House prices set to rise again next year
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With interest rates still at historic lows, many people have been re-mortgaging their properties or seeking to move home in order to lock themselves into the low interest rates before they start to rise. But the small number of houses being offered for sale has caused an overall slowdown in the housing market in recent months – and this supply imbalance is widely cited as a key reason that house prices are surging.
Further evidence of the general upward trend comes from the Hometrack index of 20 UK cities, which says house price inflation is running at 9.4% annually and set to grow another 10% next year.
While the Hometrack index confirms that London, Oxford and Cambridge are still out in front, national growth is also being driven by cities outside southern England that have recovered more slowly from the post-crisis slump. The forecast says that Glasgow, Manchester and Liverpool are currently recording their highest rates of annual house price growth since 2007 at 8.3%, 7% and 5.1% respectively. Being an Estate Agent with offices in both City Centre Manchester and Sale, South Manchester, this is something we have been experiencing first hand.
The difficulties facing younger buyers looking to get onto the property ladder is still a serious concern. Other mortgage data suggests that mortgages for private landlords are growing at more than four times the pace of first-time buyer mortgages. The House of Commons has published separate statistics, which found that a first-time buyer needs an average deposit of £47,000 and an income of £55,000 to afford one of the government's new starter homes across the country – a financial position that effectively locks most young people out of the housing market.
In another housing report that looked at the rental market, it said rents in October had dipped to stand at an average of £806 per month across England and Wales. That is down from the all-time high of £816, which was seen in September, but despite the monthly fall annual rent inflation is now 4.7%.
New property in Sale Moor. Ideal for first time buyers or investors.
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Our Sale Moor office has just put on the market the property pictured below, which would be ideal for either a first time buyer or someone looking for a rental or investment property and it is available with NO onward chain! The property has two bedrooms, lounge, breakfast kitchen, conservatory and bathroom.
This is a mid-terrace property located on Sycamore Street just off Northenden Road and within a very short walk of the Village centre, where there are variety of local shops and businesses. The location also means that you are within easy reach of Sale Town centre, Schools and good public transport links with Sale Water Park tram stop not far away as well as bus routes.
Changes to Section 21
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There are are a number of changes, that have been made as a consequence of the Deregulation Act, to both the legislation and the guidance that is put together for the Section 21 Notice.
Together, the new Regulations and guidance highlight just how prescribed new and renewed tenancies will have to be, with careful paper trails laid from October 1 onwards – and everything signed for.
Along with tenancy deposit information that is provided to a tenant upon commencement of a new tenancy, agents or landlords will need to prove that they have given EPCs, gas safety certificates and the government booklet, ‘How to rent’, to tenants.
The booklet is going to be available for download from the gov.uk website. It will have to be printed off for each tenancy. If agents or landlords are unable to prove that all this paperwork has been supplied to the tenants, they will not be able to use the no-fault Section 21 procedure.
Another change that has been brought about, is one that is designed to stop so called 'retaliatory eviction'. This is where a landlord serves a Section 21 Notice to the tenant because they have raised issues or complaints with the property.
The new legislation means that both landlords and agents will have to provide an “adequate” response to repair requests within 14 days. Failure could mean that the Section 21 process cannot be used.
For the response to be adequate, it will have to be given in writing and not on the phone. The response will have to state what works will be carried out, and give a reasonable time frame for their completion. With that said nowhere in the new legislation does it say what a reasonable time frame will be. It would seem that certain factors would include the vulnerability of tenants and the nature of the complaint. However, all complaints, no matter how trivial they seem, would have to be dealt with to the letter of the law.
If a response is not deemed “adequate”, the local authority may serve an improvement or emergency remedial notice, meaning that the Section 21 procedure cannot be used for six months.
Those are just a couple of the changes and as you can see there is some confusion regarding the changes because of the lack of precise information. There is also a problem with one other part of the legislation which relates to regaining possession of the property.
Currently the standard form notes that where a fixed term tenancy ends and then turns into a rolling or periodic tenancy, the section 21 notice would only be valid for four months from the date that it is served.
That would directly contradict the Deregulation Act, which clearly states that the required period to regain possession of a property where a tenancy is a rolling or periodic tenancy, should instead be four months from the date the section 21 notice expires.
With the October 1st date fast approaching we have put the links for the legislation and guidelines below to try and help.
Legislation is here
Guidelines are here
Is Manchester the next property boom City in the UK?
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London is without doubt the centre of the UK's property market. Both sale and rental prices are well above the national average and demand for homes in the capital is stronger than ever.
However, a list has recently been put together of the top ten locations that are likely to undergo a property boom over the next ten years and Manchester came in first. It was placed so highly due to its average residential property cost of £155,000, with flats in or around the city centre costing as little as £120,000. With the BBC Media City, ITV studios, The Co-Operatives NOMA regeneration area, the development of Airport City at Manchester Airport, a huge expansion to the MetroLink tram system and the hip Northern Quarter providing enticing draws to the northern metropolis, it is easy to see why Manchester’s property market is heading in the direction of being a potential rival for the capital.
Furthermore, there have been many new property developments in Manchester over the past five years, concentrating on newer areas of the city including the Green Village, New Islington and Castlefield.
