Tuesday, 30 December 2014

2014 Grantham Estate Agents League table

Unless an agent is going to be working over the next day or so, here is the final league table of Grantham Estate Agents for 2014.

This is what they have put on to the market in 2014 in NG31 + NG32 + NG33

1.       Newton Fallowell  360
2.       Wiliam H. Brown 237
3.       Pygott and Crone 223
4.       Haart 161
5.       Winkworth 159
6.       Buckley Wand 126
7.       Escritt and barrel 119
8.       Connells 103
9.       Wisemove 80
10.   Harrison Murray 51
11.   Moores (Stamford) 28
12.   Belvoir 27

Thursday, 11 December 2014

Grantham landlords - should you take DSS tenants?

In my years of being an estate agent and letting agent, if I had a pound note every time a potential tenant has asked me whether a particular property will accept people who are receiving  DSS benefits.

Why? Quite simply that’s because there’s large demand for properties that will accept benefit claimants – SKDC have ‘waiting lists’ running into the thousands which continue to grow. It is a specialised area of the market, and one that you must not enter casually. However, for some Grantham landlords it is a very lucrative market, and I know a few landlords who are buying to meet the tenant demand.

These tenancies can work well, but it’s really important that the landlord understands in advance how these tenancies work, and what the pro’s and con’s are. I’ll go through these below.

Should I, Shouldn’t I?

The main question Landlords should ask is ‘do I need to accept Housing Benefit Tenants to rent my property’?, For the vast majority of Landlords, the answer to this question will be no – there will be a large enough supply of good quality private tenants happy to pay the rent you want. As such you’ll stick to the private market as it is, statistically, less hassle. Grantham landlords generally need to consider a tenant on benefits :
  1. if their property is in an area where there’s low demand from private tenants, or
  2. if the local market is such that there’s a shortage of private tenants generally.
What are the advantages?

If your property isn't in the best area, there are many!
  1. You can get a premium rent for your property – SKDC, in fact all council's have a set ‘scale’ they pay against, based on the size of the property, and not based on the area. As such if you’ve got a property in one of the poorer areas of town, you’ll get more for it with a Housing Benefit tenancy than with a private one.
  2. In many cases South Kesteven District Council (SKDC) will provide a guarantee bond instead of a deposit. This is usually capped at 1 months rent..
  3. Housing Benefit tenancies statistically last longer – if you’re claiming benefit and you want somewhere nice to live, the world is by no means your oyster! As such when tenants get somewhere nice, they tend to stay longer.
  4. In certain areas of town, a housing benefit tenant may be a safer bet than a private tenant – a single parent with children is always going to be entitled to funds, whereas a private tenant on low income and in / out of work, may struggle more to pay.
  5. More often than not, a decent letting agent should be able to arrange to receive direct payment from SKDC, which mitigates the likelihood of the tenant not paying.
What are the disadvantages?

There are a few here also. It's important you understand these in advance.
  1. Rent is paid in arrears, not in advance.
  2. SKDC, in fact all local Authorities, make 13 rental payments a year instead of 12. You still get the same amount of rent annually, only in smaller chunks.
  3. Without wishing to over generalise, tenant often struggle to deal with issues that arise (such as their benefit entitlement being changed) and deal with this by ignoring it, or burying their head, rather than coming and telling you.
  4. If tSKDC overpays housing benefit, they will take it back from whoever they paid it to. As such if we’re getting direct payment for your tenant, and the LA subsequently decides the tenant wasn’t entitled to that money, they will deal with it by simply taking the money back – that's democracy for you!
  5. SKDC aren’t geared up to communicate with landlords, and very much see the tenant as their ‘customer’. If the tenant's entitlement to benefit changes, you can bet the local authority won’t tell you – the first you’ll know is when the money stops coming in. As such Housing Benefit tenancies can take a lot more management.
  6. If you want to / need to get rid of your tenant, you can bet SKDC won’t help you – you’ll very much have to rely on the court process unless your tenant is happy to play ball!
  7. Your agent will lose a little bit of flexibility on which tenant they let to – SKDC doesn’t like to see us making arbitrary decisions, and rejects any form of 'discrimination'.
  8. The secret to success is hence understanding the above and managing it. If you get a reliable tenant, and a relaxed landlord, it can work really well and deliver a great yield for the landlord. If you get an unreliable tenant and an inflexible landlord, problems can ensue!

