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

I thoroughly agree that there are landlords out there who abuse their powers over tenants and fail to fulfil their responsibilities. But the latest developments from the government feel more like an opportunity for tenants to ‘landlord bash’ than actually offer tenants better letting relationships…

Take this recent development.

Aside from giving tenants a Housing Hotline where they can seek advice against problematic landlords and the introduction of the National Landlord Register where tenants will be able to see how well prospective landlords maintain their properties. The government has also proposed launching a tenant dedicated website where tenants will be able to supply reviews on landlords and their property lettings – both positive and negative.

And it is here where everything becomes complicated…

Of course there will be genuine negative reviews from tenants against unscrupulous landlords who are at fault, but there will also be an influx of negative reviews from tenants who simply disagree with their landlords about issues which are actually law abiding.

All you need is to have one disagreement with your tenants and this website opens the doors to having your reputation tarnished for good! In some ways such a website could even make some landlords too scared to act on their legal rights in case their tenant tarnishes their name to the world.

It truly is a catch-22 where without the proper regulation this website could easily become a landlord bashing location which only works to drive bad landlords under ground whilst penalising law-abiding landlords instead…

May be it is just me and maybe I am viewing this all wrong, but I do strongly feel that this site could do more harm than good to the rental market where new tenants come to find a good landlord only to be painted a negative picture.

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

I was reading an article on HomeMove the other day, and essentially Rightmove have predicted that due to property prices becoming static over the last 2 months (dropping by 2.2%), properties put up for sale will almost halve in amount during 2010 compared to those put up for sale in 2007.

In fact, they believe because of the upcoming General Election – and the impact it will have on the economy and taxes – there will be less forbearance shown by lenders on those who have gone into arrears. Meaning there will be more forced sales and even more opportunities for property investors to invest.

Now you’re probably wondering how any of the information I have just revealed can help to make 2010 the year that professional landlords come into their own, but here are some other interesting facts that Rightmove let slip which might change your mind:

• These forced sales will be concentrated in lower income areas where demand from first time buyers has dissipated – due to their locations these properties will be priced at affordable, investable levels which will make their rental yields more attractive to property investors like you and me.
• Number of properties advertised for rent has fallen 15% in the last 6 months – now before you get worried, this drop in property advertisements has actually put existing landlords in an increasingly privileged position as new landlords have been frozen out. Why? Because they have not got the strategies or the contacts to access the limited number of buy-to-let mortgages.
• Properties bought by accidental landlords during 2009 have now been purchased – giving professional landlords a clear run with limited rental competition

It is true that 2009 was definitely the ‘Year of the Deal’ where if you had the right investments strategies you could easily invest and take advantage of 20%-30% discounts off property prices.

However, if we are to take seriously what Rightmove are suggesting then this drop in properties for sale combined with the reduction of property landlords means if you have got the know-how, the cash and the property portfolio, you can really wipe the floor in terms of profitability.

If you are interested, here is the article I found: http://www.homemove.co.uk/news/15-12-2009/year-of-the-professional-landlord-approaches.html

Ummm probably… but before you discount me as being heartless or ‘callous’ in this judgement let me explain…

You see it is a little known fact that repossessed properties sell for at least 5-10% below market values, meaning you can easily invest in these properties for more than 25% below their original 2007 asking prices, if not more which is fantastic news since property prices have begun rising again…

Now for anyone who doesn’t have a clue what I am going on about, I am discussing Credit Action’s recent report which declared that a new property is repossessed every 11 minutes. That is 131 properties every single day!

Yet this is not the worst of it…

According to Credit Action, the average household has now got a debt of at least £9,161 to their name –excluding their mortgage! Throw that into the mix and household debt rises to an astounding £58,340.

At £58,340, it is no wonder that every 3.97 minutes someone is declared bankrupt or insolvent – the finance market is in a very bad way.

Yet despite all this, it is impossible to ignore the fact that these repossessed properties represent an incredible opportunity to get the property market back on its feet.

With the demand for property growing at an escalating rate and the housing shortage becoming ever more dominant, these properties can easily supplement this demand by being transformed into multiple rental accommodations.

Maybe I am wrong about this. Maybe investing in these properties won’t make a difference. But you have got to admit that at an additional 5-10% off their asking prices it just too good a discount to miss.

Wendy xx

With bidding wars escalating for property, estate agents are reporting that many homes are now reaching their asking price – if not more – because so many people want to invest.

Take this statistic for example.

During July 2009, there were 292 house hunters to every estate agent who had 59 properties for sale. You only have to take one look at this figure to recognise that the property market is hotting up. It is electric.

Yet I have to admit that I am not sure whether to be impressed or concerned.

On the one hand this recommendation by housing experts for homebuyers to wait – unless they can get family to help them – is great news for investors like you and me. If they can’t buy, then they can easily rent, which means an increased tenancy looking for rental properties.

But with terrace properties selling for more than they fetched 2 years ago this is a dramatic increase considering average property prices have dropped 20% in the last year.

The problem is the growing housing shortage. Even with many first time buyers refraining from making property viewings because they know they have not got the cash to invest, there are still hundreds of homeowners to every property – creating even more competition for investors like you and me to invest.

According to the Council of Mortgage Lenders, the average first time buyer is 37 years old, whilst those who receive help from their parents are averaging at 31.

