My name is Paul Lawson I am 59 and have been in the Property Business since I was fifteen as have my family for generations before me. My wife Vicki is a Chartered Surveyor, so between us we have extensive experience of the industry.
Now you are in your 50’s or 60’s your children may have left the nest and you are wondering what to do about your family home and any other property investments you may wish to make.
Firstly, your property. You may feel that you are rattling around in a house that is far too big for you, but before you sell think carefully. Many people make the mistake of moving from a substantial property into a much smaller one and feel claustrophobic and unhappy. Think about the space you will be comfortable living in not what people tell you that you need.
At present the residential market is very strong with a great shortage of available properties. Agents will be touting to get your instructions and may promise you ridiculously unobtainable prices. Do you homework first. Get several valuations and go with the agent you feel most comfortable with. Also remember that whatever you may want to buy will also be In short supply.
Purpose built flats will have higher service charges than conversions often due to lifts and porterage. There may also be lump sums demanded from time to time for major works. This will be set by the Managing Agents. Conversions may have lower service charges but you will also have to pay for major works. It is always preferable for a sinking fund to be in place for both types of flats.
Be aware when downsizing to check if your existing furniture will fit in, assuming you want to keep it, and if you will have enough space for grandchildren/friends to stay.
You may wish to invest some money into a rental investment. In my opinion you are better off with small units such as one or two bedrooms, but not studio flats which are harder to rent. For the last 25 years I have found that ex-local authority flats in the Central London area are highly desirable rental investments. Going back about 18 years you could achieve 14% return which was excellent and the properties could be purchased for around £60,000. Today these same properties are are worth anything from £350,000 to £450,000. The average rental value for a one bedroom flat in Central London is anything from £280 to £350 per week with two bed flats from £350 to £550 per week. Ex local authority flats appreciate at a slower rate than privately owned but you will have a good income and these properties are always lettable even in a relatively slow market such as the one today.
Westminster City Council allows up to £450 per week in housing benefits for a one or two bedroom flat depending on the number of occupants. Most of these tenants are foreign and usually look after the property very well, although some people may disagree.
If you live outside London most of the same guidelines apply. Make sure the property has good transport links to the nearest major town and/or universities or colleges. Nobody wants a twenty minute walk from the nearest station or bus stop especially at night.
When you decorate a rental property do not furnish as an extension to your home. A good washable neutral paint is required together with a wood or laminate type flooring which tends to wear best. Furnishing packages are available according to the type of flat and the available budget. If using a rental package you will also be sure that everything conforms to current safety regulations. Large fines and even imprisonment can be imposed if these safety standards are not adhered to. You will also need a Gas Safety Certificate which is renewed every year and an Electrical Safety Certificate which is renewable every five years.
It is also important to note that all deposits need to by law be put in a deposit scheme which protects both parties. We always take six weeks rent as deposit which is usually ample as the days of tenants trashing flats are over thank goodness. As they know full well if they do they have to pay for it.
However when you let your flat it is very important to have an inventory and also a schedule of condition. The landlord pays for this going in and the tenant pays going out. Once this has been checked off and agreed by both parties then the scheme releases the deposit less anything for damages or in rare cases arrears in rent.
More expensive properties such as flats in luxury blocks and freehold houses are more expensive to purchase often with high service charges which you are liable for. Rents are often not appreciably higher except in the high luxury market. However capital growth will be faster and higher. I assume that at this stage in your life you may well be looking at the higher income for the lowest outlay option.
Now just a few tips regarding your little darlings. It is very hard nowadays for young people to get a footing on the property ladder without help from the bank of mum and dad.
One excellent solution is Shared Ownership. This is where a percentage of the property, often as little as 25%, can be purchased. This is the amount that is mortgageable and therefore the deposit is comparatively low. A rent is then paid on the balance of the other portion of the flat. Over time further increments of the property can be purchased at market value until the whole amount of the property is owned. The percentage owned can also be sold back to the landlord, who is often a housing group, again at market value. There blocks are usually new and modern and most of the occupants will be young people all in a similar situation.
There is also the Government’s new help to buy scheme which means that a deposit as little as 5% may be all that is needed to get them on that highly desirable “ladder”.
I hope I have given you a little insight into the world of residential property investment and if anyone wishes to discuss matters on a more personal level please contact me on my email firstname.lastname@example.org.