Should you source properties?

It has become apparent in the current property market that more and more people are getting into the business by sourcing investment opportunities. We wanted to have a look at the pros and cons of getting involved in this business and give a fair reflection as to whether you should be getting involved in this market.

How the property market dictates the value of your house

“How much is my property worth?” Is one of the most common questions that we hear at Choices Investments and you think that it would be easy to answer but with various changes that have happened in property over the last few years it is becoming more and more difficult to value a property.

The Leasehold Scandal

With continued media interest in the unfair leasehold practices of some freeholders and ever-increasing queries from clients surrounding this point, Choices Investments wanted to address this again.

BMV, Repossession, Auction & Investment Property List

Choices Investments has compiled a list of below market value (BMV), auction, commercial & investment opportunities which may be of interest to you.

Choices Investments is also about to launch some new and exciting opportunities. To register your interest in a particular property, please click the relevant Enquire Now button or call us on 01342 840050 and you can speak to an advisor.

INVESTMENT OF THE WEEK!

Stockton-on-Tees: Investment Apartments

Riverside one bedroom apartments with stamp duty paid and white goods included offering 8.7% rental yield.

£55,000

South Shields: Investment Apartments

Two bed BMV apartments in top 10 investment hotpot with excellent rental yield in area of regeneration

£79,995

London E14: Investment Apartments

Tenanted four bed apartment with 5.9% rental yield situated close to Canary Wharf.

£495,000

London E14: Investment Apartments

Tenanted 3 bed apartment with 6.8% yield in the heart of Canary Wharf

£375,000

Somerset: Commercial Investment

Blue chip tenanted freehold commercial premises until 2034 with tenanted two bed apartment above.

£420,000

Greater Manchester: Investment Apartments

Two bed BMV apartments offering fantastic rental returns and capital growth prospects.

£119,950

Sunderland: Investment Apartments

One & Two bedroom apartments with 10% NET guaranteed yield for 3 years situated in the city centre close to the University.

£79,950

South Yorkshire: Investment Apartments

Tenanted 2 bed BMV apartments with discounts to RICS valuation and long term private tenants

£69,000

North Yorkshire: Investment Apartments

One bed tenanted apartments with long term tenants in place and up to 10% rental yield.

£39,999

Brighton: Investment Apartment

Tenanted 1 bedroom apartment situated next to Brighton Station with long term tenant in situ.

£299,950+

Sheffield: Investment Apartment

Two bedroom tenanted apartment in the middle of the city with excellent rental returns.

£90,000

Liverpool: Investment Apartment

Two bed tenanted apartment with long term tenant in place and priced well below 2013 original purchase price.

£62,000

Liverpool: Investment Apartment

Two bed tenanted apartment with long term tenant in place and priced well below 2013 original purchase price.

£414,950

Scotland: Commercial Investment

Award winning hotel with 25 year leaseback at £120,000pa

£1,500,000

Invest or don’t invest? (We really think you should)

We are currently in strange times as buy to let investors. On the one hand we have endless headlines about increasing number of buy to let mortgages at record low interest rates, then on the other hand we see that lending criteria is becoming stricter and stricter for landlords, especially first time investors.

The other big change we have seen is the tapered removal of tax relief on buy to let mortgages for investors who buy in their own name. This change was predicted to drive many investors from the market yet conversely it has seen a huge increase in people purchasing through limited companies and a large growth in mortgage availability for that specific purpose.

So what is going on? Lots of low interest mortgage products are available but are difficult for individuals to qualify for. Disincentives to invest in property as an individual but lots of advantages if you buy as a company.

In our opinion there appears to be a very obvious drive to force individuals out of the market place in favour of larger corporate entities and limited companies. The reason for this is probably that it is far easier for governments to regulate and tax larger corporate bodies plus, they believe, that the corporate landlord will be a “better” landlord by having access to larger resources when dealing with property maintenance and corporate governance requirements. This long term trend will result in massive corporate landlords managed by large corporate agencies. In essence a form of property feudalism with an asset owner class and renter class paying them.

The good news is that it is not there yet! If you have the chance to purchase property then long term you will see fantastic returns. Whether you can qualify for mortgaging, or buy cash and then re-mortgage (which has more flexible terms as a rule), then you can get the assets you need now to earn long term income for the future. With everyone living longer, income will be the necessity for people to live comfortable in retirement. You pay your bills from income and property still provides the best chance to achieve a stable sustainable retirement for the majority of people.

Choices Investments currently has numerous opportunities that yield anywhere up to 11.4%. We have some opportunities which yields 10% net yield for three years. These deals, if purchased with a mortgage, give an annual return on investment of up to 20%. Given interest rates on an average current account are under 0.5% per year it seams a “no brainer” decision to make your money work for you.

If you are interested in how we can help you achieve financial freedom, whether as an individual or with a company structure, please contact us on 01342 840050.

It’s time for a change with freehold sales

Following increasing scrutiny on unfair ground rent multipliers and one large developer saying that they now only want cash buyers for their properties, is this the beginning of the end for freehold sales?

For many years, property developers have been setting ground rents that double after a given period, often every 5 or 10 years, in order to achieve a high sales price for the freehold. This obviously boosts the profits from each site but for an owner of a flat it soon becomes uneconomical to own the property.

The Mortgage Works, a leading mortgage lender, has announced the following criteria for all new build properties:

  • Minimum acceptable lease term on new build properties (including office conversions) is 125 years for flats and 250 years for houses.
  • Maximum starting ground rent on all new build properties with a leasehold tenure is limited to 0.1% of the property value.
  • Ground rent must be reasonable at all times during the lease term. For example, ground rent escalation should be linked to RPI (Retail Price Index) or a similar index, and unreasonable multipliers of ground rent will not be permitted, for example doubling every 5, 10 or 15 years.

If further lenders decide to take up this policy then it really does spell the end for the unfair multipliers seen in recent years. If developers want to make the same profits that they have been achieving then it is likely that they will have to up the prices of their properties.

The short term view of some developers to just avoid mortgage buyers will not last if they want to sell their properties. If the properties were just trophy assets in central London you may be able to get a sufficient level of interest to make this work. However outside of London and well know university towns this strategy is going to hold up sales.

The moral here is that developers need to work with buyers and not swim against the tide.