investment is.

    Keep in mind various additional costs such as:

    • Stamp Duty charges
    • Refurbishment costs
    • Mortgage arrangement fees
    • Decorating
    • Maintenance and repairs
    • Income tax
    • Periods with no tenant that can affect rental income

    These are all extra costs to consider that may be irregular and will not be factored into your monthly or annual expenses, but still need to be calculated when assessing how profitable an investment is.

    Key Takeaways

    • ROI (Return on Investment) is a performance measurement that calculates how profitable an investment is as a percentage figure.
    • To calculate the ROI, you need to work out your annual income after expenditure, divide that amount by the amount of cash invested in the property and finally, multiply by 100.
    • The ROI calculation works for both mortgage purchases and buying in cash, just adjust the monthly expenditure and cash investment.
    • Factor in variable costs into ROI, such as repair costs in addition to regular costs.

    What's Next?

    If you are in the process of looking for your next investment property, why not take a look at our website for the latest properties up for sale?

    If you are currently a landlord, or want some information on the property management services that we offer, get in touch for more information.
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  • 7 Things You Need to Know Before Buying an Investment Property
    Posted on 1 December 2022

    7 Things You Need to Know Before Buying an Investment Property

    1. Understand the Market

    First things first, buy into an area that you understand. So that includes the location, the demographic and the type of property you choose, whether it is residential or commercial. Don’t worry though, these are all things you can learn if you do your research.

    To begin with, ask yourself; would I prefer a commercial letting with a longer term tenant, or am I more comfortable renting out residential homes to families, young professionals or perhaps students?

    From here, you can decide what type of property you would prefer to invest in. If you want to buy a commercial property, what type of property are you interested in? It could be light industrial, a retail property or an office block.

    If you want to buy a residential property, who will you target? Are you looking for a larger home for a family or HMO, or an apartment for a holiday let or young professional?

    Once you decide on that, you can narrow down the types of areas you can invest in. If you would like to rent out an apartment as a holiday let, take a look at areas that have a lot of tourism and lots of great places to visit.

    If you would like a retail property, are there any up-and-coming areas with investment in the high street? That could be a great place to pick up a bargain with room to grow.

    Once you have an idea of the type of property you would like and the target demographic, consider the following:

    • What is the job market like in that area?
    • Is there much demand to rent the types of properties you are interested in?
    • Are there many similar properties unable to find tenants in that area?
    • Does the area you are looking in suit your target market?
    Think about the bigger picture and put yourself in the tenant's shoes.

    For example, if you were looking to rent a property and had a young family, which areas would you look in and what are the schools like?

    You do not have to buy in the area you live in, many investors make this mistake when they first start their investment journey. Take a look at areas with a good rental yield and a high level of demand, then use a letting agency to manage the property on your behalf.

    In return, you can receive a higher return and less stress.

    2. Work Out Your Budget

    Searching for your first investment property can be exciting, but be careful not to get carried away. Here are a list of some of the costs that you will need to consider when buying your property:

    • Deposit - You will need a minimum deposit of 25% with most lenders, if you do not have this then it may be worth speaking to a specialist lender or looking for a cheaper property.
    • Stamp Duty - As a rule of thumb, you will pay the standard stamp duty plus a 3% surcharge.
    • Solicitors Fees - Shop around and ask for fees upfront, and make sure you are aware of any hidden costs.
    • Valuation
    • Property Survey
    • Legal Costs
    • Mortgage Arrangement Fees
    • Mortgage Broker - If you are deciding to use one.

    Once you have bought your investment property, there are day-to-day charges that you will be required to pay, which can involve the following:

    • Mortgage interest costs
    • Letting agent fees
    • Landlords insurance
    • Redecorating
    • Annual safety checks - gas safety, boiler checks etc.
    • General building maintenance and repairs

    3. Choosing a Location

    It is an exciting time to be buying an investment property and the property market in Northern Ireland is booming.

    You could buy an apartment in Belfast, or perhaps a house in Bangor or Donaghadee. You could even invest in a commercial property if you have the capital available.

