Come on down.....The Price is right!

So the great unanswered Question arises. How much is your house worth?

Allow me to illustrate with a common Scenario:


I bought it for £250,000 three years ago. Prices have risen by 20% in the intervening period therefore £250k + 20% is £300k. Cushty (as Delboy would say!).
Your old neighbour Ian, had sold his about 6 months ago and managed to get £300k for his, so that figures. And Ian's didn't have such a big garden as yours
Agent confirms this having looked at comparables and feels that the price is achievable.

So we put it on the Market for £300k and wait for the floodgates to open.........

First up Mr and Mrs Harrison turn up say they like it but they have others to look at, so will be in touch if they are interested.
Next to view is Terry and his friend Roger who claim to be professional sharers. They both like the Master Bedroom but the other two Bedrooms are a bit Small and they're not really keen on Gardening. 
3rd to visit is Katherine and her two children. The Kids love it and tear round the house creating merry hell, but you bite your lip as this looks it could be the one. Katherine really likes the House and leaves making all the right noises! 

Folllowing Day agent phones to ask how it went. You say that you thought it went ok and that Katherine seemed very interested.

Agent follows up appointments and Confirms that Katherine did like the House but for £300k she had seen something more suitable on the other side of Town. The Agent suggests that dropping the Price might sway her, but you say No as the House is worth it. OK never mind

A few days pass and the Agent arranges for Mr & Mrs Godley to call. They are in a hurry as they have a lot to look at and are in and out in Five Minutes. WOW, was it worth it?
Then didn't even notice the feature Fireplace, and never even looked in the Utility Room! 
Next to arrive is Mr Sugden. A very Tall, but quite quiet and unassuming man. He is quite the reverse of Mr & Mrs Godley and takes nearly an hour to view. 
He wanted to know everything about the property, when it was built and by whom, what the neighbours were like, even how acidic the soil was for his rhododendrons! He was hard work.

Following Day agent calls and you explain that Mr & Mrs Godley didn't seem interested and Mr Sugden was a nightmare and that you would appreciate if they didn't send anymore like him around!

A couple of Weeks pass and nothing. So you phone the Agent to find out what's happening. they explain that because of the school holidays, buyer inquiries tend to slow down and that once the Easter Break is over Inquiries should begin to rise again. Fair enough you think....

Easter passes and week later you phone the agent again. They say that the market has slowed and that it might be appropriate to drop the Price by £15k, and that should increase the level of enquiries......

Hang on a minute my house is worth £300k, now the Agent is telling you its not. I should drop it by £10k?

Are they for real? House prices have gone up 20% and Ian sold his for £300k and he has a smaller Garden. Who do I Complain to ? Bloody Estate Agents!



Okay so might seem a bit silly, but it does happen. 

The reality is nobody truly knows what a house is worth. 

Your house is worth something to you, but that does not necessarily mean its has the same value to someone else. But as you are selling who's opinion Matters most, yours or the buyers? Its called Market Forces and you can only react to it. Sure there are some things you can do to get an idea, but thats all it will ever be, 'An Idea'. I'll cover these in a later Blog. Even RICS Valuers with their 'Red Book' of Standards will still refer to Estate Agents occasionally to get a 'Market Value'.

Agents will visit and are expected to know exactly whats its worth. Many will have a good idea based on their experience, but will probably over value in order to get the Instruction. This is especially true if they know you are asking other agents to Value. Once instructed, they will ask you to drop the price by 2.5% after 2-3 weeks if interest is low and again after that if necessary.

A house is only worth what someone is prepared to offer for it at any given moment. And if that figure is the Same as yours then Bingo! You've possibly got a Sale. 6 months later you might get £310k. Conversely you may be offered £290K! Nobody truly knows.

Its all a question of being on the market at the right time, with the correct offering for your target market!

If you want to know more then Drop me an Email or pop in and See Me

Putnoe Rentals vs Sales

I've just been trawling through rightmove looking for suitable Rental Properties in the Putnoe Catchment Area. Guess How many are available? 8. And 2 of those are Commercial. Out of 15,000 houses or whatever the current number of Properties is, that is a minuscule Number.

You would rightly draw the conclusion that the market is mostly Sales with very few Rental Properties. But the Fact there are so few skews the facts slightly. It doesn't necessarily indicate what the Demand level is, only that there is a low supply. In our experience, the demand for Rental Properties in the Putnoe has always been high due to a number of factors. Firstly, there a a lot of Schools within the Area. Secondly, the Area is fairly mature and well Established with lots of Green Areas and Parks. Given a choice, most quality Tenants would choose a well proportioned, established Family Home all day long, if its within their budget.
Finally, the last few years have shown an increase in Demand for Good Quality Rental Properties. Changes in Lifestyle and Work requirements means that for a growing number, Renting is the best solution for their own lifestyle.

