5 Ways To Maximise Your Rental Yield

Yes, generation rent is on the rise, and the housing shortage is pushing more people into the rental market. But that’s not to say that buy-to-let landlords should be resting on their laurels. If you want to get the most from your investment, you will want to maximise the rental yield on your buy-to-let property.

If you’re in the process of choosing a buy-to-let property investment, these are some of the things you should consider when making your decision:

Picking Your Area For Best Rental Yield

As Kirsty and Phil have been telling us for years, it’s all about location, location, location. Along with picking an up-and-coming area to invest in, where you will get a return and ongoing rental yield as popularity grows, there are some other aspects to consider.

Firstly, pick an area with good transport connections. The majority of people who rent have jobs in nearby towns and cities, and a good commuter route is therefore high on a prospective tenant’s list of priorities.

Areas in catchment for good schools are another winner; both at primary and secondary level. We would recommend checking out the primary schools, in particular, because it is more likely that parents of younger children will still be renting, before looking to buy as their child gets older. Some may even rent specifically to get a child into the local school before considering purchasing in their preferred location.

The Waitrose effect is something well-known in property investment circles. Basically, wherever a Waitrose supermarket is in development, prices are about to rise. This particular store is an indication of affluent nearby residents. Good bars and restaurants, coffee shops, and other higher end high street and designer stores springing up, are also indicators of an influx of affluence to an area. On the flipside, however, it may mean that prices have already risen… so it’s a question of getting in quickly.

Promising Locations for Property Investment

It’s important to note that a ‘promising’ area does not necessarily mean the cheapest, nor the most expensive. A promising location is one that people want to live in.

Rather than investing in a place that’s close to where you live, as many usual landlords might do, with property crowdfunding, you are free to invest wherever in the country offers the most promising rental yield opportunities. Investing in this way means that you don’t have to go out to check things in the property, chase rent, or fix things when they go wrong.

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Never Neglect Numbers If You Want A Good Rental Yield

You must always, always do your research. Find out the cost of properties in the area, find out the average rental yield for different types of property in different areas.

You should also be sensible about where you’re putting your money: can you afford to live if the investment goes toes-up? Don’t ruin yourself, and be aware of risk.

Build a diverse portfolio, and don’t put all your eggs in one basket. If one investment goes wrong, when you have a diversified portfolio, you have other investments to fall back on.

Who’s Your Target Tenant?

Do you know what sort of tenant you’re looking for? If you haven’t thought about this, stop right now.

You need to do a little research and check that the property you’re considering investing in is the sort of property that tenants will want to live in. It’s no good, for example, going after the HMO market in an area where the leading demographic is in the 55+ age range. Matching prospective tenants to the area, and making sure that the home you’re offering meets their needs, is crucial.

Don’t just choose a property you’d like to live in yourself. Put yourself in the shoes of your target tenant. What are they looking for? Students aren’t after all the luxuries that young professionals are – they’re more focused on location, if anything. Likewise, families are likely to prefer properties with outdoor space.

Families are also less likely to be swayed by luxury, as much as the notion of having a blank canvas on which to create their dream home. With white walls and no furniture, it’s theirs to do as they wish, within reason. Giving your tenants this freedom ensures they’re more likely to stay for the long term, which is good news for landlords.

Remember, too, that lots of tenants have pets, particularly cats and dogs, and all too often, landlords limit their prospective tenants by not allowing pets in the property. Not that that’s a concern when you’re a crowdfunding investor, but still – something to bear in mind.

Well-Appointed Properties Go Faster

Making things easier for your tenants, with all the mod-cons they’ll need, will help your property get snapped up sooner.

Microwaves, ovens, washing machines, and dishwashers, all make a property more appealing to tenants. Knowing they don’t have to buy these items themselves, and that their maintenance is covered by their landlord, is always a plus when searching for a place to rent. If you can go even further, offering things like wifi and wine fridges, all the better, particularly when dealing with young professionals as tenants!


Hopefully, this will have given you some ideas to consider as you narrow down the properties you wish to add to your buy-to-let investment portfolio. Do you have any other ideas to help prospective investors choose wisely? Why not drop us a tweet with your idea!

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Lenders call for landlord tax breaks

Tax regulations designed to protect consumers should not apply to the buy to let sector according to The Council for Mortgage Lenders in the UK who are lobbying for tax breaks for landlords.

And given the fact that BTL sector activity seems set to rise, the Government should consider the introduction of tax breaks similar to those in Germany and France where rental losses can be offset against income. In some jurisdictions the rate of capital gains tax declines over time which would be a huge incentive to many potential landlords of the future investing for their retirement.

The CMS is calling on the UK government to consider a range of changes to complement the actions taken by mortgage lenders in recent years that have allowed the market to grow. Lenders have ensure that a range of attractively priced loans have become available and landlords are still able to borrow on an interest-only basis, although this should be weighed against stricter criteria in terms of yield.

The CML also has asked government to hold off from further regulation until it has reflected on the current situation in the market, in particular with regards to local landlord licensing which it is felt may deter new entrants to the BTL market.

