Top tips for buy-to-let landlords purchasing property at auction

Investing in property at auction is a popular choice for many buy-to-let landlords as there are some good bargains to be found as well as achieving high rental yields, but as with any property acquisition, it is necessary to do your homework first and know the pitfalls to avoid. Even for the seasoned bidder, there are ever-changing rules and regulations to keep pace with.

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Here are a few tips to ensure things go smoothly:

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1. Check the legal pack

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If you’re a professional property investor, you may have seen legal packs hundreds of times, but each one will have differences relating to the particular property. Make sure you’ve read the small print, as it’s often in these sections where surprises such as covenants, restrictions and rights of access are noted.

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2. Don’t get caught out by the six month rule

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Even if you are buying the property as a buy-to-let investment, banks generally will not lend on it until it has been owned for six months. However, what is not as commonly known is that the vendor should also have owned it for at least six months. When buying at auction even seasoned professionals can be caught out by this, so it’s important to find out how long the vendor has had the property, otherwise it could be an issue with a high street lender.

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3. Be aware of potential issues with the property

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There are some issues which will immediately make funding more difficult, such as kitchens and bathrooms which are not up to scratch and can be considered unsanitary, or Japanese knotweed which can damage the property and make it very difficult to obtain finance from traditional banks. Knowing about these in advance means you can approach specialist lenders, who are often more flexible when it comes to funding non-standard properties.

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4. Check the planning consents

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If there is planning attached to a property, be careful to check when it expires. If it is due to lapse, don’t automatically assume you’ll be able to get it again. Check with the local planning department what the likelihood is of renewing.

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5. HMO regulation

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Many buy-to-let landlords look to auctions to pick up houses of multiple occupation or HMO investments. These are growing in popularity. However, not all landlords are aware that for larger HMOs, by law, the property has to be licensed with the local council. These licences usually have to be renewed every five years and you can be fined up to £20,000 for renting out an unlicensed HMO.

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6. Investigate any tenancies

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Is the property you are planning to purchase tenanted? Take the time to find out some background information about both the tenant and the tenancy agreement. Assured shorthold tenancies can cause issues for finance, whilst if you buy a property with a regulated tenant, you may find you’re going to be waiting a long time for that property to be vacated, as they will have the right to remain, and usually at rents well below the market rate.  

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7.  Beware buy-to-let changes

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As many of you will know, there have been major changes for buy-to-let landlords implemented by the government aimed at levelling the playing field between professional investors and homeowners. The first of these changes, a 3% hike in stamp duty on buy-to-let properties, came into play in April 2016 with further changes due this year. The increased stamp duty applies only to residential property though, and not commercial or semi-commercial.

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8. Have your finance in place

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When purchasing at auction you need to think carefully about finance before the sale. Auction buyers will usually have only 28 days to complete, and sometimes it can be as little as a fortnight.  Plus you’ll need to put down a 10 per cent deposit on the day. The short timescales can often pose problems for mainstream lenders, so talk to auction finance specialists. You can then go into the auction room with a decision in principle on a particular lot and bid with confidence up to the agreed bid price.

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9. Keep calm

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The auction house can be an exciting place, but don’t get carried away. If a particular property attracts a lot of interest, it’s all too easy to keep bidding but remember, once the hammer goes down you are legally committed to the property. Stick to your figures and know your bid limit. Remember the guide price is just that, a rough a guide; the property could go for under or over that price, so it’s important to ensure you don’t stretch yourself.

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10. What to do when the lot isn’t sold

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If a reserve price is not met, the auctioneer will withdraw the lot from the auction. However, at the end of the auction the vendor may agree to sell the property at a lower price. Ask the auctioneer if you can register your interest for such properties and you may find yourself with a last minute win.

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Why should you invest in Cardiff Bay?

Why should you invest in Cardiff Bay?

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There are always questions for property investors that need answering. Should you buy a freehold property in Cathays or a leasehold in Cardiff Bay, both do have their advantages. Leasehold properties are usually cheaper than most freeholds to buy, they can have some serious yields which in turn creates excellent cash flow for buy to let landlords. There is always the speculation over service charge, however, you are getting a service provided. The building will be insured and the cost will be split amongst the other leasehold owners, can you imagine if the roof needed replacing on your freehold property? That cost would have to be footed by you. 

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Some say that a freehold is more favourable as you would own the land, but it’s never as easy as that. The growing demand in Cardiff Bay is inviting more developers to build in this wonderful location. More and more young professionals are looking to relocate to Cardiff Bay, with great transport links and an excellent nightlife a stone throw away you can’t blame them.

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The big question is capital growth or a high yield? Maybe you could have both!

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With recent and new investment Cardiff Bay’s property price tags have hit the one million mark and will keep rising. Developments such as Empire House’s penthouse have taken standards to another level, and I don’t doubt there will be more to come. With this in mind, investment in Cardiff Bay has never looked more promising. Investing in a leasehold in Cardiff Bay now could prove advantageous for the future, with the price tag on the average leasehold at around £145,000 and the average yield at 7% this is a fantastic return on investment. That’s the yield covered, but is there much capital growth to be had on your properties in Cardiff Bay? Since 2003, the average leasehold has increased from £118,000 to £145,000, that’s an increase of around 23%. We have already seen the effects of recent investment on the Cardiff Bay’s property market and with more investment to come, such as the military museum in replacement for the old train station, new developments surrounding the Mermaid Quay, the average leasehold is only going to increase, and quickly!