    But, before you make any decisions, you have to do your research. Here are some of the things you need to think about when buying investment property:

    • Location matters - When choosing a location for your investment property, it’s important to take a look at the demand and supply in that area. If there are lots of people moving into an area but not enough properties for sale, then prices will increase in line with the demand for the properties.
    • Consider the resale value - If you want to sell your property at some point down the line, it’s important to consider this when buying a property too. It makes sense to invest in an area where properties sell quickly because this means there will be less pressure in the future when trying to sell your own property.
    • Up and coming areas - If there is an area that will be subject to a lot of regeneration and investment in the coming years, it makes sense to invest in this area before that happens. There is a good chance that the price of the property will increase and the demand for rental properties will too.
    The average price of a property in Northern Ireland is £169,000, which is 42.9% lower than the average price of a home in the rest of the UK which is £296,000.

    It makes sense to look further afield.

    4. Be Realistic About Rental Yields

    The idea of buying an investment property and earning a regular income sounds attractive, but before you rush out and buy your first rental property, it is important to consider what sort of yield you can realistically expect.

    The property market is very different depending on where you choose to buy. In some parts of the country, it may be difficult to find tenants or there could be high levels of employment.

    In these areas, the rental yield will be lower than others so it may not be possible to get the same amount of money back from your investment as you would like. It is important to research the area and find out the average rental yield before buying an investment property.

    Take a look at websites such as PropertyPal to get an idea of what different properties in different areas are being marketed at. Speak to your local estate agent to gain a realistic understanding of what you could achieve and how high the demand is for different types of properties in Northern Ireland.

    5. Property Maintenance

    One of the factors to consider when buying an investment property is whether you will be managing the property yourself or instructing a letting agent to do so on your behalf.

    If you decide to use a letting agent to manage your property, these are some of the benefits of a fully-managed property service:
    • Marketing the property - Letting agents will advertise the property on your behalf on their own website, in their shops and on websites such as PropertyPal.
    • Vetting and referencing - A letting agent will handle the applications of prospective tenants and narrow down a list of suitable tenants.
    • Catalogue of tenants - A good letting agent will normally have a list of prospective tenants who have registered their interest, so finding someone quickly may not be an issue and avoids properties being sat empty.
    • Up-to-date with legalities - This means that the property will be compliant with the legislation before a tenant moves in, and they will keep you informed of any changes so that you don’t have to.
    • No need to worry about contracts - Another thing that your letting agent can take care of, along with taking photographic evidence of the inventory prior to a tenant moving in. Letting agents also have plenty of experience handling end-of-tenancy disputes.
    • Property issues are fixed on your behalf - Letting agents have contracted professionals to handle any repairs or property issues so that you don’t have to.
    A fully-managed property service is an added cost that will have to be considered if you decide to go down this route, but it will free up more of your time and reduce a lot of stress that comes with owning investment properties.

    Take a look at our full list of the Benefits of Using a Letting Agent to Manage Your Buy-To-Let Property.

    6. Mortgage Fees and Taxes

    When buying an investment property, you will need to take into account the minimum 25% deposit required by the lender into your affordability. The mortgage itself can incur fees that often cannot be included in the mortgage term.

    If you are planning to use a mortgage broker to help you find the best deal on a mortgage, make sure you include their fees in your budget calculations.

    You will also need to factor in other buying costs, such as stamp duty (or land tax) which is paid when buying a property. The amount of stamp duty payable depends on the purchase price of your property, you can read our full guide with the up-to-date changes here.

    There is also the cost of a solicitor or licensed conveyancer to conduct the legal work involved in buying a property. Always find out the fees upfront before asking for any work to be completed, and it is a good idea to shop around for three quotes.

    Don’t forget to factor in insurance too, there are specialist landlord insurance policies that typically cover buildings insurance, and can sometimes include contents insurance and public liability insurance too.

    You may decide to take out Landlords Emergency Cover too, which can help recoup costs of repair charges and expensive out-of-hours callouts.

