Essentially, all first time buyers will now be exempt from paying stamp duty fees on property investments valued above £250,000 – which is fantastic news for anyone who has previously struggled to climb onto the property ladder.

However what concerns me most about this new stamp duty holiday is the government’s definition of a first time buyer, and similarly, how they are going to ensure that only first time buyers take advantage.

Currently you are exempt from taking advantage of this tax relief if:

• You have inherited a property – even if you don’t buy this property, should you wish to invest in property at a later date you won’t be classed as a first time buyer
• You are a young buy to let investor – can only take advantage if the property is your first and only main home
• You are a divorcee -  even if you are investing independently for the first time you will be disqualified from this relief
• You own a static caravan -  by law you legally own the land beneath your temporary holiday home and are therefore exempt

Yet, despite these clear distinctions from the government on whom they class to be a ‘first time buyer’, there are in fact few methods available to help regulate this scheme.

Take this for instance…

Say you invest in a property. It is your solicitor’s responsibility to tick the box which defines whether or not you are a first time buyer. MEANING they could easily help you to bypass this rule and harness this tax relief.

Next, take in the fact that previous property owners can no longer be held on the land registry. For the government to be able to check and identify whether or not you have previously owned a property, they will have to do a lot of delving, which means a lot of research and a lot of hard work!

With such easy loopholes, it does make you wonder why the government doesn’t just open up this stamp duty holiday to all property owners. It would definitely save them a lot of hassle whilst benefiting the property market as a whole. Hopefully they will see sense.

Wendy xx

Each of these 3 lenders have FINALLY reduced their deposit sizes/interest rates which is fantastic news for property investors like you and me as it will give us more cash to invest elsewhere!

Here the best ones that I have found to date – there are even a few 90% LTV’s in there:

London & Country:

• 3 year fixed rate 80% LTV Loan of 6.49% -  there is a £995 arrangement fee though so be careful to add this to your calculations

Nottingham Building Society

• 3 year fixed rate 70%  LTV loan of 5.59% – this is 0.3% cheaper a month than it used to be despite having a 70% LTV

NatWest

• 2 year tracker 70% LTV loan of 4.99%
• 2 year fixed rate 70% LTV loan now available for only 3.55%
• 2 year fixed rate 70% LTV loan now available for 3.65%
• 2 year fixed rate 90% LTV loan now available for 5.69%
• 3 year fixed rate 70% LTV loan now available for 5.89%

NOTE: all of NatWest’s tracker deals have an arrangement fee of £1,999, whilst their fixed rate deals have traditionally got an arrangement fee of £999.

Hopefully these drops in deposit sizes will prompt other mortgage lenders to act more competitively, so there is more choice in terms of mortgages. We will have to wait and see…

Wendy xx

P.S. If you spot any better buy to let deals out there please let me know and post them here. Thanks x

However, I did spot an article today which has given me some hope that the Budget Report tomorrow will present better opportunities for investors.

In this article, the National Landlords Association had essentially asked the government to recognise the importance of the private rental sector; its influence upon the economy and the need to re-evaluate current housing taxes.

And I have to confess that should they occur, it would make for a better market place…

The key 5 they addressed were capital gains tax, VAT, council tax, stamp duty land tax and the ‘Rent-a-Room’ Scheme – all of which play a fundamental role in our investment decisions.

Now if you haven’t already heard about this, here is a quick summary of what the NLA want to come from the 2010 budget report tomorrow:

Capital Gains Tax: At the moment property investors like you and me are excluded from ‘roll-over’ relief which enables us to release capital gains. However, the NLA are proposing that the government remove this rule so we can utilise this roll-over relief to renovate and modernise our property investments.

What does this mean for property investors? You will have more cash to maximise your property lets rental returns and accessibility to tenants.

VAT: The NLA want to reduce the rates for property renovations/home improvements down to the lowest levels possible of just 5%.

What does this mean for property investors? Yes I have to admit that there are currently plenty of provisions available to help property investors bring their property lets to a higher standard, but by lowering rates to just 5% this will present a much more attractive prospect for property investors who haven’t got the cash to renovate.

