London Property News

Buy To Let

Author: Callum Roberts Monday, 5 March 2012
Top Buy To Let Tips

The Buy–to–let market is making a comeback as lower house prices, rising rents and an improving mortgage market are tempting investors once again.

Our friends at independent mortgage advisors Charles Cameron & Associates provide their top tips to consider if you are thinking of investing in property.

Location, location, location

That old cliché is still one of the most important factors when deciding where to buy. Do some research, and make sure that you find a property that will appeal to tenants. Good transport links are vital, as are the availability of good schools and local shops.
Towns that have major companies, hospitals and universities will always be popular with investors as there will be plentiful demand for rental property from office workers, nurses and students.

Do the Maths

You will need to budget carefully, check the cost of the property and the rent you are likely to receive by speaking to local agents.

Most buy-to-let lenders will want rent to cover 125% of the monthly mortgage repayment. You will need a deposit of at least 25% to secure a reasonable deal, although rates and fees will be considerably higher than for a residential mortgage.

Negotiate over Price

As a buy-to-let investor you are in a strong position to negotiate a discount on the selling price, as you are not part of a chain and there is less risk of a sale falling through. Do not be embarrassed to offer a low price and do not get talked into overpaying.

Letting Agents

Unless you have a lot of time on your hands and are very practical, it is probably a wise move to employ a managing agent for your property. We will source your tenant and undergo the necessary credit checks to ensure there is less chance anyone will default on their rental payments. Our Management service will also look after any repairs that may need doing, and often have a list of electricians, plumbers and other handy men they can call upon in case of emergency. Our management service costs 5% plus VAT over and above our Let Only service.




Landlords Insurance

As a landlord you are responsible for insuring your property building and contents. Leaseholders letting out their flats will need to inform their management company that the property is let who will then ensure the buildings insurer is also advised.

Refurbishment

If you need to refurbish your property it is best to stick to neutral colours. Magnolia for walls, and white for the bathroom and kitchen. Don’t make the mistake of decorating and furnishing the property to your own tastes. There is often little difference in rents between having a furnished and unfurnished property and it will all depend on the type of tenant you are targeting.

Produce a detailed inventory

This is especially important should you decide to furnish your property. The inventory is your only proof of how the property was provided for at the outset and should accurately describe in fine detail everything in it.

Taxes

Be aware your rental income will be subject to income tax and any profit you make when you sell your buy to let property will be liable to Capital Gains Tax that HMRC will charge at your highest rate.

Use a Specialised Broker

There are over 500 buy to let mortgage products available and this number will continue to increase as lenders want to gain a share of this growing market. At recomended specialist broker: Charles Cameron, they offer clients independent advice and will search the whole of the market to source the most competitive mortgage for your situation.


Contact our Lettings team if you would like to discuss any aspect of BUY TO LET.

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