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As the emergence of alternative investment as the investment vehicle of choice continues, and shows no sign of slowing down, the collective investment scheme, property fund, build to rent and property funds are high on the list.

UK property is holding its own at present with all that’s going on in the world politically and economically, more specifically the whole Brexit situation the figures show that it is as good a place as any to invest right now.

There are more property related shows in the UK than you can shake a stick at, from Homes Under the Hammer, A Place in the Sun to Location, Location, Location people would be forgiven of making the mistake of thinking they know all there is to know about the property game.

But with more than a few property disaster stories out there it shows that this often far from the truth.

Steve Coyle, operations director at Cullen Property, has some expert tips people should know about on what should be considered before offering on an investment property.

With a television show of the same name it is widely considered that the most important factor to take into consideration when buying UK property is Location, Location, Location, and although this is most definitely a huge factor it is not the be-all-and-all.

Steve Coyle, explains the other important to take it consideration.

Now let us start at one can suppose is the most obvious of factor even the most novice of UK property investors.

  • Price – This is something that is difficult to gauge in the current property climate with the shortage of affordable housing it is a sellers-market no doubt about it. In the current climate a price tag of ‘offers over’, say, £280,000 may well mean a home report valuation of £300,000 and a competitive bid at closing date being in the region of £330,000 – £340,000, or around 20% above the ‘offers over’ amount.
  • Loan-To-Value – Or ‘LTV’. Any mortgage will be calculated at the home report valuation, not purchase price. So, in the example above, a ‘70% LTV’ mortgage will provide £210,000 of the funds. The other £120,000 – £130,000 of the purchase price will be required from you in cash.
  • Stress Testing –This is how lenders check the affordability of the loan based on a strict set of criteria. Whilst they may advertise to lend at, for example, a 1.99% interest rate, they will ‘stress test’ the loan at 5.5% and then apply a ‘rent cover ratio’ on top of that of 145%. In other words, most lenders are testing loans at 7.98%. If the rent is higher than the stress test, then the loan is likely to be granted.  If it is lower, then it probably won’t be granted. In the example above, the rent would need to be at least £1,396.50 per month to pass the test.
  • PRA rules – From 30th September 2017 the Prudential Regulation Authority (PRA) will demand that lenders have stricter guidelines for checking affordability of ‘Portfolio Landlords’, defined as any “borrowers with four or more distinct mortgaged buy-to-let properties.
  • Taxes – A buy-to-let property will be subject to both the standard ‘Land & Buildings Transaction Tax’ (LBTT), which is a progressive tax beginning at purchase prices of £145,000, and the Additional Residential Property Tax, a 3.0% tax on the purchase price.
  • Local Authority – Letting properties fall under various legislation from national governments and local authorities. These include landlord registration, fire safety measures and certificates, tenancy deposit schemes, tax returns, to name a few.
  • Planning permissions – Many letting properties require alteration or upgrade work to help them make the most of their potential. Various factors can impact such works such as the requirements, for listed building consent, planning permission, building warrants, and change of use. Due diligence should be undertaken to ensure that any proposed works can become reality after the sale has concluded.
  • House of Multiple Occupancy (HMO) – special consideration should be given to properties being purchased for HMO use, where the property will be let to three or more unrelated tenants. The regulations are numerous and usually strictly adhered to by Local Authority officers. They typically include minimum room widths, minimum kitchen worktop sizes, window to floor area minimum ratios, electrical and fire safety requirements, and so on. HMOs can offer excellent returns for investors but must be purchased with a sound knowledge of the regulations to avoid buying a property which can’t satisfy the requirements.
  • Rent levels –Possibly, the most important thing to consider is the rent you will charge.


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