Buy To Let
Many people are deciding to use but to let as an alternative for a pension or to top up pensions.
Demand is high for a number of reasons:
Young people simply cannot get a deposit to satisfy the mortgage company’s requirements.
There is very little property on the market and if your prepared to have decorating, new kitchen etc. you can often get properties under the market value price
The private rented sector now account for 10% of all UK residential property
To help ordinary people invest in this growing sector, Home For You have become very much involved in Buy-To-Let schemes with the aim of making it easier for people to buy investment properties and rent them out.
BUYING THE RIGHT PROPERTY
Don’t let personal taste decide which property you put your money into – remember that it is a business proposition. When considering buying a property you must research the market so look for a property that will be easy to let and manage and produce a good long term increase in value (Capital Growth). Buy-To-Let is a mid- to long-term investment – think a minimum of 5 to 10 years.
BUDGETING – COSTS
When you purchase a buy-to-let property you will have the same set-up costs as you would with any property including EPC, stamp duty, legal fees, survey costs, plus mortgage related fees etc. To help calculate your budget accurately ask yourself:
How much cash do you have access to?
How many properties do you wish to buy?
How long a term do you wish to keep them?
Why do you wish to buy them?
A deposit of 25% – 30% will normally be required.
The loan will also be calculated on 130% in rent to your loan (i.e. If your loan is say £600 pcm – you will need £780 pcm rent from a tenant)
Consider the following when looking for a potential property – is it:
Close to major road links and/or motorways, but not too close to be affected by traffic noise?
In a commuter area with good access to rail, bus transport
In an area suitable for younger people?
In close proximity to good schools?
Far from shopping facilities and other amenities such as pubs restaurants, schools etc.
To furnish the property, you will need furniture and fittings that conform to the latest safety regulations. Alternatively you may choose to leave it unfurnished.
Unfurnished would be considered – carpets, cooker, fridge/freezer, washing machine, lampshades, etc.
However, some properties should be furnished – a one bedroom property would be expected to be furnished as a single person or couple would probably not wish to go and purchase items just for a tenancy. It is important to get the balance right between the property and the tenant.
When buying think 5-10 years ahead
A property needs to be maintained to a good standard to attract the best tenants. Such things as first impression, exterior, gardens, interior, have to be well looked after. We do suggest that you start as you mean to go on with a professional clean. A property with a large garden is more unlikely to attract tenants wanting to take on the responsibility of maintaining it. Older properties will generally need more maintenance etc.
In Bristol and the surrounds we can offer good advice as to which are the best areas to purchase. We advise on the average returns per calendar month (pcm), types of tenant, furnishings, properties to avoid, HMO’s, The 2004 Housing Act, Gas and Electrical Acts, furnishing regulations and about 30 other Acts. All bodies recommend that you use an agent to avoid, what can be, the minefield of letting.
This topic is so extensive so if are seriously interested please give us a call on 0117 94 94 93.