    7. The Cost of the Property Being Vacant

    There are certain costs that can incur that you may not be aware of when you have an empty property, these can include:

    • Council tax - With no tenant in place and no one living in the property, you are liable for council tax on the property. Depending on the area that you live can depend on the amount it will cost and if there are any discounts, but it can also incur an extra charge if the property is empty for too long.
    • Vacant property insurance - If a property is empty for too long, often over 30 days, it can make your insurance void depending on the type of insurance you have opted for. Make sure this is something that you look out for when choosing your insurance policy.
    • Mortgage costs - This is not an extra charge, but without the rental income, you’ll still be liable for paying the mortgage and any bills on the property whilst there is no tenant.

    Conclusion

    If you plan carefully and spend wisely then buying buy-to-let properties in Northern Ireland can be a fantastic way to build your property portfolio. By instructing a letting agent to manage your property, you yourself can be located anywhere in the world.

    If you are still in the early stages of your investment journey, why not speak to a member of our friendly and experienced team for advice? Give us a call on 028 9065 3333 or send us an email with your query.
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  • The Ultimate Guide to Finding your Next Investment Property in Northern Ireland
    Posted on 17 November 2022

    The Ultimate Guide to Finding your Next Investment Property in Northern Ireland

    1. What Kind of Investment are you Looking for?


    Do you want a property that will just sit there and collect rent? Or would you rather have a property that will provide an income stream for years? Do you want something with good cash flow but will require work from time to time? Or do you just want something that provides passive income?

    Once you have decided on this, it will help you determine what type of property to purchase and whether a fully-managed letting service is for you.

    2. What’s your Budget?


    How much can you spend on an investment property? It is extremely important to factor this in at the beginning of your investment journey.

    Your budget will determine the type of home and the areas that will be best to invest in. It is best to talk to an experienced letting agent in the area to help you get the best investment from your budget.

    3. What Purchasing Costs are Involved?


    There are a number of set-up costs involved when buying an investment property, and it is important to factor these in. These are the main costs to consider when buying an investment property:

    • Deposit - Most lenders require a minimum deposit of 25%, but you may decide to put down a larger amount to get a better interest rate on your mortgage.
    • Stamp Duty Charges - The Stamp Duty charges have changed in September 2022, read our guide to find out the new costs incurred.
    • Legal and Conveyancing Fees
    • Mortgage and Valuation Costs
    • Renovation Costs

    If you are deciding to offer your buy-to-let property as a fully-furnished property to renters, you may also have to factor in buying furniture.

    4. What’s your Timeline?


    How much time are you willing to invest in your property? You will need to keep up with the property and make any needed repairs, so if you don't have the time or inclination for this type of maintenance then consider hiring a property manager.

    However, some investors prefer doing all of the work themselves because it can help them keep outgoings lower, but don’t forget that your time is an asset too.

    5. Can you Afford to Manage the Property?


    When you buy a property, whether as an investment or otherwise, there are many expenses involved. From paying for maintenance and repairs, to taxes and insurance, there's no denying that owning a home can be expensive.

    If you're going to buy an investment property in Northern Ireland (or anywhere else), make sure that you'll have enough money set aside to cover those costs before making an offer.

    6. What are your Goals?


    Are you looking for a long-term investment or just something that will provide income from time-to-time? If you're looking for something passive, consider investing in a property that has good cash flow and can be rented out easily.

    Before you invest in anything, it's important to have a plan. You want to be sure that the investment will pay off and that you won't lose money on it. If you're not sure what kind of property would work best for you, consider consulting with an estate agent or financial advisor who can help steer you in the right direction.

    7. Will this Property Generate Positive Cash Flow?


    A property that generates positive cash flow means that the rental income from the property is greater than the amount of money you have to pay off your mortgage and other expenses.

    Depending on which area in Northern Ireland that you choose to invest in, you may want to invest in a family home in a great school catchment area or an
    apartment in the bustling city of Belfast. This largely depends on your goals, we advise discussing these with an experienced, local letting agent.

