Glentree Blog

Investing in buy-to-let properties – 10 Things to consider

Posted on September 2, 2024 by Mikhail

Investing in buy-to-let properties can be profitable, as they offer the potential for capital gain and a consistent income stream. It’s essential to carefully consider and plan when navigating the complexities of the market.

Before entering into the property market, you should clarify your objectives. Are you seeking rental income, capital appreciation, or a mix of both? Understanding your financial goals will shape your investment strategy and help you identify the right property.

What should be considered before choosing a buy-to-let property?

Here are some top tips to guide you through the process of effectively purchasing a buy-to-let property.

1. Check what investing entails
Research tenant rights, legal obligations, and financial considerations thoroughly before proceeding. A conveyancing solicitor or licensed conveyancer can guide you through the legal complexities of the purchasing process and ensure compliance with all regulations. Tax consultants can advise on tax implications.

2. Understand cost implications
Evaluate if you can afford it. Maintenance will always be in your purview, and rental income may not always be consistent. If you have a mortgage, be mindful of potential fluctuations in interest rates or the end of fixed-term deals, which could increase your monthly payments.

3. Consider investment “yield”
Account for additional expenses such as advertising for tenants or fees for property management if you opt for an estate agent’s services, and initial costs like stamp duty. Just like any investment, property values and rental incomes can fluctuate.

4. Understand the property
Determine exact ownership and investigate any past or current property issues. Clarify what is included in the sale, like fittings and contents. Ensure the property can be rented out and understand tenancy details in case it’s occupied. Check all legal aspects.

5. Know the market and potential tenants
Define your ideal tenant profile and cater to their needs, such as proximity to schools and universities, excellent transport links for professionals, etc.

6. Best pricing
Be aware of varying market conditions and negotiate accordingly. Sellers eager to expedite the process may consider lower offers.

7. Factor mortgage payments
When determining your rental rate, consider your mortgage obligations. Lenders often stipulate that your rent should be 125–150% of your monthly mortgage payment. Additionally, they may require a 25% deposit when purchasing the property.

8. Choose the right insurance
Opt for specialized building and possibly contents insurance tailored to your property’s needs. Please resist the temptation to opt for cheaper residential insurance, as it may not cover losses in case of incidents like tenant-caused fires. Ensure you have dedicated landlord insurance, specifically crafted for Buy to Let properties, to safeguard your investment comprehensively. Consider adding rental income protection to your insurance plan, which can cover mortgage payments in case tenants default on payments.

9. Ensure right legalities
Never skip using a legally valid written tenancy agreement. Failing to provide necessary notices and secure a signed contract before the tenant moves in could inadvertently grant them unexpected rights.

10. Consider stamp duty
When evaluating a property, calculate the Stamp Duty and include it in the total cost. Understanding the total financial commitment upfront is essential to generating rental income from a buy-to-let property.

Making an offer on a property – 5 things to keep in mind

Posted on August 1, 2024 by Mikhail

Navigating the process of making an offer on a property can be a pivotal moment for any homebuyer. It’s a juncture where financial considerations, market knowledge, and negotiation skills converge to shape your future homeownership. Whether you’re eyeing a cosy apartment in the city or a sprawling countryside estate, understanding the nuances of making a compelling offer is essential to securing your dream home.

Making an offer

Making an offer on a property isn’t just about stating a price; it’s a strategic move that requires careful planning and consideration. The initial step involves assessing the market value of the property, which entails researching recent sales prices of similar properties in the area and considering any unique features or drawbacks the property in question may have. This information forms the foundation for crafting a competitive yet realistic offer.

Here are five things to keep in mind:

How long has the property been listed?

In a newly listed property scenario, sellers may not yet be receptive to offers, especially in today’s competitive buyers’ market where larger discounts are becoming more prevalent. Conversely, if a home has lingered on the market for several months, sellers are likely more open to negotiation.

A price reduction indicates that sellers have adjusted their expectations. This adjustment may prompt you to consider offering the revised asking price, seeing it as a fair reflection of current market conditions. However, if the price remains unchanged, there may be an opportunity to submit an offer below the asking price.

Has it been brought back to the market?

There are numerous factors that can cause a property sale to collapse – complications within the buying or selling chain, financial challenges such as failed mortgage approvals, or adjustments to personal budgets. Life events like job transitions, relationship shifts, or health concerns can also derail a sale.

Identifying a property that has returned to the market offers a distinct advantage: it signals that the seller is committed to moving forward.

What is the level of interest in the property?

Sellers are more likely to hold out for the full asking price if they’ve had lots of online hits and in-person viewings. But if they haven’t received much interest, they might be willing to accept a slightly lower offer.

How much was paid by the current owner?

Examining what the current owners originally paid for their property can provide valuable insights into their potential willingness to negotiate, ensuring a fair price for both parties involved. If the owners have resided there for an extended period, such as over a decade, they may have realised substantial returns on their investment and may potentially consider more flexible offers.

What are the market prices?

In regions experiencing high demand and escalating prices, securing acceptance for your offer can prove challenging.

Conversely, in areas where demand has waned, competition among buyers diminishes. Consequently, sellers may find themselves more inclined to entertain lower offers to facilitate a sale.

