Despite tax and stamp duty changes for buy to let properties in recent years, the market remains strong for investors, who are purchasing properties to let. This is due to people choosing to rent as they are either unable to buy, or not ready to commit to purchasing their own home.
Some people become landlords almost by accident, having inherited a property which they decide to retain, benefiting from the rental income from long-term, reliable tenants or using it for family holidays or as a holiday let – in which case a hot tub is now a ‘must’!
Alternatively, they make a positive decision to build up a small portfolio of properties, in addition to a prime residence for their own occupation, with a view to subsidising their pensions as they approach retirement, sometimes having a cash inheritance for the initial mortgage deposits.
Choosing the right location for an investment depends on its purpose: substantial capital gain over a decade or two, with the intention to sell and pocket the cash, perhaps to fund university fees or to help with a child’s own mortgage deposit. Or to keep a steady income flowing to subsidise holidays or (eventually) social care.
With lifestyle changes in the last couple of years, there is a trend away from purchasing buy-to-let flats, except in city locations around the country, which can be expensive. Instead, unfurnished two and three-bedroom freehold houses with gardens, away from town centres, but within easy reach of public transport and schools, are sought after by family tenants wanting to stay for years, rather than months.
Whatever the circumstances, landlords have responsibilities – both legal and social – to maintain their properties in good condition, replacing equipment as necessary; having good internet connections, and allowing well-behaved pets are essential for increased homeworking and general wellbeing.
Anyone choosing to invest in buy-to-let needs a detailed business plan, including whether to create a limited company as well as all costs, fees, insurance, rental income and potential void periods across the projected portfolio. A qualified accountant can assist with spreadsheets and tax implications.
Commissioning an experienced professional property manager is advisable, especially if a number of properties are held in different locations, to ensure compliance from both landlord and tenant. However, it is quite commonplace for owners of a single second property to prefer one-to-one co-operation with a tenant, supported by appropriate specialist legal/financial advice on Tenancy Agreements, tax liabilities, etc.