What Property Gives Best Return?

Last week I received a call from a Landlord looking to invest in another residential property.

The preferred area being Clapham. Now for the style of property, they don’t like blocks nor modern buildings – aesthetic reasons, so that leaves period buildings- the ever popular choice! Sharing knowledge of the most popular requests from Tenants, these being-

  • Garden/ outside space
  • Wood flooring
  • Generous Room Sizes
  • Bright
  • Modern
  • Close to Transport

My Landlord was now certain what features to look for, though she wanted to further understand what style property will give her the best return? I carried out some research (on properties with gardens) and came up with the following-

Style property         Average sale price              Average Rent                       Yield

1 Double Bed           £522,083.33                                   £1708.25pcm                     3.9%

2 Double Bed           £651,250.00                                   £2194.85pcm                     4.0%

3 Double Bed           £868,571.00                                   £2549.28pcm                     3.5%

4 Double Bed           £844,666.00                                   £2839.16pcm                     4.0%

Looking at the above we can see either a two or four double bedroom property will give the best return, depending on budget! Remember, if you are looking for a rental investment try to include as many of the popular Tenant requests as listed above.  My Landlord has since begun her search in Clapham for a well-proportioned, two double bedroom garden flat with wood floors and lots of natural light!

If you are also looking to invest in residential property, other popular spots to consider would be would be Balham, Brixton, Stockwell and Tooting.

Contact me or Bruno if you’re looking to buy rent, or want to sell or let your property.

Melissa De-Vall, Revere Property Limited

Energy Performance Certificate Regulation Changes – How Will These Affect Landlords And Their Properties?

Energy Performance Certificates (EPCs) were introduced in England and Wales for rental properties on 1 October 2008 as a legal requirement for any property that is let out. They are a result of European Union Directive relating to the energy performance of buildings. An Energy Performance Certificate is valid for 10 years from the date it is completed, it contains information about a property’s energy use and typical energy costs and also recommendations about how to reduce energy use and save money.  It gives a property an energy efficiency rating from A being the most efficient to G, the least efficient.

Next year will see the 10 year anniversary since EPC’s were introduced, this will mean the renewal of EPC’s for many landlords who need to be aware of some very important changes that will take effect from the 1st April 2018.

From 1st April 2018 a property must have a minimum energy efficiency rating of E in order for a landlord to rent their property. This requirement will apply to all tenancies that begin or are renewed on or after 1st April 2018, for existing tenancies the regulations will not apply until 1st April 2020.

Where the EPC shows a rating lower than E, so a rating of F or G, this will mean the property is substandard and therefore the landlord unable to rent the property until energy efficiency improvements in the EPC have been undertaken.

Local Councils will have the task of enforcing the new regulations. They have the power to serve a notice and request that a landlord provide details to prove compliance. Where they find that a landlord is in breach of these new regulations, they can impose a penalty of up to £5000. Further penalties can also be applied to properties that continue to be rented out despite the breach and original fine. Such fines will not affect the legal standing of the tenancy which means that rent will continue to be due and payable from tenants.

We recommend landlord’s review their current EPC’s as soon as possible, to see what rating their rental property currently achieves in advance of the new changes. If your property currently scores lower than an E, here are 7 potential modifications you could make to help improve and push up the rating of your property before the regulations change:

1)Lighting – Change any halogen or non-Low Energy Lighting to Compact Fluorescent Light’s or Light Emitting Diodes.

2)Boiler– Change an old inefficient boiler to a modern condensing one as these are the most efficient boilers on the market. This change would reflect a significant improvement on the EPC.

3)Heating Controls – Getting a room thermostat, individual Thermostatic Radiator Valves (TRVs) and Boiler Programmer would also have a positive impact on the EPC.

4)Windows – Replacing old single glazed windows with new double glazed windows will not only substantially help reduce heat loss but will also aid in shielding the property from outdoor noise.

5)Roof Insulation – Consider getting the loft re-insulated if it is currently 90mm or less. Introduce insulation at least 270mm in depth as this will also help avoid heat escaping.

6)Walls – If there are any cavity walls these would also benefit from being filled. This will help spread heat around the property. It can also prevent the property getting too hot in the Summer.

7)Draught Excluders – Fitting these to the insides of doors and windows will improve the insulation of doors and sash windows by sealing gaps that let in cold air.

If you require anymore information, feel to get in touch and speak to either Bruno or Melissa.

If you’re considering renting or selling your property and need some advice, get in touch with REVERE, the award winning Estate & Letting Agent today. We offer FREE property valuations and would love to be of service!

Bruno de Sousa – Revere Property Limited – 0207 223 3922 – enquiries@revereproperty.co.uk

 

How New Property Tax Laws Effect Landlords

One of my Landlords with a rental property in Tooting recently asked what were my thoughts regarding new tax changes for residential property. For anyone uncertain of these changes, let me explain!-

The Government are restricting the amount of income tax relief Landlords receive on residential property. Landlords will no longer be able to receive tax relief on financial costs (such as mortgage interest). This change is being bought into effect gradually over the next four years –

2017-2018               75% of finance costs can be deducted from property income (previously this was 100%)

2018-2019               50% of finance costs can be deducted from property income

2019-2020               25% of finance costs can be deducted from property income

2020-2021               No deductions of finance costs can be made from property income

This would mean on an average one bedroom flat in Brixton, with a rental income of £1,400.00pcm/ £16,800.00pa and an ‘interest only’ mortgage with monthly payments of £450.00pcm/£5,400.00pa, – Year one (2017-2018), the Landlord would receive tax relief on 75% of the mortgage interest (equating to £4,050.00), leaving them to pay tax on the remaining £12,750.00 of the rental income. For a normal rate tax payer at 20% this would be £2550.00 for the year. It would be prudent to speak to an accountant, as there may be other costs which could be deducted from the rental income before tax.

So, what are my thoughts? Well if a Landlord doesn’t incur financial costs on their rental property this will not affect them. For Landlords with a portfolio of properties, some accountants suggest it could be more beneficial to run as a company, where such costs would be company costs, thought, with this model there are other tax changes to consider. I’ve adopted the thought that becoming a Landlord is a ‘decision’, and when making such a decision, costs must be considered. However there will also be an income generated – even if that income is just paying off the mortgage- it’s still an income, and with an income comes tax.

Until now having tax relief was a bonus that many of us have come to take for granted. Ultimately your rental property is your business, it will earn you money. Keep your property in good condition and keep up to date with legislation- even better, as many Landlords do, have Revere take care of all your property needs whether it be letting or selling.

Maybe its time to flick through a property magazine to get some ideas for your next property venture.

We’re happy to discuss any of your property queries, contact myself of Bruno.

Melissa De-Vall, Revere Property Limited, 020 7223 3922 enquiries@revereproperty.co.uk