Buy to Let
Buy-to-let is becoming an increasingly popular proposition for investment.
We can act for property developers and investors – our team can help you with everything from initial property acquisition tenancy agreements and disputes to tax implications and refinancing your portfolio.
Successful buy-to-let relies on ensuring that your investment makes financial sense. Rather than buying a property that you personally would like to live in, you need to focus on the prospects for income and capital growth, and the costs that you will need to cover.
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- Buy-to-let mortgages are different from ordinary mortgages.
- There are three or four lenders who dominate the buy-to-let mortgage market.
- Yields have historically reduced over the last fifteen years.
- Think about buy-to-let elsewhere – especially areas where there is high demand for rented accommodation. University towns as well as all the big cities are the obvious places.
- Be wary about buying in a location you know very little.
- If you do buy elsewhere find a property manager that knows the area. He can advise you upon lettability and rental levels and capital growth.
- Self-management is not sensible unless you actually live very close to the property.
- Remember maintenance and repair costs when calculating yield. In particular don’t forget the landlord’s responsibility to annually maintain the gas installations.
- Take your time. Even if you are borrowing very little of the purchase price it is still a big investment and it could take time to unwind.
Tenancy deposit protection schemes
It is now compulsory for private landlords to lodge their tenant’s deposits with a tenancy deposit protection scheme. This applies to any assured shorthold tenancy agreements signed or renewed since 6th April 2007.
Failure to register deposits with one of the authorised schemes means that the tenant can apply for a court order requiring the deposit to be lodged with a scheme, or for the landlord to notify them which scheme has been used. The court also has the power to order the landlord to pay the tenant a fine of up to three times the amount of the deposit.
To date there are three schemes authorised by the Government:
- The only custodial deposit scheme, whereby the landlord pays the deposit into the scheme. This is run by Computershare Investor Services plc.
- There are two insurance based deposit schemes, whereby the landlord retains the deposit but pays an insurance premium to the scheme operators instead. These are the Dispute Service Limited, which is aimed primarily at letting agents and Tenancy Deposit Solutions Limited which is sponsored by the National Landlords Association and is aimed at Landlords.
It is compulsory for the landlord to notify the tenant within 14 days of the deposit being paid, which scheme the deposit has been lodged with.
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