Buy to let traditionally involves investing in property with the expectation of capital growth with the rental income from tenants covering the mortgage costs and any outgoings.
The property is purchased by the landlord and then let out to tenants, ideally on an Assured Shorthold Tenancy Agreement. [hyperlink]
Investing in a buy to let property is not the same as buying your own home. You need to consider the area you are purchasing in, the factors that affect rent, tenant demand and numerous other matters which will affect your return on investment (ROI).
The government has recently made the buy to let market less attractive, but if the right property is obtained, this model can still work.
It is important to think of your investment as medium to long-term and consider decorating to a high standard to attract tenants quickly.
Ensure that you take tax advice from an accountant as income tax will be payable on the rents received after deducting allowable expenses. Currently allowable expenses include mortgage interest, repairs, agent’s letting fees and an allowance for furnishings. The rules are constantly changing, and it is important to consider this when deciding whether to invest in a buy to let property.
Don’t purchase anything with serious maintenance problems (it is worth investing in a good quality survey) or cut corners with tenancy agreements and other legal documentation. Keira Rawden can assist with all these issues.