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Should I Buy-to-Let?


While interest rates are at their lowest, it makes sense to consider the option of investing in rental property. With a typical rental yield of around 4% plus the potential for capital uplift as house prices rise, it is an increasingly attractive vehicle for investment.

There are a range of buy-to-let mortgages available and these are usually granted based on the rental valuation of the property at the point of purchase. Your tenant’s rent will likely cover the rent for the duration of the mortgage term and you have a win/win situation - an investment that pays for itself.

Of course, there are some ‘ifs’ along the way. What if the property becomes a black hole of maintenance? What if I get a tenant who won’t pay his rent or won’t move out? These fears can be a greater deterrent to a would-be investor than a poor fiscal return. Being a Landlord isn’t for everyone but with careful consideration, it is a proven path to increased income and wealth.

What type of property to buy?

There is no right answer, it’s what works for the individual. I always recommend to my clients that they should buy a property they could live in. Not because that’s necessarily the plan but it’s an indication that it’s going to be desirable to a potential tenant and also one never knows what the future holds, it’s better to have options.

When you make a decision to become a landlord there are different types of property to consider:

  1. A room or flat within your existing home.

  2. A property which might become your retirement home.

  3. A property where your children are attending school or university as an alternative to renting.

  4. A holiday home for yourselves which can be let on a long term basis through the winter.

  5. A property which requires renovating where you can add capital value in the short term and uplift the rental from the initial valuation

Each of these options has advantages but it is important to keep in mind that it will require a certain amount of energy and time to be a landlord as well as some investment to maintain the property in a good condition to attract a good quality tenant.

Do your research, look at the demand for rental property in the area you’re considering and the type of tenant you might attract. Look at the industry, schools, colleges which might attract a high quality transient resident who will prefer to rent than buy. Speak to local agents and ask what type of property they could let everyday and do your sums. It can be an exciting and satisfying exercise which with proper planning and good advice will reap the rewards.

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