Buy-to-let is a phrase with which all residing in the UK are very familiar. For those who are unaware buy-to-let means purchasing a property to rent it to tenants. Banks in the UK also offer several loans to the citizens for the same. Such loans are known as buy-to-let mortgage loans. These loans are specifically meant to help people to want to buy property for renting it in the future.
It is currently seen that over 25 years, buy-to-let has decreased the housing stock. Buy-to-let has many aspects, some positive and some negative. Anyone investing in such properties needs to be thoroughly aware of it. Below are some facts discussed by the Berkhamsted Letting Agents that will help people to invest carefully in such property. Take a thorough look at the below-discussed points so that you do not make any wrong investments.
Buyers should have flexible location preferences.
That’s a major mistake made by people involved in the buy-to-let policy. Most of the landlords are limited to buying a property in the city they reside. But that’s not an ideal thing to do. You have to do plenty of research in your area as well as in your neighbouring cities. By doing this, you can find properties that are cheaper in terms of buying but in the long run can provide you good profit.
Tenant demand is the priority.
The current needs of the tenant in the property is something that every landlord needs to pay attention to. That’s because if the tenant’s basic needs are not fulfilled in your property then they won’t be interested. Also, you need to do proper research on whether or not the area is popular among tenants. If places like schools, universities, restaurants, airports, etc.
are easily accessible from your property location then it is likely to get more attention from the tenants.
Landlords should go for properties that are easy to maintain.
Maintenance of property is a costly affair. It is most likely that your property remains vacant for some weeks or months after any tenant vacates it. If you buy a property that is difficult to manage and maintain then it will affect your finances. So it’s suggested that you opt for a property that is easy to maintain. Also, if the property you are buying requires some repair then you must ask the owner to get it done or give you some discount on the price. It is recommended that you avoid buying too old properties as they demand more maintenance which can be heavy on your pockets.
Buying property owned by a company.
This is a smart move if you want to cut down on the costs involved. Usually, people do not fancy paying a heavy tax amount on their rental income. Those people can opt to purchase a buy-to-let property via a limited company. The landlord here is in benefits because the company pays taxes on profit, which are relatively lower.
That means that all costs including the taxes on loans will be deducted from their business expenses. However, you should take advice from an expert before making any investment.
Buy-to-let demands more financial inputs.
Owing to the changing government policies, the buy-to-let trend has significantly declined. This is because the latest tax laws have lowered the profit margins for property owners. The landlords have to opt for a buy-to-let mortgage for buying the property and it’s costlier than the usual residential loan. Also, the landlords have to pay extra charges to agencies for finding suitable tenants and for the landlord services that they provide.
The above discussed are some facts that would help the landlords who are willing to invest in a buy-to-let property.
Due to the changing tax laws, over the past 25 years, a decline has been seen in buy-to-let properties. But it is foreseen that if the landlords make a smart move, take advice from the property dealers and invest rightly then they can make good profits from this buy-to-let industry.