Should I rent my Hampstead property Furnished or Unfurnished?

Furnished or unfurnished? This is a common dilemma that landlords the length and breadth of the country face when letting their property. With the Chancellor's raid on landlords balance sheets, the wear and tear allowance has also been scrapped and exemptions given only on replacement furnishings and appliances.


In essence, it all depends on which sector of the market you are operating in. For example, if you are letting to students or for holiday/short term lets, you have no choice. As for all other types of tenants your property may attract, the old adage of "less is more" seems to make practical and economical sense, in almost all cases. Below are my 5 reasons not to furnish.

1.Practicalities

If you received a call from your tenant late one evening in the middle of winter to say that the boiler had stopped working and need you to get it checked out, that's not in any way unreasonable. If that call was to say the dining table leg had come off, that would be somewhat irritating.

2.Disputes and Damages

The more contents you include in your property, the greater the scope for disputes over damages and even theft. Disputes at the end of a tenancy are not uncommon and it only takes a poor inventory report to weaken your position if you are looking to claim against any damage that may have been caused. In any case, you will have to meet the costs of replacement in the interim.The other issue is with beds/mattresses.Where the property is offered on a furnished basis, the tenant may request a replacement mattress, for example, on the grounds of personal hygiene or because they have back problems and wish to bring their own bed mattress, therefore you now have to arrange for disposal of the existing one.   

3. Council tax Exemptions

Some local authorities, not all, give landlords a council tax "holiday" during void periods- please note, its on the condition that the premises is vacant and unfurnished. 

4. Tenants who have their own furniture

Should you find a tenant who has his/her own furniture, its also likely to be half way decent, therefore expect a request to remove the items you have in situ. Depending on the age, quality and condition, you will either have to pay to store it somewhere safe if you don't have a facility, donate it to a charity or if its seen better days, have the local authority collect it for a nominal fee. In most cases, tenants who supply their own furnishings tend to be well established and will look to put some roots down wherever they move to. The likelihood  is that they will move less often, for practical and economical reasons which has a positive knock-on effect for your interests in the property.

5. Cheap Furniture - A false economy

Budget range furniture is quite common in rented accommodation, though the truth of the matter is that it doesn't last the course and you will end up having to replace some, if not all of it, over time. In a more challenging market, you may find yourself having to accommodate more requests in order to facilitate a rental. Any slight increase that you may charge in rent will be wiped out by the extra expense and hassle you have to go to.

How Much Is Your Property Worth? Click Here To Find Out For FREE

If you are looking for an agent with experience that can help you find the right tenant for your property, then contact me to find out how we can get the best out of your investment property. Email me on chris@ashmoreresidential.com or give me a call on 020 7435 0420. Pop in for a chat – we are based at Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. There is plenty of parking and the kettle is always on.

Don't forget to visit the links below to view back dated deals and Hampstead Property News.

Blog, http://nw3property.blogspot.co.uk/

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Hampstead Buy To Let – Demand and Supply

Following on from my recent article about extending or improving your investment property and in particular what had happened to the rents Hampstead tenants have had to pay since the Credit Crunch. Despite a recent fall averaging 5%, rents in Hampstead are 17 higher than they were in 2008. A Hampstead landlord has since rung me after reading the Hampstead Property Blog, wanting to know more of the story of what was happening to current rents in the area. The reason he asked was that his current agent hadn’t increased his rent for a number of years and was concerned if he was getting the best return from his buy to let investment.

Hampstead Homeowners and Landlords- Inheritance Tax Part 2 - Your questions answered

Last week we spoke about the thorny issue of Inheritance Tax which will affect most, if not all Hampstead homeowners and landlords. Looking through the details, however, the revised 2015 rules are not as generous as they may appear at face value.

Adding Value to your Hampstead Buy to Let – Extend or Improve?

Last week, a landlord from Hampstead emailed me to ask, after reading the Hampstead Property Blog, if he should extend his terraced house making an extra bedroom in the loft. He had a builder friend who owed him a favour, and thought a good way would be get an ‘inexpensive’ extension.

Having more useable space is generally thought to be consistent with better quality accommodation and homeowners and tenants are prepared to pay for it. If you added a bedroom to a two bed terraced to make a three bed terraced, it will add 10% to the value of the property.  Turn a three bed terraced into a four bed terraced and 9% will be added to the value. Looking at semi detached properties, and turn a two into a three bed and 12% will be added to the value, whilst making a three bed semi into four bed will add 9% in value.

However, before you rush off to the planning department there are some important considerations, whether you are a homeowner or landlord.  What would be the cost of making that extra bedroom? The average value of a terraced house in Hampstead is currently £2,372,642 whilst the average value of a semi detached house is £3,424,029 meaning to make money the cost of the extension would need to be less than £50,000 on the terraced property and £80,000 on the semi detached house. 

