Buy-to-let properties are becoming the chosen investment for many as they seek to find an asset where their money can work hard for them, providing high returns as well as offering a safe investment. The price of property in recent years has continued to increase in many areas of the UK and the same can be said for rental prices which make a buy-to-let investment even more appealing.
Interest rates are at an all-time low and with stocks and shares being relatively volatile it has resulted in more people looking to place their capital in an asset that will provide a solid return on their investment.
Historically, purchasing property has been one of the safest ways to invest but it has also been one of the best performing investments and this still remains the same. A UK buy-to-let property investment brings together the benefits of a regular income along with capital appreciation in the long-term.
Investors are always looking for a reliable investment and it comes as no surprise that since the introduction of buy-to-let mortgages back in the mid-nineties, they have offered impressive returns that perform far better than other asset classes.
For those investors looking to make a buy-to-let property investment now is a great time to begin the process. Rental prices are increasing and yields of up to 10% can be achieved and in some cases more, especially if the right property is purchased. When compared to the extremely low interest on savings it is easy to understand why buy-to-let investment is a popular choice with investors, but they are also driven by the potential capital growth in the medium to long-term.
There are many different factors that can turn a buy-to-let property investment into a successful investment and the main ones are the location of the property, the style and type of property and the state of the property which means that research is crucial. It is not just about the property itself but good transport links and local amenities all help to make certain properties stand out from the rest, so ensuring that the property is likely to match the preferences of any potential tenants will enable investors to really maximise its potential.
Tenants now expect more from their rental accommodation so additional costs such as fitting modern bathrooms and luxurious kitchens have to be taken into consideration but remember that it is likely to help return higher yields when it comes to rental prices and capital appreciation. Making sure that there is a demand for rental properties in the area is essential to becoming a successful buy-to-let investor, but also the ability to spot an over-saturated rental market, as this will mean tough competition with no real possibility of rental increases, therefore making it difficult to make the investment work in the right way.
Buy-to-let investments are now becoming the favoured choice for those who are looking to make their pensions work harder and Hopwood House have a wide range of UK buy-to-let investment properties to suit all budgets. For more information or if you need assistance in making the right investment decision, contact Hopwood House today.
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Frequently Asked Questions about Buy-to-let Investments
Q. What are buy-to-let investments?
A. A buy-to-let investment is where the property you purchase is to be solely rented out to tenants and not lived in by yourself. If you’re considering a buy-to-let investment it’s wise to understand the risks that also come with this type of investment and if your tenants are able to pay back the rent through the possible rising interest rates of your mortgage repayments.
Q. Why invest in buy-to-let property?
A. There are many reasons people are interested in having their own buy-to-let investment. The opportunity of a regular monthly income is one of them, as well as saving for retirement or the expansion of a property investment portfolio. You could achieve a good rental yield of around 5% - 15% per year, depending on the type of investment.
Q. Can I get a buy-to-let mortgage?
A. If you own your own property, you’ll already be aware that there are specific criteria’s that have to be met in order to be accepted for a mortgage; the same goes if you’re investing in a buy-to-let property. Most lenders will want to be confident that:
Q. Do I have to pay tax whether I am a UK resident or non UK resident?
A. Normally, assuming an investor is based in the UK, there is a standard deduction (taken at source) of 20% tax from the UK tax authorities (HMRC) on the rental income. However, for Non UK Resident Investors, an exception can be applied for through HMRC, which is called The Non Resident Landlord Scheme (NRLS). Obtaining NRLS status enables you to receive the rental income without tax being taken at source. However, this does not mean that you are not liable to UK income tax and just as important, it does not mean that you do not have to file an annual UK tax return, you do. If you require further information on this subject, we can introduce you to experienced tax specialists. Part of our service would be to assist you through the whole process.
Q. What do I look for in a buy-to-let investment?
A. There are many factors that come into play when choosing a buy-to-let investment. Many landlords will already have an idea of where their next investment will be located, based on their current location or knowledge of that locations' rental market. Two of the main things to consider when choosing an area are the supply and demand and the estimated rental yields, as this will determine how likely the property will be successfully tenanted and the kind of return on investment that can be achieved from the buy-to-let investment. There are other key factors to consider, including:
Q. How much rent should I charge?
A. It is important to consider that the rental charge may need to cover a variety of things, including any mortgage repayments, property maintenance, insurance, repairs or any additional charges that are incurred by the property. If the rental amount isn't high enough, the investor could be left out of pocket if it doesn't cover any ongoing costs associated with the buy-to-let investment, yet if the rental amount is too high, you run the risk of pricing out your prospective tenants, so the rental amount has to be carefully considered. There are a number of factors that can influence the rental amount, which include:
For more information on how much to rent to charge on your buy-to-let investment, please read our research centre article.
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