Is a green mortgage really a green mortgage?

 It’s been an interesting couple of hours researching this…. So, 3 years ago I bought and renovated my loft apartment. I wanted it future and green proof, so I had new high grade windows, electric combi green boiler etc etc.  I have just had a new EPC and the is rated as E!!! best will be a D.

 

So I called up the EPC man and questioned this.  His answer was very clear; EPC is not about green it is about low costs to run the property.

 

Good windows and sound insulation lower the rating, but so does a GAS boiler – as it is cheaper to run. Electric storage heaters are also great, as they use night time tariffs, so again, cheaper to run.  An electric green combi boiler adds, as they are more expensive to run even though they don’t need GSC checks and flues.

 

As we all know, a ‘Green’ car is more expensive than a dirty petrol or diesel – so green really isn’t necessarily the cheapest option, which can work against a lower EPC.

 

Now that is clear, what are these ‘Green’ Mortgages.

 

Well the industry is incentivising property owners to look at the ratings on their properties, which is a good thing.  It has to be A-C (or some high street lenders, just A-B) at the point of completion.  They will not lower your mortgage rate after that, even if you reduce the rating.  The reduction can be up to 0.25% pa, so a good incentive for a long term investor; it also covers BTLs, MUFBs and HMOs – some cover new builds, some don’t.

 

So the best option to benefit is when you refurbish your property.  I would highly recommend you getting an EPC specialist round to tell you exactly what is required to get into the lower bracket, best not to assume.  At least this way you know exactly what your options are and don’t confuse new shiny upgrades as positively effecting your EPC ratings.

 

What can you do to benefit from this:

 

It all starts with the refurbishment.  Most investors wanting to add value will go the refurbishment route.  Also, with the climate issues, the green areas will increase, so you really want to future proof your property.

As a wider topic, lender follow the competition; once a lender decides on doing something, then it really isn’t long before the rest will want to be in the party. 

 

If you are buying a property that qualifies for a term mortgage, but is sitting at the E end if the rating, it is worth considering making the changes a condition of exchange, thereby getting a new EPC before completion, therefore benefiting from the lower product rates.

 

Funding your projects when your usual lenders can’t help

I think we’ve all now recovered from the excitement of the Euros and now summer has arrived!  I hope you’ve all had a good week.  This week I am talking about funding that’s a bit more outside the box.  As you know, we can look at all sorts of scenarios, and one of our lender’s has really upped their game recently so I wanted to run through what they can help with.

Buy to lets when you don’t have enough experience for standard lenders

We often see clients come to us with a great project, and external experiences which means we are confident it will work – this is usually where they have carried out works in their day job, so not for themselves.  This doesn’t count as experience for most lenders though.  This can cover HMOs (of any size), multi-unit blocks of flats or semi commercial buildings as well as single lets.

We can now help with mortgages up to 75% LTV for these scenarios, at a really reasonable interest rate.  The products are fixed for 2, 3 or 5 years, allowing you to gain the experience you need to move on to a lower interest rate and longer term product.  Its important to balance the lender’s risk and your experience with the rate – and also remember that you aren’t spending time or capital on projects you don’t really want to do before jumping into bigger ones!

Foreign Nationals and Ex-Pats

This is another area which is tricky to fund at the moment, so this lender allows you an easy way in to the UK market.  We can raise up to 65% LTV and the minimum loan size is £50,000 so it is available for smaller properties.  Again, the loans are for 2, 3 or 5 years and the rates are reasonable so with a good yield it is an accessible way in.  you don’t need any experience, or property in the UK at all, which is often a sticking point.  Most counties are covered under this product, and it can be in a personal name as well as limited company.

Slight credit issues

This is another potential barrier to lending at the moment.  Many lenders have become more stringent with their credit rules, meaning that even a slight blip can prevent loan approval.  Having a short term solution for first time buyers and investors is lacking in the market

This lender will allow a small amount of adverse credit, which means that a past issue which has now been resolved will be disregarded.  Some examples could be a satisfied CCJ under £5000 in the last 2 years, or one missed mortgage payment in the last 3 years.