See the graph below to see the variance in values of terraced v semi detached houses ( Source ~ Office of National Statistics)

Talking to a number of trades people in the NW3 area, most are booked up into the New Year. Also, no matter how good a friend he was, I don’t think a £50,000/£800,00 extension was ever on the cards, maybe the builder was just thinking of a bit of re-pointing work on the chimney!

Well, that got me thinking about how bedrooms affected rental prices and rent-ability as well.   Interestingly below, you will see that whilst bedrooms do have an effect on the rent that can be achieved and the rent-ability of the property – the difference does not warrant the expense, hassle and trouble of extending if you are time poor and looking to add value quickly.

•         17.6% of the one bed properties on the market to rent in Hampstead have a tenant with an average rent of £1,710 per month
•         10.8% of the two bed properties on the market to rent in Hampstead have a tenant with an average rent of £2,831 per month
•         13.9% of the three bed properties on the market to rent in Hampstead have a tenant with an average rent of £4,459 per month
•         10.8% of the four bed properties on the market to rent in Hampstead have a tenant with an average rent of £8,904 per month

Now, if you want to increase the value of your property, be you a Hampstead landlord or homeowner, there are things that cost a lot less than building extra bedrooms. This option is best explored if the property is vacant due to all the disruptions it will otherwise cause. 

The cost/benefit analysis is something that can only be realised over the long term of 3 years or more, always look at the neighbouring properties in your street to see if it’s been done by other homeowners. There are two key factors that determine the value of any property, they are location and condition. Spruce up the exterior, emulsion all the rooms, install new carpets and curtains. For homeowners, a matter of two to three thousand pounds can add tens of thousands, whilst for landlords; these things can add an extra 10-15% to the rent that you can achieve. 

How Much Is Your Property Worth? Click Here To Find Out For FREE

If you are looking for an agent with experience that can help you find the right tenant for your property, then contact me to find out how we can get the best out of your investment property. Email me on chris@ashmoreresidential.com or give me a call on 020 7435 0420. Pop in for a chat – we are based at Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. There is plenty of parking and the kettle is always on.

Don't forget to visit the links below to view back dated deals and Hampstead Property News.

Blog, http://nw3property.blogspot.co.uk/

Facebook, https://www.facebook.com/Ashmore-Residential-418583641565065

Twitter, https://twitter.com/ashmoreresi

Website, http://www.ashmoreresidential.com/

Inheritance Tax: A Word to Hampstead Landlords and Home Owners

With the average value of a Hampstead property far outstripping the London average, the 15,858 home owners and landlords will no doubt have the issue of Inheritance Tax top of mind. The average age of the first time buyer now stands at 39 and with an increasing number of people living at home well into their thirties, most will only get on the first rung of the ladder helped by the Bank of Mum and Dad or from any inheritance they may stand to get.

Adding Value to Your Investments In Hampstead and Beyond

With the raft of new regulations and changes in the taxation rules for Buy-to-Let, it's a fair assumption that the margins of Investors are being hit from almost every angle. However, there are still ways to maximise the return of your investment(s) depending on what type of property you own with a combination of creativity and commercial awareness. Below are my top tips on how to unlock the hidden potential of your property and increase your revenue streams. 

1. Rooms- If you own a freehold house with say 4/5 bedrooms then it may well be worthwhile renting it on a room by room basis. This will maximise the income potential and will appeal to single persons/young professionals/students who cant afford to rent a self contained flat in your local area. This can be helpful in keeping your occupancy rates high, especially in a slowing market where demand from families or groups may be low.  Operating the building in this way is more management and administration intensive as the trade off for your commitment. In case of any issues that may arise, do check with your mortgage lender that its permitted and that you have sufficient insurance.  Tenants that rent this type of accommodation like to have access to a well equipped kitchen and living room with space to dine that will enhance their living experience. Other sweeteners would be to include some utilities like Council Tax and water rates or even a weekly cleaner for the common parts.
2. Size Matters - The classic loft extension is the epitome of "Cash in the Attic", depending on the size you could add a further 2 bedrooms and another bathroom. In Hampstead for example, a room in a house share will average at around £1000 per calendar month, therefore the addition of 2 bedrooms and a further bathroom  can add up to £24,000 per year to the rent roll. Nowadays, a decent loft conversion of this kind will cost around £50,000, almost 50% return on the initial investment makes it attractive. With the relaxed planning regs of most local councils consent can be granted under Permitted Development. There is also the possibility to do this on a top floor flat with sole access to the attic, though check that it's in the demise of your lease. 
3. Renovate and create- Making improvements to key areas of your property such as the kitchen and the bathroom will add the most value if you don't have the resources or scope to extend. Apart from the location, these are the two main points that tenants will judge a property on. For example, a decent kitchen and bathroom could cost £10,000 to replace, though it's also likely to add £250-£300 per month to the rent roll, you've clawed back the cost over a say a 3 year period. The other benefit that is often overlooked, is that you are more likely to attract a better quality tenant who is likely to stay for a longer period giving you the benefit of the continuity. In cases where your tenant does move on - an aesthetically pleasing property wont hang around for long and the rentability increases five fold, thus minimising your voids. There is strong competition for  good tenants in today's market, keeping up appearances will keep you on top of your game. 
4. Joint Ventures- Some aspects of investing may seem daunting and costly. Networking with colleagues and associates by pooling your resources will not only help you to embark on certain projects, but to mitigate the financial risks. The sharing of knowledge and ideas with other experienced investors can create lucrative opportunities for all. 

