A. Absolutely, yes! In fact, after a bit of a slowdown in the immediate aftermath of the credit crunch, the buy-to-let sector is booming once again.
Why? Well, the main reason is that with the continuing national shortage of housing stock, demand for rental property has soared. Research shows that with the size of deposit required by lenders forcing many young people to postpone buying their own home, the majority of newly-formed households are now more likely to be in the private rental sector.
This massive surge in demand, which shows no sign whatsoever of tailing off in the foreseeable future, has in turn driven up rental values right across the country. And this against a background of lacklustre performance by most of the more traditional investment alternatives – a factor highlighted by the turmoil in world stock markets over the last couple of years. In 2011, for example, the yields from buy-to-let property (i.e. rental income as a proportion of the purchase price) averaged 5.4% - the best since 2003. In contrast, the FTSE All-Share Index yields 3.8%, UK Government pay 2% and the Bank rate is just 0.5%!
As a result of all this, lenders have been returning to the market in a big way. A recent article in the national press reported that the average interest rate on a buy-to-let loan dropped from 5.31% to 4.79% over the last two years. During the same period, the number of deals available doubled. The typical deposit required has also fallen back from 35%-plus to 25%. There are even some deals that only ask for 20%.
At the same time, however, lenders have clearly learned some lessons. So, for instance, whereas in the bad old days you could easily secure a B2L mortgage solely on the basis of the expected rental income, lenders now typically require you to be able to prove that you have an additional source of income of at least £25,000 a year. Which, when you think about it, is no bad thing.
Finally, add in the fact that prices are currently the lowest they’ve been for years, and this is arguably the best time ever to invest in property!
Monday, 27 February 2012
Friday, 17 February 2012
Q. I’m thinking about selling. Given the state of the market, is it worth running an Open House?
A. Open Houses can be a valuable addition to your armoury, whatever the state of the property market – but probably even more so at the moment, when sellers and their agents are having to work that much harder to generate buyer interest.
And generating buyer interest is what Open Houses are very good at. Unlike the more traditional viewing procedure, where potential buyers first have to register with the agent and then book an appointment to view, they give house-hunters the opportunity to take a really good, long look at a property, both inside and out, without having either the owner or the agent constantly at their elbow. In other words, it’s a bit like visiting a stately home and taking your own time over it, rather than having to take a guided tour!
In addition, research in the USA, where Open Houses have been used for years, shows that when more than one group of buyers look at a property simultaneously, it can help to create a sense of competition – so prices achieved are often actually higher than they might otherwise have been.
Of course, the idea of throwing your home open on a particular day between set times, so that it can be viewed by a whole bunch of complete strangers, can sound a bit scary. But it needn’t be, because a good agent will help you with all the arrangements.
Those arrangements can vary according to your own preferences – so the first thing is to agree a plan of action with your agent. You may, for example, prefer to have the whole thing handled relatively discreetly. Or, you might decide to go for broke, put an “Open House” sign in the window, and hang balloons and bunting all round your front garden, so that no-one is left in any doubt about what is going on! Either way, your agent will ensure that details of the event – which for obvious reasons will normally be scheduled for a weekend - are widely advertised in advance.
Meanwhile, all you need to do is make sure your home is looking its best, and that any items of value are safely locked away. Then, it’s just a mater of waiting to see who turns up on the day, making a note of their names and contact details, and leaving them to look round at their leisure.
Of course, as with anything else, there are no cast-iron guarantees that an Open House will deliver the goods. But particularly in the current market, that extra string to your bow could just make all the difference!
And generating buyer interest is what Open Houses are very good at. Unlike the more traditional viewing procedure, where potential buyers first have to register with the agent and then book an appointment to view, they give house-hunters the opportunity to take a really good, long look at a property, both inside and out, without having either the owner or the agent constantly at their elbow. In other words, it’s a bit like visiting a stately home and taking your own time over it, rather than having to take a guided tour!
In addition, research in the USA, where Open Houses have been used for years, shows that when more than one group of buyers look at a property simultaneously, it can help to create a sense of competition – so prices achieved are often actually higher than they might otherwise have been.
Of course, the idea of throwing your home open on a particular day between set times, so that it can be viewed by a whole bunch of complete strangers, can sound a bit scary. But it needn’t be, because a good agent will help you with all the arrangements.
Those arrangements can vary according to your own preferences – so the first thing is to agree a plan of action with your agent. You may, for example, prefer to have the whole thing handled relatively discreetly. Or, you might decide to go for broke, put an “Open House” sign in the window, and hang balloons and bunting all round your front garden, so that no-one is left in any doubt about what is going on! Either way, your agent will ensure that details of the event – which for obvious reasons will normally be scheduled for a weekend - are widely advertised in advance.
Meanwhile, all you need to do is make sure your home is looking its best, and that any items of value are safely locked away. Then, it’s just a mater of waiting to see who turns up on the day, making a note of their names and contact details, and leaving them to look round at their leisure.
Of course, as with anything else, there are no cast-iron guarantees that an Open House will deliver the goods. But particularly in the current market, that extra string to your bow could just make all the difference!
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