Buy to Let
This service was born as a result of demand from clients, current and potential, wanting advice on where to buy to ensure they held a safe investment and to ensure continuity with tenants and to maximise their yield.
We manage both small and large portfolios for a number of investment buyers.
The Steps To Success
1. Research
If you prefer to buy close to home then you'll probably know the local market but if you're flexible on location then we can offer plenty of advice based on our experience. You should consider the popularity of the area, transport links, local employment, schools and attractions. Buying in the very best areas obviously means you'll pay top prices but will get a high rent. But buy in a slightly cheaper location and the rent can still be almost as high, giving you a better return on your investment. Identifying up and coming areas is the ideal.
2. Select your market
If you want to target young professionals then look for properties that are manageable, possibly apartments (but check the service charge!), that are modern and well-maintained with plain decoration and either have parking or are close to good transport links. Families will generally be looking at the garden and local schools. Students want to be around other students and be close to entertainment and the Uni.
3. Involve a good Letting Agent very early on
We always encourage clients to involve us in their choice of investment as early as possible and are happy to go through your shortlist to rule out riskier options. We've let property in most streets and developments within our core areas so have plenty of comparable to rely on. We can also advise on décor and fixtures.
4. Work out the Figures
A Buy to Let mortgage is assessed on the rental income that the property is likely to generate, not on your own salary income like a traditional mortgage. Lenders will typically want the rental income to be at least 125% of the monthly mortgage payments (assuming an interest only product). So if your mortgage payment is £400pm, the rent would need to be at least £500pm. You may be asked to increase your deposit if the figures don't quite work. Deposits required vary from 25% to 30%, the higher your deposit, the better the interest rate offered. Most lenders also want you to be employed and have a reasonable earning capacity to act as a cushion. Look out for large arrangement fees and make sure you can cover the repayments should your tenant stop paying or if the property is empty in between tenants. If you're a cash buyer – no problem! We can recommend a mortgage broker to help you find the best deal for you.
5. Consider the Costs
As well as any mortgage costs you'll need to consider solicitors fees, stamp duty, insurance on the building, contents cover if necessary, regular and ad-hoc maintenance, agents' fees and service charge and ground rent for apartment blocks. You may have other minor costs such as an annual gas safety check and electrical checks, rent guarantee and legal insurance policies, etc.
6. Negotiate on Price
Buy to Let investors are often seen as more straight forward buyers, usually without a chain, so drive a hard bargain and haggle!
7. Prepare for Letting
If the property is not ready to move into, it always pays to do as much work as possible whilst it's empty then there's no interruption to the income flow later. The quality of finish ultimately determines the choice and standard of tenants available to you. If you want the maximum rent then you need to compete with the best.
8. Trust your Letting Agent
“let them do what they are good at”.