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Cadogan House

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Cadogan House offers a choice of 23 brand new 1 and 2 bedroom apartments. These contemporary apartments are situated in the prime location of the Mount Stuart Conservation Area. This exciting and unique development comprises an existing building, now restored to its former glory, and a modern new addition, all built to conserve the built environment in which the apartments stand. Keylet are proud to be part of such an exciting development, with over 40% reserved there are still some apartments still available. Prices range from £125,000 – £129,000 for a one bedroom and £170,000 – £195,000 for a two bedroom, great opportunities for investors and first time buyers.

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Take a look at the show home apartment through Keylet VR link below:

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http://storage.net-fs.com/hosting/4211450/42/index.htm

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If you would like any more information on Cadogan house do not hesitate to contact our sales team at our Cardiff Bay branch on 02920 489000 (option 1).

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How long is the process for buying a house?

There is always speculation into how long it takes to buy a property and this can often be a barrier for potential vendors. There are several factors that can contribute to selling a property and this article will discuss typical market and industry averages. Andrew, our Sales Manager, said “it typically takes between eight to twelve weeks to sell a lease hold property and up to eight weeks for a freehold property”. This is the average at Keylet sales, based out of our Cardiff Bay branch.

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There are other useful steps that can be done to help speed this process along. Preparation like any other task is important. Getting your finances in check, along with insurance policies and solicitors in place as early as possible will help minimise any delays. A good legal team always helps. Getting the right conveyancing solicitors that will work quickly to make this process as efficient as possible is a must. Don’t be afraid to contact them regarding the process, just make sure that everything is done on your end in terms of the necessary paperwork. Be aware, if you are part of a property chain this can delay the process, the larger the chain the longer the delay could be. As mentioned above, freehold properties tend to complete at a quicker rate. If the property is a lease hold this can take longer, solicitors will have to look into the current lease and this could take time. Make sure there is a full survey report before buying, if there are any structural issues this can cause serious delays.

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Local knowledge goes a long way in the selling process. When selecting your solicitor be wary of location, a solicitor from Manchester may look to raise a coal mining search because the property is in Wales however, this is made on the presumption that the solicitor does not know the local area. A local firm would only raise relevant searches leading to less time taken and a quicker selling process. Local solicitors also have a lot more experience with local developments and could pre anticipate any problems that may occur. At keylet we would recommend local solicitor firms such as Howells and Gordon Dadds, they have excellent knowledge on the local area.

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If you are looking to purchase a property, whether it may be your first home or an investment opportunity, Keylet can help. With two offices based out of Cathays and Cardiff Bay we have the local knowledge to help you find the perfect place to buy. Our portfolio ranges from student HMO’s in Cathays, to developments such as Empire House, Cyprian House and Cathedral Parc, to executive apartments in Cardiff Bay. Visit our website for more information or contact our sales team on 02920 489000 (option 1).

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Cadogan House

Keylet are proud to be instructed for the new Cardiff bay development, CADOGAN HOUSE. These new build apartments are a superb investment and perfect for first time buyers. We are working with Bristol based PG Group to bring you the latest development to Cardiff Bay. This exciting and unique development comprises an existing building, now restored to its former glory, and a modern new addition, all built to conserve the built environment in which the apartments stand.   There are 23 apartments with over 40% reserved already, so you’ll have to be quick.

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Key Features

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  • Contemporary fitted kitchens and bathrooms
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  • Communal cycle storage
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  • Show Apartment available
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  • Prime location within Cardiff Bay
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  • Some selected apartments with Balcony
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  • Help to Buy available
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Keylet are also offering a tour of the show apartment via Virtual Reality.

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VIEW PROPERTY HERE

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DOWNLOAD BROCHURE HERE

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To book a viewing, please contact the Sales Manager, Andrew on 02920376913 or andrew.wools@keylet.co.uk

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Garden Villages

A garden town is a development of more than 10,000 homes, and garden villages are smaller settlements between 1,500 and 10,000 homes. Garden cities have been long established, Sir Ebenezer Howard came up with the concept in 1898, creating Letchworth Garden City in Hertfordshire, later followed by Welwyn Garden City. As the UK is faced with a growing issue of a housing shortage, the government has decided to create 14 more of these new villages in rural regions to provide over 48,000 homes. But is this enough to solve the uneven balance of supply Vs demand?

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The good news is that new villages create new communities which in turn creates new jobs and facilities which helps boost the local economy. More importantly to the property industry, these new homes represent opportunities for agents. There could be several different developers in one site alone, and therefore it is important that agents position themselves well, so that when the opportunity arises you are at the forefront of the developers mind. It will also be a good use of brownfield sites, as there will be facilities provided within the villages to attract people to the outskirts of a city.

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Whilst it is promising to hear of such schemes, especially to accommodate the growing number of First-Time Buyers, the concern is that there is not enough money in the pot committed to building these homes. It seems that 14 plots of Garden Villages does not come close to sustaining the housing market and with no mention of Garden Cities, the larger developments have been downsized to just villages. There needs to be a combination of Garden Cities, Towns and villages to make a serious impression on the property industry.

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The government needs to continue rolling out schemes such as the Garden Villages, year on year to help alleviate the housing crisis. As well as going one step further and encouraging even larger developments such as the Garden cities, as there are more advantages of creating a larger community with more opportunities on a Brownfield site.

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