This would cover all scenarios, so buy to lets, HMOs, multi-unit blocks and semi commercial up to 75% loan to value at the same 2, 3 or 5 year terms.  This allows you to build your experience while time is passing on your credit file to allow you to move to a more mainstream lender afterwards for a slightly lower rate and longer term.

As always, give us a call if you want to run through a particular scenario then give us a call.

Focus on HMOs: Do you need a hybrid valuation and why you want a specialist lender

So here we are at Friday again – for many of us the Friday we have been waiting for! We’ve also had a solid budget this week, with an extension to the stamp duty relief which is great news.  With all this, as well as a clear roadmap out of lockdown, it does seem like there is some vibrancy to the market this week.

I’d like to talk about HMOs this week.  It’s a hot topic at the moment and we have had many enquiries asking about how to value properties and what rates we can do.  These conversations don’t always go the way clients expect though, so I thought I’d explain it in a bit more detail.  As you know we are big believers in looking at the bigger picture and not chasing low rates so this should help explain why.

Do you need a Hybrid valuation or will a bricks and mortar work?

Before we go on to hybrid and bricks and mortar methods, I just want to mention commercial valuations.  The words ‘commercial valuation’ are used a lot in the property world, and not always correctly.  The lender decides on the type of valuation we use, so we can’t request what to have; and no, it doesn’t always mean a yield based valuation!  We would only be able to use a commercial valuation for HMOs where it is 7 bedrooms or more.  There will always be a ceiling price for a property in an area based on the location, size, condition and demand and that needs to be taken into account when looking at the yield calculation.  It’s really important that as investors you do the same to be as accurate as you can.

Hybrid valuations are also something which I don’t believe are explained very well a lot of the time!  It is something that some lenders allow, but it is up to the valuer to decide what that means and what the figure would be.  I have written a blog on it here, but what I wanted to talk about today is whether it is important to you and your property.

I am a big advocate of using a hybrid valuation, but there are only a few lenders who truly use it, and it is more expensive.  So do you need it? 

If you have spent a significant amount on your refurbishment, and the total cost (refurbishment and purchase price) is significantly higher than the bricks and mortar comparables then it is worth exploring, but if not then it may not be.  I have had examples recently in Suffolk and Kent where the bricks and mortar value is significantly higher than the hybrid calculation, but areas in and around Manchester, for example, have lent themselves to a hybrid model.  It allows you to pull out what you have spent on the property when that figure is more than the bricks an mortar.  We do sometimes see the elusive ‘no money left’ situation sometimes, but that is rare, especially at the moment.  When we have seen it is where the client has done really well negotiating on the purchase price and they have made the extra money before they have even started works – you can only get this back out on a refinance through.

So why would you want to use a specialist lender?

There are so many benefits to using a true specialist lender.  Their rates will be higher than the ‘specialist side of vanilla’ lenders, but as you know we are big believers of looking at the bigger picture:

  • They work with property investors regularly, so they understand that your income may be low due to carrying forward losses.  There is generally no minimum income requirements as long as the situation makes sense
  • The required documents that you need to provide are simple and straightforward.  There is no new list once the initial requirements have been satisfied!
  • We are able to speak to the underwriter directly, so if there are any issues then they are usually quickly resolved with a phone call.  We have a good relationship with our lenders so are able to pre-empt any potential issues a lot of the time and have a good idea of what will work and what won’t.
  • They are far more open to investor funds, which is a big deal at the moment.  I have mentioned previously that there is plenty of money within the property world, with private investors looking for better returns than they can in bank savings.  There are also plenty of bounce back loans within the property investor community, and both of these options aren’t acceptable to many less specialist lenders.  Even having a BBL in your account could present a problem, so if you want to take advantage of these funds then you need to know where to go.
  • You have far more choice of how to structure your limited company in terms of SIC codes, number of directors/shareholders and group structures.  Often less specialist lenders have restrictions around this that can cause issues with the way your company is set up.