    8. Is there Room for Future Appreciation?


    The best way to determine if your investment will be worth it is by looking at the current market value of similar properties in the area. If you can find comparable homes that have increased in price over time, then this could be a good indication that your property will also increase in value.

    Ask your local estate agent for information on the up-and-coming areas within Northern Ireland. This is the best way to get insider knowledge on the best areas to invest in and which are more likely to increase in value over time.

    9. How Much Time Do I Have to Fix Up and Sell the Property?


    This is another important question to ask before purchasing a rental property because it can help you determine whether or not this investment will be profitable for you. If you need to put in a lot of work fixing up the house so that it becomes presentable for tenants, then this could take up your valuable time and cause delays in getting a tenant signed.

    This could also mean that you will have to pay for repairs and renovations out of pocket. If you don’t have a lot of time to fix up the property before getting tenants in, then this could be another reason why rental properties are not a good investment for you.

    What’s Next?


    If you still have any questions or want to take on the next steps on your investment journey, our friendly and experienced staff are always willing to help. Why not give us a call on 028 9065 3333, or check out some of the properties we have up for sale at the moment?
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  • How to Sell your Home: A Complete Guide for First-Time Sellers
    Posted on 11 November 2022

    How to Sell your Home: A Complete Guide for First-Time Sellers

    1. Look at Your Finances


    The first thing to look at if you are considering selling your property is if you can afford to move. Are you still in your existing mortgage term? If you are, you may face early repayment charges or there may be fees involved to port your mortgage to a new property.

    If you are looking to move to a more expensive property, you will need to find out how much you can borrow and if you have an adequate deposit for the new property.

    There are other costs associated with moving too, such as stamp duty charges, solicitors fees and if you need to hire a moving company.

    2. Make Small Home Improvements


    If you have any small home improvements you wanted to make, now could be the time to do it. If the improvements will cost a large amount of money or are very time-consuming, it may be worth speaking to an estate agent first for their opinion to see if it is worth the expenditure.

    Spend some time tidying up your garden and painting over any scuffs on the wall around your home. If your kitchen is looking tired, even a lick of paint and updating hardware, such as doors and handles, can be a much cheaper option to making the space feel like new again.

    3. Have Your Property Valued


    You may have an idea of what your home might be worth already, especially if similar homes in your area have recently sold. Speak to a local estate agent about a home valuation and how they can work with you to get the best possible price for your home.

    It may be more or less than you anticipated, but this figure does not mean that your home will be guaranteed to sell for that amount of money.

    4. Set an Asking Price


    Depending on whether you have had one estate agent to value your home or several, ultimately the final decision comes down to you. You may decide to market your property as “offers in excess of” or “offers over”, but this is just a guide and buyers may still offer you less than your asking price.

    5. Instruct an Estate Agent


    Once you have had your home valued and you are happy with the price that you would like to market your property at, it’s time to instruct an estate agent. The process known as “instructing” involves signing a contract that lays out the terms and conditions of the sale and the estate agent's responsibilities.

    6. Clean Up Clutter for Photographs


    A clean and tidy home looks far more attractive in photographs than ones that are filled with clutter. Here are our top tips:

    • Consider renting storage space for unwanted items
    • Declutter the master bedroom and make it a sanctuary
    • Ensure that any toiletries or cleaning supplies are put away in a bathroom or kitchen cupboard
    • Tidy up piles of letters that tend to accumulate. You won’t want to take these with you when you move, so if you’re thorough now, it’ll make your life easier later!

    We always recommend having professional photographs taken, prospective buyers aren’t going to be wowed if photographs of your home are bad quality or gloomy.

    7. Time for Viewings


    Once your home looks its best, it's time to arrange showings with prospective buyers. You'll need to schedule appointments with agents who represent the buyer (not just anyone who might be interested in looking at the property).

    You'll also need an open mind — some buyers may want to make major changes before they buy your home (which could increase your final sale price).

    8. Hire a Solicitor


    This is one of the most important things you need to do when selling your home. It’s not just about buying and selling the property; it’s also about other legalities involved in the process such as checking the title deeds, searching for any problems with the property and negotiating with the buyer's solicitor.

