Buy-To-Let Property Investment: Factors To Consider

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Thinking of investing your money by purchasing a buy-to-let property in UK? In recent years, UK property has been deemed a very lucrative opportunity to global investors. It has also been a profitable investment that renders investor with stable rental income as well as property appreciation.

However, it does not simply mean that buying UK property can path your investment success straightforward. Indeed, one should take into consideration when choosing their buy-to-let property if they want to maximize the profit and avoid possible pitfalls.

In this article, we will reveal the main key factors a buy-to-let property investor and landlord should take into consideration.

1. Be Broad-Minded when Choosing the Property’s Location

Many investors will only buy properties in or nearby their home town. This is purely not a good move. Instead, one should choose the location basing on detailed research on the rental yields in the surrounding regions. Basically the main aim of buying a buy-to-let (BTL) property is to gain stable and good rental income every month. The property location should be where that can offer you the highest stable return on investment (ROI).

2. Making Sure of the Demand for Tenants is High

The supply and demand ratio in the area of the BTL property is of vital importance. No investors or landlords want to buy a property in which no tenants will want to rent for it.

Investing in a property where the tenant’s demand is higher than the actual supply can give you an extremely lucrative ROI. Also, if you can be confident that there is demand for the property, you should be able to let it without fear of void periods.

You can target particular types of tenant by the area they live in. For example, a student will likely be looking for a property nearby their campus and a young family will be looking for a property in a family friendly area where shops, restaurants and transportation facilities are available within walking distance.

3.To be Maintained at Reasonable Cost

Buying BTL property should be something that is profitable to the investor. In short, the cost of maintenance, repair and renovation should be low as compared to the rental income.

The traditional aged cottage or period houses should be avoided as they usually incur relatively expensive maintenance cost. Modern properties are able to be maintained at lower cost and are more easily to be let out.

4. Choosing the most Suitable Property Type

It is a wise choice if your property can appeal to the mass market, ie, can attract the most of the tenants in the market.

Studio and one-bedroom flats are relatively small in term of investment cost but it can cater the need of couple or single person. Two-bedroom flats are more popular with potential tenants than the former type of properties.

It is crucial that your property can be suitable to different tenants’ demand.

5. Find the Best Mortgage Deal

It is important to have an agreement in principle so that you can speed up the process of your buy-to-let purchase.

The mortgage process can be quite complicated and as such, a lot of landlords and buyers of BTL properties don’t have the experience to navigate this process. Find a good mortgage broker that can offer you tailored mortgage deal to suit your circumstances and the lowest possible rate.

Buy-to-let property mortgages are mostly based on the rental income expected (though other means of income may be counted too) to be rendered through the property itself and thus, it work quite differently with the owned one.

6. Other Related Possible Costs

The main and recurring cost of buying a house is the mortgage. Apart from that, you may also need to pay for things like stamp duty and council tax. Other ad hoc costs you might need to factor into your finances could include: referencing checks, certificate of gas safety, certificate of energy performance, insurance costs, agency fees, property management fee . . . etc.

7. Get landlord insurance

There is no legal obligation to have the landlord insurance. However, it can protect your BTL property investment and cover your liability for loss of rent, damage from events such as flooding or fire, and replacement locks and keys.

Having an landlord insurance can further protect you in the event of a dispute or other unexpected issues. Indeed, some mortgage offer will add terms of requiring you to get the property insured too.

8. Having Basic Knowledge about Tax

As an investor and landlord of BTL property, you will profit from it as well as you will be taxed accordingly. Educate yourself with some basic knowledge on various taxes like tax on rental profits, capital gains tax and inheritance tax can save you money.

9. Getting to Know UK Property Legislation

Again, being an investor and landlord of BTL property in UK means you have certain legal responsibilities and certain obligations to fulfil. Being non-compliant can result in fines and even prison sentences. With over 150+ pieces of legislation that are constantly changing, it is best to make sure you are compliant at all times. It might be a good idea that you use a letting agent or property management company to do the job for you to save you time and hassles.

10. Agency’s Service

If you want to take the stress out of renting your property, you may want to leave it in the hands of a professional letting agent and property management company. This is the best way to ensure you are always aware of new and changing legislation, saving your precious time and effort in all the work in letting and managing your BTL property.

As a leader in property management, Prop Home Ltd. have a tracked record of experience and expertise on investment property management in which will surely increases your chances of finding quality tenants at all times.

You can choose to be hands off or hands on. We offer a variety of services, and you can decide which service you want. We can provide different levels of service like let only, rent collection and fully managed services or any specific and custom requested service.

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