As always, if there is anything you want to chat through then give us a call.  Enjoy your weekend – the evenings are lighter and things are definitely on the up!

 

Could you use investor funds or a bounce back loan for your next deal?

It’s blog time again! We are feeling more optimistic that we may be nearing the end of this lockdown, and some warmer weather definitely helps!

This week I thought I would cover investor funds and bounce back loans; there does seem to be an air of money floating around within the property world at the moment and I can see why. Bank savings rates are at an all time low, even lower than the previous all time low! We have seen a 400% increase in bank savings in the past year; a combination of being unable to spend money and an uncertainty of what’s to come means that lots of people have got more money than they usually have. We’ve also seen so many people take out bounce back loans for their property companies, as they have been affected by Covid.

So how can you take advantage of this as an investor?

There are many ways. Bounce back loans are a simple way of increasing the funds you have for your next property purchase. There has been many changes over the last year of how lenders view these loans, but on the whole they are now acceptable to be used for your deposit or refurbishment costs. What the lender doesn’t want to see is that you are stretched and have only got the bounce back loan funds available, but as part of your funds available that is fine. It’s also very important that you don’t have any outstanding payment holidays on your portfolio.

I have to caveat this by saying that each lender has their own risk appetite and therefore there are some lenders who won’t be comfortable with clients that have taken a bounce back loan, or they can have taken it but can’t use it for this property. This is mainly more high street or as we like to call the ‘vanilla side of specialist’ lenders. What this means is that you may need to use alternatives lenders, or bridging finance (which you may need anyway) to be able to use this money. Please speak to us about your scenario and we can talk you through the options.

What about investor funds? 

It’s unsurprising that there are so many people wanting to invest in to property at the moment, with so few alternatives. It also offers investors a short term option when they are indirectly investing, or an opportunity to use smaller amounts of money to dip their toe in. The returns are far higher than many other options, and the risk may be more comfortable to them than investing themselves.

As an property investor, using other people’s money is a quick way to grow your portfolio. It’s something that lenders are becoming more comfortable with as it becomes more popular.

It is so important to look at a few things before using investor money:

  • Do your due diligence, this is so important. You are entering into a financial commitment with someone so you need to be comfortable with them and where the money has come from.
  • Have a clear plan with a number of exit strategies. You need to know that you can repay the loan within the timescales. Make sure your investor knows what your plan is, and gauge how they would be if it runs over the time. You need to build trust with investors by delivering on your commitments
  • Have you demonstrated that you can deliver on your promises with a previous project? You need some experience to show your investors, as well as your lender than you are capable.

As with bounce back loans, some lenders are not happy with using investor funds. What we usually see, however, is where you would use these funds for the purchase or refurbishment and then the investor will be repaid on refinance or sale. Bridging lenders are on the whole happy with investor money, as long as you are putting in some cash and have some experience.

Please let us know if you have any questions, we’re happy to run through any deals or scenarios you have. Have a great weekend, and happy property hunting!

Case study: When you need 75% on a tricky semi-commercial property

It’s Friday again everyone.  I hope all of our working home schoolers are asking for as much help from relatives/friends as you can.  I decided to take on Ellie’s daughter’s schooling for RE…  With no children at home, I really didn’t understand just how time-consuming home schooling was.  I’m only doing 2 hours a week, but if a few people can do zoom lessons, it really does help in more ways that you can imagine.  Employer empathy and support is key to keeping good staff in a healthy mental state at the end of this tough time.  We all need to dig deep.  I took my actions from watching the Ernest Shackleton Antarctic trip in 1915…. Absolute team work is key to long term survival.  It’s worth a watch for some inspiration.

So to the weekly blog.

As it is the last of the January case studies, this week it is on a refinance of a semi commercial property.

The property is in London, has been extensively refurbished over the last few months, extended and fully tenanted out.  As you are aware, using commercial rent can be difficult during this time, particularly if you need 75% loan to value!