    A good solicitor can also advise you on how much to ask for your house, which area might be more favourable for buyers and whether or not there are any planning issues that could affect potential buyers.

    9. Time to Reassess if Property is not Selling


    If your property has been on the market for a while and hasn’t sold, it is time to look at why that might be. If you have had plenty of viewings, chat with your estate agent about what feedback prospective buyers were giving and why they decided not to make an offer.

    It may be that the property has been valued too high, and by dropping the price slightly then it might encourage more viewings. Or perhaps the photographs need to be changed to make the property seem more appealing.

    10. Receive Offers


    As soon as offers are made, you will be notified by your chosen estate agent. If you receive multiple offers, your estate agent will look into various buyer situations and advise if there are any factors to take into consideration when evaluating their offer.

    Usually, the safest buyers are:

    • First-time buyers - they are chain free but usually require a much larger mortgage from the bank to secure.
    • Chain-free cash buyers - this could be a buy-to-let investor or someone who has sold their house already and doesn’t need a mortgage.
    • Home-movers who have exchanged or sold their house SSTC - (Sold Subject to Contract)

    11. Renegotiate or Accept Offers


    Many times, buyers will offer under the asking price so this is the time when you’ll decide whether to accept the offer or renegotiate. Ask the advice of your estate agent who will be able to help you decide. Before accepting the offer, consider the following:

    • How fair is the offer? Is it close to the valuation or similar to other properties that have recently sold in the area?
    • How quickly do you need to sell the property?
    • Will you have enough from the sale to move to your next property?
    • How long has your property been on the market?
    • Do you have any other offers on the property?
    • How likely is the buyer to increase their offer?
    • What is the market like, are homes struggling to sell?

    It can feel like a daunting position to be in, not knowing whether you have made the right choice. Remember to be realistic but also to stick to your guns if you think the offer is too low and you are likely to get a higher amount from the sale.

    12. Househunting


    Great news! You have accepted an offer on your property, now it’s time to find a property to move to. You may have already had a look at some homes, but you are in the best position to make an offer if your home is SSTC (Sold Subject to Contact) and sellers will take your offer more seriously.

    Chat with your estate agent to see what homes are available in your desired area, or if any properties are due to come on the market soon.

    13. Help to Keep Things Moving


    Keep up with communication throughout the sale of your property to keep things moving quickly and on time. Feel free to get in touch if you have any questions or if you are worried that you haven’t heard anything for a few weeks.

    If you know you will be out of the country or unable to sign anything for certain time periods, communicate this to your estate agent, solicitor and conveyancer.

    14. Exchange and Complete


    Once you exchange contracts, the house sale becomes legally binding and it is time for the buyer to pay their deposit.

    On the day that you complete the transaction, you will be moving out of the property and dropping off the keys with the estate agent. Most homemovers complete the sale of their old property on the same day as their new property, and this saves having to put all of your belongings in storage.

    Ready to Sell your Home?


    We can help you sell your current home and find you your dream home, just give us a call on 028 9065 3333 or contact us via email. If you’re not ready to sell your home just yet, why not take a look at some of the homes we have for sale at the moment?
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  • Benefits of Using a Letting Agent to Manage your Buy-To-Let Property
    Posted on 7 November 2022

    Benefits of Using a Letting Agent to Manage your Buy-To-Let Property

    Letting agents provide a range of services and even fully manage a letting so that your geographical location isn’t a factor when it comes to owning a buy-to-let property.

    When it comes to managing your property, letting agents can take on marketing your property, finding suitable tenants, hosting viewings and  drawing up tenancy agreements. Once the tenant is in the property, depending on the level of property management you are looking for, the letting agent can collect rent, handle maintenance issues and conduct property inspections.

    Marketing the Property


    Letting agents know how to market your property properly, which means they can get it rented quickly and at a good price. They will ensure that the property listing is accurate and professional photographs are taken of the property.

