Buy To Let Investment Properties Uk


Do You Know What The Legal Responsibilities Are

Your First Investment Property | Buy To Let UK Property investing | Property Business | Real Estate

If you are looking to become a landlord to obtain an additional income, you may not be fully aware of the responsibilities associated with this. You need to have a business approach in letting out your property, which means that you need to focus on the tax issues of owning and letting a property in the UK.

Some of the most important regulations landlords need to adhere to include:

  • Energy performance certificates
  • Offering compliant plugs/sockets and safe electrical appliances
  • Protecting the tenants deposit
  • Providing Fire resistant furniture
  • Right to rent checks
  • Serving prescribed information

Not complying with these, and other, regulations is illegal and could land you with a hefty fine . Make sure youre prepared to invest the time, energy and money to ensure youre legally compliant at all times.

What Are The Requirements To Obtain A Licence

The local council must look at the following factors:

  • the suitability of the property for the number of occupants

  • the suitability of the facilities within the property

  • the suitability of the landlord or managing agent to manage the property

  • the general suitability of the managing arrangements

The local council must also set conditions in relation to the facilities in the property to ensure the safety of furniture and gas and electrical installations.

Change In Government Policy

Until 2015, Government policy in respect of buy-to-let had been relatively benign, but this changed in the Budgets and Autumn Statement of 2015. Four major steps were taken to reduce the attractiveness of the investment:

  • Restriction of tax relief on mortgage finance costs to basic rate tax only.
  • Removal of 10% ‘wear and tear’ allowance.
  • Introduction of additional 3% Stamp duty surcharge.
  • Accelerated payment schedule for Capital Gains Tax due.
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    Buy To Let Property Investment

    Specialist buy to let property investment solutions.

    Investment Property Partners is a leading buy to let property investment specialist serving clients throughout the UK and internationally. Our experienced buy to let property experts focus on delivering exciting investment opportunities that offer significant income and capital growth potential.

    Investing in the buy to let property sector has always proved a popular proposition for many investors wanting to start investing in property or build on their existing property portfolio, and this trend does not appear to be coming to an end any time soon.

    The main reason for this is the fact that there is more scope than ever before for investment growth, and it is an area that has been proved to deliver excellent gains for property investors who are prepared to put the work in and really research this niche sector of the property market.

    However, you should not be fooled into believing that building success in this sector of the property market is easy.

    Investment of any description takes some serious consideration -and thought -and it is vital that you make time to research all the opportunities, prospects and potential risks.

    Mortgage Fees Can Be Steep

    Buy to Let Properties, Selecting the Best Locations

    Some of the fees and the interest rates for buy-to-let mortgages can be higher than for a standard mortgage.

    Also bear in mind that most buy-to-let mortgages are not regulated by the Financial Conduct Authority .

    Such mortgages are usually offered as interest only. This means the monthly amount you fork out to your lender will be lower than for a repayment mortgage.

    This can be attractive but, of course, means youre not reducing the mortgage itself.

    On the positive side, these mortgages often give you the flexibility to pay off part of your loan each year. Thats something you might do if your rentals become more profitable down the line.

    If you do take this route, check first for penalty fees, especially if you have a fixed rate.

    Find out some of the best mortgage deals on offer with our tool.

    Another way to deal with interest-only loans is to remortgage after a number of years or when a fixed rate ends.

    But if this option appeals, take into consideration that youll have to stump up more fees, youll be older and there is no guarantee that the figures will still stack up, particularly if interest rates rise.

    Ultimately, you can sell the property to repay the mortgage. But if house prices fall and the proceeds dont cover the outstanding debt, youll be in negative equity and may have to make up the difference yourself.

    So its worth building up a financial cushion to make sure your property empire doesnt come tumbling down.

    Youll have to pay:

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    Can You Guarantee My Rental Income

    We can set up preferential rental protection cover for you via a trusted provider which will include free legal costs cover. Good agents have fewer problems with Tenants but there are always risks associated with any form of investment. This product is there to provide you with complete peace of mind should you require it.

    Hmos And Their Advantages

    Houses in multiple occupation are a form of buy-to-let property. With an HMO, landlords could receive a rental yield up to three times higher than renting a whole property on one agreement. However, they also have the potential to require additional long-term maintenance costs.

    Whilst some long-term lenders require two years or more landlord experience for an applicant to be accepted for an HMO mortgage, short-term finance works differently. For example, MFS consider applications on a case-by-case basis. This is so we can look at the larger picture, taking in the applicant and the property on individual merits rather than one tick-box criteria. Meaning, we can provide new landlords with a residential bridging loan, should an HMO opportunity present itself to them.

    HMOs are mostly popular amongst young professionals and students:

    • They can decrease the monthly rental cost between tenants
    • Minimises risk for the household

    For more information on HMOs, read our HMO regulation checklist covering many aspects new HMO landlords need to be aware of when taking on an HMO property.

