Richard Carr tells his 10 top tips for buying investment property

Buying an investment property continues to one of the smartest areas to invest your money. An investment property should be about increasing your wealth and securing your financial future. However, you need to keep in mind how effectively you are with managing your investment, which will determine whether or not the investment helps you reach your financial goals. The cost of owning an investment property can be surprisingly low after you take into account your rental income and tax deductions you’ll be entitled too. Check out Fortitudo’s tips for helping you bag a feasible investment…

1. Choosing the right property at the right price

Investing in property is usually about capital gain, so choosing the right property is vital. It is about choosing the property that is most likely going to increase in value and is appealing to rent out. The key is to do your research, work out what everything is selling for in and around the area and then you’ll discover that you will be very good at working out what the property might be worth.

Lenders and mortgage insurers have valuable data on different locations and property developments. This information can easily be accessed to assist you to avoid picking the wrong investment property. Ensuring you have a steady rental income stream is also vital because this cash flow will see you through the holding of the asset, providing an income and become a safety net of cash if anything needs maintaining within the property.

There are many different types of property you can buy, which all have their pros and cons, These are worth overlooking potential investments. It’s important to note that your property needs to suits the demographics of the chosen area you intend to invest in.

• Some apartment units have a very low maintenance cost, but can be slightly higher than the generic home.
• Houses are more expensive to maintain but can be offered to students and families, depending on the client you wish to cater to.
• Land can provide no rental income but may appreciate more quickly if purchased in an area with limited supply.

2. Do your sums – Cash flow is always king

Investing in a property should be considered a medium to long-term investment, so you need to make sure you can afford to maintain your mortgage repayments over the long term. Once you own your investment property it can become quite inexpensive to keep, this is down to the tax reduction on many of the expenses and the rent that is earned. It is also important to note that rents tend to increase over time, leading to higher income. Don’t forget to take taxes into consideration when doing your calculations. These can change all the time, Stamp Duty, Capital Gains Tax, and Land Tax all need to be taken into consideration.

3. Finding a good property manager and let them take control

A property manager is usually a licensed estate agent and a professional in their field. They can give you ongoing advice, manage your tenants, maintain any issues, review rents, find you the right tenant from checking and referencing. Some estate agents offer this at a small percentage of a deduction of your rental price.

4. Understand the market and its dynamics

If you’re investing your hard earned cash into something, you need to know everything about it. Treat the list below as a starting point of considerations before investing.

• Do your research on other properties in the area.
• Speak to as many locals as possible.
• Visit local estate agents.
• Always consult professionals to do things you’re not sure on.
• Research independent information for online; average rents, property values, demographics and suburb reports.

5. Make the property attractive for renters

Always keep to neutral tones and keep the kitchen and bathroom both modern and in good condition. This will always attract better quality tenants, and also gives them the opportunity to make it their own. Remember this is not your home, it is simply an investment, therefore do not risk getting too involved into what it looks like.

6. Use the equity of another property

Leveraging equity from your personal loan or another property investment can be a great way to purchase your investment. It also displays to mortgage lenders that you are a good candidate to lend too, considering previous payments haven’t been missed.

7. Always look at the long-term goal

Remember to always look at the bigger picture, property prices do not always rise straight, having patience is vital in any investment. The longer you can afford to commit to a property, the better the investment will be for you.

At Fortitudo we have many different new builds that are available to buy off-plan, which will be a good investment for first-time buyers or buy to let investors. For more information please visit our website.

Richard Carr talks about 3 things you need to know about the UK housing market in 2018

Since the Brexit referendum has happened, the UK housing market has been experiencing some instability in certain areas. It has been facing major difficulties in the recent months in properties at the higher end of the spectrum and in certain geological areas. This, in turn, has resulted in uncertainty from buyers. Since 2016 the average price in the UK has gone up to over £220,000 per dwelling. Although this pricing has gone up between 2012 and 2017, the earnings growth hasn’t corresponded to this, making it extremely difficult for people to buy houses. Richard talks to us about 3 important aspects of the housing market that you could take advantage off.