Council Tax: Now you’re probably already aware that local authorities differ in the amount of council tax their charge which can prove incredibly frustrating when you have got multiple property lets across the country. Under the NLA’s direction, they want the government to provide local authorities with clearer distinctions on how much council tax should be to help prevent further confusion.

What does this mean for property investors? The more uniform council taxes become, the easier it will be for you to maximise affordable and much-needed accommodation for the property market.

Stamp Duty Land Tax: The existing ‘slab system’ is calculated based on fixed rates in arbitrary price bands. The NLA want the government to reform this system as well as enable multiple property investments to be treated as individual properties instead of as bulk transactions.

What does this mean for property investors? If you are the type of property investors who prefers to buy in bulk, you will now be able to save on the cost of stamp duties. The existing problem with buying properties in bulk is that it is easy to end up paying 4% in stamp duties because 5 properties worth £100,000 have passed the threshold. However have the freedom to pay stamp duties on properties individually and in this situation there will be no cost at all.

‘Rent-a-Room’ Scheme: Basing their argument on the same used by the ‘Raise the Roof’ campaign which argues that property owners are being put off from taking lodgers due to the obstacle of having to fill in a tax return form. The NLA believe by simply raising the tax-free threshold from £4,250 to £9,000 a year property owners will feel more inclined to take on lodgers.

What does this mean for property investors? By sharing their properties and leasing them to lodgers, this will help to ease the growing property shortage occurring across the UK.

See what I mean?

Hopefully the government will see sense tomorrow and implement these changes proposed by the NLA. We will just have to wait and see.

Wendy xx

That is why it is with great happiness that I reveal that leading lenders Santanders are increasing the maximum loan sizes of their mortgages.

Admittedly this news would have been better if these increases were applicable to everyone, but the point to take away from this particular story is the fact that competition is increasing amongst lenders. More importantly, the property market is becoming increasingly accessible to first time buyers again.

To sum up what has happened, Santanders have revealed plans to:

• Change the limit for first time buyers investing in new apartments from 70% LTV to 80% LTV
• Change the limit for investing in property from 80% LTV to 90% LTV

Whilst Santanders also divulged in their report that newly built property developments will remain at 70% LTV for apartments and 80% LTV for houses (for non-first time buyers), it is impossible to see the down side of this news. Especially as I imagine that it won’t be long before other leading lenders change their criteria to include existing property investors too.

All we can do is hope that the competition gets so hot that everyone benefits from deposit reductions and that buy to let mortgages get cut a break.

Wendy xx

Like homeowners the last thing they want to do is live next to someone who harasses them – they want to live in peace. But the thing is… unlike homeowners who have to sell in order to get away from such neighbours; all your tenant actually has to do is end their tenancy agreement with you.

And let me tell you, this is the last thing you want to happen…

Can Nuisance Neighbours Affect My Profitability?

Surprisingly so… It is easy as a property investor to forget to check out the quality of your neighbours because you are not living in the property yourself.

Yet thinking on this subject I can see how this could quickly impact on your profitability. All you need is one tenant to say to another: ‘I wouldn’t live there the neighbours are horrible’ and it won’t matter how strong the tenancy demand is or how good the rental yields are, if you cannot get tenants to stay, it will be you who is footing the bills.

So what do you do?

You make sure you know exactly who are investing next to before you put down a bid:

1. Visit the property more than once – the average buyer views a property once maybe twice before putting down a bid and usually at the same time of day. To gain an accurate perception of whether your potential property let is actually a local hot spot for vandals and drunks, or if your neighbours are noisy, I suggest trying to view the property at least 5 times and at various times of the day. This will allow you to see exactly what conditions your tenants will be living under.
2. Introduce yourself to your neighbours – meeting someone face to face can tell you a lot about a person. Before you put down a bid, make sure to introduce yourself to your new neighbours. You’ll soon discover if you are going to have difficulties with them over noise or a shared driveway.
3. Know your covenants – if you have already invested in the property and have got tenants living there, make sure to check the covenants of the property to see if your neighbours for example are prohibited from being a nuisance i.e. playing music at certain times of the day, lighting all day bonfires etc…
4. Talk to a solicitor – this should always be a last resort, but should you find that your tenant makes a complaint; you speak/write to the neighbour and they still persist in their actions, then you may wish to speak to a solicitor. They will be able to issue a letter to your neighbour highlighting the properties covenants and the possibility of legal action.