    Letting agents have access to a large number of potential renters who they can screen and choose from, they know what makes a good renter and what doesn’t. They also know what type of property in which area will achieve in rent, so they will be able to price the property accordingly.

    Vetting and Referencing Procedures


    Using a letting agent means that you do not need to go through the labour-intensive process of finding a suitable tenant. Demand is high for rented properties and each property, but using a letting agent then it takes the time out of sifting through applications.

    Letting agents also have a huge amount of experience in finding tenants, so they’ll be able to spot reliable applicants for the property. It also saves you conducting credit and reference checks because this can all be done efficiently by the letting agent.

    Property Issues? Problem Sorted!


    Like owning any type of property, it is going to have issues from time to time. At some point, the property will need repairs, and it may require a visit from yourself, or arranging contractors to fix the problems on your behalf. If you don’t have a letting agent managing the property, then you will have to do this all yourself which can be difficult to manage. By using a letting agent to manage your property, they will deal with any issues and fix the problems so you don’t have to.

    Managing a property is a lot of work and it’s easy to get overwhelmed. Using a letting agent to help you out with the day-to-day tasks of looking after your properties means that it can free up your time for other ventures. You can relax knowing that your investment is in the safe hands of a professional who knows how to keep properties running smoothly.

    Rent Can Be Collected On Your Behalf


    If you are self-managing the property, you will also need to collect rent directly from tenants. This can be difficult if your tenant lives far away or does not have a stable job and it can cause a lot of frustration having to collect rent.

    If you instruct a letting agency to manage your property, they can liaise directly with the tenant to receive regular payments. If tenants fail to pay their rent, your letting agent can step in to find a solution or start eviction proceedings.

    Experts in Their Field


    A letting agent can manage the contracts and legalities of renting to tenants because being a landlord comes with a lot of regulations that can often change. Using a property agent means that they will ensure that the property is compliant with legislation prior to a tenant moving in and will update you with changes throughout the course of the tenancy.

    Deposits should be held by a deposit protection scheme, and John Minnis has an account with TDS Northern Ireland to protect your tenants deposit. A great letting agent will carry out a thorough inventory at the beginning of the tenancy and use photographic evidence as backup in case there are any disputes.

    Letting agents have plenty of experience managing end of tenancy disputes and keep up to date with what the protection schemes cover.

    Still Unsure?


    Take a look at the following questions:

    • Would you prefer someone else to deal with tenants queries and issues?
    • Are you unsure about relevant regulations and legislation?
    • Are you letting out a property in a different area to where you live?
    • Are you new to being a landlord and would like some professional help?

    If you answered yes to any of the above questions, it is worth talking to a letting agent about what options are available.

    Why not give us a call on 028 9065 3333 or email us for more information.
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  • Considering Selling Your Home? Check Out the 5 Things that Buyers are Looking for
    Posted on 2 November 2022

    Considering Selling Your Home? Check Out the 5 Things that Buyers are Looking for

    1. Proximity to Schools

    An image of a mother walking her daughter to school

    You cannot change the location of your home, but you could have a look into whether your home falls within the catchment area of popular schools. This can be a great selling point when showing buyers around your home if they have a young family, or may be planning to start one in the future.

    Competition for school places is fierce, so living in the catchment area will be a huge bonus to many people.

    2. Flexible Living Space

    An image of a woman working from home

    Research has shown that by 2025 nearly 40% of employees will work from home, so it is no surprise that many homebuyers are looking for a space where they can both work and live.

    The box room that is a little too small to fit a regular bed in could now be sold as the perfect space to house a home office. Over the last few years,  the way people work and live has changed so it makes sense that the features that people are looking for have too.

    3. Broadband Speed

    An image of an internet router
    It may come with no surprise that with streaming shows, working from home and having multiple people in the home that want access to the internet, broadband speed is a factor when it comes to searching for a property.

    Even if you don’t use the internet much yourself, it is a good idea to check out what the speeds are in your area and this can be used as a selling point, especially if you live in a more rural area.

