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Is now a good time to invest in buy-to-let? 

The buy-to-let market in the UK is riding high at the moment with confidence levels soaring and it has undoubtedly been one of the UK’s financial success stories. Investments are on the rise, with more and more people looking to property as a way of increasing their savings for weddings, children’s university fees and retirement. For many, embarking on a career in buy-to-let can be a profitable journey, and in some cases, it can completely replace an investor’s former career.  

Thinking of becoming a landlord? Now is the time… 

A buy-to-let property is considered by many to be an excellent investment for those who are able to afford it.  For many who are in the process of a remortgage that possibly could not afford a buy-to-let before, now is the time to look into it.  The extra cash which will be freed up through the remortgage process is many times enough to afford the deposit on a buy-to-let property.

The advantage one has now compared with other economic times for a buy-to-let purchase is twofold: 

  • First, the interest rate is at an historically low level, and will remain there for an estimated several more months 
  • Second, lenders are offering very competitive deals for buy-to-let arrangements as well as other types of remortgage loans. 

Marked increase in part-time landlords 

Part-time landlords supplement their earnings from a full-time job with rental income, and now make up a massive 70%* of the sector. 

Why is being a part-time landlord so popular? 

The average part-time landlord has four properties and generates an annual gross rental income of £31,000*. Although around a quarter* of this return is spent on maintenance costs, it remains an attractive additional income to potential part-time landlords. 

Rising house prices have also resulted in people renting for longer, with tenant demand resulting in properties being let faster – great news for landlords. 

Our top tips when considering buy-to-let 

A buy-to-let property portfolio doesn’t suit a ‘one-size-fits all’ approach.  If you’re confused about your options, here are our top tips: 

#1 Research your market  

Be sure that buy-to-let is the right investment for you.  Would your money yield a better return in another investment, such as a franchise? While the market is buoyant now, property values can fall as well as rise and much is dependent on the location of your property. Potential landlords seeking to build a portfolio should research the market thoroughly to understand the pitfalls as well as the potential of entering the private rental market. 

#2 Talk to other landlords  

Get to understand what it takes to be a landlord, not only from the financial investment but the personal and emotional investment that goes into letting out a property. Talk to other landlords or lettings agents about the trials and tribulations of a property owner.  Letting occasionally goes wrong so you must decide on whether you have the right temperament for life as a landlord. 

#3 Choose the right area 

By this we do not mean the most or least expensive but a location people want to live in, whether for the transport facilities, student life or for the schools.  Compare the property you can afford with the locations people choosing to live in that type of property would opt for.  While your local neighborhood might seem a natural option, don’t rule out looking further afield. 

#4 Work out your finances  

What rental income will you be able to charge for the property you are considering? Will this cover your mortgage payments? What will you do if your tenant is unable to pay, if the house is empty for a while or if you need to find a cash sum for a boiler repair? Again, talking to a reputable lettings agent with an in-depth knowledge of the area you are considering will provide invaluable insight. 

#5 Get the best mortgage deal 

Broaden your search for the best buy-to-let mortgage available rather than only contact your existing bank or building society.  Talk to an independent financial advisor to ensure you are getting the best deal available for your financial circumstances.   

#6 Consider your target tenant 

You may love the house you are purchasing but will your ideal tenant? Young professionals generally seek modern and stylish properties, while students need comfort rather than luxury.  Families need plenty of practical living space to accommodate the different needs of family members.  Will you rent your property on a furnished or unfurnished basis? All of these questions need answering before investing in your buy-to-let property. 

Talk to a lettings specialist

As a potential landlord, we understand that the first steps into the private rental market are often overwhelming but it doesn’t have to be that way.  At Castle Estates we are always available to offer advice.  Contact us today for the answers you need. 

* Source: National Landlords Association