Know your op­tions to get mov­ing in this stag­nant mar­ket

Yorkshire Post - Property - - FRONT PAGE - Franz Muelthaler Q: Will I pay more to rent than re­pay­ments on a mort­gage? Q: Would a buy-to-let be a bet­ter in­vest­ment for me?

for­mat of buy­ing and sell­ing a prop­erty. One op­tion could be to be­come a land­lord and rent out the prop­erty that you cur­rently own. This par­tic­u­lar ap­proach is re­ferred to as a Let to Buy trans­ac­tion and works by en­abling ac­cess to the eq­uity within a prop­erty by a re­mort­gage. It doesn’t re­lease all of the eq­uity but it can pro­vide suf­fi­cient eq­uity to en­able a new mort­gage on the prop­erty you’d like to buy.

You should be aware that a Let to Buy can mean tak­ing a much big­ger mort­gage but with in­ter­est rates at an all-time low it’s un­likely to cost as much as you think. In ad­di­tion the rental in­come from your old home may as­sist in soft­en­ing those monthly re­pay­ments.

The fact is many peo­ple are still not ex­plor­ing their op­tions. My ad­vice is dis­cuss your sit­u­a­tion with the ex­perts and speak to a pro­fes­sional in­de­pen­dent mort­gage ad­viser.

The nat­u­ral or­der of things is for us to grow up in the fam­ily home and make plans to buy our own prop­erty when we be­come fi­nan­cially se­cure. This ap­proach was ap­pro­pri­ate in the past, with low de­posit re­quire­ments and even 100 per cent mort­gages, it couldn’t have been eas­ier. Since the demise of the 100 per cent mort­gage, be­com­ing a first-time buyer is lit­tle more than pipe dream for most.

This not only calls for a shift in ex­pec­ta­tions but a shift in at­ti­tude. While peo­ple are hun­gup on buy­ing they could have re­alised their in­de­pen­dence and rented in­stead. The rentals mar­ket saw an up-turn last year and the ex­pec­ta­tions are to see an even stronger year in 2012. There are more pro­fes­sional land­lords with grow­ing prop­erty port­fo­lios pro­vid­ing dis­cern­ing tenants with the choice and qual­ity they are look­ing for. With com­pe­ti­tion so strong the chances of ne­go­ti­at­ing on a rental are good and fur­ther­more the bud­get you have could en­able you to rent a bet­ter prop­erty com­pared to buy­ing. The co­nun­drum many peo­ple face is do you rent a larger and bet­ter prop­erty or look to own a smaller one? It gets back to choices, recog­nise them, weigh them up and get the right ad­vice.

From re­cent re­ports it would cer­tainly look like a good propo­si­tion. All you have to do is re­search web­sites such as Rightmove to see the amount of prop­er­ties that are for the tak­ing. Re­search by spe­cial­ist Buy to Let lender, Paragon Group, has re­vealed that land­lords are ex­pect­ing ten­ant de­mand to con­tinue to re­main high in 2012. More than half of the land­lords who took part in the sur­vey thought that ten­ant de­mand would ei­ther con­tinue to grow or even boom in 2012 and just over half of those same land­lords thought that rental in­come would rise in the same year.

It looks like all the facts point to a good in­vest­ment, even ARLA (As­so­ci­a­tion of Res­i­den­tial Let­ting Agents) com­mented that three quar­ters of their mem­bers are re­port­ing de­mand for rental prop­erty is out­strip­ping sup­ply.

I’d con­sider the in­vest­ment op­tions given rental re­turns are cur­rently at five per cent. How­ever, the most pop­u­lar regions for in­vest­ment are cur­rently re­ported to be the North West, Mid­lands and Cen­tral London so it pays to do your re­search within the area you are in­ter­ested in. My ad­vice is talk to a pro­fes­sional, li­censed let­tings agent, that way you’ll re­ceive the ben­e­fit of lo­cal knowl­edge.

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