Recently, clients of ours found a property that needed complete redevelopment, so much so that any mortgage lender would consider the property to be ‘uninhabitable’ and therefore unsuitable as security for a mortgage. There was competition for the property so the clients had to move quickly to secure it. They either had to be cash buyers or be in a position to purchase without selling. Read about how they used 'let to buy' as the solution.
London property prices have surged over recent years. The gap between the average price of property in London (£401,000) and the UK as a whole (£189,000) is now as wide as it has ever been, according to the Nationwide’s latest figures at the end of the third quarter of 2014. London’s average property price has increased by 21% in the last year, whereas the overall UK average has increased by 10.5%.
Short term dip
However, the latest figures from the Land Registry show that property prices in London fell 0.7% in September, the first monthly fall experienced in the capital for nearly a year. It came off the back of a 2.4% increase in August and 2.6% in July. Perhaps now is the time to search for better value property outside the capital?
Long term growth
In the long term, if previous trends continue, then London property prices are likely to continue to outstrip the rest of the country. London is an attractive global cultural centre, a safe home for international investors and a service hub for the world. Many London home owners are considering moving ‘out of town’ to take advantage of the value to be found in the regions, but are not ready to give up the capital appreciation potential of their London property. It could be an important part of their retirement planning.
Let to buy
One way of hanging on to your London investment, but still being able to buy another property elsewhere, is to ‘let to buy’ where you keep your existing property and rent it out at the same time as buying your new place.
Recently, clients of ours found a property in Kent that needed complete redevelopment, so much so that any mortgage lender would consider the property to be ‘uninhabitable’ and therefore unsuitable as security for a mortgage. There was competition for the property so the clients had to move quickly to secure it. They either had to be cash buyers or be in a position to purchase without selling.
The clients’ current property was an easy-to-let property that they wished to retain as a future investment. The estimated rental income from the property was fairly conservative and so the mortgage did not fit using ‘standard’ Buy to Let (BTL) stress tests. With our experience of the specialist BTL sector, we were able to select a lender that used a more flexible stress test and had confidence in the clients being first time landlords.
The case study attracted the attention of the Daily Telegraph, where it was featured in an article on the potential effects of EU legislation on the BTL market. In our view, the European Mortgage Credit Directive is unlikely to be applied retrospectively to borrowers who have already taken out BTL mortgages to finance a ‘let to buy’ move, but clients who are interested in using BTL for this purpose might want to consider taking advantage sooner rather than later. As always, it pays to take the advice of a professionally qualified independent mortgage broker.
Private Finance provides first-class independent mortgage advice to suit your requirements.
Founded in 1999, based in London, it has established relationships with the key lenders in the UK mortgage market, including those who do not have a high-street presence. It arranges bespoke mortgage solutions for its clients. It works quickly and efficiently on your behalf, leaving you free to get on with your life. Its service is individual; the latest technology is used without compromising its commitment to personal service.
Whether you are acquiring a property or looking to remortgage an apartment or a house, Private Finance can help. Specialising in the arrangement of larger property loans, its experienced mortgage finance professionals have access to the whole of the market and provide a tailored one-to-one advisory service, delivered face-to-face or remotely to fit your circumstances, allowing you to finance your property in a convenient and stress-free manner.
Email email@example.com or call 0800 980 8777.