As such there can be problems with accepting tenants in receipt of housing benefit. It’s not a market that suits everyone and if you’re the sort of landlords that treats their rental properties as extensions of their own home, it’s not the market for you. That said, you can pick up a cheap property in one of the less upmarket areas of Grantham and rent it for good money. I know a number of landlords who operate successfully in this market.

Wednesday, 10 December 2014

Are there any property bargains in Grantham and how to find them.

Well, if you read this blog, i often post deals that you, the good people of Grantham should be buying for buy to let.

In the coming weeks, not only will I look current bargains, in some future articles, I want to look to look at some old bargains that have come good.

Let's start with this one, Hill View Close (off Goodliff Road near the junction Dysart Road .. think Hillingford Way but a little nicer). This 3 bed semi/ end townhouse came on the market last Summer(August 2013) for £104,950 and sold  a few months later for £103,000 (completing in early Spring 2014) .. nice isnt it?

However, roll the clock back a few years to December 2010, and it was bought for £66,000... Have a look at the photos from the time it was marketed in 2010 below .. here is the best bit .. it was marketed at £79,950 and sold for £66,000.

So the person who saw through the purple walls and crappy decor made a decent wedge .. a rise of 56% (or 14% a year).

There are still plenty of bargains out there, even in this market. The most important question you should ask an agent (and do this face to face .. not over the phone or email)  is 'WHERE ARE THEY MOVING TO.......AND TELL ME, WHY ARE THEY MOVING?'  

The first is is a sop to hit them with the second question. people who put their property on the market fall into two categories, (1) GOT TO SELLS and (2) LIKE TO SELLS .. Try and find someone in the first category who have been on the market a long time .. how do you find stuff that has been on the market a long time .. easy .. do a search as you would on Rightmove.. once it gives you a results in a  list, in the top right hand corner there is a drop down menu , called 'Sort by' ... 99.9999999999999999999% of people leave it at Highest Price first. You should drop it to 'Most recent first'.... then just keep scrolling down page by page and the stuff on the last few pages is stuff that has been on the market a long time

PS .. I have now added a subscription link at the top right hand corner of this blog (you need to be reading it on a desktop or tablet - it wont show on mobiles_ .. just pop your email in and it sends an email when I post something new. I don't get to see your email either, so you wont be spammed with crap (not that i have anything to sell you that is! )

Tuesday, 2 December 2014

How affordable are Grantham properties?

I had an interesting chat with a chap who lives in Barrowby last week. He is thinking of buying his first buy to let property and he wanted my opinion on the state of the Grantham property market and if it was a good time to invest.

He was particularly worried that with all the newspaper headlines of a booming housing market, there wouldn’t be any demand by tenants. One of the best pieces of advice I can give to those looking to invest in property is a simple trick of the trade. You can judge the affordability of an area’s property market (and thus how much demand there could be) by simply finding the ratio of the average property price to the average salary. The lower the ratio, the more affordable property is.

When we put this to the test, we found that an average property in the Grantham currently has an average property value of around £176,600 with the average salary being £18,510. This is a ratio of 1 to 9.5, which is very close to the UK National average of 1 to 9.46.  So lots of first time buyers should be buying property? Not really. The issue isn’t affordability, it’s the raising of the 5% deposit, which when you take into account fees, will be in the order of £9,000.

Tenant’s inability to raise that sort of money for the deposit is driving demand for rental property.