|Effects of the pandemic situation have resulted in job furloughs or termination, economic loss and various other factors. So the idea of having a financial “backup” can be alluring as well as challenging. It has been felt that property is one of the safest investments to be made, with the correct guidance to avoid stumbling blocks and yet being reasonably sure of a positive outcome. To assist you with this is one of the well-known estate agents in Beckenham who are experts in property investments.
Now is the time to “invest” in property education by researching and being guided by experts in the property business. They will follow the real estate market carefully and advise with new listings and price indications of those who need to sell. Cost factors should be thought out carefully. The location of the property and the tenant demand (in BTL cases) are essential factors to consider.
Pros: SDLT: With the SDLT (stamp duty land tax) being withheld till 31 March 2021, it is an advantage for prospective buyers.
Take time: However, do not be in too much of a hurry to take advantage of any property deal just because it is available. Investment should be considered only after research has proved that it will be beneficial for capital growth. If you are investing for rental income and evaluate that the market drop will not be too low, you can invest and reach your goals.
Benefit to the buyer: With the economic situation, some sellers are struggling to sell properties – from residence owners to developers, and this is the time to negotiate prices, so that reasonable offers will be considered.
House flipping: has become increasingly popular with buying low-cost properties, renovating them and then selling them soon at a profit.
BTL – Buy to Let: With many people looking to rent houses rather than buy them, especially with the younger, working-class population, the BTL market has improved significantly. One tip is to look for property in prime locations (near business and corporate sector offices, school catchment areas) so that tenanting will prove easier.
Tenanted property: Some landlords are still wanting to sell and investing in tenanted property has its advantages. With tenants already in the property, it will save the issues of having people physically move in, handing over keys etc. If the rental income is of prime importance, then you should check whether the tenants’ employment and salaries have been affected by the pandemic so that it does not hinder the rent payment.
Popular homes: With many people working from home instead of an office, prospective buyers are now looking at properties which will be permanent and offer more environmental comforts as well, such as independent houses, with gardens and many bedrooms. Those that are detached and more in rural settings are gaining in popularity. With this increasing trend, property investors have a better idea of where and in what areas to look.
Mortgages: It may be challenging to obtain the mortgage that you need, with some lenders not taking new applications and sometimes drawing back on mortgages that had been agreed to in principle. Exploring avenues to obtain the best rates from the best lender will need to be done.
BTL: In the case of Buy to Let, mortgages may be more challenging to obtain, with the added risk of renting the property, and fees may be higher. Also, the profit will not be immediate since it will take some time to cover the deposit expenses.
Responsibility: If you are renting the property, the maintenance of the same and attending to the needs and problems of the tenant will be your responsibility. Tenants expect amenities which will have to be provided. This can be time-consuming and a drain on your finances as well.
House flipping – taxes: Flipped houses do not usually come under the 1031 Exchange tax benefit because they are short term and speculative. Also, if the property is flipped within a year, short-term Capital Gains tax will apply at regular income tax rates.
Tenanted property: Some lenders will insist on an AST (Assured Shorthold Tenancy) agreement before agreeing to a mortgage on the tenanted property, and some will lend only if the rent amount is more than the mortgage repayment. You will be responsible for fulfilling the previous owner’s obligations to the tenants, so these should be meticulously checked out. Choosing an experienced solicitor to verify the terms of the purchase would be a good idea.
Conclusion: With crises come opportunities, and it is the person who is willing to take the challenge, even with risks involved, who will come out the stronger. This is true, especially if you are in a position to invest. It has been proven with the emergence of Airbnb from the financial crisis of 2008. Looking at the long term factor, the “bricks and mortar” investment will be an asset!