The property market is very much open for business, and with the stamp duty deadline looming, it’s going to be an exciting first few months. Providing some inspiration for your investment plans, buy to let consultant, James Powell, explains three possibilities for landlords this year, which don’t necessarily mean purchasing new property!
Investment plans don’t just have to be purchasing new buy to let properties for your portfolio (although there’s good reason to do so). As I’ll explain, you can take time this year to nurture your existing portfolio and ensure you’re getting the most out of your investments!
Save money by remortgaging
In these uncertain times, making sure you’re not paying more than necessary and stream-lining your monthly cash flow is vital.
As any savvy landlord knows, you don’t want to be rolling onto your lender’s expensive Standard Variable Rate (SVR) at the end of a fixed-term! Whether your Early Repayment Charge (ERC) period is about to expire or your fixed term is coming to an end, remember you can usually secure a new buy to let mortgage around two months before your current one expires. After all, there’s no harm in getting ahead.
If you fixed on a mortgage rate that’s higher than you’d like, but still has a year or so left on the ERC period, it may still be financially beneficial to remortgage. Our brokers can do the maths for you and see whether there’s a more competitive rate available so you can start saving money now!
If you are looking to expand your portfolio, then remortgaging an existing property which has increased in value (or holds enough equity) can allow you to release capital for a deposit on a new investment. This is a popular and efficient method of growing your buy to let portfolio and increasing rental income.
For a full guide to remortgaging, you can see our previous blog on the topic here.
Add value to your properties with refurbishment
There comes a time when any property needs a little TLC, and for buy to let properties there are two strong incentives for refurbishment: increased rental income and increased property value.
Good quality decorating and updated kitchens and bathrooms are a quick-win way to attract higher monthly rent rates. You may also be considering making energy-saving improvements to raise Energy Performance Certificate (EPC) ratings. Given that the minimum requirement will likely rise from D to C by 2025, it’s never a bad thing to get ahead of the game. It’s also worth remembering that the Green Homes Grant scheme deadline is now 31st March 2022 (for works to be completed), which offers vouchers covering up to two-thirds of the cost of specific energy-saving improvements, up to a limit of £5,000. You can read more about the scheme here.
The most common way for landlords to finance refurbishment work is with bridging finance. Quick to access, this short-term finance covers the work’s cost and can then be paid off by remortgaging the property (for a hopefully increased price). Depending on the level of refurbishment you’re looking to complete, heavy or light, our buy to let and commercial teams have plenty of experience in this area, and will be able to talk you through the process and options.
Property bargains either side of the Stamp Duty deadline
For those looking to purchase property as a buy to let investment this year, the stamp duty deadline at the end of March may or may not be a deciding factor. However, we’re sure it’s likely to offer up some bargains as move into the Spring, so it’s worth keeping an eye out.
As we get closer to the completion deadline, the more sellers are likely to drop asking prices in order to increase their chances of securing their own forward purchase. While it’s doubtful prices will do anything drastic, you may be able to snap up a one-off deal if you keep a keen eye on the listings.
It’s been well reported that since the stamp duty holiday announcement in July, house prices have inflated by nearly 7% due to the enormous demand on the market. Once the deadline passes, we’ll likely see a slight relaxation of these increased prices – no more than 5% - once again offering investors the chance to pick up a deal (or two). We expect any decrease in property values this Spring to recover again by the Autumn, so there’s no need to worry about negative equity.
These are just three suggestions of how you can make the most of property investment this year. Although 2021 hasn’t started the way many of us hoped, the property market is still open for business and thriving, so the possibilities are endless for the motivated investor.
STAMP DUTY HOLIDAY DEADLINE
For all our customers seeking to complete property purchases prior to the expiry of the Stamp Duty Land Tax holiday on 31st March 2021, whilst we will do our utmost to enable completion to occur on or before this deadline, we are unable to guarantee this will be achieved. Mortgages for Business do not control processing timescales for lenders, valuers and solicitors. Accordingly, we do not accept any liability to you in the event that completion is not achieved prior to the expiry of the Stamp Duty Land Tax holiday.
6th January 2021