Either way, these ages indicate how hard mortgage lenders are making it for homebuyers to get onto the property ladder. Without outside aid, they simply cannot afford the 25% deposits to invest.

Wendy xx

As part of their ‘Hidden Homes Scheme’, Wandsworth council and Notting Hill Housing have teamed up to help convert a disused car park in Putney into 10 spacious apartments. Their reasoning? To help first time buyers find an affordable route onto the property ladder.

And I have to admit, it is a rather clever idea.

Taking boarded up properties, shops and disused car parks – essentially properties that are just sitting there doing nothing – by converting them into attractive apartments/homes they could help to relieve the strain currently on the property market. Especially if more organisations choose to get involved.

Already the Empty Homes Agency is jumping on board with this scheme, as it will help transform wasted space into housing, plus will save on expenditures to knock these properties down and rebuild them. To put it more bluntly – renovating this way will help maximise the UK’s property space.

Now I know what you are probably thinking – for a single investor you can’t get involved in such a scheme. But I don’t think that is strictly true.

All these associations are actually doing is renovating. Yes, car parks may be out of your price range, but boarded up shops won’t be. Negotiate your deal wisely and the savings you make whilst investing could be directly transferred into the renovation itself, creating little costs for you.

I know there is much more to renovation than this, but the point I suppose I am making is that the potential is there. The potential for property investors – like you and me – to get a slice of this idea and use it to create new rental properties.

It’s definitely worth considering.

Wendy xx

PS. If you are interested in reading the full story, here it is: http://www.guardian.co.uk/money/2009/jun/28/empty-properties-converted-accommodation. Enjoy!

In the last week, Moneyfacts has reported on average rises of 0.16% on 2 year fixed rate deals, with 5 year deals quickly following suit at 0.21%.

So what happened?

According to Moneyfacts this rise has been triggered as a consequence of inter-bank borrowing, and their rising costs. More expensive to borrow from, banks are now practically stumbling over one another as they try to pump up the cost of their fixed rate deals.

Is it that bad?

Now on the one hand you could argue that a 0.16% rise is nothing, but on a mortgage of £100,000 this could prove to be a substantial increase in the long term.

Take a look at the following scenario.

If for example you chose to invest in a £100,000 property (with a 25 year mortgage) on a fixed rate of 4.74%, that would equate to monthly repayments of £570. However, take this same property at an increased rate of 0.16% (bringing it to 4.9%) and you could face an additional monthly repayment of £9 (£579 in total).

On the outset, £9 extra a month is nothing, but spread that figure over a year and that is £108 more than you would have had to pay on a fixed rate deal of 4.74%.

When you examine the figures like this, it is easy to see why property courses encourage you to invest as soon as you can. If rates can change this much in a week, imagine what we could be facing in a year.

Wendy xx

You see for any investor, new or experienced, when you invest in a rental property you want to be able to keep it sustainable. Never empty. Never cutting into your profits. But always working for you.

That is why picking the right lease is so important – especially in commercial real estate.

Pick the wrong one and they could end up looking elsewhere. You need to get it right.

So ask yourself this question: what do you need out of your lease agreement? Simple. A guaranteed rental income, plus the means to control the costs of your property.

And your tenants? They will want to be able to peg their rental costs as closely as possible. Why? Because no one wants to pay above and beyond if the property is not worth it.

You need to prove it’s worth pursuing.

To help you choose, we have compiled together a list of the UK’s 3 top commercial real estate leases:

The Gross Lease

This is sometimes described separately from the full service lease, but their differences are not that much. Essentially what they both involve is the landlord/owner taking full responsibility for all the building expenses: taxes, insurance and maintenance.

All your tenants will pay is a fixed rent, which can be used to pay for the expenses that may incur.

A point to remember here is that costs increase over time. And if costs increase, so will your expenses. That is why it is important to keep yourself covered by including an escalation clause in your lease. This enables you to increase the rent owed from your tenants, so that their fees will continue to cover the costs.

Of all the commercial leases, this is probably the least favourable to you as an investor. Here your tenants only have to pay the rent, the rest is on you as their landlord and if some expensive maintenance is required, it could leave you with negative profits.

The Triple Net Lease

This type of lease requires the tenant to pay a significant share of the expenses, as well as the taxes and insurance related to their rental unit.

The triple net lease is commonly used in multi-tenant industrial and retail properties, and works quite favourably for you – the landlord. Why? Because their expenses will vary: electricity, plus the taxes, maintenance and insurance can all work to boost your profits.

This admittedly though, makes many tenants resistant to enter into this type of lease. It gives them no control over the increases in their expenses, and prevents them from budgeting their costs. It is completely shared, even down to the cost of roof replacement.

The Modified Net Lease

Is essentially a compromise between the gross lease and the triple net lease.

Here, how the property is maintained is decided between you and your tenant. As the landlord, you will take most of the responsibility, but your tenant too will also be in charge of caring for certain aspects of the property.

And the taxes and insurance? That will be your tenant’s job too.

This type of lease is great for industrial, retail or multi-tenant office properties. It is uniquely versatile in its flexibility, and allows you to both come to an equal agreement on what is required of each of you.

And we have to admit, it is very promising.

Of all the real estate commercial leases, the modified net lease works to benefit both your interests, allowing you to control and generate a positive cash flow, whilst giving your tenant an element of control that will boost their confidence as a successful company.

What more can you ask for?