Once you have made the decision to invest in a residential Buy to Let property, it’s worth sticking to a few basic rules. This is likely to make the whole process simpler and easier to manage further down the line. They are;
To some extent this might be governed by your cheque book, but have in mind what you are looking for and why. Most private landlords will agree that flats are more management-intensive than houses, but in some areas the young urban professional is attracted to the benefits that come with residing in a centrally located, well appointed apartment in a city centre. On the flipside, houses usually have gardens - which need to be tended!
If you are considering multiple occupancy then a larger house in need some work might be ideal if you have reasonable DIY skills and a knowledge of the law relating to multiple occupancy dwellings. University towns are worth considering if you are looking at converting a large property for multiple occupancy for obvious reasons.
Remember that flats are more susceptible to neighbourhood disputes and noise complaints and because they are, by necessity, leasehold properties, you have your own landlord’s rules to abide by, as well as a service charge and ground rent to pay.
It’s almost always better to stay local. Invest in an area you know well and that you like. If possible, buy in an area you wouldn’t mind living in yourself. After all, a cheap property is usually cheap for a reason! The better the location the better your chances of a reliable income and long term capital growth - with one exception (see (4.) below).
Try and buy in local in Maidenhead. There is nothing more soul-destroying than a 90 minute trip up a snow-covered motorway at 8pm on a Wednesday night to deal with a broken boiler! Even if you intend to employ a managing agent, it’s well worth considering local investment. Owning property nearby is a much easier proposition to manage.
If you know an area well and there are good reasons to expect that the area is improving then investment in that area is well worth considering. Sometimes the construction of a new railway station or improvement of the road network will make the case for you. Sometimes it is more of a cultural thing. In the past many investors have followed ‘the pink pound’ with great success, buying in low cost urban areas that are becoming popular with vibrant metropolitan communities usually made up in large part by artists, artisans and the affluent metropolitan gay community.
Remember, your investment is only an investment if it provides a return! If your property is empty for long periods of time then it can quickly become a crippling burden on your monthly cash flow. Also, buy the type of property most in demand in the area you have chosen. There is little sense in buying a small one bedroom flat in a primarily family-oriented suburban area with good schools, unless you plan to target the recently divorced of course!
All property costs money to buy, sell and own. There may be a significant stamp duty charge for you to pay on purchase these days and remember it is higher for buy-to-let than for owner occupiers. There’s also insurance, statutory checks of gas and electricity and other utilities and the upkeep of the property’s fabric and internal fixtures and fittings such as smoke alarms and cookers.
Remember to allow for void periods when the property is empty and keep a cash float to cover void periods, letting agent’s fees and general maintenance.
Unless you are confident that you can add extra value by refurbishing older property for let, or the return on investment is higher for character properties in that area, then buying modern property that is well insulated, built to modern standards and in less need of regular repair and costly maintenance is likely to save you an awful lot of time.
As with any business proposition, make sure you undertake a full cash flow analysis before you commit.
This should include all capital costs and ongoing expenses and allow for regular inspections, maintenance, professional fees, void periods and tax liabilities. Allow for the additional ‘hassle factor’ that comes with owning property and make sure that the return you are getting (both rental and capital) is worth the risk.
Choosing which fixed rate to go for has been a dilemma for many of our clients so far this year. There really isn’t a right or wrong answer, but below we will look into the pros and cons of a two-year and five-year to help you make the right decision for you.
13 days ago
Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.
Call us for more information: 01628 507477 or email: team@mortgagerequired.com.
14 days ago
According to Rightmove, a whopping 500,000 UK homebuyers are rushing to finalise their home purchase before the new Stamp Duty rules change in April.
The UK government is introducing new rules for Energy Performance Certificates (EPCs) that will impact landlords. Here's a summary of the key changes
21 days ago
Choosing to buy a house is one of the biggest decisions you are likely to make in your lifetime. There are many factors that influence a house purchase, these include: finances, housing market conditions, and mortgage rates.
24 days ago
Since being launched back in 1999 Individual Saving Accounts (ISAs) have been very popular for those wanting to put money into savings. There are four types of ISA, and the majority allow flexible saving and the ability to withdraw funds easily. There are financial penalties on certain products, these usually pay the most interest.
28 Feb 2025
According to the Office for National Statistics, last year (ending March 2024), there were 153,800 new homes completed in the UK. To help the housing crisis, the UK government has pledged to build 1.5 million new homes in the next five years.
Check out some of the reasons why a new-build home might be for you.
Many households are still being affected by the high cost of living, with several people worrying about how they can make ends meet on a monthly-basis. Unfortunately, the cost of bills including, water, council tax, and energy are still rising. Here are some things you can do.