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- How to Beat the Credit Crunch
How to Beat the Credit Crunch
- By Toby Hone
- Published 8/10/2008
- Credit Crunch - How We Help
- Unrated
A survival guide for property investors and landlords
There is only so much bad news one can take so what can be done to get through the credit crunch. If you are a landlord things have never looked so bad and so good?
The bad news is mortgage interest rates have rocketed by 30% with Loan to Value's (LTV's) falling, rental cover increasing and tightening lending criteria. For those landlords with at least 70% LTV mortgages, and average UK house prices falls of 12%, things will start getting tricky come remortgage time as valuers slash property values and the only option will be to switch to bank Standard Variable Rates (SVR's). A surprise 1/2 percent cut in the BOE lending rate in October may mean that SVR's will look more and more attractive but as long as market uncertainty prevails banks will be protecting their pockets with their own cash and charging higher interest rates. The effects of the suspected UK recession are starting to filter through to the real economy with unemployment increasing, consumers struggling to meet high petrol and food costs, and the nett effect is more and more people will struggle to meet their mortgage or rent payments. This will increases repossessions and may result in a broad property 'rot' as has happened in the USA with sub-prime mortgages and the resultant 3 million affected homes eroding the value of homes of 'prime' mortgage holders. So what's the good news you may ask?
The good news is that rental yields are rising in many parts of the country and prudent landlords will be taking advantage of these conditions to not only improve their rental yields, but cherry pick the best tenants. Also, with government having worked out that 250,000 new homes are needed per year for the next 10 years to meet existing demographic changes, and only 70,000 new homes expected for 2008, if/when liquidity returns to the mortgage markets and things start returning to normal, there will be a sharp recovery in house prices with a much higher population base competing for an even higher shortage of homes. Unfortunately, landlords have to get through the next few months/years while financial markets struggle to deal with the Credit Crunch.
For many landlords who are relatively geared they will have to start actively improving their property portfolio. How so you may ask? Well that is the subject matter of a new published book titled: How to Beat the Credit Crunch written by property developer and landlord, Toby Hone. The book covers the 5 main areas that landlord should target and these are:
1) Rents - how to maximise rental yields;
2) Mortgages - what to expect and what actions to take;
3) Deposits - ways of increasing deposit holdings and effectively protecting these;
4) Operating costs - how to minimise these (if you use a letting agent you will learn how self managing can save you as much as 32% of your yearly Rent!);
5) Other areas - covering different methods of building cash reserves and ways of adding value and making money from your property portfolio in the existing climate.
The book is written by a landlord with input from industry professionals, brokers, solicitors, and other landlords and is aimed at giving practical advice to landlords that either may be struggling in the existing climate, or those that just want to improve their portfolio positions.
The bad news is mortgage interest rates have rocketed by 30% with Loan to Value's (LTV's) falling, rental cover increasing and tightening lending criteria. For those landlords with at least 70% LTV mortgages, and average UK house prices falls of 12%, things will start getting tricky come remortgage time as valuers slash property values and the only option will be to switch to bank Standard Variable Rates (SVR's). A surprise 1/2 percent cut in the BOE lending rate in October may mean that SVR's will look more and more attractive but as long as market uncertainty prevails banks will be protecting their pockets with their own cash and charging higher interest rates. The effects of the suspected UK recession are starting to filter through to the real economy with unemployment increasing, consumers struggling to meet high petrol and food costs, and the nett effect is more and more people will struggle to meet their mortgage or rent payments. This will increases repossessions and may result in a broad property 'rot' as has happened in the USA with sub-prime mortgages and the resultant 3 million affected homes eroding the value of homes of 'prime' mortgage holders. So what's the good news you may ask?
The good news is that rental yields are rising in many parts of the country and prudent landlords will be taking advantage of these conditions to not only improve their rental yields, but cherry pick the best tenants. Also, with government having worked out that 250,000 new homes are needed per year for the next 10 years to meet existing demographic changes, and only 70,000 new homes expected for 2008, if/when liquidity returns to the mortgage markets and things start returning to normal, there will be a sharp recovery in house prices with a much higher population base competing for an even higher shortage of homes. Unfortunately, landlords have to get through the next few months/years while financial markets struggle to deal with the Credit Crunch.
For many landlords who are relatively geared they will have to start actively improving their property portfolio. How so you may ask? Well that is the subject matter of a new published book titled: How to Beat the Credit Crunch written by property developer and landlord, Toby Hone. The book covers the 5 main areas that landlord should target and these are:
1) Rents - how to maximise rental yields;
2) Mortgages - what to expect and what actions to take;
3) Deposits - ways of increasing deposit holdings and effectively protecting these;
4) Operating costs - how to minimise these (if you use a letting agent you will learn how self managing can save you as much as 32% of your yearly Rent!);
5) Other areas - covering different methods of building cash reserves and ways of adding value and making money from your property portfolio in the existing climate.
The book is written by a landlord with input from industry professionals, brokers, solicitors, and other landlords and is aimed at giving practical advice to landlords that either may be struggling in the existing climate, or those that just want to improve their portfolio positions.