Welcome to your monthly property update!

Woodpecker Lane, Newhall, CM17 9GZ

The first thing you appreciate when viewing our clients property is its location. Positioned in a seclude area of the award winning...

£699,000

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Pilkingtons, Church Langley, CM17 9DR

Pilkingtons is a quiet cul-de-sac located off Church Langley Way. This property is presented immaculately throughout, benefiting...

£475,000

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SANTA’S GROTTO |
24 Dec 2023

Get into the Christmas Spirit with a visit to our famous Santa’s Grotto, opening on the Ground Floor from Tuesday 8th November.

Click here to read SANTA’S GROTTO |
24 Dec 2023.

Matching Charity Farmer's Market | 20th July 2024

Our Farmer's Market is run by volunteers for the benefit of Matching Village Hall Registered Charity No 301366. We celebrated our 13th Birthday in October 2020...

Click here to read Matching Charity Farmer's Market | 20th July 2024
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How to help your children buy a home

Buying a first home is no easy feat, which is why many first-time buyers turn to the Bank of Mum and Dad for that extra bit of help. If you’re eager to help get your adult children on the property ladder, let’s take a look at ways you can help them take their first step.

How can I help my child buy a home?

The term ‘Bank of Mum and Dad’ refers to parents who offer financial support for their children’s major life expenses, such as buying a house. This is usually through a gifted deposit or a loan, but if you can’t afford to gift a large sum of money, there are mortgage options available to help them buy their first home:

Retirement interest-only mortgages
Guarantor mortgages
Family offset mortgages
Joint mortgages
Joint Borrower, Sole Proprietor mortgages

Gifted deposits

If you have the means to gift your child enough money for a deposit, this is the easiest way to help them onto the property ladder. Many mortgage lenders will allow gifted deposits from family members, but you will need to provide a Gifted Deposit Letter and supporting documents confirming the following:

Your photo ID and proof of address
How much you’re gifting
Your relation to the mortgage applicant
Where the funds are currently
Confirmation that it is a gift and that you won’t have any financial or commercial stake in the property (usually a written statement)
Proof that you are in a financial position to gift a deposit.

It’s important to note that this lump sum is officially a gifted deposit, therefore you will not have any stake in the home, and it is not a loan.

Tax implications

There won’t be any immediate tax to be paid by you or your child if you opt for a gifted deposit. However, a bill could be due further down the line. In the UK, every individual is allowed to give away up to £3,000 a year with no inheritance tax charge. Your unused allowance can be carried over from the previous year, meaning that two parents could potentially gift their child up to £12,000 without having to pay inheritance tax. Any more than this, and you will likely be liable for inheritance tax.

Guarantor mortgages

This type of mortgage allows you to act as a guarantor for your child by putting up savings or your property as security. If you decide to use savings, you can earn interest on them but they will technically be off-limits for a fixed period or until the amount owed falls below a certain threshold.

Acting as a guarantor can help your child secure a mortgage, but the risks are significant and shouldn’t be overlooked. If the borrower cannot keep up with their mortgage payments and the home is to be repossessed, you could lose some or all of your savings. If you used your home as security, then you too could lose your home in the worst-case scenario.

Family offset mortgages

Family offset mortgages link the borrower's mortgage deal to a family member’s savings account, resulting in reduced interest rates for the borrower. While this is a great option if you are in a good financial position, you will not earn interest on your savings once linked to a family offset mortgage. Plus, if you wish to withdraw some of the cash in your savings, the borrower’s mortgage payments will increase as a result.

Joint Borrower, Sole Proprietor mortgages

In a JBSP mortgage, you can join as a borrower along with your child. This means that your income and credit history are considered when determining mortgage eligibility and affordability. This can be particularly helpful if your child's income alone is not sufficient for the desired mortgage amount.

While your child will be the sole owner of the property, all parties are equally responsible for repaying the mortgage. Defaulting on payments can have serious consequences for both the child's and the parent's credit scores and financial stability.

Joint mortgages

As a joint mortgage holder, you'll be equally responsible for repaying the loan along with your child. This means you need to be confident in your collective ability to meet the mortgage payments.

Decide how the mortgage repayments will be handled. Will you and your child split the payments evenly, or will one party be responsible for a larger share? Having clear communication and a written agreement can prevent misunderstandings later.

