Property Investment In London
London Property Investment
There are certain areas in and around the London region that are hot spots for property investment and property investors. At time of writing the property market is unstable with even the most courageous investors holding back on new investment projects and opportunities.
Investing in property across the UK has always paid dividend provided the investor understands the market conditions and focuses on either profiting from monthly rental earnings or the more longer term equity increase.
The London property market, traditionally has always been the premier or prime target for a majority of investors as London is the business capital of the UK and even in times of economic downturn tends to suffer less in terms of wide scale profit.
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The obvious area of interest at the moment is Stratford - with plans to regenerate the area into the third most important part of London in time for the Olympic Games in 2012. Read more about Property in Stratford
What Areas Of London Are Best For Property Investment
Non specifically, the best areas in and around London are those that currently have good road, rail and tube links. These areas will more likely sprawl in time.
The current market value of properties in London with good transport links are usually highly priced - but in today’s market bargains are there to be had if you know where to look.
Looking forward, if an area is just out of your budget follow the tube stops in directions heading out of Central London until you find and area that is within realistic budget.
As an example if Stratford is an area for potential investment but not affordable follow the tube stations north - this brings Leyton and Leytonstone into the equation.
Which Areas of London Are Most Popular For Property Investment
Currently the most desirable and popular London property investment targets are:
| Hampstead | Limehouse | East Dulwich |
| Walthamstow | Shoreditch | Chingford |
| Maida Vale | Finchley | Brockley |
| Finsbury Park | Palmers Green | Norwood |
| Battersea | Leyton | Balham |
| Ealing | Peckham | Rotherhithe |
| Cricklewood | Lewisham | Willesden Green |
These areas are in no particular order and some of the obvious candidates have been omitted such as Mayfair and Cheslea.
Property Investment Vs Property Development
Property Development Or Property Investment
Property development and property investment could be classed as one and the same in some quarters - but in reality they are a quite far removed.
Property development is best hightlighted by the televison programs that frequent our screens such as Property Ladder and How To Be A Property Developer. A residential property is acquired below the market value due its state of disrepair and then developed into something that can be offered for resale or to the Buy to Let or rental market.
Profit is made (or lost) by the developer but time has to be factored into the equation as development is very much hands on and linear. Many individuals that are property developers can only concentrate on one project at a time.
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Property Investment on the other hand is all about the rental market and is completely scalable.
Why Property Investment Is More Profitable That Development
The ideal starting point for a would be or potential property investor would be to research properties in your area - visit local estate agents and ask to be put on their mailing list. Ideally pick a dozen or so properties that will not take up too much of time firstly, to initially view - and secondly to visit should the need arise.
The type of properties to avoid are flats or apartments where you may need to factor in the cost of ground rent or communal maintenance - this monthly cost will come out of your profit.
It is important to remember that your profit is not based on the potential of your equity rising in years to come but a solid monthly profit from the rental.
Once you have found the formula for success it can repeated over and over again.
Property Investment is by a better option and by far a better use of you time and capital.
Is The Property Market Going To Crash
Property Market - Is It Going To Crash
According to the media the UK property market is free fall - not a day passes without a mention of the current property crisis in the UK. But is the property market in as bad condition as we are lead to believe?
If you are worried about the situation and have been convinced the UK housing market is going to crash like the USA and Spain you are worrying unnecessarily - There may be some similarities between us, but our (the UK) prices will drop less significantly than those of the USA and Spain.
The reason for this confidence is simple economics and the fact that the demand for housing far exceeds the supply.
This year alone (2008) the UK government has predicted we will only build 100,000 new homes - a quarter of the required amount- before 2009. So until the UK can match this demand, the market is safe.
Why The UK Property Market Will Not Crash
1. One of the reasons why Spain is struggling is that they are still building more than they require. The number or available properties far exceeds the population. We have got the opposite problem in the UK.
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In 2005, 193,000 new houses were built. This may sound impressive but to make a real impact on the growth of housing prices and reduce their costs, 245,000 new homes need to be built. And we are far from reaching that goal.
2. In 2000-2006, the uk population increased by approximately 1.7 million this resulted in the need for 800,000 new residential houses. Although 1.1 million were built in this period, these extra 300,000 new houses were insufficient. They could not account for the growth rate of the churn or 2nd home ownership.
3. When UK inhabitants are looking to move home they do not compare their salary to the price of the house. The big mistake they usually make is to actually compare their income to their annual mortgage payments.
Although, it could be argued that mortgage payments - as a share of a household income - has increased from 15% (2001) to 19.6% in 2005, these figures are still well below the 34% recorded in the last property crisis in 1989.
4. It is natural to see fluctuations and property activity in certain areas of the country as the economy grows, but some areas struggle to match these demands. Through a combination of a lack of housing and transport, certain locations have become property hot spots to accommodate this need, but cannot expand fast enough.