    4. Outside Space

    An image of a woman planting flowers
    As house prices have grown over the past couple of years, homes with gardens have grown at a faster rate than those without. Recent studies show that people are willing to pay up to 5% more for one.

    Even if you have a small courtyard or a shared space, try to brighten the space up with potted plants and some seating to shine the best light on the space.

    5. Eco-Friendly Homes

    An image of someone searching an energy efficient home
    It’s no secret that energy prices have increased recently, so if your house is energy efficient then this will be a great selling point to prospective buyers. If you are thinking about ways to make your property more attractive to savvy buyers, great ways to do this is through double glazing, alternative energy sources and electric car charging points.

    Want More Tips?

    Speak to our friendly and knowledgeable team on 028 9065 3333 for more information, or why not take a look why not check out our advice on how to add value to your home?
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  • How to Invest in Rental Properties in 2022
    Posted on 31 October 2022

    How to Invest in Rental Properties in 2022

    What are the considerations for buying a buy-to-let property in 2022?


    1. Is There Enough Demand for the Area?

    This is an important consideration when looking at areas for buying a rental property. Speak to local letting agents in the area and find out how much demand they are getting for specific areas or types of properties. Local knowledge is invaluable if you are unfamiliar with the area yourself.

    Do some research yourself by checking property websites and seeing how long listings are staying live for before being snapped up. It is also worth considering the transport links, schools and how commutable it is to the nearest city. These are all things that can directly affect how desirable an area is to rent in and how much demand it generates.

    2. Financing the Property

    As a general rule of thumb, the typical maximum loan-to-value (LTV) for a buy-to-let mortgage is 75%, meaning that you will need a down payment of 25%. Lenders like to see that the rent will cover between 125% and 145% of the mortgage payment.

    Each lender has its own specific lending criteria, but typically lenders will need to meet the following:

    1. 1. Have a good credit rating
    2. 2. Prove that you can afford to maintain the property
    3. 3. Have an annual income of at least £25,000 - especially if you are a first-time buyer
    4. 4. Have a minimum of 25% deposit
    5. 5. Be an existing homeowner
    6. 6. Are able to pay off the buy-to-let mortgage by the age of 75

    If you do not meet all of these requirements, there may be specialist lenders that are willing to offer you a mortgage but it could incur higher charges than your standard lenders.

    3. New Stamp Duty Changes

    If you already own your own home and you are looking at buying an investment property, it will incur a 3% stamp duty surcharge.

    Here are the new rates for buying an additional property, as of September 2022:
    • Up to £250,000 - 3% of the purchase price
    • £250,001 to £925,000 - 8% of the purchase price
    • £925,001 to £1,500,000 - 13% of the purchase price
    • £1,500,001 and over - 15% of the purchase price
    If you are a non-UK resident or company purchasing property in England or Northern Ireland, from April 2021 an additional 2% stamp duty surcharge will apply on top of existing stamp duty rates.

    For more information on stamp duty rates, read our helpful guide here.

    4. Consider All of the Costs Involved

    Once you have bought the property, you may have to spend some money and time on getting the property ready to be tenanted. Depending on the condition of the property, it is important to factor in these costs, as it may affect the rental yield you are able to achieve.

    If you are investing in a property that has low demand for the area, you may have to spend more money to make the property more attractive to prospective tenants so it stands out from the rest.

    It is also important to consider the type of tenant that you will have renting the property. If you are wanting to attract families or young professionals who are likely to rent the property for a longer period of time, you may want to invest in nicer fixtures for the property than if you were renting to students.

    5. Choose the Right Area

    Traditionally, many landlords would buy rental properties close to where they reside, even if the yield was not as high. This is outdated, as technology has evolved, it makes it easier than ever to invest in property in the best areas, wherever they happen to be.

    Take some time to research the hotspots where you can get the best return on the investment. By choosing a letting agent that can fully manage your buy-to-let properties, you can search for properties that will achieve the highest yield rate.

    Need More Information?

    Speak to our friendly and experienced team on 028 9065 3333 for more information on investing in buy-to-let properties and our comprehensive property management service.
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