Continued interest after new pension rules
Six months after the Government implemented new pension rules, Fenn Wright, who cover Essex and Suffolk, continue to receive substantial interest from amateur and existing landlords seeking further information about investing in property in and around areas such as Chelmsford, Witham, Colchester, Stanway, Manningtree, Ipswich and Kesgrave.
What are the new pension rules?
The new rules came into force in April of this year, and extend from George Osborne’s March Budget last year where he revealed a number of changes to allow pensioners more flexibility over how they use their retirement fund. The new plans mean workers from the age of 55 can use their pensions ‘like bank accounts,’ and withdraw as much money as they need from their savings whenever they like, to spend or invest as they wish, ending the effective requirement to use their retirement savings to buy an annuity.
Why is property investment so attractive in the East and South East of England?
In an era of volatile stock markets and low savings rates, the lure of property investment is hard to resist. Over the past 20 years, it has provide a growing number of amateur landlords with a steady income plus impressive capital gains growth due to soaring property prices. According to recent property research, 22 per cent of all households in the UK are in the private rental sector, a figure that is expected to grow over the next few years. In the South East and the East of England, rents have outperformed London in terms of quarterly and annual rental growth, whilst demand has hit an all-time high.
With the buy-to-let market buoyant in the commuter areas in and around Essex and Suffolk, Fenn Wright’s Buy-To-Let investment team believes there is a unique opportunity of excellent yield and capital growth for savers keen to take advantage of investing in these regions.
Joseph Hall, Head of Development, Lettings at Fenn Wright explains what it’s all about…
“Going as far back as 2014 when this announcement was initially made, amateur landlords as well as those already with a portfolio have been in touch for more information on how the sales and rental markets are performing and the best way in which our team can help them achieve maximum returns.
“It is no secret that the private rented sector across the South East and East of England is booming, with rental price growth for Q2 2015 outperforming London in both regions on a quarterly and annual basis. Tenant demand is at its highest for both regions and with house price growth set to continue over the next five years, we have the perfect equation for any buy to let investor.
“There are lots of factors to think about which include costs, taxes, property law, market conditions and what is expected for the future. It’s therefore crucial to speak to a good letting agent who really knows their local market as well.”
Things to think about include:
Good quality is the key to securing the best possible rental yield and over the long term the capital growth. One and two bedroom homes are the most sought after, which if in excellent order can command a premium, creating a wonderful opportunity for buy to let investors. New build properties automatically provide excellent quality and energy performance ratings, but to unlock that potential in older style properties, we advise landlords to make sure their portfolios are of the highest standard. Modernising a property doesn’t need to be expensive but these crucial changes should make a really big difference in terms of rental income.
Is it the best thing for you to do financially?
Just like with buying and selling property, it is possible to be out of pocket. The first thing to do is make a financial plan. Calculations to cover include the costs of; renting a property out, changes and repairs you need to make, tax, stamp duty, mortgage interest rates and letting agent fees. Remember to include ‘void periods’ into your calculations too. Your plan should also cover medium to long term, where you may need to repair or replace items in the future.
There are a number of rules and regulations landlords have to adhere to in order to avoid a fine, prosecution and even imprisonment. For example:
The Housing Act 2004
There is legislation which directs and controls the renting of homes in the UK. For example, there are expensive implications should a landlord not correctly protect the tenants deposit to maintain the property to a good standard. A knowledgeable letting agent could save you a great deal of stress and money!
Housing Health & Safety Rating System (HHSRS) and Health & Safety Act 2004
As a landlord, you have a responsibility for the health and safety of your tenants. This means you must conform to all areas of the HHSRS correctly and efficiently. You will have a legal obligation to undertake an annual gas check, ensure the electrics are safe and from 1st October 2015, smoke and carbon monoxide alarms must be fitted in all rented homes. Any furniture you provide must also comply with the Fire and Furnishings Regulations (1988, Amended 1993)- there is a much stronger demand for unfurnished lets so it may be better to remove all furniture from your home before you offer it for rental.
You will need to ensure your property is covered with the correct Building and Contents insurance policy.
Don’t hide from the tax man!
Don’t forget to register with the HMRC as any income received from renting your home must be declared.
Joseph adds: “We understand that every landlord’s motivation is different, it’s not only about identifying the right rental property but also about understanding their long term aspirations to invest. With this in mind, we are able to give our landlords sound advice on potential properties but also make sure their investment meets their long term goals.”
Fenn Wright’s in-house Buy to Let team have proved invaluable to investors and developers for many years, enabling us to create an excellent working partnership and return on investment. For more information about how we can help you and our specialised services, find your local branch here.