Buying property to let
Investing in property can be a profitable business venture and a great way to save for the future. However, there are many practicalities that you need to familiarise yourself with when committing to being a landlord.
Before entering the market, think about:
- Return on investment
- Interest rates
- Long-term commitment
- Rental income and capital growth when selling the property – ask your agent for advice regarding property yields
- Seek advice from owners of buy-to-let properties
- Have a budget in mind
- Establish a maintenance fund
- Factor in unforeseen/emergency expenses
- Prepare for voids
- Agent fees
- Income tax on profit
- Fees/costs to offset against tax bill
- Stamp Duty fees
A buy-to-let mortgage will be required, which will be assessed differently from residential mortgages:
- Assessed on likely income from property
- Lender may stipulate minimum salary
- Higher interest rate and deposit
Landlords are required by law to pay tenant deposits into a government protection scheme for assured shorthold tenancies.
Types of schemes:
- Deposit Protection Service
- MyDeposits
- Tenancy Deposit Scheme
Location:
- Transport links
- Local leisure activities
- Potential rental income of similar properties
- Property hotspots – regenerated areas
- Crime rates
Tenants:
Set a clearly defined tenant profile that you wish to attract as this may affect your search – e.g. student, young professionals or families.
Properties:
- Type of property that matches tenant profile
- Parking availability
- Outside space
- Age of property
