MARKET TIPS UPDATE: FORECAST FOR UK BUY TO LET PROPERTY 2008
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MARKET TIPS UPDATE - NOVEMBER 2007
BRIGHT BUY LTD FORECAST AND TIPS FOR THE UK PROPERTY MARKET 2008
http://www.brightbuy.co.uk
Well after a year that started so well I’m sure there are a lot of investors out there who are uncertain where to invest and whether property is still a suitable investment vehicle. For this month's tips I have drawn up some key points that any buy to let investor should bear in mind before making any purchase decision for property investment in 2008. In my opinion, property investing will still offer you the best return for your money but for all you armchair investors out there; you need to raise the lever on your recliner and sit up straight for the New Year to face the tougher challenges ahead.
Remember that each region will be different
This week there has been an announcement from Nationwide on the property forecast for 2008. On the face of it the 0% property growth prediction for 2008 does not sound good but when you read past this headline grabbing figure you begin to understand the regional differences. This figure takes into account the overall growth prospects for each region. So while Northern Ireland is expected to see an overall decline of -5%, Scotland growth is expected to rise by around +4% in 2008.
Disregard generalist media blurb regarding growth and look into localised reports of the areas you want to invest. If you are online there are plenty of sites out there that will give an overview such as mouseprice.com BUT this information will always be outdated when it's compared to the knowledge of local estate agents and letting agents.
Generally more people will be put off by negative national press coverage but that only means less competition for the shrewd investor who knows the best areas to invest! Let most people read into the media blurb whilst you gain a real insight into the key locations by networking with local investors, getting in with local agents and professionals.
Similarly, each region will differ in terms of level of rental demand and the need for housing. If you are focusing on student property make sure you find out whether the local University has any new plans for building halls accommodation or relocating any courses to a different campus. These are critical factors that many people miss and will affect the future demand and so the rental levels achievable in your area. Similarly for professional tenants, have any new businesses moved into the area or are any old businesses moving out? Your local letting agent will be on top of all the leaked information due to its local connections.
Make your broker work hard
Brokers are the key to a good mortgage which in turn provides you with either a ‘good’ or ‘could be better’ buy to let investment. You can have the location right, but the wrong finance deal can spoil your plans. This is why you need a decent broker who knows what strings to pull (legitimately). A good broker can be the difference between a £10,000 deposit or a £14,000 deposit or a mortgage of £400 per month versus £450. Therefore a good broker can leave you with £4,000 more in your pocket for the next investment or £50 per month better off. It still surprises me how many brokers miss the fact that a 90% LTV is possible for buy to let and are quite happy to let you go with an 85%. Weigh up all your finance options and ask about all the available products to you. Are you able to put down a lower deposit and get 90% finance because the rental is very good? In my opinion a £2k arrangement fee added to your loan doesn’t make a difference in the long term, if in the short term you will benefit from a higher leverage; a lower deposit or mortgage payments leaving you with more cash in the bank in the present whilst your investment grows to outweigh the high arrangement fee.
Ask about the base rate trackers available - The Times newspaper reports on the 15th November that the Bank of England are seeking to lower interest rates on two occasions sometime before next summer in a bid to counter the credit problems and predicted low general housing market growth. On this information and based on the fact that interest rates have risen and levelled since August 2006 it is far better to seek out a base rate tracker mortgage rather than a fixed rate which has become an increasingly popular choice with our investors. Be all over the finance and newspapers to determine what is right for you at the time! We live in a world where these perspectives change consistently. In my opinion I would not go for a variable rate mortgage for any sort of purchase right now as there is no guarantee that should interest rates fall that the lenders will follow suit. Lenders are not obliged to reduce their variable rates if the bank rates fall. As most lenders are trying to recoup losses suffered elsewhere, they are not going to be jumping at the chance to reduce the rates on their bread and butter variable mortgage products.
For our recommended broker go to our mortgages page and fill in your details for a free no obligation quote. Your home may be repossessed if you do not keep up repayments on your mortgage.
Be all over the figures
You find a property you like the sound of, how can you tell that the purchase price and rental figures attached to it will stack up? 1. Check out the previous sales prices for the area using a site like ourproperty.co.uk 2. Check current rental asking prices and demand through websites like Rightmove.co.uk 3. Confirm your findings by talking to a local estate agent and letting agent. In the areas you are choosing to invest it is always a good idea to have a relationship with a letting agent and local estate agent for advice and help. Build on this relationship so that you are not just simply calling up every now and then to probe for information, as they will soon become unhelpful!
Be wary of developers prices, often you will have a developer offer you a great deal with anything up to a 25% discount. It will transpire in most cases that the market price given by the developer is their own estimate rather than a proper valuation and the discount ends up to be irrelevant. You may end up purchasing a new build property for the actual valuation figure when you were expecting some equity in the property. To avoid this do some research on the previous completed sites by the developer and find out whether these sites have been affected by these devaluations and overpromises.
By : Bright Buy Admin | Category: Investment Property News | Comments [0]
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