 

 

Rental growth stalls but long term value secure

An increase in the number of first-time house buyers appears to have slightly eased demand in the rental property market, which is turns seems to have checked the recent relentless rise in rental levels.

As the number of tenants drops, so a slowdown materialises with the average monthly rental payment in England remaining constant from May to June 2013. At £737 per month however, rents are still 2.6% higher than in the same month last year according to LCL, parent company of Reeds Rains.

As always of course where property is concerned, the survey found significant regional variation with half of UK regions surveyed seeing rents rise in June, topped by the East Midlands where rents rose 0.7% from May.  The North-West and South-West also saw rental levels surging ahead at 0.5% growth. Compare this to the situation in Wales where average rents are down almost 2%.

The report found that overall the proportion of households in the private rented sector continues to grow and that this trend should continue for the foreseeable future. Affordability of a first time home purchase continues to be limited by low earnings and high deposit requirements plus other factors associated with compliance rules. Hence average rents are expected at least to rise in line with inflation in the coming years.

Private Rentals Continue to Flourish

Levels of UK Home ownership are still falling whilst the numbers of people in the UK in rented accommodation is becoming correspondingly higher.

According to the latest English Housing Survey, 65% of the England’s 22 million households are owner-occupied, 17%  are socially housing whilst the remainding 17% are privately rented. And according to the survey there has actually been a drop in the overall number of owner-occupied properties since 2005. Over the same period, the number of privately rented properties has increased by more than 50% to 3.8 million.

Of particular interest is the amount of income for those in each housing category, and the proportion of that income that is spent on mortgage and rental costs. The average mortgage payment for owner-occupiers is £611 per month whilst social tenants paid £83 a week on rent. But the highest amount for accommodation is paid by private tenants who cough up an average monthly rental bill of more than £710.

Of interest for those that own and let their property to tenants is the situation with tenancy deposits. 70% of tenants had their deposits returned, 17% received part of their deposit back and 13% had no right to any of their money back. And one particularly interesting statistic for landlords. When asked why tenancies had ended, more than 80% ended at the behest of the tenant, 10% ended by mutual agreement, and 9% of households were requested to leave by their landlord.

Are Housing Charity Shelter Being Unrealistic?

Housing charity Shelter have recently called for landlords to pay the costs of setting up tenancies through letting agents, instead of tenants. In my opinion this is totally unrealistic … and somewhat naive.

What do Shelter expect to happen once agents and landlords are faced with the full costs associated with a new tenancy? It doesn’t take a genius to work it out. One of two things will happen. Either their business will be put under massive financial strain which may lead to them going out of business completely, or else they will simply increase the rent to cover the charges.At the moment a range of associated costs are not charge to tenants, including checks and certificates associated with services such as gas and electric and other repairs. Tenants would be left wide open to ruthless agents who will seek to exploit administration charges, damage claims, etc. Administration fees are probably the most divisive aspect often causing major problems with fees varying widely across the UK.

Agents fees must be transparent from the start of the tenancy and tenants need to be aware of exactly how much is payable and at when. Although letting agents can be expensive, tenants can choose which letting agent to use, but they are unlikely to be a cheap option?

 

Stepping Up To The Plate: Letting to Local Housing Association Tenants

The House Crowd steps up as many landlords step back from Local Housing Allowance tenancies.

More than half of landlords can no longer afford to rent to tenants on housing benefit, according to a survey by the National Landlords Association (NLA), which we at The House Crowd think is a very worrying statistic.

We’ve known for a while that cuts to local housing allowance were happening. But with 53% of landlords now stating these cuts make it untenable to rent to those on benefits, and almost 69% saying they don’t expect to rent to local housing allowance tenants in the future, what position does this leave these vulnerable people in?

It is times like these when property investment strategies such as our crowdfunding model really come into their own. Not only are we stepping in as local housing allowance landlords, at a time when supply is increasingly limited but demand is high, we are also enabling would-be landlords the opportunity to be part of a property investment group, without the worry that issues such as these can present.

Whilst we know that our model is a great way for investors to make good potential returns in the property market, we are a company that – essentially – is concerned with the social good of our country. Alongside allowing a wider range of people to get a foot on the property ladder through the investment of whatever sum they have available, we are also committed to improving the state of the market for those seeking homes.

We work with SPVs who refurbish old properties to improve the standard of living for the next owner or tenant, and we make it easier for people seeking rental accommodation to find a home they feel comfortable in. By cutting out the banks and mortgage brokers, we are able to open the doors to more opportunities, both for investors and for those looking for a home in this environment of supply/demand catastrophe.

If you like the sound of a more democratised property market in the UK, then why not find out more about investing through property crowdfunding?

You can learn more about the work we do by registering on our website by clicking the purple button below. If you just fancy a browse through the properties we have on offer for investment at the moment, click the blue button!

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If you have any questions, or just want to chat about property investment and get some advice, then drop us a line. We’re always happy to help out!