Investing in Buy to Let for the First Time?

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  • Investing in Buy to Let for the First Time?

Buy to let often gives an alternative route to getting onto the property ladder. It is important though, to understand what you are entering into if you are looking for a healthy return.

In some areas of the UK, such as London and the south east, aspiring first time buyers are unable to step on to the property ladder. If this is you then you might be casting your gaze elsewhere in the country. You could consider buying a property to let as that may be a better route to get on the property ladder. On paper it isn’t a bad idea. You will be investing in an asset that could serve you well financially for a long run, or even act as a home for retirement. It is important though, before deciding to proceed, that you are 100% aware of your responsibilities as a landlord. You need to understand what your landlord responsibilities are. It is not like putting money into a savings account. Property investments have a tangible effect on other people such as the tenants living in the property.

You should think carefully about whether you are ready to sign up for the commitments of being a landlord. It is important that your tenants are safe and all regulations have been adhered to.

Mortgage Interest Tax Relief

Landlords will not have any mortgage tax relief. This will continue to be phased out until April 2020. It is important that you understand that any income you get will be taxable and speak to an accountant in this regard.

HMO Licencing

There are regulations for all HMO (Houses in Multiple Occupation) properties. Every HMO landlord will need a license and the property will have to meet certain standards. The Deregulation Act in October made dramatic changes to HMOs. Please read our article in this regard.

Is there a Local Licensing Scheme?

There is a mandatory HMO licensing scheme throughout the country. There are also more than 60 Councils in England that operate additional or selective licensing schemes that are changing all the time.

It is very important that you are aware of what your responsibilities are.

Minimum Space Requirements

The regulations governing a minimum size of bedroom came into force in October 2018. This is so important. If you are thinking of purchasing a property you need to make sure that the room sizes are big enough. You may not be able to get a licence if the room is not big enough or may have to exclude one of the rooms as a bedroom.  If for instance you are purchasing a three-bedroom house and could only rent out two of the rooms it would reduce your income dramatically.

Buy to Let Mortgage Trends

Landlords will usually need to prove to their lenders that the rental income will cover the mortgage. The lender will look for a percentage between 140 to 145% of their mortgage payments (known as the interest cover ratio). Some lenders will go as low as 125-130% though. Please see our previous article on Top tips for buy to let landlords – https://harringtonslettings.co.uk/top-tips-for-buy-to-let-landlords/

It is important to remember that the payments of a variable mortgage can go up and down every year. A fixed mortgage will ensure that the payments stay the same for the fixed term.

Energy Performance Certificate

See our recent article on Energy Performance Certificates. There are minimum energy efficiency standards that launched in April 2018. It is important that you are aware of what your responsibilities are.

Right to Rent

The High Court has recently ruled that these are discriminatory to tenants. The Government has not yet decided on how they are going to change the rules or if they will at all. We are all waiting to see exactly what the Government will do. If you are unsure what you can and cannot accept as sufficient right to rent documents please refer to the governments website – https://www.gov.uk/government/publications/right-to-rent-document-checks-a-user-guide

The dreaded word: Brexit

We would love to tell you that the uncertainty around the UKs withdrawal from the European Union won’t affect you but in truth nobody knows for sure what will happen with the property market.

It is so important that you are aware that property is not necessarily a short-term fix. It is a long-term investment like a pension fund.

What is a void period?

This is when your property is empty. The tenants might have left the property to go elsewhere and it has not yet been let. You need to ensure that you have enough income to cover the rent in the interim.

It is so important that you are aware and able to cover your liabilities in the event that the property is empty.

Is it a get rich quick scheme?

No one knows when it comes to property. The trends over the years show that property has anywhere between a four to eight-year cycle. Prices can go up as well as down. It is more like a pension fund in that you must determine when it is best to either sell the property or keep the income as the property price can dip.

If you require insurance in relation to your property, then don’t hesitate to contact us to ensure that your investment is covered properly.

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google-review Review
Tegan
Tegan
17:30 22 Feb 24
Have been very accommodating and helpful when calling agents. They have been very helpful in being able to secure a house for students.
TheFlyingCrocodile
TheFlyingCrocodile
16:42 21 Feb 24
Went above and beyond to get things sorted for me
Brittany Stace
Brittany Stace
11:18 24 Jan 24
Harringtons have been incredibly helpful and supportive of us as new renters and they have been super efficient in getting all of the documents sent through and signed in such a short period of time. Thank you!
Georgie Prebble
Georgie Prebble
20:36 05 Jan 24
Jade Innes
Jade Innes
10:24 04 Jan 24
So far the service has been good. The staff are very friendly and quick to respond to any questions and requests.
Polly Smith
Polly Smith
11:17 28 Dec 23
we chose this letting agents as they chose a good bills company that is much cheaper than other agents. When viewing houses the staff were very friendly and have been very helpful in answering our questions and making the process as easy as possible.
Emma Howe
Emma Howe
16:06 14 Nov 23
I would rate Harringtons Lettings a 5/5. Very lovely on the phone and very quick and easy to communicate with via email. Any problems have been resolved in no time at all. So far so good!I found Harringtons via Rightmove.
Akwisitions Feedback
Akwisitions Feedback
16:25 30 Oct 23
Very responsive and super helpful throughout the process. Highly recommended!
Chloe Ballard
Chloe Ballard
17:28 02 Oct 23
Although I have only been renting with Harringtons for a short period of time, I have had nothing but a positive experience. From viewing to admin updates. The admin team especially are very polite and quick to respond and I have no doubt that the rest of my tenancy will run smoothly. I would recommend to anyone considering renting in brighton.
Matthew Ball
Matthew Ball
11:46 19 Sep 23
Professional communication with tenant although entirely impersonal. There was a bigger disconnect in their communication with the landlord in most cases, which seemed to be either slow or non-existent (discovered after contacting the landlord directly).Property was full of spider webs on day 1 despite apparently being professionally cleaned. Took a day off of work to clean it on move out day, leaving it cleaner than when it received but still had to pay part of the deposit for professional cleaning.It has been a while since I have rented, but I'll avoid letting agencies completely now if this is anything close to the average renting experience.
Ronan SK
Ronan SK
12:38 12 Sep 23
Great professionalism/communciation from the start up until the end of my tenancy. Definitely set the standards for what agencies should be like. Highly recommend to those within Brighton.
Daniel Sutton
Daniel Sutton
10:29 24 Aug 23
I have rented with Harringtons Lettings before and have always found the agents to be quick, efficient, friendly and helpful. I loved their service so much I have chosen to rent with Harringtons again. Faultless 😊
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