Lovett & Co. Estate Agents

The Benefits of buying-to-let

Do you dream of becoming a property mogul? Do you watch shows like Property Ladder and Grand Designs and think, ‘I could do that’? If you’re considering taking the plunge into buy-to-let, here are some things you should consider. A buy-to-let mortgage is a business investment, so you must think like a business person. That means having a clear idea of your target market – who will you rent to? Families? Professionals? Students? Once you know who your tenants are likely to be, you can start thinking about what kind of property they will want to live in.

The advantages of buying-to-let

There are over five million private renting households in the UK. This creates a vast pool of potential tenants for your property. If the idea of becoming a landlord tempts you, here are some things to consider: Long-Term property investment is highly profitable: Despite occasional uncertainty in the housing market, property values have increased steadily over the long term, outperforming most other investments.

It can provide a regular income:

Once your buy-to-let mortgage is paid off, your tenants will be paying you rent money every month, giving you a stable income. With an investment of money and time up-front, you can earn a steady passive income for many years.

It's a relatively low-risk investment:

Unlike other assets such as shares, the value of a property is much less likely to go down sharply.

It can offer a retirement income:

With careful planning, your buy-to-let property could provide you with an income in retirement.

It's a tangible asset:

Unlike other assets such as shares, the value of a property is much less likely to go down sharply.

What to consider when buying a buy-to-let property

There are a few key things to think about before buying a buy-to-let property:

The mortgage: You’ll need a buy-to-let mortgage to finance your purchase. These are different from standard residential mortgages, so make sure you understand the difference.

  • The deposit: You’ll need a larger deposit than for a standard residential mortgage – typically 25% or more.
  • The rental income: You’ll need to charge enough rent to cover your mortgage payments and other costs such as insurance, repairs and maintenance.
  • The void period: This is the time when you don’t have any tenants within your property. Make sure you have enough money to cover your mortgage payments during this time.
  • The local market: It’s essential to research the local property market before you buy. This will help you understand the average rental prices in the area and the types of properties in demand.

What are the returns on a buy-to-let property?

Before committing to a buy-to-let, it’s important to do the maths. Will you earn enough rent to cover the mortgage and other costs? Will you make a profit? At its most basic, take the expected monthly income and subtract the monthly mortgage amount you’ll be paying. If you’re in profit, you’re good to go. A good rental yield can be as high as 12-15%, though 5-9% is more typical. In addition to the monthly income is the capital growth. This is the increase in the value of your property over time. This can be significant, especially in a rising market.

What are your responsibilities as a landlord of buy-to-let properties?

Landlords are responsible for the safety of their tenants and must comply with a range of legislation. This includes the provision of gas safety certificates, electrical safety checks and energy performance certificates. Carbon monoxide alarms must be fitted in properties with solid fuel appliances. You’ll also need to obtain an EPC certificate before marketing your property. Landlords must also protect their tenants’ deposits in a government-backed scheme and provide them with a copy of the tenancy agreement. In addition, landlords have a responsibility to their neighbours and the local community. This means keeping the property in good repair and not causing or allowing a nuisance with noise or anti-social behaviour. Landlords are also legally required to check the status of their potential tenants to ensure they have a right to live in the UK. Renting to illegal immigrants can result in a fine of up to £5,000 and up to five years imprisonment.

Why you should use Lovett&Co. Estate Agents for your buy-to-let properties

At Lovett & Co. Estate Agents, we have a dedicated team of experts who specialise in buy-to-let properties. We understand the market and can advise on everything from finding the right property to achieving the highest rental yield. We’ll also carry out all the necessary checks to ensure your tenants have a right to live in the UK. This gives you peace of mind and protects you from any potential fines. Whether you have just one property or a sizable portfolio, we’ll help you with invaluable local housing knowledge to ensure you can secure the highest possible yields for your properties. We’ll review your rental income to ensure your yield remains competitive as the market changes and reduce void periods between tenancies. We also monitor for new opportunities for our Buy-to-let landlords, directing them to new properties that might be suitable to add to their portfolio. Lovett&Co is a UK-based firm with offices in Lichfield, Burntwood, Cannock, Rugeley, and Walsall. We have the expertise you need to help you in your local buy-to-let market and the private rental market. This invaluable knowledge allows us to partner with landlords like yourself to maximise your investment. We know that being a landlord of buy-to-let properties can be time-consuming due to constantly changing rules and regulations. That is why we offer a range of landlord services to meet your needs.