Thursday, 28 September 2017

Home Buyers in Penicuik – Beware the Cost of 90% Mortgages


There are an increasing number of lenders willing to grant 90% mortgages to first-time buyers, but that doesn’t necessarily mean you should jump in without exhausting other possibilities.

You see, the cost of a 90% mortgage to first-time buyers compares quite poorly to those with a deposit of 15% or more; so much so that it could actually be beneficial to take out a separate loan to cover the difference.

Currently a first-time buyer with a 10% deposit can access a two-year fixed mortgage at a rate of 1.79%. Whereas having a 15% deposit in place would lower the rate on the same product to just 1.27% (meaning there’s 29% less interest to pay!).

If you’re reading this thinking a 0.5% difference in interest rates is negligible and all the mortgage rates seem very low, you’re right! But it can still make a real difference in the long-term.

Let’s say you’re thinking of buying a £125,000 house with a 10% deposit. On a repayment basis, you can expect to pay £465 each month towards the mortgage. But by raising your deposit to 15% those repayments would drop to £413 per month OR if you paid the same £465 a month as you were going to, the mortgage would be paid off three years quicker!

You may think you have little choice; and with the average property in Penicuik selling for £185,695, even a 10% deposit will require £18,570! But if you consider that by borrowing the additional £9,285 to step up to a 15% deposit could save you £77 per month in this scenario, you could actually afford to borrow this sum at 10% (interest only) to be no worse off.  

So even though the interest rates on a personal loan might be higher than a mortgage, the shorter length of the loan means you’ll pay it off quicker. This will boost the level of equity in your home, which will help when re-mortgaging in the future and could save you money in the long-term.  However, and it is a big however, certain mortgage lenders take a dim view about this sort of thing.


I’m not saying you should borrow more to stretch yourself and this certainly doesn’t constitute financial advice (you should consider contacting the registered professionals for that). But, I would urge you to ensure you’re accessing money as cheaply as possible to future-proof yourself and keep more money in your own pockets rather than in the banks coffers!

And, of course, there is another alternative although I appreciate that this is an unpopular thing to say .... give up some of lives ‘less essential’ ‘essentials’ and save the greater deposit.



#penicuik #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #energyefficiency #privaterentedsector #prs #privaterentedsector #firsttimebuyers

Thursday, 21 September 2017

Penicuik First Time Buyers – here are some helpful hints


If you are planning to buy your first home, you’re probably filled with a mix of excitement and, let’s face it, fear. This is a big, big commitment and you don’t want to get it wrong. You certainly didn’t spend all that time saving for your deposit just to throw it away on a few bad choices.

Buying a home is not easy, even for those who have done it before. Here of some of the things you may not have thought about but which could make the entire process go a good deal smoother.
Widen Your Choices
We often want to live in a certain area, either close to work or near to friends and family. Looking further afield, however, and really checking out the house prices can make a significant difference. For some, it can mean choosing between a cramped flat or a three-bedroom house for the same amount of money. Ideally, you want to search for an area that is on the up and up – somewhere that could be a great catch for new buyers in the years to come.
Choose Your Estate Agent Wisely
Don’t settle on the first estate agent you come across – look for someone with experience who is going to work with you and get you the best deal, not just protect their own commission. Ask for recommendations or check out estate agent review sites. AllAgents is a great place to start.
The Benefits of a Mortgage Broker
You might think getting a mortgage is simply about approaching your bank and asking for the loan. Mortgages can be a minefield and you want to choose the right one for your needs. A broker might seem like an added expense but they can save you from making the wrong decision. The rules are a little tighter now when it comes to mortgage lending, so a good broker is the best person to advise you on what will work and what won’t.

Learn Your Survey from Your Property Search
One pitfall new buyers often fall into is not understanding the difference between the solicitor’s property search and a home survey. The first includes all legal documentation about your property such as land checks. The second looks at the condition of the property and whether there are any expensive problems such as damp or damage that you should be aware of. They are both important.
Don’t be in a Rush

With so much competition from other buyers, you might be tempted to put in offers and get things signed, sealed and delivered as quickly as possible. It is important you love your new home, but getting carried away and rushing in could end up in tears. Bear in mind that this is going to be one of the biggest investment you make in your life and as much as a particular house may be “perfect” try to stay level headed.
Buying a house can be a long process and there are many different strains and stresses that will crop up during that time. If you are renting don’t hand in your notice until you are 100% sure that things are going through. There can be various delays, most of which you don’t have a control over.
As the old saying goes: Grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.
Get Covered
Finally, when the choice has been made make sure that you sort out not just your buildings insurance but your contents cover too, making sure your valuables are covered during the moving process.


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

Thursday, 14 September 2017

Trend towards multiple property owning Penicuik landlords


I am seeing a couple of trends amongst our Penicuik landlords – both understandable and, I suspect, likely to continue. 

On the one hand, the more serious landlords are investing and buying more properties on the basis that, despite the recent changes and hassles in the Private Rented Sector, buy to let property investing is an attractive proposition. 