So try to take these on board the next time you invest in property. £500 positive cas flows and a high tenancy demand are all well and good, but get a bad neighbour for your tenants and they may affect your long term profitability.

Wendy xx

In his story, he revealed that after securing 90% LTV loans from his bank in 2007, he decided to invest in 2 off-plan properties (1 worth £415,000, the other worth £375,000). However, after Berkeley’s property prices fell by 40% in 2008, banks would no longer loan him this sum offering him a maximum 75% LTV. Faced with either having to fulfil the shortfall himself or abandon his deposit, Dowd tried to default on his deposit only to be confronted with court action from the property developers.

It is a sad reality when a man has to pay over £100,000 in damages, because the economy has turned against him.

But the thing is he is not alone… A further 300 legal claims – in London alone – have been taken against homeowners wishing to default on their off-plan properties.

Who is in the right?

Now on the one hand I can understand that as homeowners have signed a contract on these properties they are legally obligated to complete the deal. BUT when statistics state that property prices in London have fallen by only 14%, not 40% like on these property developments it really begs the question of: what has happened?

The truth is, back in 2007 property developers were seriously overestimating the value of their properties – by a lot. As a result they are now experiencing greater property price drops of an extra 26%.

And it is this 26% that is really biting homeowners such as Dowd…

I imagine, many homeowners may have easily been able to work around property price drops of 14%, but 40% is ridiculous! Who has got an extra £100,000+ spare to cover such a shortfall? Not many and that is my point… It is not completely homeowners fault. Property developers have got equal responsibility for creating this situation after valuing their properties too high in the first place.

It is undeniable that some sort of comprise has got to be met before this situation escalates any further. In London alone, Berkeley signed over 3,300 contracts in 2007 with homeowners, 85% of which were off-plan.

Fortunately many homeowners are forming collectives to help find alternative routes for resolving this issue, and so far they have come up with 13 options. However, with many having signed contracts on these prospective properties, it is going to be a long road ahead before this situation is completely resolved.

Wendy xx

Take this news story I read about this morning…

Over 6,400 property investors who own second homes in Cyprus may now be at risk of losing their land following the case of Linda and David Oram who have been ordered to give back their land to a Greek Cypriot refugee – all without any hope of compensation!

According to the article, this 5 year long case was initially sparked back in 2004 after Greek Cypriot refugee Apostolides went to the Nicosia Courts and put in a claim against the Oram’s land stating it was his and that he had fled it after Turkish troops invaded in 1974.

Now having been through the Nicosia Court, the European Court of Justice and just recently the Court of Appeals in London, all 3 Courts have ruled in favour of Apostolides stating that the land is rightfully his. As a result they have ordered the couple to demolish their second home; return the land; pay Apostolides damages and worst of all, pay him a monthly rent until the land is properly returned.

It is ridiculous to think about the number of cases which are now going to spring up as a result of this case. Especially as in all cases it is neither the property investors nor the Greek Cypriots fault, but those who took the land and sold it without checking its history in the first place.

According to UK and Greek Cypriot officials, more than 1,400 Britons are living on land which is believed to belong to Greek Cypriot refugees, whilst a further 5,000 are living on self-declared Turkish Cypriot land whose title deeds are held by displaced Greek Cypriots.

Add them together and that is a lot of property investors who could potentially lose thousands if not hundreds of thousands of pounds should they be taken to Court.

This case really goes to show, the importance of researching your property and consequently its land first before investing. No matter where it is located – UK or overseas – title deeds and land disputes can really mess up your investments if you are not aware of them when you invest. The outcome may not be as extreme as the Oram’s – who had to demolish their home – but you could still lose thousands of pounds unnecessarily.

Wendy xx

In the past, any homeowner looking to sell their property in Scotland would first have to advertise their property and give a minimum property price quote, before inviting buyers to put in ‘offers over’ bids.

Now what always used to fascinate me about this process was the fact that these quotes didn’t have to be accurate estimations. Using set guidelines, sellers could in fact set a minimum bid for their property which could cause buyers to place bids more than 25% above their original quote. Meaning not only could they benefit from guaranteed capital returns, but they could easily use this extra cash to invest in their property.

