Tuesday, 11 December 2018

Edinburgh buy to let opportunity in a traditional block

Today’s buy to let opportunity from The Edinburgh Property Blog is one bed flat in a well maintained traditional tenement.

The flat is a top floor, one bed flat in Wardlaw Place in Gorgie.  It has a lounge with a kitchen as well as an interesting dining area off it, a double bedroom and a shower room.  The property has double glazing, electric heating, a shared garden at the rear and unrestricted parking outside.  Although the sales advert says that the property ‘would benefit from some refurbishment’, the pictures make it look as if it would be ok to rent out so worth checking this out at your viewing.

A couple of points to be aware of.  The flat is on the top floor of a tenement so if there are (communal) roof problems, this flat is likely to be one of the first to be impacted.  In addition, the property has electric storage heating which is less attractive to tenants than gas central heating.  These are likely to be reflected in both the purchase price and the rent levels achievable.

Turning to the financials.  The asking price for this property, which is on the market with Mov8, is offers over £115,000 so let’s say it goes for £130,000  The flat should let for around £625 pcm which get you to a yield of 5.8%. 

We hope you find our posts useful.  If you would like some advice with your potential investment, please call me on 0131 603 4570 or email me on news@thekeyplace.co.uk.

#edinburgh #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #privaterentedsector

Friday, 7 December 2018

Mental health support .... all part of the day job for a letting agent

Latest instalment of The Key Place's regular blog 'Confessions of a  . . . Letting Agent'

Landlords often ask us what goes on behind the scenes at The Key Place and so we thought we would share our experiences, and what we have learned from those experiences, with you.

I have working in lettings for many years and can categorically state that in this job there are no 2 days the same.  I look back and think there are many times when I or my staff could have taken the easy option and been less helpful to our tenants, however often taking the roundabout route results in a more positive outcome for our landlords.  Here is one such example.

We had a lovely Italian tenant, Luigi, who was a long term tenant in a flat in the south side of Edinburgh.  He was the sort of tenant all letting agents and landlords want – a professional who worked in IT, paid his rent in full 6 months in advance, kept the flat clean and tidy, was never a bother.  I used to put extra time in my diary to do inspections at Luigi’s flat as he always made me a strong Italian coffee and we would sit and put the world to rights for a while.

After being a tenant for years Luigi became very paranoid.  Whether it was stress related, a mental health issue or down to too much strong Italian coffee, I will never know.  However as a result of the paranoia Luigi requested the locks be changed on his front door.  He wanted an additional lock fitted, so that he would have a Yale, a Chubb and a new extra Chubb lock.  His logic for this was that when tradesmen visited the flat, only the new Chubb would be locked – they would therefore only be given this key, and not the other 2.  Luigi was very anxious that we meet this demand and was really quite insistent.

Although a strange request, we agreed.  Thinking about Luigi as a tenant, we decided we wanted to keep him.  Often it is better to make a small compromise to keep a good long term tenant than to refuse help and risk losing them.

Sadly Luigi has left now and gone back to Italy to be with his family.  We miss him as a tenant and wish him well, although I do hope he is staying away from the Italian coffee!

For information about the services we offer, please visit our website www.thekeyplace.co.uk

#bathgate #bonnyrigg #bo’ness #boness #dalkeith #edinburgh #falkirk #grangemouth #kelso #linlithgow #livingston #loanhead #musselburgh #penicuik #stirling #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #firsttimebuyers #brexit #hardbrexit #cliffedge

Tuesday, 4 December 2018

Is the Edinburgh property capital growth v rental yields see saw broken?

In Edinburgh, I am speaking to more and more landlords, be they seasoned professional landlords or FTL’s (first time landlords), as they read The Edinburgh Property Blog that shows that the Edinburgh rental market is doing reasonably well, with rents and property values rising. 

When I was having a chat with one of these landlords over a latte in Cafe Contini the other day, he asked me two completely unrelated questions that got me thinking.  The questions were, how much faster are Edinburgh property prices rising than in towns around about Edinburgh and how much he should be paying per square foot?

Interestingly, we both thought that obviously Edinburgh property prices would be rising faster than towns around about but, going by my mantra of ‘never assume nuthing’, I did my research and was astounded by what I found.

Over the last 20 years, property values in Edinburgh have risen by 248.28% which is ever so slightly ..... but only every so slightly ..... more than towns around about Edinburgh – Musselburgh property values rose by 245.81% in this 20 year period, Penicuik property values by 242.34%, South Queensferry by 242.33%, Linlithgow by 242.33%, Dalkeith by 242.33%, Falkirk by 244.30% and Grangemouth by 240.05%.

