Richard Blanco, dancer turned landlord, bought his first property in 1995 in Hackney, and has since bought 11 more properties and made a hugely successful business from buy-to-let. What’s his secret to success?
1. When do you put your properties on the market?
“Knowing when to put your properties on the market is crucial. I engineer all of my tenancy agreements so that they end between February and June or September to October. Spring and early autumn are often the best times to let out a property – so you’re likely to achieve a higher rental price and lower void periods. I actually recently re-let a property for 12 months in August, and when I renew I will offer a 13-month contract so that the next tenancy ends in September.”
2. How do you pick an investment?
“I do have criteria for investment, such as a minimum rental yield, and I also prefer freehold houses that fit the needs of my target market. Most importantly though, a property must always have the potential to add value and it must be located in an area that is improving.”
3. What do you think about Crossrail’s impact and Crossrail 2?
“I’m a huge fan of new rail schemes as they can really lift an area and bring in professional tenants who are my target market. I think substantial chunks of the Crossrail corridor have matured in terms of potential – especially in central London and inner east and west London, but having said that, if you buy in these areas you are likely to be protected from any price falls. I’m certain there is still money to be made in outer London sections both east and west – but this is definitely a long-term goal. I mean, look at how long it took Brixton to regenerate even though the Victoria line arrived in the 1970s!
At the end of the day, we still don’t know the final route of Crossrail 2 so it’s hard to fully comment on its potential impact. I think the north east end of it will be most interesting as there could be greater gains than in already bloated Chelsea, Battersea and Balham.”
4. How have you reacted to the HMO licensing and looming tax changes?
“I have generally taken licensing in my stride. Three of my properties are subject to local authority licensing schemes and two more may be in future. It’s really important that you’re aware of new legislations; for example, my latest purchase in Newham is affected by Article 4 directions, so has to be let to a family.”
5. Do you recommend buying through a limited company?
“I manage my properties as a business through a limited company – and recent research shows that 40% of landlords are thinking of buying property through a limited company. It’s important you do your sums before making a decision. Although you can set all finance costs against rental income in a limited company, you will pay tax on any money over £5,000 per annum that you withdraw from the company as dividends, with the highest rate being 38.1% – on top of the 20% corporation tax already paid. And imagine setting up a company structure only to find in 5 years’ time that the government changes the tax regime again.”
6. Do you recommend a mortgage provider for buy-to-let?
“Yes – there are some fantastic deals out there are the moment! Virgin Money, BM Solutions, Godiva and The Mortgage works are still the quickest and all have good rates. I never pay percentage fees but flat fees, because a percentage of a London property is a lot of money. I like working with building societies, as if you can manage to develop a good relationship with one it can be really beneficial. Always make sure you have a commercial lender that you can work with, like Lloyds or Bank of Cyprus UK.”
7. What do you think of the future of buy to let now Theresa May is in government?
“Like many landlords, I am heartened that George Osborne was sacked. Theresa May and the new Chancellor Phillip Hammond say that they will be looking at measures to help support business and stimulate the economy. The construction sector is keen for the 3% stamp duty surcharge to be abolished, but I fear we will be stuck with the changes Osborne brought in.
Lenders are keen to continue buy to let as it is profitable for them and Bank of England proposed regulation has already been factored into how most of them operate. George Osborne shifted policy to homeowners away from landlords and it is hard to predict whether this will continue to be the stance of Theresa May’s government. We’ll have to wait and see…”