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Residential Property Investing Tipsheet 1


1. Not having a business strategy

Entering the Buy-To-Let industry should be viewed exactly the same as starting up a business. Many new landlords will start out without having a clear idea of their goals and the strategy they are going to adopt. Every landlord should create a business plan covering the following areas.

  • What is the purpose of the investment?

Are you looking to create a surplus monthly income or build a capital amount, or both? Many people invest in a buy-to-let property just to impress their friends as it seems a trendy thing to do. Investing in property is a long term commitment with many potential ups and downs along the way. If you are not clear on the reason for investing from the outset your enthusiasm is likely to run out very quickly.

  • How many properties do you want to have in your portfolio?
Are you just looking for one investment property or are you going to scale it up to a full-time business? If you are planning to build a portfolio this will require a lot of management time and may take up much of your leisure time, are you prepared for this? Alternatively you could instruct a letting agent to deal with your investment and just sit back and reap the rewards, but this will come at a cost.

  • What type of property are you going to buy?
Will you concentrate on small residential properties, student accommodation or even commercial properties? Specialising in one type of property investment is the most sensible option to start out. Once you are fully versed in one property type you can then start to expand in to other types if you wish.

  • What is your exit strategy?
Will you eventually sell and if so when? Many people see a buy-to-let investment as a future pension so you need to be clear on when you want get access to your investment funds. Selling up one or a number of buy-to-let investments takes time and property markets fluctuate so good timing is crucial to get the most out of your investment.

2. Poor property choice

Not every property, or area, will be suitable for a Buy-To-Let investment. You should invest in an area where there is a proven demand for rental property and in properties that will appeal to potential tenants. Here are some tips for buying the right property.

  • Do your research
Find out the areas where rental demand is high, searching the property portals and talking to estate agents will give you some idea. Ask estate agents to keep your informed when any potential investment properties become available.
Find out the expected rents on the type of property you are interested in and make sure this is sufficient to cover all the outgoings on the property.

  • You are buying a property to rent, not to live in
Many new landlords will buy a property based on their tastes rather than viewing it as an investment. If you do this you may end up paying more for the property and find it difficult to maintain. A first-time investor should keep things simple and go for standard property types in areas with rental demand and don't take on anything that needs a lot of work as this will increase costs and delay the renting process.

3. Not doing the sums and watching the cash-flow

It's not enough to just assume that if the rent covers any mortgage then everything will work out fine. You must sit down and calculate the real cost of your investment before you buy. Don't enter into this investment with rose tinted glasses be realistic and always over estimate on costs rather than under estimate. Here are a few pointers.

  • Calculate the true cost of buying
Make sure you include stamp duty, solicitor's fees, mortgage fees and maintenance required before you make a purchase. This will give you a clearer idea of your return on capital.

  • Don't under estimate the ongoing costs
Make sure you include all your ongoing costs such as mortgage payments, maintenance, insurance, letting agent’s fees and an allowance for void periods when calculating rental yields.
  • Keep a close eye on the cash-flow
Landlords should keep detailed records of all income and expenditure and record these in a spreadsheet, this will enable you to see the profit & loss on a monthly basis together with future projections. Make sure you are putting money aside for potential high cost repairs such as a new roof or boiler.

You should also review each property in your portfolio annually, so that you can ascertain the profitability or otherwise of each investment. If an investment is costing you money on a monthly basis the nit may be wise to sell the property to recoup your investment.

4. Not vetting tenants

  • References
It is vital that you take up references regarding employment and previous rental history as well as carrying out a credit check. A letting agent can help in this area.

  • Quality
You should make a judgement regarding each tenant on whether they will look after your property whilst renting it. Ask questions about their lifestyle and write into the contract your view on pets and any other restrictions. Buy-to-let investment is a business so treat it like one and be hard-nosed about the quality of the tenants you are prepared to let your property to. Better to be patient and wait for a good quality tenant than let to the first tenant that comes along and live to regret it.

5. Not understanding the legal issues

  • Landlord responsibilities
There are some legal requirements that landlords must adhere to that could have serious consequences if ignored. Some requirements are around safety standards, others concern the treatment of tenants in situ and on eviction, if needed.

  • Don't forget the taxman
In general terms if you are making more than £2,500 income from property (after deducting allowable expenses) each year you will need to file a self-assessment tax return. It may be worthwhile using the services of an accountant to help in this area.


As with all investments you need to do your homework to get a good return and Buy-To-Let is no exception. Don't expect short-term miracles but if you avoid the mistakes mentioned above your investment may return good dividends.
Ikos Investments, Branston Court, Branston St, Jewellery Quarter, B18 6BA Tel: 0121 523 2317
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D E S I R E O R F E A R?


