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Legal and financial aspects to buy to let services



Financial services:
 
- Economics of Buy to let
- Market appraisal and demand
- Tenant supply
- Financial considerations
- Planning 'Gain' and Development
- Mortgages
- Insurance
- Legal

Market Appraisals

Buy2Let Expert is able to use its experience to assess a potential buy to let investment decision. There are numerous factors to be considered but all will affect the investment return and so should be considered carefully. A few of the major profit drivers are:

Current Tenant Demand

Buy2LetExpert will analyse both current and potential future demand carefully. Measuring current demand is probably the most easy. We check advertising portals and note how quickly properties let. Even telephoning and conducting a “dummy”viewing on a property similar to the one the investor is considering is useful. At the viewing, it should be possible to obtain a sense as to how popular the property is as well as the kind of standard the property is to achieve that demand.

Just as important is assessing long term tenant demand. This is more difficult but a few pointers might be:

  • Public Transport. New transport infrastructure will result in more demand in an area. However, while property prices might well rise well in advance of the opening of the new infrastructure, rents will not rise until just after the new infrastructure has bedded in. Buy2LetExpert would recommend proceeding on the assumption of current rental prices, although demand will be increasing as the new transport starts to operate. In the longer term rents should rise more than in areas where transport provision remains stable (assuming other demand and supply factors remain constant).
     
  • Changing Transport. There is no doubt there has been a change or expansion in the number of transport modes used in London in the last 10 years. A couple of key changes that are often overlooked are:

    - Buses. There has been a big expansion in the use and quality of buses in the last 10 years. More bus lanes, improved buses, better information about routes and timings have all helped.

    - Bicycles. There has also been a huge expansion in the use of bicycles and scooters in London in recent years as cycle lane, canals, bus lanes and more offer more opportunities for safer, more enjoyable cycling.

    These trends should be considered carefully by the property investor. No longer is an underground train necessarily essential to the potential renting client. The investor should not dismiss other transport modes like he historically might have done.
     
  • 'Up and Coming' Area. The oldest game in the book is to try to predict areas that might become fashionable for whatever reason. One can speculate for hours about particular future demand drivers in particular areas! But2LetExpert recommend something far simpler in the first instance. Buy a compass and draw circles at half mile intervals around the main focuses of employment in London. Then, identify the areas that are cheapest that fall within these circles. Visit the areas and find out why these areas are cheap and if the reason is going to change. If so it may be worth looking in that area. Locations Buy2LetExpert has worked with in London include:
     
  • London East End:

To illustrate the key issues regarding this area it is important to make a distinction between the old East End and the New East End.

  1. Old East End. This is the traditional historical East End. It is the area of London to the East of the City of London. Historically the area was adjacent to the docks and industry and an area in close proximity to the manual work opportunities in the town. It was therefore the location where the manual workers lived and also a cheap area of London attractive to various waves of immigrants from the Irish to the Jews and later the Bangladeshi's. Building quality was low, the area poor and before the second world war, littered with slums. The last 30 years has started to see a gradual but progressive change for the following reasons:

    - The old London docks closed and the surrounding industry moved further out of London. This was in part because many of the labour intensive jobs were lost to lower waged overseas competitors but also because London was growing. The old 'edge of town' was no longer the edge.

    - Construction of the Docklands area began in the 1980’s. A new employment focus was becoming a reality. The Old East End was becoming sandwiched by the City and West End to the west and Dockland to the East. No longer on the “edge of town”.

    - Infrastructure followed. The initially small DLR (Dockland Light Rail) system to Canary Wharf in Docklands expanded. The Jubillee Line was extended just in time for the millennium. The DLR linked with this and extended south of the Thames to Lewisham.

    The major changes above have resulted in the Old East End becoming fashionable particular in certain hot spots such as Shoreditch, Canary Wharf, Brick Lane, Stratford and more. The process will continue. The 2012 Olympics will have a knock on affect. Already Stratford is seeing enormous investment with a huge new shopping mall, transport hub and more.

    A consequence of the changes is the usual influx of restaurants, cafe’s, shops and quality housing. Prices of property both to rent and purchase have risen sharply. However a consequence is the traditional 'East Ender' has been pushed out. Manual workers must live in the New East End. The Old East End is becoming an area steeped in history but not a place for manual workers to live.
     
  2. New East End. This area is the new location of choice for recent immigrants to London which includes the large influx from Poland and other former Eastern European nations. Inhabitants are mainly skilled and unskilled manual workers and include the descendants of inhabitants of the Old East End. The area is broadly an area to the East of the old East End. It would include Leytonstone, Walthamstow, Canning Town, Stratford and further to the east Dagenham and Barking.

Specific Buy2LetExpert targets in the old East End have included:

  • Shorditch. This area of London was historically mainly industrial and composed of warehouses serving the nearby London docks. The London docks died (as a port) along with the use of the warehouses by the 1970’s. In the early 1990’s most the warehouses were empty and the area was very run down. Transport was very poor. However, the area was a walk to the City of London and it was cheap! First it was artists and students that began to see the area as value space in central London. Later developers started to develop the old warehouses. Money poured in. Restaurants, shops, cafes and more followed. Now Shoreditch is an expensive area. Prices per square metre rocketed as did rent per square metre.
     
  • Brick Lane. An area literally adjacent to the City of London. The former Spittlefields fruit and vegetable market closed in the early 1990s to be located in the New East End. The old market is still in the process of transformation. Many shops, cafe's mini markets and more have been born with the original wrought iron market structure. Brick Lane its self is no longer the cheap Bangladeshi area it was. The mix of Bangladeshi restaurants is far broader. The area has been rebranded as 'Banglatown' to emulate 'Chinatown'. In addition old Trumans's brewery on Brick Lane closed in the 1990s but businesses and restaurants have been born within its beautiful Victorian structure.
     
  • Hackney. Always an interesting area. Part of the old East End but plagued with historically very poor transport links yet very close to the City and Docklands. The housing stock is good on the whole and many streets are either beautiful or potentially so. New London over ground services have recently linked the area to the tube system.
     
  • Areas such as Bow, Whitchapel, Stepney Green and more could also be analysed in detail and all these and the areas discussed offer excellent investment opportunities.

 

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