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    What Are Landlords Looking For In Investment Properties

    The pandemic has had a significant effect on what we want from a home, with time spent away from the office and the prospect of hybrid working in the future changing buyer and tenant priorities.

    Shawbrooks research shows landlords are reacting to the trend of home movers looking for bigger properties with gardens or access to outside space.

    The chart below shows the top five priorities for landlords looking to buy an investment property.

    There Are New Tax Rules To Learn

    How I use RIGHTMOVE to find BUY TO LET properties | Property investment UK

    In April 2016, the government imposed a 3% stamp duty surcharge on second homes and buy to let properties in England, Wales and Northern Ireland.

    Landlords still have to pay the 3% surcharge on the whole property. So if you buy a rental flat worth £400,000, the 3% stamp duty surcharge works out as an extra £12,000.

    The surcharge is on top of the usual stamp duty rates, which we outline here.

    In Scotland, second home owners and buy-to-let landlords have to pay an extra 4% in stamp duty.

    Buy-to-let investors have also been hit with more tax changes:

    • Until recently, private landlords could deduct mortgage interest payments from their rental income when calculating their tax liability. This was known as mortgage interest tax relief.
    • Since April 2020 buy-to-let landlords have had to pay income tax on the entire rental income, regardless of how much is swallowed by mortgage interest.
    • Landlords can take advantage of a new 20% tax credit on the interest. This rule will make the change neutral for most of those in the basic tax bracket .
    • However, landlords who pay income tax at 40% or 45% will be paying far more than before the shake-up.

    Calculating buy-to-let tax

    Let us assume monthly rental income of £1,000 and mortgage interest payments of £400. Were ignoring other expenses that can be set against tax.

    • Annual rental income = £12,000

    Tax on annual rental income:

    • If you pay tax at 20% = £2,400
    • If you pay tax at 40% = £4,800
    • Tax credit on interest = £960

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    What To Consider When Buying A Property To Let

    There are many aspects of the market you would need to consider before investing. Firstly, you would need to research the towns and cities where you would like to invest and understand average occupancy levels for properties similar to ones you want to invest in, and how much they have increased in value over time. Consider the cost of the property and also average rents for properties that are similar to it. Get an understanding of the tax you will have to pay, from stamp duty when obtaining the property to taxes on rental income.

    You would also need to make sure you have the funds available, or a suitable buy-to-let mortgage and deposit to hand. Keep in mind that you may need extra funds for solicitor’s fees and for refurbishment if the property requires it.

    If you are looking to manage the property yourself, you need to make sure you have the time to properly run it. Alternatively, you can use a management company but you would need to factor in the costs as it will affect the returns you make on your investment.

    Anyone can invest in UK property but if you are investing from overseas, you may have to adhere to different taxation legislations. Mortgage availability may also be more limited.

    Start your property journey…

    Earning An Income From Rent Is Key

    House price gains have boosted returns over recent years, but much of the long-term appeal for buy-to-let investing comes from the rental income.

    Any aspiring buy-to-let investor must consider the yield of a potential investment before buying.

    The rental yield is the percentage of return you can expect to make back on the purchase price each year.

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    Should I Buy With A Mortgage Or Cash

    As an example, if a property was £100,000 and rented for £5,000 per year your yield would be 5%. If you invested purely with cash, your return on investment would be 5%.

    However, if you purchased with a mortgage, the figures might look something like this:

    Purchase Price: £100,000: £1,875Net Annual Income: £3,125Return on Investment: 12.5%

    For the purposes of the above example we havent factored in any stamp duty or legal/broker fees, or taxes, however you can see the difference in return.

    With mortgage finance, you can also refinance the property every 2-5 years depending on your mortgage product, and providing the property has gone up in value, you should be able to release some funds for a second, third, fourth etc investment. This is how to build a portfolio using just one initial pot of cash.

    Other things to factor when investing in buy-to-let are your stamp duty payments, as investors are now required to pay an additional 3% surcharge on buy-to-let properties. Click here for an online Stamp Duty Calculator be sure to click Additional Property to get the most accurate figure.

    How Is Buying With Vesta Different

    Orchards Estate Agents

    Buying investment property is different to buying property for you to live in

    The main question is not can I see myself living there? it is can I see other people paying rent to live there. We ensure that each property we bring to market comes with a bespoke financial and investment analysis so that you dont need to guess.

    And whats more most of our property is sold with the tenant in place which provides further peace of mind:

    • You know exactly how much rent the property commands
    • See how well the tenant looks after the property
    • You start earning rent the moment you collect the keys

    With over 500 properties on our website and a pipeline of 4,000+ we can help you find a property that fits your requirements be it high yield, low value, single unit or block.

