“Buying to Let” (Part Two)
5th November 2015
Our last article considered the benefits of buying to let in principle. Here we consider some practical elements:
Attitude: Buying to let is a long-term investment. So don’t over-stretch yourself, because if you had to sell in the short term you would almost certainly lose money.
Choose well: Follow your head not your heart. Take advice as to which property would represent a sound letting proposition. Is there a strong market in your area? And always buy within a few miles of your home so you can keep an eye on the property.
The right mortgage: It can be worth increasing the mortgage on your own property rather than taking out a separate one on the rental property. Definitely worth speaking to a specialist here.
Hidden costs: Remember insurance, rates, maintenance and long-term improvements.The biggest unforeseen cost could be a period of vacancy. Nationally, the average void period is reported as 21 days a year*, although ours is a fraction of this!
Management: You could manage the property yourself or appoint a letting agent who will also find tenants, ensure the agreement is watertight, and collect references and rent.
Insurance: You may require special insurance, and as a landlord you also have certain responsibilities such as compliance with various safety regulations.
Tax: Rental income is taxable but mortgage payments may be deductible. Any profit you make when you sell the property might also be liable to Capital Gains Tax, so it may be worth putting the property in joint names to take advantage of two personal allowances. Certainly speak to an accountant before you embark!
Please feel free to call us for a chat if you would like to investigate buy-to-let opportunities in this area. It could be extremely profitable!