With banks offering tiny returns on cash savings and ISAs and the fairly recent stock market volatility still fresh in people’s minds, investing in property is still considered by many to be the best way to invest their money.
This longheld belief is part of the British love affair with real estate and is one reason why homes in some parts of London and the South East are now values at many times the average person’s annual salary. With demand for homes outstripping supply year on year and historically low mortgage rates, it is clear to see the appeal to the investor considering a plunge into the buy-to-let market.
So, you have made the decision to invest. How best can you mitigate the risks involved with owning property as an investment? Here are our 5 top tips;
- Decide how you intend to buy - Are you a high rate tax payer? Do you intend to borrow money to leverage your deposit? If so, consider the tax benefits of buying through a limited liability company. Investment in the Buy-to-let sector is no longer an attractive option to the highly borrowed private individual that pays tax at the highest rate.
- Do your research - Pick a location you know and which is ‘on the up’. You don’t want to buy in a poor location that is becoming a problem. Just because somewhere is cheap does not mean it’s a good investment. You should be considering capital growth as well as initial return on capital. Consider buying close to home. How will you deal with that burst water pipe of broken central heating boiler if your property is 200 miles away?
- Buy the right type of property - There is little sense buying a large family home in an area popular with the sophisticated urban professional, or the one bedroomed flat in an area with great schools popular with young families. Consider whether multi-occupancy is right for you. If it is, University towns and locations with large infrastructure projects underway may offer you a pool of tenants looking for shared accommodation.
- Allow for a contingency - Make sure you do your sums. Don’t forget stamp duty, legal fees, inspections by gas and electrical specialists, repair and maintenance, agent’s fees and disbursements and the voids you can expect between tenants. Who pays the mortgage when the property is empty (or worst still, occupied but not rent producing!). Make sure you have a cash contingency to cover you for the most scenarios.
- Ask yourself one question - Are you ready to be a Landlord? Do you have the time and inclination to deal with difficult tenants that won’t pay you rent? Is the extra return you might receive worth the hassle you are likely to get at some point during your ownership? Can you afford to pay six months mortgage payments if your tenant stops paying rent and won’t move out? Owning a buy-to-let property in the right location can be hugely lucrative in the long term, but it’s not like having a cash ISA. There is a reason higher returns can be made on property and this is in part down to the ‘hassle factor’ and the potential risk involved.
Of course, the upsides can be enormous, especially if you buy right, let well and borrow shrewdly.
To speak to a buy to let mortgage adviser contact us on 01628 507477.
Related articles:
Download our Free First Time Buyers Guide
Recent posts
The chancellor will deliver her second budget this autumn. Due to slow economic growth and high inflation, the government need to manage a £40 billion shortfall in public finances. There have already been reports about changes to taxes including income tax and capital gains tax.
Landlords could face a new tax this autumn
4 days ago
The chancellor has advised that landlords could have another tax to pay this autumn as the Treasury decide whether to extend national insurance contributions to rental income.
According to a report in the Guardian, senior ministers have asked Treasury officials to look into a “proportional” property tax to see how it would work as an alternative to the existing stamp duty land tax on owner-occupied homes.
More than a quarter of UK adults in long-term relationships (26%) have reported that despite living together, they keep their finances separate from one another.
There has been a rise in both rent and mortgage costs over the last three years, with renters seeing a greater increase in their monthly payments than those with a mortgaged property.
Delayed Start Mortgages
27 days ago
The new Delayed Start Mortgage launched by Skipton Building Society allows first time buyers to postpone the first three mortgage payments. This product has been designed to help soften the blow of moving in costs for first time buyers.
Green Mortgages | Rewards and Benefits
4 Aug 2025
Mortgage lenders are starting to recognise their “Green” responsibilities when it comes to the different products they offer.
A recent study by Boon Brokers where 1,000 people who had used an estate agent over the last year were surveyed, showed that a whopping 52% said they were pressured into using the estate agents’ in-house mortgage broker.
More information
Trusted by
