James Davis of UPad has this to say about using buy to let as part of your retirement plan:

“The current economic climate has meant that now, more than ever, many of us have had to diversify our investments. And, the last two years have provided clear evidence that a policy of investing in stocks and shares alone is not sufficient – particularly those looking for an additional retirement fund.

The rental sector provides many opportunities; buy to let investors have the potential to benefit from a regular income, as well as capital appreciation.

Student lets are expected to double by 2020, so this could be a good market to look at, as well as single dwellings. The rental market is picking up, and where house prices have experienced a real dip, now could be the time for those who are retired – and potentially cash rich – to diversify their investments and look at building up a buy to let portfolio. They just need to remember to approach this as they would a business.”

There have been numerous articles written recently pronouncing the death of the buy to let market – but things seem to be changing and we’re seeing a sharp upturn it seems. This is likely down to increased demand for rentals with the shortage of affordable homes for first time buyers, and the lack of available finance, despite recent government efforts. But beware – ideally, the rental income that your investment properties produce each month should be more than enough to cover the cost of financing, the cost of managing and maintaining them, and a little bit extra for you. In the real world, that often isn’t going to happen.The rental market will eventually be created because of the affordability barrier – but there will be a lag.

Here are my top ten tips for buying to let in 2010

1) Carry out thorough research. Check local rental conditions, analyse rental demand and determine the types of renting in your area. Look for obvious clues such as a large company relocation, the opening of trendy bars and shops, or the existence of good schools nearby and choose a property with features that will appeal to your market.
2) An appealing property rental is one that is close to transport links and/or has off street parking.
3) If you plan to rent your property to professionals, all of the bedrooms should ideally be doubles.
4) Think low maintenance. You want a property that will run itself as smoothly as possible
5) If you are managing the property yourself, be prepared to do some hard work. A buy to let property is far from being a hassle free income.
6) Choose a property close to home, which will enable you to pop over and sort out any problems easily. If you are not able to do this it can cost you more than a weeks rent to get someone in.
7) Bear in mind that family rental homes require plenty of space and storage
8) If you are the sole freeholder of the property, you will need to ensure that the common parts and the exterior of the property are well maintained. You may wish to spend a couple of hours a week vacuuming and polishing or employ a professional cleaning company to keep these areas up to scratch. If your buy to let is leasehold, however, the responsibility for the maintenance of the exterior and interior communal areas will rest with the freeholder unless your lease specifically states otherwise.
9) Steer clear of large gardens, especially in a town property, unless you intend adding the cost of a gardener to the weekly rental and you are aiming to market your property as a family home. As any keen gardener knows it doesn’t take long for a little neglect to show.
10) Consider whether you want to let furnished or unfurnished. Sometimes there is little difference between the rents commanded by unfurnished compared with part or fully furnished properties to let. It all depends on your market and the demand in your area. Before you go looking for furniture, do your research and find the best option for you.

Best of luck everyone!

Research carried out by Friends Provident reveals that almost 25% of homeowners who are currently working will consider downsizing in the future to fund their retirement.

According to retirement specialist, Archstone Lifestyle Homes, however, there is a growing trend for the over 55s to downsize for reasons other than releasing equity.   Many home owners ‘cross-trade’ to a home of similar value to their former homes simply because a new home is much easier to maintain than an old property as well as being more energy-efficient.  Other downsizers buy ‘lock up and leave’ retirement properties in order to travel  or live abroad for several months each year in a second home.

In terms of downsizing, timing is crucial. The majority of Archstone homebuyers decide to ‘downsize’ when they start to experience difficulties in maintaining older properties set in extensive  gardens – or when illness strikes and living in a large home becomes ‘too much.’

Archstone’s developments, at the high quality end of the retirement property spectrum, are ideal for downsizers who are looking for a stylish, impressive home with fewer bedrooms rather than less living space.

