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Posts Tagged: Buy to Let

Make Sure You Take Running Costs Into Account

According to research carried out by Platinum Property Partners, a franchise providing support to buy-to-let property owners, there is a concerning number of landlords that do not take into account such things as maintenance and running costs when calculating their return on investment on their rental property. The research was conducted back in February 2015 with in excess of 200 landlords. It was discovered that approaching 12% of landlords did not take into account any costs when working out their return on investment. Furthermore. 75% of landlords did not take into account the top ten most popular costs that they found they had to pay for. The top ten most popular costs were: – 1. Repair costs. 2. Letting agents’ fees in respect of managing a buy-to-let property. 3. Decoration and refurbishment costs. 4. Fees charged by letting agents to find tenants. 5. Regular costs to maintain the exterior of the property such as cleaning windows and gardening. 6. Maintenance fees. 7. Regular costs for cleaning the interior of the property. 8. Service charges. 9. Mortgage interest. 10. Marketing or advertising fees in respect of letting the property. It has been estimated that the average annual cost of the above…

Buy-to-Let Mortgages Celebrate 18 Years

Hasn’t the buy-to-let sector come a long way in the 18 years since specific mortgages started to be offered by the major lenders to help landlords fund the purchase of an investment property? Back in 1996, there were 2.4 million residential properties within the private rented sector. Today, there are 4.9 million homes. There can be no doubt that the ability for a landlord to arrange a buy-to-let mortgage has had a bearing on this increase. Previously, it would have proved difficult for someone to start to get on the buy-to-let property ladder by investing in his or her first rental property. They would either have had to fund the purchase outright from savings or borrow the money from a bank on a business loan involving them having to find a larger deposit than they have to do these days with a conventional buy-to-let mortgage and pay a higher rate of interest and fees. There are numerous lenders currently offering buy-to-let mortgages. This makes it a very competitive marketplace resulting in the customer being able to benefit from some excellent deals. To find the most suitable buy-to-let mortgage can involve some research on the part of the landlord. You could…

Which Type Of Residential Investment Property Provides The Best Rental Income Yield?

As a landlord, when you are considering buying a residential investment property to let out you may be making the purchase for a couple of reasons. Firstly, you hope that should you ever come to sell the property in 10 to 30 years time that it has increased substantially in value and secondly you are looking to achieve a good rental income from it. The type of property that you buy could have an impact on both of the above things but let’s focus on the latter – the rental income yield. Mortgages for Business produce a Complex Buy to Let Index each quarter that looks at details of mortgage transactions on Vanilla Buy to Let properties (i.e. standard 2 to 4 bed houses and flats), Multi-unit Freehold Blocks (i.e. purpose built flats), Houses in Multiple Occupation (i.e. private houses for students to let with their own locked bedroom doors and shared kitchen/bathroom) and Semi-Commercial Property (i.e. shops with flats above). You may be interested to know that the index also provides information about the gross average rental income yield the above types of property produce. Obviously, the figures can change going forward but we thought that you may find…

Drop In Rent Rises Forecast

The result of a survey by Your Move and Reeds Rains in respect of forecast rent rises during the next year is a little concerning. Presently, rental income on residential properties is rising by an average of 2.4% per annum. We don’t think many people can complain about that bearing in mind that the UK inflation rate dropped to 1.5% in August and the Bank of England have a target of 2%. However, this survey is predicting that the average annual rise in residential rental income over the next year will only be 1.8%. This does rather put a different perspective on things. It is also interesting to note that a large percentage (57%) of the 1,100 private landlords taking part in the survey do not intend to raise the rent that they will be charging their tenants over the next year. A lot of landlords that intend to raise rents are doing so with inflation in mind being the main reason with the second most popular reason for increasing rent being to cover the cost of maintaining the property. On a more positive note, the survey revealed that 41% of landlords have seen an increase in interest from potential…

What Sort Of Property Should You Buy To Let Out?

If you are considering purchasing an investment property with a view to letting it out you need to decide what sort of property to buy. As a landlord, your decision will be based upon a number of factors so let us have a look at some of them. Budget Obviously, the amount you have available to spend on a property potentially made up of savings and buy-to-let mortgage will have a huge bearing on your decision. You will also need to build into your costings any improvements/alterations the property may need as well as the possible purchase of furnishings. % Investment Yield In theory, the higher the value of the property, the greater the rental income but the important factor is the % investment yield. For instance, does a property valued at £200,000 provide a lower or greater % investment yield than one valued at £400,000? If it is significantly greater then is it better to buy two properties at £200,000 each as opposed to one at £400,000? You may wish to seek some professional advice in that respect. Detached, semi-detached, terraced or apartment? This decision will, in many ways, depend upon not only your budget but also the type…

How Easy Is It To Get A Buy-to-Let Mortgage?

If you are considering getting into the buy-to-let market for the first time as a landlord you will certainly need a significant sum of money to complete the purchase of the property you want to rent out. You will also need to pay for any works that may be required such as installing a new bathroom, fitted kitchen, redecorating and furnishing the rooms. So, where is the money going to come from to buy the property? If you have liquid cash readily available then that is certainly cheaper than having to borrow the money but if not you may need to approach a bank or building society for a buy-to-let mortgage. If you are in that situation, how easy is it to obtain a buy-to-let mortgage and what are some of the criteria? Well, there are several major banks and building societies that offer such mortgages so it shouldn’t prove a burden in being able to source a lender. The difficult part can be in meeting the lender’s criteria that tend to be different to that of mortgages to purchase owner occupied properties. For instance, how much you can borrow tends to be connected to your projected rental income in…

Rent increases – What You Need To Know

The vast majority of landlords are in the buy to let business with a view to making money and probably as much as possible. That could be by way of a combination of rental income and capital appreciation in the value of the property. However, as evidenced by previous drops in house prices, there is absolutely no guarantee that your investment property will increase in value. As far as rental income is concerned, it is a very competitive market place so, realistically, you may only expect to make increases in the rental that you charge your tenant(s) in line with the competition. As a landlord you should be aware of everything to do with rental income so let us have a look at this in a little more detail. It is important that your tenancy agreement covers when the rent can be reviewed and in what way it can be reviewed. For instance, if the tenancy agreement is of a fixed term nature then, unless your tenant is in agreement, the rent can only be put up at the end of the fixed term period. In the case of a periodic tenancy, unless the tenant is agreeable, it is usually…

The Benefits Of Letting To Professionals

If you are considering entering the buy to let marketplace one of the things that you will need to think about before choosing a property and its location is the type of tenant you would wish to rent your property to. There is a whole range including students, those people on benefits, retired and professional people. Firstly it would be useful to look at what sort of person qualifies as a professional. Well, it could be argued that the likes of doctors, dentists, solicitors, bank managers, accountants and teachers to name but a few all come under this category. The list goes on as it may include business owners, sales people, IT consultants etc. With regard to the benefits of letting to a professional, let us have a look at some of these as they may have some bearing on your decision as to whether this is a sector of the market that you would want to attract. The perception is that a solicitor is going to be respectable and trustworthy and is likely to keep the property and its contents well looked after as opposed to let’s say some students who are more likely to hold parties well into…

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