A Discussion With a Property Developer from Long Bennington, Grantham
Whether you run a household or a multi-million pound company, when you wake up in the morning you never know entirely what the day will hold for you. I think that this is a good thing, as we all need an element of variety and surprise in our days and of course we would be unlikely to get up in the morning, if we knew the bad “stuff” that was about to hit us! Sure we need some sort of routine, whether it be, getting the kids off to school, the morning staff meeting or organising a new, Tenancy Agreement. However, it is the unexpected that usually makes the day special or memorable.
Take yesterday as an example. It was a pretty ordinary day, rain in the morning, coffee (instant) at around 9.30 am, emails to read and respond to, a trip to the bank, arranging a Tenant’s referencing and paying a few bills. At the end of the day, I was just thinking about turning the new “come in we’re open” sign to “sorry we’re closed but you can still find us online”, when something unexpected happened, which I will come to in a minute. As an aside, we, that is all of us letting and estate agents, have just been sent these new, colourful “open” signs for our offices by Rightmove as part of their latest marketing campaign. As I drove down the High Street on the day the package arrived, every agent I passed had put up their new sign (including me). The package had arrived “unexpectedly” that day and we all like something new and of course for “free” or part of what we pay our monthly dues for!! Personally, I like the old sign better, but naturally I still put up the new one!
Enough of signs, I hear you asking, what happened on the day in question? Well, just before closing a man was looking in our window, reading the displays about our services and properties and then came into the office. He was a property developer from Long Bennington and what followed makes this job so exciting – helping people. He was considering buying some rental properties, alongside those for development and wanted to find out about the current state of the buy-to-let mortgage market (following the recent Mortgage Market Review - MMR), typical deposit requirements and the $64million question, what property should he buy. In about half an hour, we had covered what he wanted to know and he asked me to help him find some suitable properties.
In a nutshell, the answers to his questions were as follows. The MMR has not really affected the buy-to-let mortgage market to the same extent as residential mortgages. A deposit of 25% will secure competitive rates, with better deals at 40%. There are a few providers that do not need a minimum, annual personal income, as long as the rent meets their requirements. However, having that personal income will open up some better deals. Although lenders realise that property owners often want to put their own stamp on a property, it needs to be in a “rentable” state to qualify for most mortgages, or large retentions may be placed on the property, until the required works are completed. For this reason, unless you are lucky enough to have a large pot of cash, properties requiring limited works are usually better bets. They can be turned around and rented out quickly, thus ensuring an earlier income. I am just about to look at the final part and try to find some properties for him, before I move my sign! That is the bit I really enjoy – helping people!