A fixed rate mortgage might be the best option for you

• You remain stable for consecutive years.
• Can be used with buy-to-let properties too.
• More properties are being built and are expected to come to the market this year.
• First-time buyers can take advantage of schemes like Help to Buy to further augment choices.

Buy-to-let is still a viable option for investors

• Tax reforms left uncertainty for buy-to-let investors.
• Liverpool has increased in rents at 6.2% PA.
• Nottingham increased in rents at 6.2% PA.
• Cardiff increased in rents at 6% PA.
• Southampton increased in rents at 5.9% PA.
• Greater Manchester increased in rents at 5.9% PA.
• University towns remain a good place to invest in buy-to-let.

Affordable homes are available
• Local councils are working with private developers to make housing assessible for all.
• Shared ownership allows you to part-own or rent part of a home.
• Government schemes including Help to Buy.
• Areas such as the west of the UK are cheaper to live.
• Stamp duty has been abolished for first-time buyers if the property they are buying is less than £300,00.

 

 

 

Richard Carr talks about Fortitudo’s investment into Poole

For the first time in 12 months, it looks as though House prices are on the rise down south, especially in Poole, rising by 8.3% in the last 12 months. According to the National Statistics, the average property in the area sold for £317,561, which is nearly 50% higher than the UK average of £226,906. This is, however, making it increasingly difficult for first-time buyers to get themselves onto the property ladder.

Throughout the whole of the UK, there is an increase in house prices. However, the strongest growth regionally has shifted from London to the south west of England. Christchurch houses have risen by 5.9% in the last 12 months and April saw a 3.1% leap, selling their average property for £350,696. Whereas Bournemouth houses have risen by 3.6% since June last year and 0.2% in April. Although these properties will increase in value for current owners, it makes it even harder for first-time buyers to even think about saving for a deposit, not to mention all the other fees and extra’s that come with owning a home.

At Fortitudo we try to make property assessable for everyone and create property ownership possible for first-time buyers. There are a number of developments currently under construction in Poole and Bournemouth which will all be associated with Help-to-Buy. The government scheme allows first-time buyers to purchase a new home with just a 5% deposit, the scheme also recommends mortgages that would work with them to get everything done efficiently and less costly as possible. Most of our sites are associated with Help-to-Buy, you can find which development is most suitable to you below!

Help to Buy – Key points

– The fifth anniversary of the Help to Buy loan scheme is this year.
– You can borrow interest-free for five years.
– You can get on the housing ladder sooner.
– You could buy with a smaller deposit but get better mortgages rates.
– Your mortgage payments are likely to be less than your rent.

Fortitudo Developments that intend or currently feature Help-to-Buy

The Highlands, Fareham
Willow Park, Havant
Black and White Cars, Commercial Road
West Quay Road, Poole
Wootton Mount, Bournemouth
30 Tower Road, Branksome Park
– Canaway Court, Poole
– Poole Pottery, Poole

 

 

Richard Carr talks to us about the current property market in London

Some years ago, London property investment was perceived as very stable. For example, back in 1998, the average price of the property was £115,00. 20 years later in 2018, that residential price would be somewhere around 300% higher. But just because something is dependable, it doesn’t make it resistant to change.

In 2017 experts started warning about a UK housing market downturn in London within the coming year, which was demonstrated in the last half of the year and has continued during 2018. This is led to a lowered buyer demand and house prices flattened. Mortgage lender Halifax said that London housing prices are dropping at their quickest rate in nine years. Prices have dropped 3.2 %, which is actually the biggest decline since the financial crisis. But from property investors perspective Richard Carr explains that this is a good time to buy. So the question is, what has caused these changes?

UK leaving the EU
• Inflation rose to around 2.5 %.
• Brexit impacted the housing market the most
• Affordable housing has plummeted
• People are not selling
• Home-owners are buying abroad

Stamp Duty Land Tax
• Has become 2.3 % higher over the past 5 years.
• Is on a constant rise.
• London is a prime area for high stamp duty.
• Has made buy-to-let housing investment less attractive.

