Landlords in the UK are under pressure, thanks largely to a range of measures being imposed by the new Labour government. But, for all of the headlines that have been generated by the changes, are they enough to dissuade would-be investors from getting into the buy-to-let market?
Whether you’re thinking about renting out your first home or becoming a landlord, here are a few things you might consider.
Buy-to-let mortgages
Those looking to get into this market might consider a specialist buy-to-let mortgage. These were introduced in the late nineties and led to an expansion of the private rental market. Though these products are considered high-risk by lenders, rates for would-be buyers are favourable.
If you’re looking for the best possible rate, it’s often a good idea to visit a specialist buy-to-let mortgage broker. These professionals have a firm grasp of the property market and will help you to track down the best available deals.
Advantages of a buy-to-let
A buy-to-let might be an attractive source of income. It’s considered reliable since just about everyone wants a place to live. Rental prices are likely to continue to increase in years to come, and thus a buy-to-let can be a reliable source of income.
Demand for rental property is buoyant, which means that you’ll be able to fill an empty property reasonably quickly. There’s also the possibility that many landlords will be leaving the market in response to the latest changes. If you think that you are in a position to capitalise, you might be able to secure an asset that will provide substantial returns.
Potential drawbacks
With that said, there are a number of costs to consider. Landlords have to contend with a substantial amount of regulation. For example, rented properties need an EPC rating of C. Properties which fail to meet this standard might need to be upgraded at considerable cost. Moreover, there’s every chance that the bar will be raised in years to come.
The October budget also increased the stamp-duty surcharge on second homes from 3% to 5%. There have also been changes to capital gains tax. Then, there’s the pending Renter’s Rights Bill, which may make it more difficult to earn a predictable income through being a landlord.
How much profit?
Your earnings from your buy-to-let portfolio will depend on a number of factors. The location, type, and value of the property will all have a say. In the UK, the average rental yield is around 4.75%. However, since this figure varies from place to place, it’s worth establishing the average yield in the area where you’re investing. Do your research, and your investment could pay off!