This is an interesting result as it makes you wonder whether the historical view of the capital growth vs rental income see saw is broken.  The capital growth vs rental income see saw says that the higher the capital growth the lower the rental yield and vice versa. 

However, the property values research I did means that whilst the capital growth of Edinburgh property is growing faster than the surrounding towns it is only growing a wee bit faster whereas there is a significant difference in the rental yields between Edinburgh and the surrounding times – rental yields can easily be 6-8% per year in these towns whereas in Edinburgh you are lucky if you get 3-4% per year which, over a 20 year period, could be 70% more on average which is far far greater than the small differences in capital growth noted above. 

So is it time for Edinburgh landlords to have a re-think and consider buying properties outside Edinburgh?

What about the ‘how much he should be paying per square foot’ question I hear you say?  Well, that’s a topic for a future blog post .... watch this space.

Whether you are a landlord, a ‘Homes Under the Hammer’ addict or just a homeowner who is interested in what is happening to the local property market, then please visit the Edinburgh Property Blog (www.edinburghpropertyblog.co.uk), contact me for a chat (phone on 0131 603 4570) or email me (robert@thekeyplace.co.uk).

#edinburgh #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #firsttimebuyers #brexit #hardbrexit #cliffedge

Friday, 30 November 2018

Tenancy deposits ..... what to do

Welcome to the next instalment of The Key Place’s regular Scottish Private Rented Sector regulation updates ..... as there are over 150 laws that apply to renting out a property in Scotland, there is a lot to know to ensure that we are doing thing right.

Today we are discussing tenancy deposits. 

It has been six years since the Scottish Government introduced rules that require all deposits to be held by an independent third party tenancy deposit scheme.  I believe that this was been a huge step forward in introducing some trust into the sector.  At the time, people were saying that it won’t make any difference as all landlords and letting agents were, of course, managing deposits in the correct manner ..... but clearly this was not the case as you only have to look at the number of letting agents that were sold around the time of the introduction of these new rules to think that some of their deposit accounts may not have been full!

Legally, anybody who takes a deposit for a Private Rented Sector property needs to lodge it with a third party Tenancy Deposit Scheme within 30 days of a tenancy starting.  There are three Tenancy Deposit Schemes:
  • Safedeposits Scotland.
  • my deposits scotland.
  • Letting Protection Scotland.

A key point to note is that a deposit is a tenant’s unless the landlord/letting agent prove that the landlord should get some/all of the deposit at the end of a tenancy ..... this can only be done at the end of a tenancy.
At the start of a tenancy, you need to do the following:
  • Take the deposit.
  • Lodge it with a Tenancy Deposit Scheme.
  • Formally tell the tenant you have done this (there is a prescribed form to do this).

During a tenancy, the deposit stays in the Tenancy Deposit Scheme.
At the end of a tenancy, you need to do the following:
  • The landlord/letting agent and the tenant should seek to agree the split of the deposit.
  • If both agree, ask the Tenancy Deposit Scheme to pay out on the basis of the agreed split.
  • If both the tenant and the landlord/letting agent do not agree, then the fun starts .....

If the landlord/letting agent and the tenant do not agree how the deposit should be split, then the case goes to the Tenancy Deposit Scheme’s arbitration systems.  In this case:
  • The landlord/letting agent give the Tenancy Deposit Scheme their view of how the deposit should be split between the landlord and the tenant along with the evidence backing up this view.
  • The tenant does the same thing.
  • Once the Tenancy Deposit Scheme gets this information, it passes it to their arbiter who decides how the deposit is split based on the EVIDENCE only ..... they do not speak to the landlord/letting agent or the tenant.

At The Key Place, we have extensive experience of tenancy deposit schemes including the arbitration process which is the most complicated aspect.  Based on this, here are some helpful hints:
  • Always follow the TDS rules .... there are fines of up to three times the deposit amount if you don’t.
  • The law has been amended recently to make it really clear that money received from a tenant can only be rent or deposit ..... it cannot be anything else whatever name you may give it.
  • Evidence is key to getting any money from a tenant’s deposit
  • Key pieces of evidence are:

      Detailed inventory at the start of the tenancy.

      Check out report at the end of the tenancy.

      Detailed rent records.
  • Arbitration submissions .... these are a wee bit of science and a wee bit of art so it is best to get somebody who has experience of these to manage the process for you.

We at The Key Place are always happy to help with deposit scheme queries, just give us a shout.  

