Logo

Does let-to-buy offer an escape from the housing market?

PUBLISHED: 10:12 08 November 2018

Pic; www.gettyimages.co.uk

Pic; www.gettyimages.co.uk

How will the rental sector be affected by the impact of last week’s budget? Mike White, from Martin & Co in Norwich discusses.

Mike White, lettings agent at Martin & Co. Pic: www.edp24.co.ukMike White, lettings agent at Martin & Co. Pic: www.edp24.co.uk

Chancellor Hammond deliberately held the budget on a Monday, the first since 1962, to avoid, by his own admission, the headline; Hammond’s Halloween Horror.

As far as I can tell though, the only ‘horror’ is he failed to address the housing market in any meaningful way. He gave more relief to public toilets than he did to the broken housing market!

However, there was a potential stinger in there for landlords when he announced that Capital Gains Tax Relief is to be restricted but at the time of writing the detail hadn’t yet been published.

So, it looks like we’ll all have to fix the broken housing market without too much governmental support – nothing new there then.

Not too much mention neither of the other ‘B’ word in the budget which was a surprise since whatever is bad or not, quite rightly in the UK, focus is being placed firmly on the battle-worn shoulders of Brexit. And that most definitely includes the current soggy housing market - data recently released by the Land Registry shows falling transactions being the common theme throughout all the sectors reported on, and it appears there is still very little cause for optimism.

Don’t worry, this isn’t yet another interminable article about Brexit, so no need for your eyes to glaze over just yet. However, as sales of houses continue to slow and prices flatten, there is a way for those looking to sell (and can’t) to get on with their lives and move on.

When it’s a ‘buyer’s’ market, i.e. you can get your next property at a very good price without too much competition for it, the hard bit is to sell your own property to take advantage. So instead of selling, why not consider letting your current property instead? This would enable you to leverage its capital value and with the rental income, boost your borrowing potential for the new property.

This isn’t going to work for everyone but if you own a property with a decent bit of equity, its certainly worth exploring. Let me give you a fictitious example of how it would work. We’ll call our couple, Mandy and Jim, both work full time, in good jobs and have owned their flat for nine years. It’s been valued at £200,000 and they could reasonably expect to get £750 per calendar month in rent. The house they would like to buy is just four roads away from the flat. Now having small children, they need the extra space and want to stay in the same school district. ‘We love the area and have friends here. It would have been awful to lose all that because we couldn’t sell the flat,’ you could imagine the made-up Mandy saying.

Given the capital appreciation they’ve experienced in the last nine years, they have accrued a big chunk of equity and their current monthly mortgage repayments are quite modest relative to their joint incomes. By remortgaging the flat to extract as much of the equity as possible and taking the new mortgage on an ‘interest only basis’ the expected rent should more than cover the monthly repayments thereon. Enough will be left over to pay service/maintenance/insurances so that their new-found lettings business would comfortably wash its face.

Let-to-buy is not new; it dates back to the housing market crash of 1990 when many owners were in negative equity and in theory couldn’t move. But in those days’ rents were high in proportion to capital values, so some owners got enough income to secure a mortgage by letting out. Nowadays, it’s the other way around where a lot of people have decent equity in their property which can be remortgaged.

For many, let-to-buy may be a way out of the current stagnant market, which some doom and gloom merchants reckon could be with us for a good few years yet.

While I hate the tired cliché, ‘thinking outside of the box’, it does nonetheless perfectly describe what people keen to move need to do. Property is often seen as being an illiquid asset, especially in down times but I don’t believe that is true, there is usually always a solution.

If you think this could be the solution to get you moving, the Key points to note are:

 Check with Martin & Co Norwich that your home is ‘lettable’

 Consult with a mortgage broker to remortgage your old property to free equity for a deposit on the next home

 Consider about using an agent to find and manage tenants. The cost will be tax-deductible

 Ensure your old home is well-decorated and has modern equipment

 Get tax advice.

Give me a call on 01603 766860 if you would like to chat the basics of this through.

Mike White can be contacted at Martin & Co Norwich on 01603 766860 or see www.martin-co.com

Martin & Co has sponsored this column.

Latest Property Articles

It is a derelict, fire-hit site that has been sitting empty for a decade in Thorpe St Andrew.

Plans have been submitted to Norwich City Council to create a 10 bedroom house.

From bringing ‘ghost’ ponds back to life, to environmentally switched-on schoolchildren and energy-efficient social housing - projects in Norfolk have been celebrated with awards.

What’s the importance to a firm of feedback? Ben Rivett, of Savills’ Norwich residential team, discusses.

Situated at the end of a no-through road, you would never have reason to find this magnificent house, originally the home of an esteemed Norwich coroner. And yes, it really is on a hill! Property editor Caroline Culot had the joy of visiting Hill House in Bramerton, for sale for £2.5million.

From controversy to accolade - a Norwich housing development is up for an award.

This mid terraced house was bought at auction last year and the owners have completely renovated it, transforming it inside, and have now put it back on the market for sale for a guide price of £595,000.

The landlord of a squalid block of city flats told his sales agent to report tenants who complained so he could kick them out.

If you like the idea of really being by the sea, you might like to view a new development based on the site of a former convent right opposite the beach and sea. Property editor Caroline Culot went to visit St Mary’s in Lowestoft where homes are for sale with Aldreds ranging from £160,000 to £400,000.I grew up by the sea just a bit further down the coast and I absolutely adore the sound of the waves crashing. There’s nothing like a bracing walk on the beach in the winter for clearing your head. And, there’s something really rewarding about braving the water and having a swim in the summer - even more rewarding is the hot chocolate afterwards to get the feeling back in your fingers and toes! So, I relished an invitation to see this new development of 20 homes which have been built by Cripps Developments on Rectory Road literally a pebble’s throw from the seafront and beach. Ten properties have already been sold leaving 10 available ranging from a one bedroom ground floor apartment to a three/five bedroom end terraced house.