For more advice, contact the dedicated team at Howick & Brooker

How much of my income should I spend on rent?

Maintaining the right balance of your income spent on rent is crucial when getting involved in the rental market. By sustaining this balance, you have a better chance of creating financial stability and retaining a comfortable way of living. One-in-five of the UK's residing tenants spend more than half of their income on rent, reducing their overall financial freedom dramatically.* Renting a home allows you to have a freer, enhanced lifestyle; it's not meant to burden you financially.

Why should you rent?

Renting is a great way to create your own safe space from the outside world without becoming permanently tied down. When renting, there are some well-known guidelines to help steer people in the correct direction on how much of your income should be spent on housing per month. There is no one-size-fits-all situation when it comes to your home, you should rent whatever property suits you and your lifestyle.

What affects the price of rent?

Multiple surrounding factors of the property affect the price of rent, and you need to ensure that these align with your lifestyle and overall budget. Considering these important factors can help you navigate through the rental market and discover what price and property is right for you.

Location – When choosing your new home, location will always have the largest impact on the price. Choosing to live in a city increases the monthly rental cost because the property will be close to a variety of shops, activities, and opportunities.

Type of property – More space leads to a higher price, so deciding how many bedrooms and bathrooms you require can help you discover a perfect budget. Having access to certain amenities, such as the rental property being furnished, or parking can also influence the price. It is important to recognise your needs in a property before committing to your new home.

Rental market trends – Local and national trends easily influence the cost of rent, especially supply and demand. It is important to observe all rental market trends constantly, allowing you to stay in the loop and enter the market at the right time. Renting through a letting agent can help you identify good opportunities in the market and make well-informed decisions.

The infamous rental guidelines

Finding a place to call home can sometimes feel overwhelming, but proactively planning your income with one of these guidelines can help you feel confident about how much you can afford. These are some well-known rules to help guide you to the correct cost you should potentially be spending on housing.

30% rent rule – This renting rule has been a very popular model since its establishment in 1981. This rule suggests spending 30% of your gross income (before tax) on housing costs, as over 30% could create a strain on your monthly finances. This is the best guideline to use when starting out in the rental market, as it helps you identify an affordable budget.

Under 30% rent rule – Commonly used, this rule is for people able to live in more affordable areas, allowing a larger increase in financial flexibility. This rule is in place to show people that they don’t have to spend the full 30% of their income on rent and still get their desired home. This allows you to save and live a more luxurious lifestyle.

50/30/20 rent rule – This rule is a great guide to use when you begin to have a steady monthly income and allows you to maintain a stable budget. 50% of your income should be spent on your needs, which would include rent, bills, and any constant outgoing monthly costs. 30% can be spent on your wants, allowing you to continue to enjoy life outside of work hours, and 20% should be placed in savings for a potential house deposit or any debt that needs to be covered.

What’s your end renting goal?

When renting a property, you want to ensure that it is the right property for you. It is a personal decision based on your individual preferences and needs. These rules have been put in place to provide vague guidelines, ensuring that no one becomes lost when entering the rental market. Make sure you have identified your budget, monthly expenses, and what kind of lifestyle you want to lead, before entering the rental market.

Get in touch today and rent right, through us

Propertyeye*

Your guide to Rent Guarantee

Let’s take a look into what Rent Guarantee is, how it works, and why you might need it for your property.

What is Rent Guarantee?

Rent Guarantee is an essential type of insurance if you rely on rental payments as a form of income. Typically added as an extra on a landlord policy, it covers you financially should your tenants fail to pay their rent.

In the event that your tenant falls behind on their rental payments, the insurance provider will reimburse you for the lost rental income, typically up to a specified limit and for a certain period.

What does Rent Guarantee cover?

Rent Guarantee can cover your monthly rental income by up to £2,500 for a maximum of 12 months if the following applies:

Your tenant has fallen at least a month behind on rent
Your tenant is refusing to leave the property following an eviction notice
Your tenant has deliberately caused damage to the property
You are in a dispute with your tenant over repairs or renovations to the property

Most policies will cover around 50% of your rental income while you search for new tenants and will continue to pay out up to three months after the previous tenant has been evicted.

Do I need Rent Guarantee?

Rent Guarantee insurance protects you against the financial implications of rental arrears caused by tenant default, legal expenses incurred in evicting tenants, and sometimes the cost of property damage caused by tenants.

