With property prices cooling, most people are reluctant to invest in residential property. Leading property expert David Lawrenson argues that NOW is precisely the moment to act and invest in buy-to-let because a slower housing market means there are more opportunities for a bargain to be found and a strongly increasing demand for rental accommodation is pushing rents up. In his completely revised and updated edition of Successful Property Letting – How to Make Money in Buy-to-let, Lawrenson outlines everything you need to know about property investment and letting.
AUTHOR’S COMMENTS ON THE RESIDENTIAL PROPERTY MARKET
Is it too late to get into the property market and is this a bad time to invest?
When house prices take a breather, there is a huge opportunity for the serious property investor because property can be bought at lower prices. Many professional investors have been waiting for a time when they know that vendors will be willing to listen to offers. Investor landlords also know that many would be property buyers are unnerved by media talk of an unstable housing market and will choose to rent instead of buying, thus pushing up demand for rented accommodation and hence rental incomes. In the longer term a rising population and lack of housing will push up both house prices and rents.
What about the landlords who bought into flats in city centres and now find them hard to rent?
I’ve been warning for the last five years that in many cities far too many identikit city centre flats were being built and too many were bought by investors in the hope they could make a quick profit. The reality in many cities is that the tenant market was always going to be too small to make these properties work well as rental propositions, let alone achieve any decent capital growth.
Why have Mortgage lenders advanced money to landlords to buy these properties?
It’s my view that most lenders don’t really understand the buy to let market and you have to ask why the mortgage lenders’ valuations did not consider the risk of future oversupply and the consequent effect on capital values and rentability. They are now wary of new build flats and have either stopped lending on them or severely restricted loan amounts relative to property values. However, the warning signs that this was poor lending were flashing red a long time ago.
Can we rely on the level of advice given to us for the buy to let market?
Whilst it’s OK to learn about buy to let from a company that’s also making money by selling property, people must do their own independent research too. My advice to would-be property investors is to read the quality press and independent blogs to find out what’s really happening in buy to let, not rely solely on vendors who may have a vested interest in recommending you buy a certain property.
What type of property should landlords buy?
This all depends on where you are and the local demand and supply of both property and tenants. Overall though, as a general rule, family sized 2 or 3 bed houses should continue to outperform flats – growing in value faster and generating good rental yields. This is because there will continue to be a shortage of this type of property as there are still not enough being built – which is partly due to past government planning policies favouring high density flats over houses.
What else should be changed?
Under the current system, landlords are being forced to play Scrooge and dribble out short term assured shorthold tenancy agreements in which the tenant has no definite security of tenure beyond 6 or 12 months. Also, in the event of landlord default on mortgage commitments the tenant can still end up losing his home through no fault of his own. This situation is unacceptable for many tenants, especially those with children. Many landlords would happily issue tenancy agreements for 3 or 5 years providing there was a fast system to recover their property in the event of non payment of rent. The current framework needs to be changed so that renting can become a flexible system that suits the modern needs of the very many people who choose not to buy property.
What does he think about overseas property investment?
Right now I think too many investors are buying into markets that neither they nor the property promoters really understand. In poorer countries, governments and property owners are keen to raise cash by selling off large tracts of land to overseas property investors. This will ultimately produce an oversupply of property and disappointing returns for many investors.
What are his top buy to let tips for success?
1. Buy in areas where tenant demand is strong and transport or other improvements will make the area more attractive in the future. 2. Make sure tenants are properly referenced. 3. Treat tenants as you would like to be treated yourself. 4. Know your legal responsibilities. 5. Have a good admin system.
“SUCCESSFUL PROPERTY LETTING HOW TO MAKE MONEY IN BUY TO LET” explains how to…
Buy the right property in the right location for high rents and capital growth
Find and buy property at “below market value” from developers and private sellers.
Access the best mortgage deals
Decide whether to use a letting agent or find and manage tenants yourself.
Comply with all the laws and regulations & avoid the “tenants from hell”
Minimise your property tax bill & buy to let abroad with confidence
This is the first property book with the most up to date information on changes to CAPITAL GAINS TAXES, TENANCY DEPOSIT SCHEMES, DISABILITY REGULATIONS and the NEW RULES ON LARGER SHARED HOUSES (HMOs).
DAVID LAWRENSON is the UK’s leading buy-to-let expert, with over 20 years’ experience as a property investor. Not being linked to a property company or finance provider enables him to provide unrivalled unbiased advice via his website http://www.lettingfocus.com/where he also publishes a popular blog. He runs high-quality buy-to-let and property investment seminars, mentoring, consultancy and coaching sessions for individuals and companies. Lawrenson is an outspoken and frequent commentator and speaker on property investment in the media and at public and private events.
Comments on first edition: Landlordzone.co.uk: Excellent guidance – a valuable contribution to the savvy landlord’s bookshelf; Scottish Landlord Magazine: Jammed full of facts; National Landlords Association: A practical guide – full of tips.
If you would like to commission David as a consultant or speaker or to request an interview with him please contact Georgie Askew on 020 8741 3663 or email firstname.lastname@example.org