Archstone is committed to creating small, exclusive, gated courtyard-style developments which comprise easy-to-maintain traditional-style homes with manageable gardens.   Each home is designed to provide flexible living space with a wide hallway, stairs and landing, a generously-proportioned living room, carefully-planned kitchen, a dining room and sunroom or conservatory.  Archstone also creates shower rooms on the ground floor so that owners are able to live on one level should the need arise.   The fact that Archstone includes high quality fixtures and fittings, designer kitchens with a full range of integrated appliances and, usually, with a combination of carpeting and tiled flooring, adds to the appeal of the new homes as retirees are able to move straight in.

Each Archstone development has an Estate Management service which appeals to those who spend their newly found leisure time abroad – either travelling or in a second home.   The Estate Manager takes responsibility for maintaining the development, including the gardens and the communal areas and ‘keeps an eye’ on properties whilst owners are away.

Another reason for downsizing to a retirement development is security, which is extremely important for mature homebuyers as Tim McEvoy, Archstone‘s Sales and Marketing Director makes clear:

“At Archstone, we create courtyards that achieve a balance between privacy and a sense of community.   Most of our developments include fewer than 20 new homes, so they are small enough to offer the sense of security that our buyers – particularly single female retirees and lock up and leave owners – appreciate.

Archstone’s current developments include a newly launched development in Hardenhuish Lane, Chippenham and another in Highworth, Wiltshire, as well as St Michael’s View in Mere, Wiltshire,  Stapleford Court in Stalbridge, Dorset and Abbeymead Court in Sherborne, Dorset.  For further information, please visit the website on www.archstone.co.uk.

We asked Upad.co.uk, the rental experts, for their advice on whether new builds are good for buy to let:

A survey by Ludlowthompson showed that, of property investors intending to expand their portfolios in the next six months, only 12% intended to purchase newly built properties. Asked the same question back in March, 26% said that new-builds would interest them.

There’s no doubt that the housing market has suffered from an over-supply of new-build properties, as developers who overbuilt during the boom try to clear their stocks, urged on by the banks who want to recoup their more speculative lending. The problem is particularly acute for those who built blocks of apartments – exactly the area that many buy to let landlords might be interested in.

On paper, this clearance stock looks as though it might be a perfect buy to let proposition: prices are low, meaning that landlords can have some flexibility over the rents they charge. This in turn will help to minimise void periods: properties will be filled and earning their keep much more quickly. Investors who can snap new-build up while its cheap could have a great capital investment which will appreciate while the housing market slowly recovers.

But investors are right to be wary. An over-supply of property for sale can, all too easily, turn into an over-supply of property for rent. While the general mood of the rental market is improving, things are not yet stable. Unemployment remains high and some predictions have it going higher for some months to come. In such circumstances, first jobbers are likely to share with friends or even stay with their parents, meaning that this usually reliable supply of new tenants may not be there. And with horror stories from the student sector of loans in chaos, “pile ‘em in cheap” apartment blocks are a risky investment indeed.

When developers have built huge apartment blocks or even several similar blocks together, properties quickly become commodities.

James Davis, Upad.co.uk’s CEO and a landlord himself, counsel’s caution: “As always, investors thinking of going into this market need to do their homework first. The thought of a property bargain can be dazzling, especially if you have an annual bonus burning a hole in your pocket and the bank’s only offering you 1%, but buying a property that you can’t let out at a profit is an expensive mistake to make.”

James says, “The golden rule is to consider supply versus demand. Developers who can’t shift new build stock might be offering it at knock-down prices, which can look as though it means you can afford to take lower rents.

But if a dozen other landlords on the same street have had the same idea, which can mean that everyone is competing in a race to the bottom, with everyone trying to undercut their neighbours. What is worse still is that if there isn’t consistent and sustainable demand for rental property in the area, over-supply can mean that some properties end up being left void for much longer than normal. It’s essential that those thinking of buying new build do their research – not only into rental prices for the area, but that they also look at how many other similar properties are likely to come onto the market at the same time as theirs.”

Those who can afford to buy up entire developments may find themselves in a stronger position, as they can control supply and thus rents more easily. Discounts available for the purchase of entire blocks are considerable, and those with the assets to do this will find themselves advantaged over smaller investors purchasing just one or two properties in a street full of others doing exactly the same thing.