Stratford in London springs to mind. Read about Property Investment In Stratford
Is Property A Safe Investment
Throughout the last two decades the UK has survived two property crashes and bounced back stronger than before. Experts predict that by 2010 the housing market will be buoyant once again.
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Best Mortgage For Buy To Let
Buy To Let Mortgages
If you just starting out in the property investment market and completely bemused as to which type of mortgage to choose for your buy to let property, there are specific mortgages for Property Investment - i.e. to rent out rather than live in - you will need a buy-to-let (BTL) mortgage.
Buy to Let mortgages are unique and quite different from the mainstream mortgages as, instead of assessing the amount you can borrow from a lender, based on your income, loans are calculated on the rent you could get for the property.
In the past mortgage lenders required a rental coverage that was above that of the mortgage amount, for example 120 % of the monthly repayments. But lately the rules have become more relaxed and you can get a mortgage with rental coverage of 100 per cent in some cases. The credit crunch is seeming to work in favour of the property investor compared to the standard residential mortgage.
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However, it is still usual practice to have to raise a deposit of 10% or more, but more recently the number of No Money Down deals have populated the market. Traditionally only a small number of specialist lenders offered BTL mortgages but more recently we have seen high street banks start to lend to landlords.
BTL mortgages can normally be either repayment or interest-only loans. Interest-only mortgages mean cheaper monthly payments but the property will not be yours at the end of the term – you will still need to repay the capital amount or sell the property. Repayment mortgages ensure that you repay a bit of the capital and a bit of the interest each month and at the end of the term the debt is fully paid off.
If you have have ambitions in the Property Investment martet and would like to find out more information about Buy-to-Let mortgage option you can register for a Free property Investment Workshop in your area.
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How To Be A Successful Landlord
Advice For For Landlords
A decade ago anyone with the slightest entrepreneurial spark would have been highly advised to get involved in the property development or property investment market.
The life of landlord was an easy one - the life of a new start up landlord was made easier by mortgage lenders ready to throw money at the mere mention of Buy to Let.
A decade on and the life of landlord is still relatively easy - despite the doom mongerers, landlords in many UK regions have only suffered a slight drop in the price of their property assets. Many landlords consider their equity to be a long term investment with the monthly rentals their earnings or wages.
In fact, many landlords have enjoyed a higher monthly rental income from their Buy to Let properties as the current housing market has dictated that renting rather buying makes economical sense to the first time buyer or those at the bottom end of the property ladder.
So How Do New Landlords Start And Survive
Recently the NLA - National Landlords Association offered advice to its industry and gave tips on how to survive the credit crunch.
The tips for landlords are based on the assumption that the landlord has a property and is about to offer it into the property rental market.
1. Get Advice - a little knowledge is a dangerous thing especially where money is concerned. A good investment can turn bad if you don’t plan for as many eventualities as possible. Joining associations such as the NLA should be a prerequisite - The NLA has over 13,000 throughout the UK and has the new start landlord and the experienced among its members. Visit The NLA Website
2. Understand Your Legal Obligations - another reason to join and an association such as the NLA. The private rented sector is now governed by over 50 Acts of Parliament. With this increasingly heavy regulatory burden, it is now more important than ever that you, the landlord understand your legal responsibilities.
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3. Make The Most Of Your Mortgage - its may appear obvious but some landlords struggle with their current mortgage repayment without investigating other avenues. If you are at the end of a current term and the repayment plan doesn’t look as attractive - try commercial finance opportunities.
4. Choose Your Tenants Carefully - it is essential that as a landlord you don’t rely on gut feeling. Check out prospective tenants thoroughly. Perform a credit check and and search for previous tenancy information.
5. Talk To Your Tenant - all relationships work better with communication. Don’t just contact your tenant about rental matters, he or she is your customer and so treat them like one.
6. Students Make Great Tenants - don’t shy away from letting your property to students. Provided you have employed the services of letting agency it makes economical sense to let to 3 students rather than a family of three.
7. Put Money Aside For Repairs - rental income is not pure profit. just as in any residential property things will need replacing or repair such as a new boiler, carpet or window. If finances allow put aside 10% of rental income for miscellaneous repairs.
8. Get Insurance - get adequate cover for every eventuality. Standard household insurance policies may not cover a buy to let or rental property. Specific industries requite specific insurance cover. Property investment insurance companies such as ForLandLords have been set up with the Landlord in mind. Visit ForLandLords website.
9. Listen To Advice - television programs such Property Ladder are built for TV granted but they do highlight that even after advice has been given it is often ignored. Remember if you are new to the whole landlord scene - there are others that aren’t.
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10. All Of The Above - the 9 above points are of equal importance. Putting money aside for repairs is of little consequence if you as a landlord are not properly insured.