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    We Reveal Some Of The Places Where Property Investors Could Enjoy A Tidy Profit

    The reopening of the UK economy in 2021 has presented something of a mixed picture for buy-to-let investors.

    On the one hand, rental demand rose sharply and has recently hit an all-time high.

    According to the National Residential Landlords Association , 57% of private landlords said demand for private rentals increased in the third quarter of 2021.

    This was undoubtedly good news for existing landlords, as was the fact that in November, Zoopla reported that rents were rising at the fastest pace for 13 years.

    On the other hand, for new investors or those looking to expand their portfolio, the soaring house price growth seen over the past year has made it harder to make deals stack up.

    The good news is that many forecasters have predicted a softening of house prices in 2022, so there may be more opportunities for landlords looking to buy more property.

    So, what locations should they be investigating?

    High Tenant Demand Nationwide

    Over the past few years, private renting has gone from strength to strength, and the surge in tenant demand has not gone unnoticed. Many people living in the UK are unable to afford mortgages or secure their own homes, which is a huge contributor to the success of private renting. Additionally, the increased requirement for homes combined with the under-supply of housing is driving more plans across the country to construct and develop residential projects to meet the demand. With city-centre living popularising, increasing numbers of young professionals looking to rent and renting becoming more affordable than buying, there has never been a better time to invest in this sector.

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    Buy To Let Property Market

    The buy to let property market hit its peak just before 2007, yet shortly after this time the banking crisis and recession hit and the UK and international property markets ended up in dire straits.

    Since then however, demand for good buy to let property opportunities has started to rise and now is proving to be a good time to get your hands on a great investment deal.

    If, like a lot of people, you are excited about the prospects of what the buy to let investment sector can do for you now is most definitely the time to get stuck in.

    But, even though you may be eager to get your buy to let property portfolio officially up and running, you should bear in mind that you will need to follow certain tried-and-tested guidelines if it is all to go swimmingly.

    How To Buy To Let

    Investing in buy to let properties in the United Kingdom 1

    Practical tips for landlords

    Read our tips on how to become a landlord from choosing a property and mortgage, to understanding your tax liabilities and legal responsibilities to tenants.

    Your buy-to-let property may be repossessed or a receiver of rent may be appointed if you do not keep up payments on your mortgage.

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    Where To Invest Holiday Let Or Buy To Let

    28th Feb 2022 by Philip |

    If you happen to be in the fortunate position of being able to invest in a second home, should you capitalise on the staycation boom and buy a holiday home that you can let out short-term when youre not enjoying it yourself or a buy-to-let property that you can rent out on a long-term basis?

    Over the last few years, things have changed quite a bit. Increasing numbers of landlords are fleeing the buy-to-let market after their profits were hit by stringent new tax rules.

    That said, both routes can prove to be worthwhile investments, but there is lots to consider. From potential rental yields, tax benefits, potential hassle and what you want to achieve.

    Below we look at the pros and cons that you should be thinking about before you make that final decision because each property investment strategy presents their own unique challenges and rewards.

    Property Will Tie Up Your Investment

    Unlike with stocks and shares for example property is not an asset you can sell quickly.

    The average time it takes to sell a property from the first day of marketing to legal completion is 129 days, according to property information group The Advisory.

    If you think you will need to cash in on your investment quickly at any given time, then you may regret your money being tied up in property.

    ‘Property is fundamentally an illiquid asset, and the process of buying and selling is lengthy and painful,’ says Rob Bence, founder and chief executive at Property Hub.

    ‘But on the plus side, this removes the temptation to over-trade: the accessibility of stock market investments often leads people to buy and sell at the worst possible times.’

    The average house price has risen substantially since the financial crisis lows, Nationwide’s index shows

    Investors should be aware that over the long-term houses are as expensive as they have been at any point since before the 1900s, Schroders’ research shows

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    How Do I Get Started With Buy

    You need to know a few things when selecting buy to let properties. To make sure you most out of their investment, we recommend focusing on the following criteria to increase your chances of success. Before deciding on a property to buy to let, make sure you know how to identify the best buy to let opportunities.

    Why Live And Work In Leeds


    This cosmopolitan city is a prominent destination for buy-to-let investment due to the ongoing demand from buyers and renters. As a destination for young professionals looking for work in the thriving financial and digital sectors in Leeds, more and more individuals require rental property in this vibrant city. This demand, in contrast to the undersupply of residential properties, will undoubtedly boost house prices and rental costs even further in the coming years. This popular city is home to three universities, including the prestigious University of Leeds, where Poet Laureate Simon Armitage lectures. As a result, students are attracted to Leeds for the respected academic institutions but a high percentage of graduates choose to remain living in Leeds for its spectacular career opportunities and booming business hubs. Leeds prides itself on its diverse, talented and professional community of residents that choose to live, work and play in this Yorkshire city.

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