November 14, 2022
It’s no secret that property is an excellent asset class with high income potential. You just need to be diligent. Consider the recent UK real estate boom. The average property price rose 7.5% year-on-year, marking a record high. While the housing sector flourished, apartments were left behind to sell for immoderate discounts. The importance of choosing the right business model cannot be understated.
In the property market, buy-to-let has consistently stood out as a popular and lucrative approach. Tenants provide regular returns and capital appreciation offers the possibility to sell your buildings for profit in the future. Of course, this is all easier said than done. Here are 4 tips to keep in mind.
By conducting thorough research and staying focused on these tips, you can set yourself up for success in the buy-to-let property market.
Start by learning about the financial aspect of property investing. Are you familiar, for instance, with the 2016 ruling regarding additional properties? The law states that investors must pay at least 3% stamp duty tax on a property worth £125,000 or less. On the other hand, real estate worth over £951,001 can be subject to 13% interest.
Another crucial factor is financing your investment. Perhaps you’re lucky enough to pay out of savings accounts. If not, there are several alternatives. One is to opt for a buy-to-let mortgage from a reputable lender.
Million-pound mortgage providers like Enness Global are no stranger to the London property market, where they step to the fore in place of banks that typically back away from these types of transactions. Their million pound mortgages are available to international investors as well.
Before securing funding, you need to determine what exactly you’re renting out. Refurbished property, which is characterised by updated period buildings, is one option. But attractive as tenants may find them, renovation costs can add up quickly. Dated real estate is also prone to safety and maintenance issues.
The alternative is to go modern with contemporary properties fitted with recent amenities and furnishings. New builds, like those built by Rotelle Home Builders, bring a different kind of demand, as tenants know they’ll be the first to move in. You can purchase these while they’re still under construction, allowing you to leverage below-market rates.
Location is key to winning in the buy-to-let property market. Some areas offer far greater returns than others. Look for those with rental yields of 8% or above. You can calculate this by estimating rental income and dividing it by the average price of nearby property. According to Simply Business, the best buy-to-let areas in the UK include:
Identifying the right location is crucial for buy-to-let success. While it's easy to identify general UK hotspots for property investment online (think big cities like London or Manchester), it can also be valuable to explore more specific rental prospects, including the student market. For insights into which cities are best for student property investment, consider exploring this detailed "which cities are best for investment?" guide. Resources such as this can help you make informed decisions on where, and upon whom, to focus your property investments.
Aside from ensuring the safety of your tenants, you should also take steps to secure your investment. Every property should be carefully assessed, with particular attention to the developer behind its construction. Also, remember to take out essential policies, such as building insurance, contents insurance and loss of rent. There are many companies like Mashroom that provide great guides on the types of insurances you need.
Aside from ensuring the safety of your tenants, you should also take steps to secure your investment. Every property should be carefully assessed, with particular attention to the developer behind its construction. Also, remember to take out essential policies, such as building insurance, contents insurance and loss of rent.
Thorough research lays the foundation for buy-to-let business success. Stay focused and it won’t be long before you’re raking in the rent.