If you want the maximum LTV, then comprehensive knowledge of the property and client is key.  Most commercial rent cannot be used if the tenant has not been trading in lockdown – which for some industries was sadly not an option.  The tenant also needs to have been trading for more than 12 months and have a minimum of another 12 months left on the lease.  This particular commercial tenant had another food shop, so able to trade.  They were expanding and had just signed a new contract at our property, which was a problem for this lender.  In anticipation of the lender’s questions, I extensively researched the viability and quality of the incoming tenant so I could satisfy myself it was worth a ‘fight’ with underwriting.  That included websites, social media, reviews – all angles covered.

This all started before Christmas when, as you are probably aware, lenders were super busy.  The underwriter was honestly one of the best (Greg Barnard of Hampshire Trust Bank) and happily called me to discuss the detail; which can resolve things so much more quickly and easily than a long string of emails.  With some fine tuning of information, we had our offer at 75% LTV.  This gave us a super happy client and completion should be today.

I know we keep bleating on about this, but knowing your lender’s true appetite it is so important to the outcome of the case. 

The other important part is having a really good team at the solicitors (Nicola Watson, Naomi Williams and Eva Ciunkaite at Paris Smith). They can make or break transactions – opt for a ‘cheap’ option and you can really end up paying more.  They have worked tirelessly, 6 days a week and their communication is top drawer as well. Thank you, ladies.

Baya are still able to complete refinance cases in a reasonable time – lender dependent still before end of March.

Case study: Don’t be afraid of an ugly property if the yield is good

We’re here at Friday again, nearly 3 weeks through however long this lockdown is going to last! I hope you’ve had a good week, we’ve been trying to find some happiness and laughter in each day to keep us going. We’ve also got a new American president this week, which has got to be a sign of a brighter future ahead.

This week I want to talk about ugly properties… in particular ugly blocks of flats.

I was approached by a client of ours late last year with a collection of four blocks of flats (32 units in total). The unit value is low (approximately £20,000), condition of the flats weren’t great, it had outside staircases (not balcony) and was let to tenants on housing benefit. Sounds like a great buy I hear you say!! Our client was drawn to the amazing 21% gross yield and gave us the task of finding a solution.

There were a few complications:

  • Various levels of experience and income from the 4 directors
  • A shareholder who would normally be expected to be a director and couldn’t be due to other work commitments
  • A complicated lease structure in place for the blocks of flats
  • The flats are in a variety of conditions, some have recently been renovated but some do need updating throughout
  • The majority were tenanted, but not all
  • Client wanted to avoid the bridging route

We researched the area; the client was able to provide plenty of reasons why this area was a good investment in terms of future regeneration. On cases like these, it really is important to be transparent with your broker.  To get a good outcome we really need to know the case and the applicants – warts and all… as we are the ones that need to sell it to the lender.

It is really important to know your lender’s appetite; we do work hard at our lender relationships, as that allows us direct access to the people we need, rather than putting into the system and hoping for the best.

We engaged a lender who we know are ok with low value properties and whom we trust to do what they say. They were able to look at the appearance and give us a good steer that they would be able to lend (subject to valuers comments). What we weren’t sure about was what the valuation would be and what loan to value we could get to.  Our client really wanted 75%.

The clients were happy to proceed so we instructed the valuation.  Although a purchase, we emphasised the importance of the clients meeting the surveyor on site which I think is really worth it if you can. It gives them confidence in you as an investor and you can talk them through your valuation methodology.

The valuation came back with the market value as the purchase price. The vacant possession and 180 day value were much lower though. The valuation read well and agreed with the client that it was a good investment with a good yield. We then had to wait for the lender to let us know what they could do, and they came back with an offer at 75% of the market value and on a term product. Best case scenario! The clients were very pleased.

Legals are going through now and we are hoping to complete within the next month.

So, the moral of the story… let your brain make the decision and not your heart.  An investment property is not your family home and it’s all about the numbers, so you must take the emotion out of it.

I hope this inspires you to look at some properties that perhaps are outside of your comfort zone to see what yield you could achieve.

