Date Published 28 October 2021
Joanne Noonan has been advising clients on the rental market for over 20 years now and being a qualified FARLA agent too, she's experienced it all.
Here's Joanne's thoughts on investing in a Buy-to-Let :
UK house prices have skyrocketed in the past 20 years, which is the reason that, despite blips in the market, so many people view property as such a good investment.
One of the first things to think about, aside from the financing and budget, is the likely demand from tenants – so understanding the local market where you plan to buy will be really important.
This will help target the right type of property to appeal to tenants and minimise the potential for breaks in rental income, which is so important for any buy-to-let investment.
But what about financing?
To finance your buy-to-let, some lenders will put applicants through their paces.
The level of buy-to-let mortgage available will largely depend on the amount of rental income that the property will generate.
Lenders will want to see that the rent will be adequate to cover the mortgage interest by a set amount and calculated using a ‘stress rate'.
That is designed to give some cover for any other costs or future interest rate rises.
Pros of investing in property
- You own something tangible
- Property values are on a long-term ascent, so there is a good chance of benefiting from capital growth
- You benefit from rental income as well
Cons of investing in property
- Costs can be high – the big deposit, stamp duty, repair costs, legal fees, surveyors' fees, and agents' fees if you outsource the management of the property
- You will pay income tax on your rental income and potentially capital gains tax if you sell up
- You pay more in stamp duty as a buy-to-let landlord
- You can lose money because of problem tenants or periods when the property is empty
- Managing a property can cost you time if you manage the property yourself
- You may not be able to sell it when you want or get the price that you want
Joanne finishes by adding, "I am more than happy to speak to anyone thinking of becoming a landlord or who already is one. - client or not, I would rather give my time imparting my experience and knowledge of the law than see anyone fall foul to lack of knowledge. But be warned, I can talk the hinds legs off a horse but you'll be so glad you did!"
For expert advice from a qualified agency in sales and lettings, give us a call, we'd be delighted to help.