So, is it a good time to invest in property?
The key to succeeding in the housing market is staying ahead of the market as much as possible, it’s about knowing when and where to buy and to sell. There are some signs that point towards what could happen in 2019, but to go beyond, it takes a real expect to understand all the factors affecting the housing market right now. No matter your situation, whether it’s buying your first home, or buy-to-let, or even considering buy-to-leave properties, all these routes need experts to advise. See what Fortitudo has to offer today for your current situation, to identify the right opportunities for you. It is my opinion that when we exit the EU there will be a boom in property and the UK, this is because many large corporations have held back on their capital expenditure, we will become the Hong Kong of Europe which will lead to a flood of inward investment.

Richard Carr’s top tips for aspiring first time buyers

Buying your first home can be one of the most daunting decisions to make in ones lifetime. To rent or to buy is one of the key questions for many. The whole process is long and complicated and can seem initially fairly confusing to younger generations with no guidance, but it doesn’t have to be with the help of Fortitudo.

Richard Carr, Chief Executive for property development company Fortitudo, specialises in properties for first time buyers. Richard would like to share his top 5 tips for first time buyers looking to get a foot onto the property ladder.

1. Look into schemes and mortgages with the lowest rates
Over time the government has tried to make home owning more assessable for first time buyers with many different schemes. The Help to Buy scheme is part of most of Richard Carr’s developments, and allows you to purchase properties with a deposit as little as 5%. It aims to make more mortgages accessible for those who cannot afford a large deposit. The Help to Buy ISA pays first time buyers a government bonus, which is interest free for the first 5 years, leaving you enough time to get you on your feet!
Low interest rates with long term fixed rate are hard to come by, that alone is enough to put some people off. Also household circumstances can change, and no one wants to be in a contract that they cannot afford after 5 years. However many banks are starting to realise that this is a problem for many. Recently Virgin Money Mortgages have lowered there interest rates and increased their fixed rate to 10 years, in time many other competing banks will do so too!

2. Know your area
A good location is key, it can make or break your first home, so research needs to be done imperatively. Learn about the job opportunities that could arise, see what schools are in the area, check out the leisure and hospitality facilities. Visit the area at different times of the day; find out how busy your morning commute could be. Test out transport links – how long does it take you to catch a train or a bus? What bus stops are nearby? The number one rule is: never commit to an area unless you could imagine yourself living there.

3. Save your pennies
We all know that buying a home for the first time is a huge financial commitment. Don’t forget that its not just the deposit that you need to save for. Make sure you have thought about all the added extras that come with buying a property; mortgage arrangement fees, solicitor fees, council tax, utility bills and insurance. This might mean tightening the purse away for a little while. Try and cut down of day-day spending and invest into a Monzo card, which can help track your spending and saving. Did you know: the average Brit spends over 2,000 a year in coffee shops!

4. Check your credit report
These days your credit report is more crucial than ever when it comes to being accepted for a mortgage, as lenders will want to see a squeaky clean history of previous borrowing. Clearscore offers a free credit check and tracker and gives you tips and tricks on how to improve your rating, to get the most suited loan to you! 

5. Love move in day
You’ve done your research and saved your money – now is the time to enjoy your new home and make It your own. Packing and moving boxes may feel like a bore, but moving day is a time for celebration! Keeping up spirits with on the day will be sure to get you through. Once the hard work is all over, why not head over to your new neighbours with a glass of bubbly. It’s time to make the most of your very first home.

Property Vs Pension investment – this weeks debate

“Assuming that property prices continue to increase over the coming 20 years in the way they have in the past 20 years, a property of today’s average value of 235,000 will be worth 1 million by 2038.”

Says James Davis the founder of letting agent Upad. Jamie has 20 buy-to-let properties and his confident that they will see him through his retirement. Property investment is a secure way to build your retirement fund. Even with the worst-case scenario of not making any monthly profit from your property (which you will), you will still have a significant amount of capital appreciation.

But what type of person are you?

