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The below mentioned steps refers to the process includes in Buy to Let property investment in UK. They cite the best steps that would enable the investors to understand the ethics of the investment procedure that should be followed by any investor. The buy to let market has been popular in UK since 1990s. This sector has been going through a period of unparalleled growth. In recent years an amplified number of investors in UK have invested in buy to let property investment. But still there is deficit of potential renters in some areas around UK. So there is a need to do some research work to become a buy to let investor. A buy to let investment is buying a property in order to rent out to tenants. It can be a medium to long term investment. It is different from owning your own home. It is about becoming a landlord and running a small business with legal responsibilities. In order to buy a residential property you can go for a buy to let mortgage deal or can use your own cash. If you are planning to invest in buy to let property in order to rent out to tenants there are some essential things you may consider. Study the market Before investing in a buy to let property, you should thoroughly investigate the market. You should be familiar with all the risks and return involved. After all it’s a medium to long term investment. If you are not willing to tie up your funds for a considerable period of time in a tangible investment then a buy to let investment may not be the right option for you. If housing markets falls, there are chances that the value of the property may fall and if there is a need to sell the property, the sale price may not cover the whole mortgage. In that case you will have to make up the difference. Ups and down in the rent you charge depending upon market trends, major repairs and finding the right tenants for your property are some other factors to consider. Select the appropriate area Choose the best areas to rent in and select the right type of property to rent out in that area. According to the results of UKs largest letting agency the highest buy to let yield in July this year were achieved in Wales at 6.6%, Midlands at 6.5% and North at 6.4%. Choosing the right area also means the place where your potential tenants will want to live. Make sure that the area should have special appeal for your desired tenants for plenty of reasons, like schools, transportation links, amenities etc. Do the calculations Buy to let is a big commitment. Before taking this plunge just make sure you have done all the calculations regarding the value of property, cost of buying, expected rental yields and the mortgage payment (if it’s a mortgage). Ideally buy to let investors want rent to cover 120-130% of the mortgage repayments with larger deposits of around 25%. Also keep in mind that if you need to sell the property on loss, the sale price may not cover the cost you owe on mortgage. You will have to bear the difference. And if your tenant leave and there is no rental income, still you need to make the mortgage repayments. Explore the best mortgage deals Shop around and look at all the possible mortgage deals available in the town. Don’t just go for the one which your bank offers. There is a list of online companies that offer list of best buy to let deals on their web sites. You can also get the services of a specialized broker in this regard or may visit various local estate agents. Local auctions note and weekly paper advertisement may also be helpful. Focus on the potential tenant Who are your target tenants and what do they want. E.g. if they are students then their demand will be entirely different from families or single person or from young professionals because they require purpose build student accommodation. Once you have decided your target market it will help you in what type of property you should invest exactly. Also remember that good tenants are those who stay for a considerable period of time and don’t spoil your property but they are critical to find. Debate on price As a buy to let investor you are in a position to negotiate on price of the property. In this case you are not the part of onward chain so there is a lesser risk of a sale following through. Once you find the right property, start with a low offer and don’t pay too much for it. Consider the risks Think about the negative aspects and risks involved. What if the house prices fall, the value of your property may likely to fall as well and you may not be in a position to sell at a profit. Also if you can’t find tenants your property will be vacant for long period of time or if you can’t charge the rental yields you expected, you may not be able to cover your mortgage repayments. Tax and charges In UK when you purchase a property and the price exceeds a certain limit you are required to Stamp Duty Land Tax. Also you will be paying income tax on rental income. In buy to let mortgage you will have to bear the cost of buying which may include solicitors fee, Stamp Duty Land Tax and Survey fee etc. also running and maintenance cost is associated with rental home. How will you get along Once you have owned a buy to let property, now the question is will you deal everything alone or you will hire an agent to manage and let out the property. Agent will charge a fee for this but he will take care of repairs, maintenance and advertising. He will handle tenants on your behalf. The above essential buy to let tips will guide you to successful property investment. To be a part of buy to let hype which is going on currently in UK it is important to play by the rules. Before indulging yourself in a buy to let investment, contact your financial advisor or ourselves for an assessment advice. About Author: Da Iqbal, from a property development and investment industry of the UK has proposed some useful plans and opportunities about UK Student Property Investment which is one of the best investment sectors for the investors to invest in. Feel free to contact him at http://www.trivelles.com or email him at hello@trivelles.com
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