Tom Amis of Savills’ Norwich-based new homes team reflects on the market.

Spire Solicitors LLP are pleased to announce they have been shortlisted for two national awards to celebrate their achievements after another successful year. The awards are a part of LawNet and follow on from the firm being crowned Law Firm of the Year in 2017/2018.

Natalie Briggs, conveyancing executive at Spire Solicitors LLP, takes a look at the stamp duty implications when purchasing a property with an annexe.

Are you renting out a room of your house? Tax expert Jon Hook, from Norwich Accountancy Services, discusses ‘rent a room relief.’

How are new homes being built to reflect our changing lifestyles? Edward Parker from Bennett Homes, discusses.

How will the rental sector be affected by the impact of last week’s budget? Mike White, from Martin & Co in Norwich discusses.

A family have told of their shock after developers on their housing estate left their car completely covered in mud and started working at 6.30am at weekends.

Some may fear the housing market is slowing but not in East Anglia where two of the biggest country estates have sold: Sutton Hall Estate for well in excess of its £31.5 million price tag and Lodge Farm, part of the Riddlesworth Estate, Gasthorpe, which sold for around £9.5 million.

The NR31 postcode area - covering locations like Yarmouth, Gorleston and Bradwell continues to be where the most homes sold in the whole of Norfolk and Suffolk over the past few months, according to a new report.

Plans have been submitted to build nearly 200 more homes in an ever expanding Norfolk village.

Residents have submitted more than 230 objections to a planning application to build 148 homes in Norfolk.

The former Start-rite shoe factory site in Norwich could finally be redeveloped more than a decade after it closed.

A charity that helps disadvantaged young people is selling one of its Edwardian properties in Norwich for £850,000.

Your home in the east of England could be worth on average 9.3 per cent more in 2023 - but this is not as much as areas in the north which could see values soar by over 21 per cent, a new report highlights today.

This Grade II listed house, which dates in part as far back as the early 1500s, is architecturally exceptional but it has been given a complete make-over by the current vendors who have improved it and dressed it with the most beautiful interiors. Property editor Caroline Culot enjoyed a visit to see Knapton Old Hall, for sale for £1.35 million.

Don’t abandon your conservatory this winter – warm it up, instead.

They spend their working day creating beautiful, sought-after spaces for their clients – but when it comes to their own homes, what are some of Norfolk’s interior designers’ favourite rooms?

Winter’s just around the corner so, to help keep you warm and cosy, we asked Oliver Murphy, retail operations manager at Gasway, to answer some home heating questions.

TV racing presenter and a former jockey, Emma Spencer is selling her palatial Newmarket home. EDP property editor Caroline Culot went to visit The Courtyard, Balaton Place, for sale for a guide price of £3.5 million.

The bid to revamp Norwich’s Anglia Square has been dealt a potential blow, after watchdog Historic England lodged a fresh objection and signalled it would take its battle to stop the scheme to the government.

A Grade II listed farmhouse needing complete renovation went under the hammer for £480,000 today at auction. Here are the full results.

A decision over the future of the site of the Eastern Daily Press and Norwich Evening News’s Prospect House is due to be made by city councillors next week.

What once was an office block on Prince of Wales Road in Norwich is now a plush apartment development brought to the city by Regency Residential and more than half way to being completely sold out. So what do these one, two and three bedroom homes at Grosvenor House, ranging in price from £154,375 to £284,950, have to offer?

We buy with our eyes and nothing sells a house more than evocative photographs. But when a house is completely empty, how do you sell that all important concept, a lifestyle? Nick Eley, a partner at Watsons, can help you.

Developers are preparing proposals to build 600 homes and a petrol station just off the main road through Bradwell.

It began as a pension project but 14 long years later, the renovation of Aylsham’s watermill is finally complete and the third and last property is up for sale. Property editor Caroline Culot went to take a look at Wagtail, for sale for a guide price of £625,000.

Hidden away in the heart of Wells-Next-The-Sea is the most beautiful Grade II listed Georgian former rectory. Its structure is divine and it has been renovated and dressed in a contemporary style. Property editor Caroline Culot had the privilege of visiting The Old Rectory, Church Street.

If you’re a fan of golf, this could be your dream home, a property for sale overlooking the course and right next to the clubhouse!

Buy this house which dates to 1580, the reign of Elizabeth I and full of original features like mullioned windows and exposed timbers.

A student accommodation block and disused car park could be demolished in Norwich city centre.

Recently returned to Norfolk from London, the newest member of Savills’ residential sales team, Polly Hughes, focuses on the powerful pull of life in and around Norwich.

Historic England has raised concern over proposals for 30 new homes next to the remains of a 15th century lodge in Drayton.

Fancy doing a self-build but got limited funds? You can do on a smaller scale, says Ron Beattie, of Beattie Passive.

What are all the ‘hidden’ costs developers have to pay when building new homes? Tony Abel, of Abel Homes, explains the expense of building homes which many people are unaware of.

Your home in Norfolk went up in value in August - with areas of Breckland going up by the most, and by the least in the west of the county, new figures show.

Thousands of new homes are going to be built in Norwich and its surrounding areas over the coming years.

Meet the Editor

Caroline Culot

Email
Twitter

I am the property editor in charge of delivering some exciting and informative content within Archant’s varied titles. We have 16-17 pages of stories, features and columns in the EDP Property supplement out every Friday free in your EDP so please don’t miss it.