    Tuesday, 27 November 2018

    Complete refurbishment required for this Edinburgh buy to let opportunity

    The buy to let opportunity today from The Edinburgh Property Blog needs a complete refurbishment .... and when I say ‘complete’, I mean complete.

    The property is a one-bed first-floor flat in Bothwell Street just of Easter Road in Edinburgh ..... it’s in a traditional tenement. 

    The flat has a large lounge, a kitchen, one bedroom, a toilet and a shower in a cupboard.  The property looks as if it has single glazed sash & case windows, no heating (other than an electric fire in the lounge) and on street parking but it is worth checking this ..... as well as whether there is a communal garden.

    The asking price for this property, which is on the market with Campbell Smith, is offers over £105,000.  Given the requirement for refurbishment, I would expect the property to be popular so say it goes for £125,000.  To be honest, I do not know how much it would cost to refurbish, this is something you would need to assess once you have seen the flat (see below for further comments).  Once refurbished, I would expect that the flat would let for around £700 - £725 pcm depending on the extent of the refurbishment. 

    The trick with buying refurbished properties is not to get carried away with idea that because it is cheaper to buy it must be a bargain as, in my experience, people often underestimate the cost of refurbishment (both the refurbishment itself and the finance costs of the associated void period) and so spend too much money on the property itself. 

    My advice would be to work backwards from the rent you expect to get post refurbishment and rental yield you require to derive a ‘total price’ you are prepared to spend.  Once you have this ‘total price’, be brutally honest regarding the costs of refurbishment and deduct this ‘brutally honest’ cost from your ‘total price’ to get the price you are prepared to pay for the property itself.  Then stick to this price for the property itself and do not be seduced into paying more.
    We hope you find our posts useful.  If you would like some advice with your potential investment, please call me on 0131 603 4570 or email me on robert@thekeyplace.co.uk.

    #edinburgh #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs 

    Friday, 23 November 2018

    Welcome to our monthly blog - Confessions of a Letting Agent.

    Landlords often ask us what goes on behind the scenes at The Key Place and so we thought we would share our experiences, and what we have learned from those experiences, with you.

    This week I thought I would tell you about a high end property which we manage in a prestigious Edinburgh location.  We have looked after this property for a number of years, without any problems.  Well, apart from once . . .

    The property is a converted warehouse with a stunning interior.  Included in the furnishings are a baby grand piano and original art works by artists including John Bellany and Peter Howson.  We advised the owner to remove these prior to letting however he declined. 

    The property was up for rent and I had an enquiry from a local businessman who was keen to view.  I met him myself.  At the viewing he was overwhelmingly interested in the artwork, more so than the property itself I felt.  I have to say that I became a bit suspicious about his motives, as he enthused about the paintings.

    The businessman came back to me after the viewing to say that he would like to take the property.  I sent him an application pack.  Although his references checked out, something still didn’t sit right with me.  As he owned a business locally, I took a drive by to have a look.  To my surprise the business didn’t actually exist.  There was a business with a similar sounding name but not the one he claimed to own.  I asked him to confirm the business name and address and he came back with the same information.

    While I was snooping around, the businessman phoned wanting to know about the progress of his application.  As he had said he was moving in with a wife and son and they hadn’t seen the property, I suggested a second viewing to let them have a look.  He said he would get back to me on this.  A few days later he called to set up a viewing. 

    I met the family at the property and was immediately aware of the very strange dynamic between the 3 of them.  It was as if the businessman had never met the boy and the wife seemed more like an acquaintance who wasn’t particularly interested in looking around the place.  Once again the chap spent almost the entire viewing looking at the paintings.

    Well by now I had convinced myself that he certainly had the potential to be an art thief. I shared my concerns with a colleague who was in agreement.  I decided to speak to the owner, who was aware that someone was interested in taking the property.  I told him the whole story and advised him not to take these people as tenants.  He was happy to trust my judgement and so I let them know that their application had been unsuccessful.

    I think in business it is essential to listen to your instincts.  It would have been easy to take the businessman’s money to secure a let but who knows what may have happened next.  Rather than choosing this option I stood back and looked at the bigger picture, and at the possible long term repercussions if my suspicions were proved to be correct.  In the end I decided to give up the short term gain in favour of doing what I instinctively felt was right for the landlord.  Shortly after, I secured a good long term let for the landlord, and was able to sleep easy at night!  To this day, the paintings remain in situ.