Case study: When the wrong broker nearly kills the deal!

Happy Friday everyone. As a friend said to me, as long as one foot is in front of the other, we will get there… with kindness, patience and tolerance.

This case study covers a few areas: the correct broker; the correct broker and the correct broker!

I was offered this case about 6 months ago, maybe a bit more, but the client decided to go with a broker that wasn’t comfortable with his own expertise this area, but the client really trusted him.

The project is a large single property, ground up build.  Exit is sale and the client is a professional in another, busy industry.

I was approached again at the beginning of November, it had been with a lender for over 4 months and it had collapsed.  The lender had declined the case.  It was problematic in that the build warranty hadn’t been started and also it could be considered as owner occupied at the end – the property was larger than his own, and in the local area. Giving the correct evidence and assurance that it wasn’t was key.

The client had also run out of money and needed a speedy completion or the contractors would walk, and that can be a nightmare even without Covid to worry about!

We were able to utilise as much from the previous lender as possible – valuation report and QS updates, which eased some of the costs.  I put the client in touch with a very short term investor to cover a cash gap and then got to work on smoothing out the rough edges.  The build warranty should be started at the beginning, it’s not impossible to get it late, but it does increase the cost.  The lender, LendWell, were as always, fantastic.  They keep things in a sensible straight line. If there are any bumps then they are there to have a sensible conversation, and are always working towards completing the case. With other lenders it can feel like they are trying to find a problem.

We were able to agree a facility which got to client 25% of the GDV for 12 months. His build time had only got 4 left so this leaves plenty of time for any hiccups and sale.

Having a broker that is not transactional meant I, the Director, got totally involved. Managing the build warranty; warranty for a swimming pool and even working with the contractor. Keeping things smooth and transparent.

We completed on the 18th December.  The investor was paid from the drawdown funds and everyone could breathe again.

It really wasn’t a straightforward case – part built properties can be problematic, so you really need to know what you are up against.

The client learned a few lessons as well.  Every day is a school day, they say.

I can’t emphasise enough the importance of the right person for the job.  It is coming up time and time again and your time and stress never seems to be in the equation.  Someone said buy cheap, buy twice.

Case study: When your simple HMO refinance doesn’t go to plan

Happy New Year to your all! I know it feels like 2021 has been around for far longer than just 8 days.. but here we are on week one of the blog.

For January we are focusing on case studies; as we are often asked what sort of properties we look at and what the benefits are of a specialist broker.  So here are some examples which show the sorts of things we can help with.

This week we are looking at an HMO refinance. Might seem like an easy one on paper but this one wasn’t! The client called me up just before Christmas in a bit of a panic. She had bought a property in summer the of last year with the plan of converting it into an HMO from a commercial building.  Planning was granted and the conversion started all on target but by October she had completed the works and was starting to look for a refinance options.

The broker she was using at this point went back to the lender that was used for the bridge to arrange the refinance, but they gave the property a ‘nil value’.  Now this doesn’t mean the property is worth nothing, but that it doesn’t fit with the criteria of that lender,  therefore is not suitable security. App fee and val fee wasted! The broker then tried another lender and had exactly the same outcome. Both lenders are those which we could call the ‘vanilla side of specialist’ and although they do lend on HMOs, they are strict within this area.  So the client has paid for 2 app fees, 2 valuation fees and no end in sight for the bridge.

The client didn’t know what the problem was, but reading the reports it could be any one or a combination of the following:

  • insufficient demand for that sort of property in that area. For example a property designed for professionals in an area which typically doesn’t see that.
  • Rent which is significantly higher than the market rent you would expect. Even if you can fill the property quickly, and it still fits (for a mortgage stress test) on market rent
  • The property would struggle to be converted back into a family home if the lender did have to do this to sell it on. This can be where we have 5-6 bedroom HMOs with all en suites. It may also include kitchenettes or second kitchens.

The frustrating part is that we have no recourse to challenge the surveyor, or find out why it doesn’t fit with that lender as quite often the lender themselves don’t know!