Property and pension are two completely different entities. Depending on circumstances, lifestyles, strategy and risk, depends on which one a person may choose. As an investor you need to ask yourself how much disposable income do you actually have? When purchasing a property, you need to think about the initial costs and post-cost which refer to the renovations and management fees. Securing these investments are time consuming which can be enough to put someone off this strategy. With pensions you can save for a retirement through achievable monthly payments over a much longer period.

Property Investment

• Property will almost certainly over perform with return on investment
• Beware of stamp duty and taxation on buy to let income
• Government schemes available to get you on the property ladder like Help to Buy
• You can cash in when you want and at any time
• Monthly income, without waiting until retirement age
• Increased risk and time consuming with managing the properties
• House pricing keeps rising
• You can re-mortgage to reinvest
• Property is a tangible asset, which gives people comfort and security

Pension Investment

• Tax-efficient way of saving, government offering tax relief on pensions
• Many different ISA’s to help you gain pension interests
• Pensions are not enough to live on throughout your retirement period
• You will need to wait till the requisite age to get hold of your funds

Richard Carr house purchase

Richard Carr discusses how Help-to-Buy could get you on the property ladder

Over recent years it has become increasingly difficult for first-time buyers to find a house and secure a mortgage that is feasible. First-time buyers are being priced out of the property market in around the UK, where nine out of ten houses are too expensive for locals, according to reports. However with government schemes in place like Help-to-Buy, it has made it possible for younger generations to own their first home. 

Help to Buy: everything you need to know

Are you trying to get onto the property ladder? You could be closer to saving your deposits than you think, move into your new home, with just a 5% deposit using Help to Buy. You no longer need a large sum of money sitting in the bank to buy a property. Keep reading for the latest initiatives and ideas to help you get on the property ladder in the UK.

Help to Buy is a popular Government encourage scheme that gives you an interest free loan, aiming to make more mortgages more accessible for those who cannot afford a large deposit. It is becoming increasingly difficult for the younger generations to get themselves onto the property ladder or even for existing property owners to move up the property ladder. But with government schemes in place like Help to Buy, can give you the right steps to owning your own home The Help to Buy ISA pays first time buyers a government bonus, which is interest free for the first 5 years, leaving you enough time to get you on your feet!

About the Help to Buy scheme
• A deposit as small as 5 % is the minimum required
• Available on most of Fortitudo developments in England up to £600,000
• Help to Buy loan is only available on new build properties
• No household annual income limit
• The government will lend you an interest free loan up with 20 % of the property value for five years. This equity loan can be repaid at any time, or on the sale of your home.
• You will only need to secure up to 75% of the mortgage
• Help to Buy also gives you direction on getting you some of the best mortgage rates at the time

How to apply?

Check your eligibly for your first home with Help to Buy

Which of our property developments are likely to have Help to Buy?

Fareham
Petersfield Road, Havant 
30 Tower Road,  Branksome
West Quay Road
• Labour club, Wimborne Road
• Dolphin Carpark
101 – 107 Commercial Road, Poole  

Richard Carr looks at recent construction growth in build-to-rent sector

While there is plenty of negative or ambivalent media attention surrounding the UK property market at the moment, official figures show that there is much to be positive about.

The British Property Federation, which represents developers like Fortitudo Property, as well as property owners and agents has just released the first set of annual figures specifically for the ‘build-to rent’ sector. The figures represent the number of homes in the UK that have been built specifically to be rented out and professionally managed.

Growth in sector

Figures from the report show that the number of build-to-rent homes that have either been completed, are under construction or in the planning pipeline across the UK has gone up by 30% to 117,893 during the 12 months up to the end of March 2018.

Image Richard Carr construction growth in build to rent sector

This sector has been boosted after the government specifically gave it a more prominent role in the national planning policy. With a strong development pipeline, it’s likely that the build-to-rent sector could double to about 200,000 by 2020.

Completions also grow

The number of houses completed in this sector was 20,863, which is a 45% increase on 2017. The number under construction has increased even more by 47%. But why is this growth happening?