One property expert has said 'It’s not surprising that many investors, especially from the South, are targeting Manchester as a great place to invest. A property in Manchester can provide a 5% minimum cash rental yield and a typical 12% total cash yield, including 7% capital appreciation. Demand for rental accommodation is strong and by comparison with other regions, housing is cheaper.’
According to home.co.uk, the average rent in Manchester currently stands at £804 per month, compared to £2,354 in London. With the cost of living in London continuing to rise and the government's plans for Manchester to be at the centre of the economic 'northern powerhouse', not to mention connecting it to the capital via High Speed Rail 2, Manchester looks set to become an increasingly desirable location for property investors, homebuyers and renters alike.
Top Tips for Buy-To-Let
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Buy-To-Let has proved for many to be the investment of choice in recent times, while the interest rates on savings are so low and the stock market is still volatile. This is because more tenants in the market, rising rents and improving mortgage deals have tempted investors, along with the fact that the property market is showing signs of improving house prices. This gives investors the hope their investment will rise along with the prices.
However there are things to be mindful of if you are looking at Buy-To-Let as an option. This is why we have set out below some useful tips for those that are considering this or for those who are just keen to know more.
1) Do your research
It may seem a bit of an obvious thing to say but it is a fundamental starting point and therefore a top tip worth mentioning.
What do you actually know about the market? Do you know the risks involved? Is buy-to-let right for you? These are the kinds of questions you need to ask and then look in to before making the decision to go ahead and buy a property for investment.
Property investing has paid off handsomely for many people, both in terms of income and capital gains but it is essential that you go into it with your eyes wide open, acknowledging the potential advantages and disadvantages.
2) Work out the figures
Once you have decided that buy-to-let is the right option for you your next top tip is to look at the figures involved.
This includes everything from what deposit you can put down, what you can lend, what the interest rates will be, what potential rental yields will be, possible renovation/ maintenance costs, fees involved in purchasing and fees for letting the property.
Obviously not all of these cost are something you can calculate before you buy a property but the ones that can be should be something you start to work out straight away.
Before you think about looking around properties sit down with a pen and paper and write down the cost of houses you are looking at and the rent you are likely to get. For example, a property delivering £10,000 worth of rent that costs £200,000 has a 5% yield.
When looking for a buy-to-let mortgage and the best rates, it pays to speak to an independent broker. They should not only be able to advise you on the best deals available but which one is right for you i.e. whether to go for a fixed rate or a tracker.
Once you have the mortgage rate and likely rent established then you can be clear in deciding whether your investment will work for you.
3) Buy what will rent
This may seem a bit obvious again but what we mean is don't necessarily buy something you would want, put yourself in your potential tenants shoes.
If they are young professionals then it will probably need to be modern and stylish.
If it's a family then they will possibly need good storage and outside space. You may need to consider taking pets.
What you really need to do is work out who you think your target tenants will be and look at any potential properties as if you were them. You will of course still need to look at it from your own investment point of view as you may need or want to sell the property on in the future.
Things to always look for are; good transport links in the area you are looking in, schools, good local amenities, shops and leisure facilities. Areas such as Sale, Sale Moor and the close surrounding areas all have access to these, as do places like Salford Quays and Castfield. These are also areas where you can find you get more for your money than some of the areas nearby. To see what properties we have available click here
4) Make your money work harder
When looking for properties make sure you research what types are selling for what kind of price. Below is a good example of why this is an important top tip.
Just because a property may look nice and may be in a nice area does not always mean it is going to be a good investment as you will possibly find you pay more for not that much more rental income. For example, in one area you might get a 2 bed apartment for £250,000 and has rental income of £850. If you look a bit further out you could get a 2 bed house for £125,000 that has a rental of £650. This means you halve your purchase price but your yield only drops 24% and you could even potentially buy two properties that give you a return of £1,300 instead of £850.
Similarly the cheapest property is not always the best option either as you may find you have to pay for it later in renovation and maintenance costs.
5) Decide how involved you want to be
Once you have 1-4 of our top tips sorted you then need to decide on the level of service you would want from an agent. The most common services are either let only or managed.
With let only the agent will do all the marketing and advertising of the property including showing potential tenants round. The will then reference a tenant for you and process an application for the property, which will include identity checks and credit referencing. They will then produce a tenancy agreement for the tenant to sign and the agent will sign on your behalf. Once this has been signed the agent will collect the deposit and first months rent from the tenant and make any necessary payments to you.
A managed service covers everything a let only one does but then once the tenant moves in to the property the agent is the point of contact for them, so should there be any problems or issues they contact them instead of ringing you. This then means that you don't have to worry about having to give up evenings and weekends in order to run round sorting out repairs etc. The agent will of course make you aware of any issues and keep you up dated as you may have to authorise certain repair work.
Included within the managed service are routine inspections/ visits to make sure the tenant is complying with the tenancy agreement and is looking after the property. This also helps to identify any possible issues early on so that they can be dealt with effectively before they become worse or potentially costly. Most will also include an inventory, which will document the condition of each room, any items in those rooms and will be accompanied by photographs.
Not all agents offer the same under each service though and look out for hidden costs in small print or add-on charges. At Stevenson Whyte there are no hidden or add-on fees, everything is set out clearly and transparently. To have a look at our services click here