However, on the other hand, the ‘hobby’ or ‘accidential’ landlords are throwing up their hands in horror at these changes and are selling their properties.

It was interesting for me to have this anecdotal trend borne out by evidence. 

Whilst the number of rented properties across the Country is increasing from 4.9 million in 2015 to 5.1 million in 2017, the number of landlords across the Country is falling from 3.72 in 2015 to 3.72 in 2017.  This means that the size of the average landlord’s portfolio is 1.44 which is the highest level it has been since records began in 2005 up from 1.33 in 2015 and a low of 1.24 in 2010 (presumably due to the affects of the financial crash).  Another interesting stat is that in 2017, 73% of landlords owned one buy to let property which is a far less that the 86% it was in 2010.

So, what do you need to think about when you get into owning multiple buy to let properties.

Firstly, it is often more profitable and less risky to buy a number of properties than just one for the same outlay.  Not only that it gives you more flexibility and reduces the effects from voids; your risks are therefore reduced too.

If only one property is purchased a void period will result in no income for the investor.  However, if multiple smaller units were acquired the effect of one property being unoccupied is proportional to the number of properties held and a return on your investment will still be maintained.

Additionally, the overall achievable rental return is likely to be significantly higher across a portfolio of several smaller properties rather than a single investment in a larger one. In Penicuik, for example, rent from one £300,000 property would be £1,000 pcm but from 3 x £100,000 properties it could be over £1,700 pcm.


Time it right

In general there is upward movement in all aspects of the housing market and this makes property an excellent choice to consider for investment.  Your return on your investment is a mixture of yield from rent and capital growth, perhaps 6% and 3% respectively, so a potential annual ROI of 9% gross.

Maximise your profit potential by adding to your portfolio when property prices are rising, but aren't running away. In Penicuik we're currently experiencing a fairly 'flatish' sales market with prices increasing but not at an overly accelerated rate. Perhaps this is the future, but a steady 3 – 5% growth is healthier than boom and bust.

In addition, it's important to review the rental market as well.  Indicators of good timing for growing your portfolio would be when there's competitive tenant demand and rents are on the up (as this will automatically increase your yield).

Plan and prepare

The solid foundations of property portfolio success are often down to advanced planning and precise preparation…

Before investing you need to have your finances in place, plus you will need to have an overall long-term plan.  Taking advice from a qualified financial advisor as how best to fund purchases is essential.

It's important to identify why you're investing in an additional property and what you want that property to achieve.  For example, is it for a pension?  Are you hoping to increase your monthly income?  Is it for a long-term capital growth to use in the future?  Are you planning to live at the property in the future?

It's also essential to know when (and how) you're intending to exit the investment so that a clear and concise exit strategy can be prepared. Again talk to a financial advisor and tax expert before committing to portfolio growth so you can plan how to exit in the most cost-effective way.

Starting the search…

Although there is likely to be a multitude of properties available for purchase in your area not all of them will make the best rental investments so it's important to choose carefully.

When searching for your next investment, short-list several properties taking into consideration the following for each: location, price, potential renovation costs, suitability for the rental market, timescales before being rental ready, tenant demand, achievable rental return, potential for capital growth, plus where it will fit in with the rest of your portfolio. 

I am happy to have a chat with you before you start your search and/or once you have got your short-list.  Not only do I know the local property market but I also know what tenants want and need from a property, what's in demand and which type of properties are likely to be successful for investment purposes. In fact, as risk indicators are sometimes overlooked by those searching for a purchase, I can tell you what's wrong with a property as well as what's right.

Overcoming challenges

Of course having multiple properties isn't without its challenges.  Each element of the rental process will be multiplied… doubled, tripled, quadrupled etc.

Not only will you be dealing with the paperwork and maintenance of a number of properties, you will also be juggling the management of the people who live there, all of whom will have their own demands and needs.

Bear in mind too that there are new financial challenges. We're in year one of a four-year process to drop tax relief for landlords, plus an extra 3% Stamp Duty now has to be paid for each property bought for rental purposes.

So, how can a landlord make juggling multiple properties simpler?

By far the easiest way to manage an expanding portfolio with ease is to engage the help of a property management agent.  As industry experts they will thoroughly vet potential tenants, troubleshoot emergencies and issues and arrange necessary maintenance utilising our bulk buying power with our regular contractors.  They also understand and meet the current legislation, plus will keep on top of essential anniversaries, such as gas safety certificates.

All of the above becomes increasingly harder for a self-managing landlord as their portfolio multiplies but, if you engage the services of a property management agent, your involvement will be minimal.

Watch out for further information on this in future posts on The Penicuik Property Blog.



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

Thursday, 7 September 2017

Energy efficiency in Scottish private rented properties – dull but important stuff!



As some of you will no doubt be aware the Scottish Government is conducting a consultation regarding energy efficiency and condition standards in private rented housing.  Details of which can be found by clicking here.

The Scottish Association of Landlords has submitted its ‘generic’ response to the consultation.  Details of this can be found by clicking here.  I have submitted my own as a landlord/letting agent.

