London residential REIT

Landlords looking to join the London residential juggernaut but do not have the hundred or so grand to put down as a deposit on for a small 2 bed flat in a mediocre area might want to take a look at a forthcoming IPO being prepared by Ludlowthompson a London based estate agent.  Possibly my biggest investment regret was not to buy a property back in 2004 when the differential between London and the rest of the UK was at it's lowest in recent history.

House prices in London according to the ONS have now risen by more than 12% in the last year. 

What are the attractions?
A REIT is required to pay out 90% of it's free cash-flow in dividends and is a tax efficient vehicle for investors paying no corporation or capital gains tax.  This new REIT is aiming to pay an annual dividend yield of 4.5%.  This equates to a gross rental yield on a buy to let investment of 6%, considerably above the level currently achievable in many areas of central London.

If you do believe that the London residential property market has further to go but don't want to bet your house on it then an investment in this REIT could be the way to go.

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Universal Credit direct payment worries

Here's a worrying update from trials of the new Universal Credit over in Wakefield.

A pilot scheme where 1000 tenants living in public sector rented housing were paid their Universal Credit as a direct payment led to a £241,000 rise in rent arrears.

These results probably come as no surprise to many landlords.

The results were reported at the Chartered Institute of Housing South East Conference by the  Chief Executive of Wakefield Housing who went on to report that from the 1,000 tenants involved in the pilot, 400 had to be dropped after reaching eight weeks of rent arrears.

The aim of direct payment of Universal Credit was to encourage people to take responsibility for their finances. It strikes me it will help nobody other than the 'paydayloan sharks', who all must be rubbing their hands with glee with the potential roll out of this policy.

A Department for Work and Pensions spokesperson said: ‘Direct payments are an important part of universal credit to make it easier for people to move into work, but we’ve been clear from the outset that we will take steps to ensure vulnerable people are protected."

‘This is exactly why we ran the Demonstration Projects to help us put the right protection in place for both tenants and landlords, and why the findings have been so very useful.’

Let's all hope that the Government gets realistic. Otherwise the already diminishing number of private sector landlords willing to rent to tenants receiving benefit will diminish even further.

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Low rates to stay to 2020

It appears that Mark Carney is in no rush to raise interest rates from their five year low of 0.5%, and the Bank of England boss has made it clear that any rises will be 'gradual' and 'limited'.

The bank has clearly indicated that interest rates will not go beyond two or three percent before 2020. Prudent property investors should factor in a potential rise of 2 percent in any variable rate BTL mortgages to protect against risks to future cash-flow.

House prices jump 2.1 percent in a month

House prices jumped 2.1 percent in February according to this Halifax BS data.

That's a bubbly kind of statistic to wake up and eat your cornflakes to.

In real money, for every million pounds in property, a landlord has seen an increase of £21k… in a month.

With confidence returning to the market and the clear signal that there will be no big rate increases for a while yet, landlords should expect prices to continue rising.

Right! Back to my cornflakes before they go soggy.

Are female tenants more trouble?

As one of my female tenants stops paying rent and another is wittering on about the upstairs flat moving furniture about and it being noisy.  I ask myself "are female tenants more trouble?"  I think the general assumption from most landlords is that female tenants will be:

• Quiet
• Neat & tidy & house proud
• More organised and concerned about paying the rent
• Leave the property in a better state when they move out

Simplistic I know.  But many newbie landlords in particular will start with this stereotype.  I have to say after 20 years of renting out property, nothing could be further from the truth.  My most house proud tenant is male and as he rightly points out my rental property is his home and just like and homeowner he is constantly looking to improve his home environment.  This is  admirable and understandable, even if his regular prompting emails about the latest round of upgrades can get a little tiresome.  My experience to date is that the only tenants to stop paying the rent have been female and as a consequence from my perspective I can only conclude that they are.  Other landlords insights and views welcomed.

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Property auctions tomorrow

More property auctions tomorrow, Wednesday the 5th of March.

• Network Auctions, London starts at 2.00 pm.
• Auction House South East Wales, Cardiff starts at 5.00 pm.
• Goldings, Ipswich starts at 2.15 pm

Tune in via here

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