Our area is certainly popular with investors and the change in the pension laws will undoubtedly attract even more people to our area looking for good quality properties to invest in.
Buy-to-let property investments a reportedly the best performing asset class when researchers compared property investment to the likes of ISAs, UK shares and government bonds*. Anyone considering going into buy-to-let as an investment must think through the process and carry out due diligence, as you would with any investment.
There are many aspects to cover when considering a buy-to-let investment. Speak to a professional ARLA regulated Letting Agent to help you find the answers…
Key things for Buy-To-Let Investors to consider:
Is now the right time?
Is it the right time in the ‘property cycle’? Mortgage rates are low and rental values high making this a good time to invest.
Can you get a buy to let mortgage if you need one?
Buy-to-let mortgages are different to the usual residential mortgage and can have higher rates, bigger arrangement fees and require bigger deposits so make sure you are aware of all the costs you might incur. Affordability will be judged on the ‘rental cover’ as opposed to a personal income.
Are you getting good value for money with your property purchase?
Think about the cost of works you may need to complete to provide and maintain good quality accommodation. Will items such as white goods be included in the sale and do they look likely to pass a safety inspection? Remember to factor in purchase costs such as fees, surveys and stamp duty.
Will your asset appreciate well?
Property values have increased rapidly in our area of Hampshire & Surrey over the last few years. The rate of increase is now more subdued but property values continue on an upward trend.
Is rental demand high for that type of property in that location?
Speak to me for advice on what properties are most in demand and where
What is the yield?
Although rents are at a historic high; house prices, house maintenance costs and costs associated with being a landlord are not far off historic highs either.
The yield calculates basic return on investment for a rental property. The gross rental yield is found by dividing the annual rental income by the purchase price of the property then multiplying by 100 (to give a percentage). Typically an investor would look for a yield above 4.5%
Rules and Regulations
There are many rules and regulations which govern the lettings market and ensure property is safe to rent. These include rules on gas safety, fire safety, damp& cold, heating, deposit protection to name a few. We have details in our Landlord Guide and you can contact me to discuss any concerns or queries you may have on current and proposed rules and legislation.
What is your commitment period?
Buy-to-let investment is a complex method of investment and a long term one. It is not a situation where you can easily withdraw a capital sum, consider the length of time you intend to keep the investment and bear in mind exit costs such as selling costs.
I’m in a fortunate position at Mackenzie Smith that I can liaise with my colleagues selling property across the area to find the right investment property for you, we can also appraise property for investment across the market to find you the right opportunity.
I look forward to hearing from you,
Mike Clarke, MARLA, Lettings Director
firstname.lastname@example.org 01252 514000