Now that the Average price of a 3 Bed Semi is about £220-230k in the Putnoe Area and that Rental Figure upwards of £900 could be achieved. A fairly reasonable 5% return on investment could be achieved without too much problem. Given that there is very little Competition in the Area the market is ready willing and able to accommodate such properties.

If you would like to know more then drop me a line here

Property Focus: Bamburgh Drive

Everyone likes a BOGOF!

Thats exactly what you get with this property on Bamburgh Drive. A Four Bedroom Detached Property with an attached One Bed annexe. Now thats a lot of Bang for you Buck

Bamburgh Drive

Offered for Sale at £315,000 by Urban and Rural, it features 4 Goods sized Bedrooms, Large Lounge, Separate Dining Room and Utility Room. The annexe is fully self contained with it own Kitchen and Shower Room. Ideal Property for those who run a Small Business from Home, have elderly relatives or regular guests that may stay over. Alternatively, if you dont require the space, you could partition off the annexe and rent it out. Small 1 Bed Property would Rent for about £400-450 pcm. Better than a lot of Flats!
As always, theres a BUT. Its been on the Market since April 2015, bit strange for a nice looking property in a Nice Part of Bedford. Is the Agent bothered? Is the price justified? Do they really want to sell? Dispute with a neighbour ? Who knows.......

Email me here

Do semi-detached properties on the Poplar Avenue make good investments for Buy to Let?

I was talking to someone who lives in a semi-detached house on the Poplar Avenue. He wants to purchase his first Buy to Let property and has noticed our shop on Tavistock Street and my previous articles, so was interested in getting to know the industry a little bit more.

As he has lived on Poplar Avenue for over 8 years and he felt comfortable investing in the area, as he knew it well. We started to discuss the property market in this area.

Firstly, we found that 30 semi-detached houses have sold in the Poplar Avenue since the year 1999.
Property values in Bedford have risen on average by around 73% over the last 14 years, but most semi-detached properties on the Poplar Avenue have beaten that rise. 
When we look back to 2001, a three bedroomed semi-detached property in the Poplar Avenue was bought for £133,500 and sold in 2013 for an impressive £215,000.  

With excellent capital growth you would expect yields to be comparatively lower, but most three bedroomed properties in the area can be picked up from £240,000 to £250,000 and could have achievable rents of £950 per month. This means annual yields can be around an attractive 5%!

If you would like to talk to us about your potential investment, please come into our office on Tavistock Street.

Property Focus: Putnoe Heights

Putnoe Heights - Bungalow

There something Quintessential about Bungalows. In this day and age, most new houses are being built upwards to make the most of the Land available. 3 Floor Town Houses feature on most new Estates.
Bungalows hark back to a day when we all had a bit more Space and were not as rushed as we are in todays modern environment. They offer a sort of peaceful tranquility.
They all tend to sit on good sized Plots and feature good sized Rooms.
This one in particular illustrates the point perfectly, and one I know quite well as I walk my dogs on Bowhill Park, which the property is situated next to.
Offered for Sale by our Friends at Urban and Rural it features good sized Rooms as well as a Conservatory that overlooks the Park.
As they say nice Retirement pad or a small family Home.
Now heres a thought. Most people wouldn't Associate Bungalows with Renting. But one things remains true,  the few we have on our Books never seem to be empty........

If you'd like to no more or just a chat, please get in touch!

Chicken or Egg?

Ah the age old Question, which came first? Do I find a buyer or a new house first? 

Fortunately, the answer to this is a bit easier to decide.

Without a doubt, make sure you secure a buyer on your existing House before you Make an offer on anything else. If its done right, buyers will flock to your property. 
Until you have an offer you don't really know what you've got to play with.
There is absolutely nothing wrong with checking out the Area where you hope to locate to. Speak to Agents, browse about and have a scout the area. 
But dont get all emotional about anything in particular, because in all likelihood it may have gone when the Time comes.

Having an offer on your home will also en-power you with any negotiation as you will be taken more seriously. 
You will be able move more quickly and dictate the pace more easily.

Want to know more? Email or pop and See me in the Office

Budget: Tax Changes

What Will The Tax Allowance Changes Mean To Bedford Landlords - And What Can You Do About It?

The Chancellor George Osborne sprung a rather unexpected and nasty surprise on Landlords in the recent budget, by restricting interest rate relief on Buy to Let mortgages - now the dust has had time to settle I thought it worth taking a look at what it may mean for Bedford Landlords

The Chancellor has cut the tax relief that private landlords receive on their mortgage interest payments, cutting it from 40% or 45% for higher rate taxpayers to 20% by April 2020

The new restrictions start in the 2017-18 tax year on a sliding scale, and become fully effective in 2020-21

The changes will only affect higher rate tax payers, so Landlords who only pay the basic 20% rate of tax will not be adversely affected

This phasing in will mean that 25% of this extra tax will be payable on profits made in the April 2017- April 2018 tax year, 50% in April 2018-April 2019, 75% in April 2019-April 2020 and 100% in April 2020-April 2021 meaning that the full effect of this wont be felt until your January 2022 personal tax bill is due