So what did we do differently? 

After a long chat with the client to find out what she was looking for, we decided to try a more specialised lender. The rates are slightly higher, but we have so much more control over the process. We can choose from some available surveyors and we can speak to the underwriters if there are any issues. This particular property had a great yield even as a single let, so I knew that if a lender saw this they would be fine – as long as I could have that conversation!

The client was so frustrated, worried that her bridge would run out without a solution and frantically trying to find a cash buyer in case we couldn’t find a solution.

We spoke about how much she had spent on the property and some comparables to see what we would be looking at for a value. She had over estimated her original value, and the broker had not given her the original bridge valuation which was frustrating. We got three valuation quotes, as we are able to with this lender, and the client made a decision as to who to go with. Again we talked about the options, our previous experiences with these valuers and the balance between cost and availability.

The application was submitted and we waited cautiously for the valuation. It came in higher than we expected, roughly the total cost of the purchase and cost of works which is what we would normally see for a hybrid valuation. I wasn’t really expecting to see a hybrid valuation given the comments around a lack of demand for HMO room rentals on the previous valuations, so that was a pleasant surprise!

The client was over the moon, she had invested so much time and money into this project. It meant she can not only keep the property,  but also pull some money out to move to another project. She was able to borrow 75% of the open market value.

The offer came through on Xmas Eve – we don’t often get tears over a formal offer, but it really made her Xmas.

The important phrase that we keep mentioning is The Route of Least Resistance.  Investors are not charities, so unnecessarily spending, particularly on small properties, is painful and difficult to recover.  Be realistic about your investment and try to steer away from only focussing on the annual rate.

The avantages of a portfolio refinance 

So how are you all this last Friday of lockdown? I’m sure there will be mixed feelings across the country as we all come to terms with the new tiers we have been placed in. With that and all the Christmas news this week it’s a lot to digest.

This week has been a bit of a crazy one for Baya, last week of the month, in a month where everything seems to be taking extra time, so then everything becomes urgent. We are seeing a good volume of business though, which is great – long may it continue!

This week I’m talking about portfolio financing. This is something that I think gets a bit of a bad reputation as being expensive, but there are so many advantages and it isn’t as expensive as you think. The cost of limited company buy to let’s and HMOs, as well as personal buy to let’s where there is a portfolio in the background is creeping up; we are generally looking at about 3.5-4% for 75% loan to value on an individual loan for each house.  As a comparison, we can get under 4% for an equivalent loan with a bespoke portfolio refinance, so not really that high any more.

So why would you choose a portfolio loan? 

  • As your portfolio grows, the time it takes you to source and refinance each remortgage goes up. How long does it take you to refinance each property and what else could you be doing with this time? Looking at properties separately means providing documentation each time which can be very time consuming. Especially when they are spread out throughout the year.
  • Using one specialist lender for a whole portfolio means that we can often negotiate a lower rate. A few lenders are now looking to compete with high street rates, but with the speed of specialist. They are also generally happy with interest only at a higher loan to value too.
  • There is only one legal fee and arrangement fee. Completing the legal work in bulk is less costly, you will only need one appointment for legal advise and to sign the documents. This means you’ve only got to do it once in 5 years if you want to!
  • Building a track record with a lender is great when you want to buy more properties. When they can see your conduct it does make further lending easier and there is less required from you.
  • If you have some low value properties (under £75,000 generally) or low yielding properties that you can’t maximise the refinance on their own, putting them into a portfolio can help. They can rely on other higher value or yielding properties and lenders will often allow you to add on security which wouldn’t be suitable if it was on its own.

We can often use a desktop valuation rather than a visit from a surveyor. This is great at the moment; it means you don’t need to worry about booking appointments with tenants, but more importantly you don’t have the added worry of a person’s opinion as we are using only factual comparables. In this market I think that this is a huge advantage.

At a time where there are opportunities out there for cash buyers, a refinance to raise capital may seen appealing too. Perhaps an area you hadn’t thought about… ?

We are happy to take a look at your portfolio and see what the options are for you.

