Renting a property has seemingly never been more popular, with an increase of 1.7 million households to the private rented sector over the last 10 years. However, it is not just the number of tenants that continues to grow, as the recent rental price rate has also strengthened. Private rental prices increased a significant 1.3% in the year leading up to May 2019.
According to our Lettings Director, property continues to represent one of the best long term investments available, as long as you do your research and talk to an experienced agent.
“The property market is always prone to peaks and troughs, but over approximately ten years, your property is likely to have increased in value, meaning you will enjoy the capital growth in the long term.” – Lettings Director, Michael Clarke
Consider the demand for your property
Michael advises that it is essential to talk to local agents about the demand for the location of your considered investment property. “It is important to remember that you are not buying for yourself, so you must disregard personal preferences and focus on what prospective tenants want. Tenants’ favourites tend to be modern properties located within easy reach of a train station, motorway junctions and business parks.”
Work out the financial detail
An investment property will likely be in addition to the property that you already own; therefore the first thing to consider is the additional stamp duty on your purchase. Once you have found the right property, you need to ensure that the finances work for you and that you will make that all important profit. You can do this by working out your gross annual return, by dividing your purchase price by the annual total anticipated from monthly rental payments. As a property investor, you would normally look to achieve a 4-5% return to make your efforts worthwhile.
When buying apartments to let, as a landlord you will be responsible for the payment of any ground rent, service charges and management charges, so these will also need to be taken into account when considering the financial implications. Don’t be disenchanted by the amount of your first rental statement, which will typically have items such as a gas safety inspection, electrical checks, cleaning, inventory charges and agents’ fees deducted. In some cases, you may still owe the agent for some of these services, so it could be well worth checking.
“If you have selected a property wisely and had the rental price set accurately, the property should have a suitable tenant in situ within just a few weeks – and then rent starts to come in!”- Lettings Director, Michael Clarke
As long as you consider your options, carefully calculate the finances and get all of the advice you need, buying property to let is still a great way of investing.
If you are considering buying a property to let and would like some advice, you can speak to our Lettings team on 01252 514000 or email@example.com.