However, this has now all changed…

Following the introduction of the ‘Home Report’ last year – which are the equivalent of our HIPs – homeowners must now provide an accurate valuation price of their property, meaning they can no longer experience such sizeable returns.

In fact, Home Reports have impacted on their investment system so much that ‘offers over’ are rarely seen nowadays. Instead sellers are choosing to market their properties under an ‘offers around’ scheme which if they are lucky can generate them some capital, but nowhere close to what they were used to.

I have to admit, that this change to their property investment system has made Scotland a much more accessible location for property investment. Notoriously lower in price compared to properties in the Southern regions of the UK, all the myth – and overspending – behind this region has gone, making their system not that far from their own.

Even their ‘offers around’ is basically a similar version of our own general bidding system where the highest value is usually accepted by homeowners.

I can honestly say that I am thoroughly looking forward to getting stuck into the Scottish property market now it is less of a mystery.

After all, with average house prices of £155,691, and rental incomes of £907.63 a month (based on a 4 bedroom property), the returns far outweigh the investment cost.

Wendy xx

You may remember the other week that I discussed Economists predictions which suggested that because of static property prices, the buy to let investment sector will grow in popularity.

However, I have also been hearing rumours which suggest that property prices are about to go into a double dip.

Now I don’t know about you, but these mixed reports are driving me crazy. For example should I keep investing in property under the pretext that property prices are not going to fall any further? Or should I believe these double dip rumours and wait for these property price falls to hit?

If you haven’t heard either of these stories I’ll quickly sum them up for you:

-          In the Bank of England’s Financial Stability Report they revealed that property prices are at risk of going into a double dip should banks choose to sell off £200bn worth of distressed properties. Not only will these sales reduce banks ability to give loans, but this sudden increase in properties for sale could disrupt the supply/demand balance.

What’s worse, should they do that, banks may be forced to sell off further properties, causing further price falls.

Now as a property investor, increased properties for sale (which are discounted) is great news as this means more opportunities to invest at a more affordable price. However the indecisiveness of these rumours is completely and utterly frustrating.

What is right? What is simple speculation? When is the right time to move and harness these property opportunities…?

The answer is: who knows? I for one have got no idea, but one thing I am certain of is that I will be paying closer attention to what is happening in the property market over the next couple of months.

Wendy xx

I was reading an article by holidaylettings.co.uk the other day and in it they revealed that year on year UK holiday home enquiries have risen by 73%!

Even by recession standards that is a dramatic increase and one definitely worth taking note of if you are interested in breaking into the sector.

Yet according to their research, these enquiries have been global. South Africa, Turkey, Croatia… all have been witnessing similar increases in holiday letting queries too:

• South Africa – holiday enquiries have increased 13 times above their 2008 figures
• Croatia – enquiries for 2010 are up 113%
• Malta – enquiries for 2010 are up 94%
• Greece – enquiries for 2010 are up 74%

There is no disputing that 2010 is proving to be a profitable year for property investors and professional landlords alike.

In many ways holiday lettings is an incredible way to earn an extra income.

Not only will your ‘Tenants’ cover the entire cost of your mortgage whilst you are not occupying the property, but in many instances your second home will give you monthly bonus. Why? Because rental yields are notoriously higher than mortgage repayments.

Take this scenario for example.

Lets say you own a £120,000 property in Luton (3 bedroom) with a 25 year mortgage of 4.99%. Opt for an interest only mortgage and your repayments will be £499 a month. However choose to rent out this property and you can easily charge rental yields of £741 a month. Do the maths and that is an instant profit of £242.

Now I don’t know about you, but an additional income of £242 a month for simply renting out your second home is just too good to ignore, especially if you only use this property for 2-3 months out of the year. For the other 9 months you can easily earn £2,178.

Taking all these facts into consideration, owning a second home could definitely be a worthwhile venture if you have got the cash to invest.

PLEASE NOTE: rules surrounding ‘Furnished Holiday Lettings’ are changing in the new tax year, so make sure you familiarise yourself with this, before you consider joining the club.

Wendy xx