 

 

How Covid has changed the property market

We are half way through lockdown, hopefully! How are you all finding it – is  it tougher than previously? This week I am talking about how Covid has changed the investment property market. I spoke about this at last week’s PIN meeting, but I wanted to go into a lot more detail on the blog as I think it’s such an important topic at the moment.

There are two aspects to this; the types of investors who are now coming to the market, as well as the types of property and tenancy.

Who could be the new investors on the block? 

There are plenty of reasons why people may be looking to get into property at the moment. We have had such a massive change of lifestyle and direction this year; many people have spent more time with their family and have realised that they want a career that is more flexible around that. We have all had time to stop and reassess what is really important to us – stepping off the hamster wheel can make you reluctant to get back on it!

Property can offer so much more flexibility in your life, it can be YOUR career on YOUR terms. It will be full of challenges, but also comes with autonomy…  and, of course, the potential for growth.

Grabbing an opportunity…

With plenty of working people having been furloughed for possibly a lot of months, then being made redundant, this may give some the push to use the money and put down a deposit on a property.

A lot of you will also have gained some extra time with less social activities, therefore allowing time to spend dedicated to researching potential areas to invest in and work on strategies.  Netflix or new career research…..????

Also, I think that having gone through this year and the uncertainty it has brought, it has increased the importance of having a diversified income stream. Property can be something to add to your income pot, adding an asset to any savings and/or pension, but importantly it gives an income to take the pressure off in a changing jobs market.

There are also a number of ways in which Covid has changed the way we view particular tenant profiles.

Students

This is a far more resilient market than I think anyone was expecting! Back in March lenders were worried that this academic year would be completely online learning from home; yet we have seen students return or go to university. They are craving any kind of normality it seems! There are also benefits to house sharing in HMOs over student accommodation at this time. It’s generally smaller bubbles and you have got more communal space if you are limited with your external social life. There’s also the option to encourage a two year letting period taking away the need to find and view somewhere new to live. This gives you the option of somewhere to stay during the summer if you’re not able to go home.

Long leases 

In this uncertain market, lenders and landlord are crying out for some guarantees, and that’s what this can offer. For a long time any lease over 12 months was a big problem, but now we have at least three lenders who are looking at this, and at competitive rates, on a 75% loan to value, interest only product as we discussed previously. The yield may work out slightly lower, but when you take out voids and repairs you aren’t far off what you would get for a professional tenant. This is definitely a growing market and something I’m sure we will see more of.

Holiday let’s

UK holidays are going to be the way forward for the next few years. I’m sure many of us (myself included!) enjoyed a fantastic UK holiday this year, and it’s made us all realise how many places there are for us to explore in the future. It’s a cheaper option, and for many that will be a big consideration next year. It’s also far more flexible with bookings and pets – abs is far more environmentally friendly!

As an investor, your self contained unit is going to be far more attractive than a hotel or B&B in these covid times. Lenders are becoming more open to these options too. We have a lender who will now allow you to purchase on a bridge to carry out some works and then move to a term mortgage in 9 months so you don’t need to worry about initial rental voids. This gives you some time to get it all ready to hopefully open once the weather improves and restrictions are over (big fingers crossed on that one!).  Also, there is a market for working away from home – which gives potential for the times of the year not traditionally busy.

We are again seeing lenders more open to holiday let’s, using both the market rent as a 12 month tenancy or the passing holiday let income if we have a proven track record.

Cities vs Suburbs

Priorities are changing for tenants. It’s no longer so important to have access to cities and towns and tenants are now favouring larger spaces both inside and out. Outdoor space has become far more desirable, and a home office or space to work is now a massive selling point. Other, more rural locations are becoming more attractive, which may open up new opportunities as investors – perhaps your local area, or something which is affordable that wouldn’t have worked previously for an investment property.

With change comes opportunity, and as a resilient group of investors I really feel that over the next few years we will see so much of both.

As always, call if you have any questions. Look after yourselves, only two more weekends to go – fingers crossed!