Cash rich older buyers and savvy younger investors are pouring into the buy to let market, attracted by rising house prices and cheap mortgage deals. The area that we cover here at Sarah Kenny, has also attracted professional and both student tenants. We deal solely with the professional end of the market and in the central and northern areas of Bristol, with its close proximity to the city centre, beautiful architect and local amenities always ensure that these areas have a high level of demand.
Predictions for the housing market show that demand for rental accommodation will continue to rise, reaching 5.7million households in England by 2018. Meanwhile some have warned that demand for rental properties could be dampened by the Help to Buy mortgage guarantee initiative. However, with the average price for a one bedroom flat being in excess of £100,000 in Clifton, combined with the transient nature of young professionals, we feel that the demand for rental accommodation will continue to rise.
As attractive as buy to let is, there are several pointers which we have listed below, in order to help you in your search for finding the right one to buy.
Always look for properties close to amenities, restaurants and shops, as generally tenants want to live in convenient locations.
When considering yields, it is always good to consider not only the gross rental yield, but also the net rental yield. This would take into consideration costs such as the building service charge. This is something that the Landlord would be responsible for and can sometimes, in some of the newer developments, be quite high.
As a Landlord you must also consider the tax implications, both capital gains tax as well as your annual tax returns. You must be organised and keep records, invoices, receipts and statements for up to six years. The income you receive is potentially taxable up to 45%, but it is always best to speak to an accountant, as you can also allow for deductions, such as offsetting rental income against interest payments.
If you don’t mind fixing dripping taps or having tenants collecting spare keys from you on a Friday night, as they have locked themselves out of the flat, then its more than likely that you won’t wish to enlist the help of a Managing Agent. If this seems like more unwanted hassle to your already busy life, then enlisting the services of a Managing Agent is definitely the way forward for you. However, there is a monthly charge for an agent to manage the property for you and it means that they can arrange for any necessary works for you and keep an eye on rental payments being made, as well as routinely checking the property for you and reduced charges for works undertaken by contractors.
If you require any assistance in dipping your toes into the buy to let market, please do not hesitate to contact either Peter Allen or Jemma Corbett, we will be more than happy to hear from you.