As well as the government’s support for the sector, build-to-rent generally attracts long-term institutional investors as it offers a rental income stream that can pay for things like pension liabilities. And, following the government’s lead, lots of local authorities have also put their weight behind this sector, as the realisation dawns that it offers a realistic way to generate long-term, useful income and will help to meet those all-important housing targets.

Regional variances

Housing associations and councils are collaborating with developers more and more on build-to-rent schemes. At the moment, London has more build-to-rent developments than other regions, but these figures show that everywhere else is catching up.

Regions outside of London account for 62% of the total of build to rent houses under construction. Again, this is partly thanks to more positive and supportive attitudes from local authorities, which are welcoming more rental-focused developments.

Areas outside of the capital that are becoming hotspots for the build-to-rent sector include Liverpool, Manchester and Bristol. London is increasingly being seen as more of a challenge by developers in this sector. This is even though many mortgage owners in London face difficulties due to the lack of affordability and high house prices.

This is because developers of homes they intend to sell can construct and sell in different phases, while a build-to-rent developer must finish the whole site before renting out and seeing returns.

Fast-tracking affordable housing

London’s mayor has backed the policy changes and said that developments that come with a minimum of 35% affordable housing will be fast tracked through the planning process. However, the build-to-rent industry argues that implementing a 35% threshold for developers who are building to sell, and those building to rent, is unfair as it “cannot compete with build-for-sale on land acquisition and pricing”. But, the affordable housing targets in London will stay.

One of the major criticisms often thrown at the build-to-rent sector is that it doesn’t properly address the urgent need for family-sized accommodation, as it concentrates on smaller homes for professionals. However, the research shows that this is starting to change, with 17% of the build-to-rent schemes currently under construction or being planned include decent-sized houses, as well as apartments.

Richard Carr

Richard Carr discusses unspent housing budget

It’s recently come to light that MPs are demanding an explanation from government ministers about a huge amount of money from the housing budget that hasn’t been spent.

They were informed that £817 million that was allocated for the UK’s desperately needed affordable housing schemes and other projects has ended up back at the Treasury.

Cross-party committee

News of this unspent cash has apparently astonished members of the cross-party housing, communities and local committee. It certainly seems to directly contradict the prime minister’s recent assertion that housebuilding is at the top of the Conservative’s priority list. In addition, it must have been shocking to hear for local authorities, many of which are becoming desperately mired in financial problems due to constant cost cutting measures from central government.

The committee discovered the colossal underspend for the financial year 2017-2018 and confronted both the homelessness minister (Heather Wheeler) and housing minister Dominic Raab. The government is under massive pressure from MPs and the Local Government Association (which is also controlled by conservatives) to implement some helpful measures for the local authority sector, which has endured budget cuts of 50% since 2010.

Strain on local authority budgets

Bob Blackman, Tory MP and acting chair of the committee, said: “We will be wanting to know why this very large sum has not been spent at a time of great strain on local authority budgets, and why it was not channelled to other spending projects.

“It does not help those of us who argue that more should be given to local authorities if the chancellor knows money he gave last time has not even been spent.”

MPs want to argue for more money for local authorities, given that unexpectedly high tax receipts have left the Treasury with between £7bn and £10bn extra.

Public finances

On the government’s side, the Chancellor explained that much work had gone into putting public finances back in order, and they’re now ready to pump money into services, which includes housing.

He said: “We’re making good progress on building the homes this country needs with, last year, a 20-year record high for housebuilding. This is how we build an economy that works for everyone.”

Affordable housing

However, this doesn’t fit with evidence regarding the number of affordable properties that have been built. Helen Hayes, MP for Labour said she thought it was astonishing that this amount of money is unspent when the number of affordable homes built by local authorities has plunged since 2010.

She said: “This is the biggest issue for families up and down the country. It is simply astonishing and unacceptable that there is so little urgency being shown.”

Since around 1988, local authorities have consistently cut back on social housebuilding due to the impact of increasing budget cuts. Councils have also been discouraged from building new houses by the government’s ‘right to buy’ scheme, which lets tenants buy council properties at a discount of 40%.