If you are financially dependent on your rental income, then rent guarantee coverage is a must. However, if your tenants have been through a thorough screening process, then the risk of tenant default may be lower.

Assessing risks and requirements

Evaluate the risks associated with your rental property and tenants to determine the level of coverage needed. Factors to consider include the reliability of tenants, the local rental market conditions, and the financial implications of potential rental arrears. Additionally, familiarise yourself with the eligibility criteria and requirements set by insurance providers, such as tenant referencing checks and minimum tenancy periods.

Choosing the right policy

Research and compare rent guarantee insurance policies from different providers to find the best fit for your specific circumstances. Consider factors such as coverage limits, excess amounts, premium costs, and any additional benefits or exclusions.

Tenant screening

While Rent Guarantee insurance provides financial protection, proactive tenant screening and due diligence remain crucial in minimising risks and ensuring a stable tenancy. You have poured a great deal of time and money into your buy-to-let property, and therefore you need to know that it is in safe hands.

Your agent can conduct thorough tenant referencing checks, including credit checks, employment verification, and previous landlord references, to assess the reliability and financial stability of prospective tenants.

Contact us for more letting advice

How to prepare your property for the rental market

As a landlord, preparing your home for the rental market is crucial to attracting tenants and maximising your rental income. From inspections and maintenance to legal compliance and insurance, let’s take a look at how you can make sure your property is ready for a new tenancy.

Inspect the property

Firstly, you should inspect your property and take note of any areas that require attention or repairs. By taking care of these issues in good time, you can present a well-maintained property to potential tenants, increasing the likelihood of securing tenants. This will also reduce the chances of maintenance issues further down the line, which will reduce your expenses throughout the tenancy period.

Present the property

Presenting your property well significantly increases its attractiveness to potential tenants, as it showcases your commitment to providing a comfortable and well-maintained living space. You should begin by cleaning and decluttering the space to create a welcoming environment, before staging the property with attractive décor to highlight its full potential. Make sure to capture high-quality photographs to showcase its best angles and features in rental listings.

Decide between furnished and unfurnished

Deciding between offering a furnished or unfurnished rental property is a crucial consideration when preparing it for the market. Furnished rentals appeal to tenants seeking convenience and immediate occupancy, as they come equipped with essential furniture and amenities. This option can command higher rental rates and attract short-term tenants, such as students and young professionals.

On the other hand, unfurnished rentals provide tenants with the flexibility to personalise the space according to their needs and preferences. These properties tend to appeal to long-term tenants looking for a more permanent living situation and often cost landlords less time and money. Ultimately, the decision depends on factors such as your target market, the property’s location, and local market conditions.

Prepare an inventory

Preparing an inventory is crucial as it reduces the likelihood of disputes arising over damages or missing items during a tenancy. You should document every item included in the property, from fixtures and fittings to appliances and decorations. It’s important to take detailed notes and photographs that accurately show the condition of the property. This will not only protect your investment but also provide peace of mind and establish clear expectations and understanding between you and your tenant.

Make sure you’re fully covered

You should ensure you have adequate landlord insurance coverage to protect your investment against potential risks. Landlord insurance typically provides coverage for property damage, liability protection, loss of rental income, and legal expenses. Without the appropriate insurance coverage, you could face significant financial loss in the event of accidents, property damage, or tenant-related issues.

Adhere to safety regulations

Adhering to safety regulations is paramount when preparing a property for the rental market, as it not only ensures the well-being of tenants but also protects you from potential liabilities. By meticulously following safety guidelines and regulations, such as installing smoke detectors, carbon monoxide detectors, and fire extinguishers, you can demonstrate your commitment to providing a secure living environment.

Use a letting agent

Using a letting agent to prepare your property for the rental market can significantly streamline the process and enhance your return on investment. Letting agents possess extensive knowledge of the local rental market, allowing them to advise you on setting an optimal rental price and attracting suitable tenants.

They handle tasks such as marketing, tenant screening, property viewings, and tenancy agreement drafting, saving you valuable time and effort. Letting agents also have access to professional networks and resources, enabling them to efficiently address any maintenance or repair needs and ensure that your property complies with legal requirements.

By entrusting the preparation of your property to a letting agent, you can benefit from their expertise and industry insights, ultimately maximising your rental income while minimising potential issues and risks.

Looking to expand your property portfolio? Contact us today