Q.Dear Russell, with property prices projected to fall and interest rates forecast to rise, should I buy?
A.As with anything to do with property, it is all about timing. The latest surveys – whether they are from the major lenders, the high-street banks or the online property portals –are all pointing to further falls; they just differ in the magnitude of the forecast drop. You have to look at your circumstances and what you want to buy. Rates are still low, so you need to agree a mortgage at a sensible rate for as long as you can. Once you have agreed your finances, start looking and do your research. There are so many microcosms of the property market so decide on your area and research the properties available. Sometimes there have been properties sitting on the market for a while – find out if they have been reduced. Just because it hasn’t been selling, it doesn’t mean it is a dud property – perhaps the agents have lost interest in it, maybe it is overpriced or needs a lick of paint.
Q.Dear Russell, what features should I look out for when purchasing a buy-to-let?
A.The first piece of advice is that you should not look at it from a perspective of would I want to live there. You need to take that out of the equation and think rationally about who would want to live there. You should try to buy a property where the bedrooms are as equal as possible. If there are only two bedrooms, then tenants prefer not to share a bathroom – look for places with either two bathrooms or an en suite. You should always offer either furnished or unfurnished.
It might seem obvious, but you want to buy somewhere where the building is in good repair and has a long lease. You should also find out if the property has a good rental track record. If it has never been let out before, try to find out what similar properties in the area have rented for. Aim for quieter residential roads and if you do look at a lower ground floor flat, make sure it is light. If the flat is on a higher floor, there needs to be a lift, but remember that a lift and a porter entail higher management charges.
You should always be a bit conservative on your rental projections. The service charge, which you are liable for, is an important cost and you need to look at the potential management charges and the letting fee, which can both eat into your return.
Russell Hunt is managing director of Property Hunt, a search agent for London and the Home Counties. www.property-hunt.co.uk