Council development companies

richard carr houseMany councils have implemented their own property development companies to get around the rules set by government, so that they can get on and build homes. However, progress has been limited, partly die to the threat from the government that they might extend ‘right to buy’ to the new development companies owned by the council.

While shadow housing minister John Healey said that housing and local government secretary Sajid Javid’s department is ‘selling families short by surrendering much-needed cash for new homes’, a housing ministry spokesman said:  “We are investing £9bn in affordable homes, including £2bn to help councils and housing associations build social rent homes where they are most needed.

“All of the affordable housing underspend from 2016-17, including £65m returned by the Greater London Authority, has been made available to spend on similar schemes.”

Potential council insolvency

The National Audit Office estimates that 10% of local authorities and county councils have less than three years left before they are vulnerable to insolvency. It seems many people agree that urgent action is now needed.

Some developers have always been positive about affordable housing, yet have had their hands tied. At Fortitudo, we always strive to be part of the solution for people who need affordable homes, and hope that the government will act to make it easier for their own housing goals to be met.

– Richard Carr

Richard Carr on why the government should stand firm on house building

Last month the government outlined planned changes to planning legislation in the UK to tackle the shortage of houses. The plans show that councils that don’t build enough homes will lose the right to decide where new houses should be positioned.

Nicknamed ‘nimby’ (not in my back yard) councils, local authorities who don’t meet targets are to be watched by the Ministry of Housing Communities and Local Government to ensure this changes.

New rules

richard carr governmentNew legislation will see councils issued a target for the number of homes they must build every year, taking into account wages, house prices and the number of key workers (for example, police officers, teachers and nurses) in the area.

Where an area has higher ‘unaffordability ratios’, higher targets will be set for the relevant local authority. Should they fail to deliver on the target, the council will be stripped of its planning powers.

The housing revolution

While the announcement received some mixed reactions in the industry, it’s clear that we do have a housing crisis. It was discovered recently by The Independent that the 2014 initiative designed to get people on the housing ladder is failing.

The Starter Home Initiative was described at the time as a ‘major push’ to get people in their first home and further said it would include “innovative changes to the planning system” to “allow house builders to develop under-used or inviable brownfield land by freeing them for planning costs.”

Four years later, not a single property has been built under this scheme, and officials now call it an “ambition”. Many point towards the lack of accountability for councils to deliver on their promises in terms of houses, something that the new legislation is designed to change.

Reaction to announcement

In the immediate aftermath of the speech, share prices for the biggest housebuilders went up, while industry leaders expressed some notes of caution particularly surrounding involving the community in planning decisions.

At Fortitudo Property, we’re in favour of robust and sweeping reforms to tackle what has become a huge problem. As an example, the last time the UK reached the target the government has set for 2020 was in the 1970s when 300,000 homes per year were built.

To get back to this, government intervention is absolutely necessary both at a local and national level. Increasing the planning power in local authorities is an important step forward.

Working together

To use the planning power in the best way, councils should work directly with the national government to sort out problems in the current planning process. To maintain and implement a sustainable housebuilding development scheme, councils must avoid the ‘nimby’ approach.

It’s also vital that developers receive much more government support. There are problems in securing funding from banks which is slowing down the expansion of the housing market, and it’s good to hear the prime minister discuss our role as developers in the reforms.

If the government and councils can succeed in getting rid of the red tape prevalent in the planning process, then more land will be available to developers.

Home Building Fund

The government also proposed to sink £1.5bn into the Home Building Fund, which is also very important particularly for smaller developers. This influx of cash will reduce the number of developers that are forced to wait on available sites.

We very much hope that the government commits to these planned reforms, in the face of undoubted challenges. If these plans become watered down in a similar way to past policy changes, then nothing will change.

We need a radical transformation of the entire planning process, backed up by the government in order to achieve the sustainable housebuilding that the country needs. The announcements are very hopeful, however, and by empowering both developers and local authorities, the government is on the right track.

– Richard Carr