If you have a single property or portfolio, I'd be happy to have a chat about the possibilities of increasing the income potential of your investment(s). 

How Much Is Your Property Worth? Click Here To Find Out For FREE

If you are looking for an agent with experience that can help you find the right tenant for your property, then contact me to find out how we can get the best out of your investment property. Email me on chris@ashmoreresidential.com or give me a call on 020 7435 0420. Pop in for a chat – we are based at Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. There is plenty of parking and the kettle is always on.

Don't forget to visit the links below to view back dated deals and Hampstead Property News.

Blog, http://nw3property.blogspot.co.uk/

Facebook, https://www.facebook.com/Ashmore-Residential-418583641565065

Twitter, https://twitter.com/ashmoreresi

Website, http://www.ashmoreresidential.com/

152% Return for Hampstead Buy To Let landlords in 15 years!

Buy to let is essentially different from investing in stocks and shares or putting money in the Building Society. Whilst these other investments (Building Society Passbooks, Stocks and Shares, etc) are passive  i.e. once the  money has been invested it you leave it alone, with buy to let, things are more hands on, in fact it’s  a business. One thing the landlords I speak to say is the fact that they like buy to let because it is both an investment as well as a business. It is this factor that attracts many of my Hampstead landlords – they are making their own decisions rather than entrusting them to others (such as City Whiz Kids in London playing roulette with their Pension Pot).

So if you are investing in the Hampstead property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as 'capital growth'. Capital growth, also known as capital appreciation, this has been strong in recent times in Hampstead, but the value of property does go up as well as down just like shares do but the initial purchase price rarely decreases. Rental income is what the tenant pays you - hopefully this will grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return.

I was talking to a landlord who bought a flat in Wedderburn Road NW3, back in 2002. He paid £300,000 for a rundown 2 bedroom flat in need of complete refurbishment and a lease extension for an additional £60,000, plus £9000 for Stamp Duty tax. It sold again in January just gone for £930,000, a capital gain of 152% in just under 15 years – a gross annual return of 10.14%. See the graph below that illustrates the growth in equity over the lifespan of the investment.

However, the real returns are for those Hampstead landlords who borrowed money to purchase their buy to let property. They have made significantly higher returns than those who paid 100% cash. If the landlord had borrowed 75% of the £369,000 (purchase price plus renovation and lease extension costs) of the Wedderburn Road flat on an interest only 75% mortgage, he would have only needed to invest £92,250 (as his 25% deposit... borrowing the remaining £276,750 - worth today, £413,154) £930,000 less £276,750 interest only mortgage... a rise of 152% or £561,000 and I haven’t even mentioned the rent he would have received in those 15 years! See the pie chart below that illustrates the proportion of equity against the value of the original investment.

This demonstrates how the Hampstead buy to let market has not only provided very strong returns for average investors since 2002 but how it has permitted a group of motivated buy to let Hampstead landlords to become particularly wealthy. In fact, if this landlord had continued to remortgage the property as it went up in value, he could, by my reckoning have had additional two or three properties (albeit with larger mortgages but greater future potential).

As my article mentioned a week ago, more and more Hampstead people may be giving up on owning their own home and are instead accepting long term renting. Whilst the recent changes in SDLT and taxation changes to mortgage relief, having scared off some smaller, less established landlords, there is still opportunity for those who’ve played the long game. The slight falls in house prices have given those with the sort of equity mentioned the buying power to negotiate on price as a bargaining tool for the Stamp Duty hike, sometimes making 2 or 3 purchases at once in a particular block or development. With interest rate at a historic 400 year low, lenders have some attractive deals on offer in a bid to bring Investors back to the market.

How Much Is Your Property Worth? Click Here To Find Out For FREE

If you are looking for an agent with experience that can help you find the right tenant for your property, then contact me to find out how we can get the best out of your investment property. Email me on chris@ashmoreresidential.com or give me a call on 020 7435 0420. Pop in for a chat – we are based at Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. There is plenty of parking and the kettle is always on.

Don't forget to visit the links below to view back dated deals and Hampstead Property News.

Blog, http://nw3property.blogspot.co.uk/

Facebook, https://www.facebook.com/Ashmore-Residential-418583641565065

Twitter, https://twitter.com/ashmoreresi

Website, http://www.ashmoreresidential.com/