Buying to let
If you are in the fortunate position of being able to afford a buy-to-let property, you might be weighing up whether to take the plunge.
The recent increase in stamp duty means that anyone with a property they rent out or use as a second home is liable for an extra three percentage points per ‘band’; additionally, mortgage relief on buy-to-let is changing to a flat 20%, which is being phased in from April 2017. Interest rates for buy-to-let mortgages are still very favourable, however, having continued to drop since April 2011.
A buy-to-let property is a big decision, of course, and it should never be assumed that investing in property will guarantee returns; however, the rental market is strong, particularly in big towns and cities where young people are struggling to afford to buy their first property.
The best way to maximise your investment is to do your research very thoroughly. This applies to where you buy, which mortgage provider you use, the schools in the area and the strength of the rental market; in fact, it applies to every aspect.
Strong areas will always be big towns and cities and places with good transport links to these hubs. University towns are also worth considering; however, remember that there are extra considerations and responsibilities when renting out to students. Students are not the best housekeepers and cheap and cheerful is the key.
Decide whether you want to be a hands-on landlord or would rather hand over the day-to-day responsibility to a management company, in which case research the fees and other costs you will be expected to pay.
It is important to remember that you are not buying for yourself; instead, you are buying somewhere for someone else - a stranger - to live in. Don’t go crazy with expensive furniture and fittings if you are renting out a furnished property. Auction sites and the internet are great sources of well-priced furniture.
Equally, if you are charging a premium rental rate, you will have to make sure the property is worth it and looks the part, although you don’t have to fork out huge sums of money. Careful budgeting and savvy shopping should mean that you can achieve a high-end look for a high street price, whether this applies to light switches, carpeting, furniture or kitchen cupboards.
Easy maintenance is also important. If you are refitting somewhere prior to renting it, don’t scrimp on things such as the heating system, windows, doors and lighting. Somewhere warm, clean, secure and easy to look after will always be more appealing to potential tenants.
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