We are all busy people but I would encourage you to have a look at what is proposed if you can find the time and possibly respond to the consultation – it is online and not too onerous.


Without boring you to death, the bottom line is that for a variety of reasons including Climate Change and Fuel Poverty, the Scottish Government has put in place a policy that requires all Private Rented Housing in Scotland to meet a certain standard of energy efficiency as measured by the Energy Performance Certificate.


This consultation is not about whether this will happen, but rather how and when.
In its most basic form, all rented properties will need to achieve at least an EPC level E initially and subsequently an EPC level D rating within a timeline that is to be set.

There is no need to panic, I will just repeat that..... Don't Panic.

Worst case, assuming the consultation is adopted wholesale, we have until April 2019 before properties let from that date on ‘new tenancies' need to achieve an EPC rating of E and by end of March 2022 for all properties. After which we have until the end of March 2025 for all properties to achieve an EPC rating level D.

Those of you who are ‘regular’ readers of my blog will notice that I have started mentioning the EPC rating of potential ‘buy to let’ properties where appropriate, this legislation is the reason why.

So having given some background and the bad news, is there any ‘good’ news?
On the plus side, the current proposal does include a cap on the expenditure of £5,000 per property (not massively great news I accept). Most properties, we hope, should be able to meet the requirements at a much lower level of expenditure than this.

Additionally, we have been told that there will be ‘some' funding available (no details as yet) in terms of grants, interest-free loans etc.

I would suggest is that any landlord who has concerns should start exploring alternatives fairly soon.

You might consider the following:
  • Identify if your property needs upgrading to meet the standard.
  • If it does, have a look at the full EPC report as they usually give some guidance on energy efficiency measures. Whilst I suggest that you take this guidance and the projected costs/savings with a truck load of salt, they are a start.
  • Explore all the possibilities for energy efficiency but ensure you get ‘expert’ guidance and written quotes for the different types and their efficiency. The range of insulation, heating, energy efficiency products that are available now is staggering and it’s only getting bigger as ‘energy efficiency’ becomes more and more of a focus.
  • Explore the funding situation to see what's available. Some companies that specialize in ‘energy efficiency' works will assist with this and/or will often have a good handle on what might be available. Additionally, some will throw in a post works EPC (which is required to evidence the improvement in the EPC rating) for free.
  • If you are going to get work done then allow for disruption, discuss it with your tenants and/or try and plan it for when there is a void period. Maybe combine it with other works you may have planned.


To give you an idea of the kinds of ‘technologies’ that are available here are some examples, with links to some providers. This list is by no means exhaustive and you might try to check out the Energy Savings Trust Scotland website by clicking here.

I would emphasize that these aren't companies I have used and I am merely providing their details as examples. It is for you to decide whose services you employ bearing in mind that, which technologies or improvements will have the greatest impact on any given property, will depend on a variety of factors and so need to be considered on a case-by-case basis.
  • Heating – obviously installing gas central heating is a big improvement but also a sizeable cost and that’s assuming gas is available. However, even if that’s not an option, the range of modern electric heaters that are highly efficient and cost effective is massive. From simple panel heaters to gel, water or oil filled alternatives even modern versions of the venerable storage heaters. I have gel filled in one of my own properties and the tenants are very happy with them and they are a quantum leap up from the old ‘storage heaters’.
  • Insulation – there are numerous options depending on the construction of your property and how much you want to spend. As well as the usual loft and cavity wall insulation there are internal/external cladding systems, sprayable options etc. A couple of examples are: (i) ScotFoam – sprayable insulation and noise reduction, great for getting into spaces that aren’t easily accessible https://www.facebook.com/scotfoam/ and (ii) OVO Energy https://www.ovoenergy.com/guides/energy-guides/the-ultimate-guide-to-solid-wall-insulation.html.
  • Glazing: Ah yes that old standby, you may already have it, but how old is it? If you don’t have it then maybe now is the time, or a cheaper alternative might be secondary double glazing, if the property is listed or in a conservation area.
  • Energy Sources: Assuming your property isn’t a flat then maybe a miniature wind turbine, solar panels etc.
  • But let's not forget the basics that people have known about for years. Draft proofing, new cladding on hot water tanks/pipes, increased loft insulation, programmable thermostats to turn things on/off, modern controls on radiators, energy efficient lighting. Sometimes lots of little changes can add up to one larger one.

A few final points:
  • Firstly there is plenty of time.
  • Bear in mind is that the areas of improvement with the highest EPC impact (in general terms) are insulation and heating.
  • Beware of false economies by which I mean by this is don’t do this on the ‘cheap’ and get caught out, don’t pay money to move from an EPC G to an E and then several years later have to get more work done to get to EPC D. Look at the costings and, if it's viable, carry out the work in one hit.
  • I can’t promise you the government won't ‘move the goal posts’ (there has been some talk of trying to get to EPC C, however, I think this is unrealistic given the age/type of some of the housing stock and that even some new builds struggle with this).
  • There is lots of information and guidance available out there so take your time and do your research.

Watch out for further information on this in future posts on The Penicuik Property Blog.


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