If you are considering purchasing an investment property then we can help. Here at Sue Bridges Lettings we can offer advice and guidance through every step of this often daunting process. We can give you an idea of the rental price and letability of properties you have sourced yourself and, due to our vast experience, also help you find a great investment property by scouring the market for you.
Buy to let lenders often require a 15-30% deposit and a rental income of 125% of the mortgage repayments. Some lenders may accept less but at the expense of a low interest rate.
Once you have purchased your property, its is also important to have a contingency fund if you can, just to cover any emergency repairs or void periods where rent isn’t being collected.
Note: From 1 April 2016, you have to pay an extra 3% on top of each Stamp Duty band when you buy an additional home or a residential buy-to-let property.
Depending on the type of property you invest in will vary the tenant type you attract and if you have a preference, some thought may need to go into your target tenant when looking at property. For example, if you are aiming at the family market your property should ideally have at least 3 bedrooms, be close to local schools, have a garden and plenty of space. If your aim is to attract the professional tenant then something modern, low maintenance and close to bars and restaurants is always desirable.
Note: Retired tenants are also on the increase so bungalows can prove popular and provide a long term home.
Once you have found the ideal buy to let property calculate the potential yield you will achieve in order to estimate the profitability of the property. Rental yield is the annual rental income as a percentage of the property value. Do the numbers add up? Is the property not only attractive to your tenant type but also a good financial purchase too?
Note: Focus on the long term and allow the rent to grow over time to help fund additional property investments.
You have just completed on your purchase of the buy to let property, what now? Becoming a landlord means taking on certain legal responsibilities. You will need to declare the income for tax purposes, via an annual Self Assessment tax return. With regard to advertising and letting the property current regulations include, but are not limited to; gas safety, smoke and carbon monoxide alarms, furniture and furnishings and right to rent checks along with deposit legislation and energy performance certificates.
Note: Generally there should already be an Energy Performance Certificate on a property you have just purchased.
The last thing to consider is whether you are going to let your property on a furnished or unfurnished basis. Generally furnished properties are in shorter supply in our area and often attract shorter term tenants looking for a temporary home whilst working on contract or visiting the University. Unfurnished properties attract tenants looking to stay longer term and often make your property their home.
Note: An unfurnished property must include carpets, curtains and a cooker as a basic
Please remember, whoever the property is aimed at modern, clean and tidy kitchens and bathrooms are a must and will always make your property more attractive to potential tenants.