Crafting the right offer involves more than just the monetary aspect. It’s about understanding the motivations of both parties and tailoring your proposal accordingly. The offer should not only reflect the current market conditions and the property’s value but also align with your own budget and long-term financial goals.

Turning gold into base metal is no accolade Mr. Sunak

Posted on July 18, 2024 by Trevor Abrahmsohn

Dear, oh dear, oh dear! We all tried to give the former Prime Minister, Rishi Sunak, the benefit of the doubt and now the jury is back, any lingering doubts that the man was politically incompetent, have been reassuringly, eliminated.

It’s like lending someone your very valuable, classic car, in pristine condition and despite the assurances that the driver is highly experienced, he smashes the car into a wall and brings it back in twelve shopping bags and says sorry.

No one forgot that he was ‘et tu brute’ when he ‘knifed’ Boris and failing to beat Liz Truss after the hustings should have given us a signal that his diminutive figure was so, in many other respects.

Foinavon moment

Here was a perfectly decent provincial accountant who through a ‘Foinavon moment’ (Foinavon being the unlikely 100/1 winner of the Grand National in1967 when most of the other front runners fell) was catapulted by circumstance, to the ‘top job’ in British politics and evidently, he just couldn’t hack it!

He surrounded himself with a cabal of young ‘wet behind the ears’ inexperienced advisors such as Liam Booth-Smith, James Forsyth and Craig Williams, the latter of whom, injudiciously, couldn’t resist a flutter on the surprise Election date, in-order-to make a few bent coppers. How foolish was he.

Clearly, the plain vanilla combination of Sunak and Hunt, with their ‘steady as she goes’ political direction, was far too pedestrian and timid, to excite the electorate.

The Tory Party were behind Labour by six percent when the former Prime Minister Truss was booted out and Sunak turned that into a persistent twenty percent gap, which never narrowed during the pre-election period, which is unprecedented.

Pork chop at a Bar Mitzvah

Even the poisoned, ‘political pigmy’, Jeremy Corbyn, managed to gain nine percent on Theresa May before the 2017 Election, and this was despite him effectively being a ‘pork chop at a Bar Mitzvah’ to the bulk of the electorate.

We should have taken more note of the signs at the 2023 Tory Party conference, where Sunak’s flagship policies were anti-smoking and a new school’s curricula. His empty rhetoric of being the ‘candidate for change’ went down like a ‘Lead balloon’. Maybe somebody needed to remind him that after thirteen years in power, the last thing that you can represent is being a ‘paragon of new thinking’.

Pull up the drawbridge on inward investment

His ineptitude in dealing with the major issues facing this country was staggering i.e., reducing the housing quota, failing to deal with Nimbyism, weak to worthless immigration policy, not properly implemented, and he always struggled with the treatment delays of the NHS.

His tax hikes on Corporation Tax, Non-Dom reforms, no VAT reclaim, effectively served to pull up the drawbridge on inward investment. He was timid when he should have been bold and as for the decision to call an early Election, was foolish beyond belief.

What’s the point in moving from fixed election periods to then studiously lose out on good news on inflation, UK growth and the chance to have a ‘last hoorah’ with an autumn Budget which could have thrown a few sweeties to the Tory faithful.

A later Election would have distracted Mr. Farage and the Reform Party, whilst he helped his pal President Trump with the November Election in the USA.

Reducing Labour landslide

Whilst he was never going to win the UK Election, he could have had a chance to reduce the Labour landslide from two terms to one.

He ignored the wise counsel of Isaac Levido and irritated a hundred and fifty so of his MPs who were not in place for the early Election date.

The Tory coffers were threadbare, and the only donations were from supporter’s hopeful of gaining a ‘gong’.

And, as for his absence at the D-Day photo-call, words fail us, it was such an obvious own goal and greatly irritated the ‘grey votes’ which his party needed so badly.

Despite the unaffordable cost of lowering National Insurance Tax, he was still banging on about it when no one really cared, and would have preferred the money to be re-directed to the NHS and education.

The Tory MPs did not cover themselves in glory, but most would agree that had Boris taken proper ownership of ‘Party gate’ and continued as Prime Minister, there would have been a hung parliament and not a drubbing at the Election, since he is ‘catnip’ to the red wall voters.

Worst Tory result in over one hundred years

Sunak presided over the worst Tory result in over one hundred years and needlessly lost two thirds of his MPs. At least Moses found a ford across the Nile to lead the Israelites to safety.

Eddy the Eagle

We were hoping that Sunak would be the Montgomery of British generals but instead he was Eddy the Eagle and displaced former Tory MPs are baying for his blood.

Kemi Badenoch was absolutely right to give the former PM a dressing down at the first shadow party’s cabinet meeting, but then again, it is the price you pay for ruining people’s lives and for discovering, when it’s too late, that you are not up to the job.

Badenoch has the stamina to hold the rump of the Party

Mr. Sunak you can rightly hang your head in shame and although it is a long, winding road for the Tory’s to recover their momentum, I hope that someone like Badenoch has the stamina to hold the rump of the Party together over one or two electoral terms.

The only hope for the Tory’s is that Starmer’s success is broad, but thin, and it wouldn’t take much of a seismic shift to redress the balance in favour of the Tory’s.

All we can hope for is that Tony Blair continues to mentor Mr. Starmer and avoid the pressure from Angela Raynor and her cohorts, to lurch to the left.