Changes for rental properties lettings in New Zealand announced.

Changes in New Zealand mean that every rental property must reach specified insulation standards by July 2019 and have smoke alarms fitted.

Housing minister Nick Smith has announced new rental regulations which all landlords must meet. Only properties where it is physically impractical to fit insulation will be exempt.

The smoke alarms will become obligatory in July of next year but tenants will be responsible for replacing batteries and informing landlords of any defects that prevent the alarms from working.


Source: Property Wire


To read full article please follow this link

Birmingham named as UK buy to let hospot.

Birmingham has come top in the best postcodes for buy to let, with landlords in the Midlands benefiting from the UK’s best rental yields, new research shows.

The highest rental yield postcodes from the first quarter of this year can now be found in Birmingham, Ipswich, Liverpool and Glasgow, according to the data from property peer to peer lending platform LendInvest
Though Birmingham has beaten London, postcodes around north and central London are still delivering the best overall returns on investment, thanks to capital gains delivered by rising house prices.


Source: Property Wire

To read full article please follow this link

South east UK lettings market seeing more demand.

Parts of the south east of England lettings market are seeing a surge in enquiries from buy to let investors and a demand from older tenants.

Improvements to the sales market resulted in a dip in supply of rental properties towards the end of last year, but Waterfords lettings department says that attractive yields and potential capital appreciation are encouraging landlords to expand their portfolio.

‘Improvements to the sales market did impact the supply of rental properties in the fourth quarter of 2014 as those who became accidental landlords during the downturn chose to sell up and take advantage of more favourable market conditions,’ said Brendan Cox, managing director at Waterfords estate agents..


Source: Property Wire


To read full article please follow this link

UK Home Counties see strong quarterly lettings demand.

The number of tenancies agreed across England’s Home Counties rental market between was 50% higher year on year in the second quarter of 2014, according to the latest Knight Frank lettings index.

This has been driven by an increase in demand from corporate tenants working in London and in the first half of the year nearly 40% of all tenancies agreed were to international tenants led by individuals from North America.

The report explains that tenants relocating from the US are often present during the first half of the year, with many wanting to move before the new American school term starts in August.


Source: Property Wire


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Lack of supply could hold back London property market, it is suggested.

A limited drip feed of new homes to buy or rent and forthcoming tightening of mortgage lending criteria may hold back the resurgent residential market in London, it is claimed.

Demand is still outstripping supply in both sales and lettings now that the political uncertainty of the past few months is over, according to research from London estate agency Chestertons.

The firm’s latest prime residential sales report says that despite the uncertainty in the lead up to the general election at the beginning of May, the demand for new homes remained robust in the first three months of the year and continued to outstrip modestly improved supply. Demand for new-build homes from overseas also remained high.


Source: Property Wire


To read full article please follow this link

Sales transactions down while lettings thrive in prime London property market.

Sales in London’s prime property market have continued to fall for the second month in a row in 2015, with transactions down 22% year on year.

According to real estate firm W.A. Ellis, a JLL company, this comes on top of a 34% year on year fall in sales recorded in January.

A breakdown of the figures shows that the most dramatic reduction is sales of houses within Belgravia, Chelsea, Knightsbridge and Kensington which have dropped by 100% from 40 sales in 2014 to 19 in the same period this year.



Source: Property Wire


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Extra stamp duty set to reduce number of lettings in UK, say agents.

The extra stamp duty charge for the buy to let sector that begins next April has triggered a less optimistic outlook among letting agents in the UK.

Some 40% are predicting that rental supply will decrease over the next five years, the highest rate this year, according to the latest report from the Association of Residential Letting Agents (ARLA).
‘This month’s findings are triggered the Chancellor’s announcements around buy to let tax in his Autumn Statement. We said these changes would be catastrophic for the rental sector and this has been echoed by letting agents across the country,’ said David Cox, ARLA managing director.


Source: Property Wire


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UK lettings agents report fewer rent rises and new homes on market also falls.

The number of letting agents reporting rent increases for tenants has fallen month on month while the number of homes for rent is also down, according to the latest UK rental sector report.

The analysis from the Association of Residential Letting Agents (ARLA) shows that for the first time this year, the number of ARLA agents seeing rent hikes for tenants has decreased from the previous month.

The report reveals only three in 10, some 33%, of agents reported an increase in August, the lowest since April this year and a drop from 37% last month.


Source: Property Wire


To read full article please follow this link