    #bathgate #bonnyrigg #bo’ness #boness #dalkeith #edinburgh #falkirk #grangemouth #kelso #linlithgow #livingston #loanhead #musselburgh #penicuik #stirling #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #firsttimebuyers #brexit #hardbrexit #cliffedge

    Tuesday, 20 November 2018

    Hard Brexit - How Would It Impact Edinburgh House Prices?

    With all the current discussions about Brexit, more and more the concept of a hard Brexit has been taking centre stage. 

    I am often being asked how a hard Brexit would affect the Edinburgh property market so I am going to try and give you what I consider a fair and unbiased piece on what would happen if a hard Brexit takes place in March 2019.

    After the weather and football, the British obsession on the UK property market is without comparison to any other country in the world. I swear The Daily Mail has the state of the country’s property market on its standard weekly rotation of front-page stories! There are better economic indexes and statistics to judge the economy (and more importantly) the property market. The number of transactions are just as important, if not more, as an indicator of the state of the property market.

    Worries that a ‘Yes’ vote in the Brexit referendum would lead to a fast crash in Edinburgh (and national) property values were unfounded.  Now, it’s true the Edinburgh property market has see both a slower increase in the number of people moving and property values in 2017 and 2018 year to date compared to the heady days of a few years but, before we all start panicking, let’s ask ourselves, what exactly has happened in the last couple of years since the Brexit vote?

    Edinburgh house prices have risen by 15.54% since the EU Referendum…

     …and yes, in 2018 we are on track (and again this is projected) to finish on 12,700 property transactions (i.e. the number of people selling their home) … which is slightly more than 2017 … and higher still than the long term 10 year average of 10,095 transactions in the local council area.

    So, it appears the EU vote hasn’t caused many major issues so far.  However, if there was a large economic jolt then that could be a different game but how likely is that?

     The property market is mostly influenced by interest rates and salaries.

    A hard Brexit would subdue wage growth to some degree, yet the level of the change will depend on the undetermined type of Brexit deal (or no deal). If trade barriers are imposed on a hard Brexit, imports will become more expensive, inflation will rise and growth will fall, although at least we are not in the Euro, meaning this could be tempered by the exchange rate of the Pound against the Euro. In plain language, a hard Brexit will be worse for house prices than a deal.

    So why did the Governor of the Bank of England suggest a disorderly hard Brexit would affect house prices by up to 35%?

    I mean it was only nine years ago we went through the global financial crisis with the credit crunch. In Edinburgh property prices dropped by 6.1% over a year or two. If we had a similar percentage drop, it would only take us back to the property value levels we were achieving in the summer of 2017.

    And let’s not forget that the Bank of England introduced some measures to ensure we didn’t have another bubble in any future property market. One of the biggest factors of the 2009 property crash was the level of irresponsible lending by the banks. The Bank of England Mortgage Market Review of 2014 forced Banks to lend on how much borrowers had left after regular expenditure, rather than on their income. Income multipliers that were 8 or 9 times income pre-credit crunch were significantly curtailed (meaning a Bank could only offer a small number of residential mortgages above 4.5 times income), and that Banks had to assess whether the borrower could afford the mortgage if interest rates at the time of lending rose by three percentage points over the first five years of the loan … meaning all the major possible stumbling blocks have been mostly weeded out of the system.

    So, what next?

    A lot of Edinburgh homeowners might wait until 2019 to move, meaning less choice for buyers, especially in the desirable areas of Edinburgh. For Edinburgh landlords, Edinburgh tenants are also likely to hang off moving until next year, although I suspect (as we had this on the run up to the 2015 General Election when it was thought Labour might get into Government), during the lull, there could be some Edinburgh buy to let bargains to be had from people having to move (Brexit or No Brexit) or the usual panic selling at times of uncertainty.

    Brexit, No Brexit, Hard Brexit … in the whole scheme of things, it will be another footnote to history in a decade. We have survived the Oil Crisis, 20%+ Hyperinflation in the 1970’s, Mass Unemployment in the 1980s, Interest Rates of 15% in 1990’s, the Global Financial Crash in 2009 … whatever happens, happens. People still need houses and a roof over their head. If property values drop, it is only a paper drop in value … because you lose when you actually sell. Long term, we aren’t building enough homes, and so, as I always say, property is a long game no matter what happens – the property market will always come good.

    Growth in UK property values as well as in Edinburgh seems fated to slow over the next five to ten years, whatever sort of Brexit takes place.

    We hope you find our posts useful.  If you would like some advice with your potential investment, please call me (on 0131 603 4570) or email me (robert@thekeyplace.co.uk).

    #edinburgh #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #firsttimebuyers #brexit #hardbrexit #cliffedge