LET'S OPEN DOORS TOGETHER
Experts predict that the private rented sector will account for 25% of all UK properties by 2020 and according to research published by the bank of Scotland “41% of UK pensioners are expected to take a lump sum out to buy a property or pay off their mortgage on retirement.”
New rules that came in April this year have meant over 55's get more freedom with their pension pot, resulting in some people are favouring property as it can make a valuable part of a pension portfolio. Although, it is worth bearing in mind that property is a very hands on investment, and even when instructing a letting agent, there are certain rules and regulations you’ll need to follow.
At Keylet Sales & Lettings we cover all aspects of the buy to let process so that we can provide you with as much information as you need regarding the rental market, including the supply and demand.
Keylet offer a fully experienced Sales team that can help you with the purchase of your buy to let property, and once this is completed and exchanged our resourceful lettings team will be able to advertise your property for rent and manage the property on your behalf.
Our fully managed lettings service allows you to sit back and relax, as we handle viewings, tenant referencing, tenancy agreements, rent, deposits, renewals and check out inspections. Our full list of lettings services can be found here:
It’s important that before you start looking at properties to purchase for Buy-To-Let, that you are able to raise a deposit and as mortgage rates change, to prepare yourself for gains and losses.
Should mortgage rates rise you need to know that your investment will sustain. It is also worth noting the taxes on buy to let investment. On the plus side, a rise in tenant demand and a rise in rents is tempting landlords into investment.
Make sure you research the market and compare the advantages and the disadvantages. Is it the right investment for you? Do you know anyone who has this sort of investment, and if you do ask them how it’s going. All these things combined will help you realise whether this market is for you.
Before you start your viewings to buy, it is worth putting the figures on paper to see in black and white the kind of investment you should expect to see. Find out how much deposit you will need to pay, and in turn how much mortgage lenders will give you. Also find out the average rent of a typical property that you can afford. Don’t forget to take into consideration property management costs, including maintenance etc.
Make sure you shop around to get the best mortgage. Book yourself in to see an independent financial mortgage advisor so you can find the best deals on the market at the time. It will also pay off to do your own research and contact banks and building societies to find out what they can offer you.
Make sure you choose an area that has high tenant demand, is there a university nearby that can cater to student lettings? When researching an area, check for things such as transport links, schools and local amenities, as these are all indicators of a sought after area.
Who would be your target tenant and what would they require from a property? For example if you are considering student lets they would require, basic layout and standard furniture. For professionals they would want a contemporary space and other benefits like parking etc. For a family, they may be looking for a larger unfurnished property.
Rent should be the key return for Buy-To-Let, for example a property delivering £10,000 worth of rent that costs £200,000 has a 5% yield. Again, it is important to note here that landlord expenses will need to be factored in to this. Once mortgage, costs and tax are taken into consideration, the idea will be to build up the rent over time, to potentially use it as a deposit for further investments or to pay the mortgage off at the end of the term.
This is an important factor to consider when buying property, how much work will need doing to get the property ready to let? Usually it is the properties that need improvement that have the best chance of boosting their value. Properties in need of repair can be better negotiated, and in turn, once refurbished can gain higher rents, and higher chance of renting quickly. Refurbished properties are desirable when tenants are looking for rental properties.
The advantage of a Buy-To- Let investor is that you may not be reliant on selling a property to buy an other, therefore if you are not part of a chain you come with less risk of a sale fallen through, which can be very attractive to vendors and will usually allow some leeway on price. It is also worth knowing the market, online portals such as Rightmove are able to provide indicators of the housing market in the area you are buying, so use this to your advantage.
It is absolutely essential that you always research the negative side to any investments. Therefore, should house prices fall, would you still be in a position to maintain the investment. Look into re-mortgaging so you can have idea of what can be done if the rate varies. What would happen if the property sits empty? Whilst tenant demand is high, there can be times of the year where the demand is less. There should also always be money in the bank for any major repairs, new boilers etc.
What happens after you buy the property? Will you appoint a letting agent? You will need to consider how well you know residential lettings and whether you have the time and resources to take this on yourself. If you are planning to be a landlord in Wales, you will also need to know about the newest piece of legislation, Rent Smart Wales. Most letting agents will come out to the property for free valuations and offer advice, it is worth appointing several agents at this stage and then pick one that best suits you.