On a property worth £100,000, a landlord in a higher tax bracket with an 85% loan-to-value mortgage and a mortgage interest rate of 5% would end up losing £100 a year. When the rate reaches 5.5%, the burden on the landlord's finances will jump again, triggering a loss of £440, and then to £780 when the rate reaches 6%, according to financial experts

Industry professionals say George Osborne's Budget move is likely to hit people who have sunk their money into property because they were getting no interest on their savings in the bank, or following the financial crisis, no longer trust the pension model, and are relying on rental income

Ultimately this change in tax relief for Landlords will not only affect landlords, it will also be detrimental to Tenants because ultimately, if Landlords' margins are squeezed, they will be forced to increase their rents to make their investments work, or sell up

It is still early days and we need to see how HMRC will implement some of these changes but here are some initial thoughts on how we could tackle this change

This change only seems to affect individuals and partnerships/LLPs. Ltd companies seem to be excluded. Landlords could potentially look to purchase their future properties into Ltd companies (if this works Buy To Let lenders will become more open to this-otherwise commercial lenders will already facilitate this)

For those who already own properties personally or in a partnership/LLP they may want to transfer them to a Ltd company (but they will be subject to capital gains tax and stamp duty)

An easier way to do this if you want to keep your current mortgage would be by using a deed of trust, which would transfer the beneficial ownership to a Ltd company

A good solicitor can draw one of these up for you but please seek professional financial advice before doing so as it will affect the way you get your money out in a tax efficient manner (you will either need to take the money out on the form of dividend, salary or bonus, none of which are tax efficient) and furthermore tax on gains will always be payable at some point (capital gains tax stops being payable when you die but Ltd companies are immortal!) 

New analysis from accountants PwC featured in an excellent Daily Telegraph article has shown that if a private landlord transfers one or more properties into a company structure, known as incorporating a business, the total tax rate is greatly reduced.

"This is because a company is paying tax on the actual profit and therefore the rate does not fluctuate wildly. If the profit reduces, so does the tax," said Paul Emery, a tax partner at PwC.

"If the rental property is run privately, there is a scenario where because you no longer get full tax relief for your expenses, you can pay tax even if there is no profit," he added. "That means potentially enormous effective rates of tax."

By 2020, when interest rates are likely to be higher, the levy on a property worth £100,000 to a private landlord in a higher tax bracket - with an 85pc loan-to-value mortgage and a mortgage interest rate of 5pc - would be 106pc

As a result they would expect to suffer an annual loss of £100

If the same property were run as a business, the landlord would pay a tax rate of just 49.2pc and bank £888.

If mortgage rates go up further, the contrast becomes more stark

If rates hit 6pc, a property owner operating under a business umbrella would again pay 49.2pc, but the private landlord would pay 186.7pc tax, and make an annual loss of £780, according to the PwC model

"Other taxes such as stamp duty and capital gains tax could affect profits from a rental business, especially for a landlord with only a handful of properties," warned Mr Emery

If the owner is a sole trader, he would pay stamp duty again on the "incorporation of the business" based on cost of the property

But if the owner is in business with a partner, they could enjoy some stamp duty relief

Alternatively, if a sole trader or business partners own more than six properties, it is classified as a commercial property business and they will only pay a flat 4pc stamp duty on the sale

"The big tax difference is capital gains tax when the company finally comes to sell and dividend the profit to the owner at 49pc compared to 28pc for a private landlord - but at least you would know what your effective rate of tax is, and if you are reliant on the income rather than the appreciation of price, it may be a hit worth taking," said Mr Emery

"Although incorporating your business helps you guarantee your monthly tax bill, it is not a magic solution. Tax is only one consideration when forming a company. For example, audited accounts might need to be filed," he added

Savvy landlords will look to purchase more properties that need refurbs

Another change is that Landlords can no longer claim 10% tax relief for wear and tear (and instead must claim back the actual amount spent) as long as the property is in a lettable condition when you buy it (but still needs redecoration) and comes into the lettings market before the refurb. is done most repairs/replacements such as kitchens, bathrooms, paint etc can be offset against all property income from your whole portfolio

This means that a £7,000 refurbishment could potentially come off all of your other rental income profits

So the solution for those most heavily affected by this tax change could be to buy a few properties that need a refurb every year

Given the changes will only take affect between 2017 and 2020 there's plenty of time to prepare and undoubtedly there will be further advice and guidance over the coming months with strategies being developed to mitigate against the losses 

As always my advice would be to consult an expert on such matters - the above are just a few pointers I've picked up from reading exhaustively about this since the change was announced


If you'd like to discuss what impact this change may have on your rental income speak to an accountant or tax adviser (I can recommend one if you wish) or to discuss any aspect of the Bedford property please drop me a line to nigel.bywater@belvoir.co.uk or Call 01234 290685