When done correctly, investing in property can be hugely rewarding in many ways. However, in order to make the most from your venture, it’s important to think carefully and do your homework before jumping in. We’re here to help!
Buying a house to let means you purchase property with the intention of letting it out. The rental market is huge in the UK so you have the opportunity to make a sound investment if you choose wisely.
When buying a buy to let property, you should think about how much rent you need to bring in to make it all worthwhile. Your yield is how much annual rental income you can expect and it’s good to have a goal in mind at the outset. For example, if you buy a property for £200,000 and take £14,000 per year through rent, your yield will be 7%.
Although thinking about how much you could earn is exciting, it’s important to factor in your expenses including mortgage repayments, maintenance costs, tax and admin (either your own time or a third party). Doing these calculations can help determine how much rent you ask for and/or whether to invest in a particular property.
7% of the property’s value is generally considered a good yield but you may achieve slightly more or less than this. An estate agent from Charters can help with your calculations.
If you can afford it, buying a buy to let property can provide you with regular income as well as a long term investment. However, becoming a landlord is a big responsibility and carries legal obligations to your tenant(s).
As a landlord, you will have to:
If this list sounds daunting, we can guide you through all of the above. We will be happy to help at every step.
Buying a buy to let property is a little different to buying your own home. If you need a mortgage, you must tell your lender your plans for the property as buy to let mortgages come with different rules and rates. Usually, it is a breach of contract to use a residential mortgage for a rental property and you may face repossession if you are not completely honest with your lender.
Also keep in mind that Stamp Duty rates are 3% higher for second homes/buy to let properties in England. Make sure you add this extra cost into your calculations when looking at potential houses to buy.
It’s a very good idea to talk to an accountant or financial adviser before buying a buy to let property.
They will discuss your options and talk you through the tax implications of your investment; you will need to pay tax on your rental income and Capital Gains Tax if/when you sell your buy to let property.
Owning a rental property can be extremely rewarding but is not without its challenges. Lots of people who own buy to let properties simply don’t have time or don’t want to be involved with day-to-day management of property/tenants.
At Charters, our experienced estate agents are here to help with a whole range of services to make your life easier. We can help with:
If you’d like help with your property search when buying a house to let, or have got any questions about the services we offer, please get in touch. Our knowledgeable team have years of experience in the local rental market and are here to help.
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