Is It A Good Time For Property Investment

Is Now A Good Time To Invest In Property

In todays economic conditions the word investment is not used as freely as it was a year ago. Combine this with the word property or house and its even fewer.

So why does property investment seem such as scary proportion at this point in time.

All investment opportunities in all industries have ideal conditions. When prices are low - this is the time buy.

The problem with the property and housing market is that the residential home buyer is obviously connected to this market.

Property sales involving ordinary home buyers in the UK has fallen by 53% in the past year, according to the latest government figures.

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In September nearly 60,000 homes were sold, over twice as many were sold the same month last year.

That was also a 62% fall from the recent peak in sales, of 154,000, seen in December 2006.

Currently the credit crunch has plunged the housing market into its sharpest slowdown for many years.

Housing Market Decline

Despite a recent cut in interest rates, attempts by the government to assist the banking system, and a reduction in the burden of stamp duty, there is no sign yet of the property market coming out of its worrying decline.

Providers of mortgage products such as the Halifax and Nationwide have reported that prices are still in decline around a tenth of what they were this time last last year.

A recent survey by the Royal Institution of Chartered Surveyors (RICS) found that estate agents were having problems trying to sell a property a week.

In addition, the best leading indicator of future activity - the number of new mortgages approved for house purchase but not yet lent - is down by 70% on a year ago. This indicates that prices still have not reached a low point.

Lack Of Money

The key factor in the sales slump has been the lack of funds in the past year available to banks and building societies to lend to borrowers, especially first-time buyers.

With house prices falling, lenders have been demanding that borrowers put down deposits that are much larger than normal, to protect themselves if someone becomes unemployed and the home is subsequently repossessed and sold at auction.

At the start of the year, mortgages worth 100% or even more of a property’s value disappeared. Now even the traditional 95% mortgage is in danger of disappearing.

Many lenders now ask borrowers to put down at least 10% of the purchase price of a new home. The most favourable deals, at the lowest interest rates, are generally available only to those who can put down 25%, or sometimes even 40%, of their purchase price.

“There are some signals that housing market activity could be close to hitting a floor but there is a danger that a sharp rise in unemployment could precipitate a further round of fear on the part of buyers,” said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics).

Is Now A good Time To Invest In the Housing Market

Despite the unhealthy conditions if property were any other commodity - the time for investing is fast approaching.

Once the market is on the floor the only way is inevitably up.

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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.

Property training companies such Property Mentor offer Free property training courses and seminars. Visit  Property Mentor website

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.