Buy to Let
For property investors the traditional route into UK residential property is through Buy to Let however, it has suffered sustained attacks by successive UK Governments and increasing European regulation.
These include:-
- Increased punitive stamp duty for additional properties above your own home.
- Tax relief on costs restricted to basic rate 20%
- Restriction of Buy to Let mortgages by applying new affordability rules for the landlord including your own home mortgage and your spending
- Raising the rental cover required for a mortgage from 125% to 145%
- Higher agent’s costs
- Landlord obligations to ensure tenants have the right to reside in the UK – with possible prison sentence if you get it wrong
- Higher Health and Safety requirements, more annual checks and associated costs – with potential manslaughter charges if you omit the checks
- Removal of the 10% furniture and fittings allowance
- And the killer blow that even though Capital Gains Tax will fall from 28% to 20% and the lower band from 18% to 10% BUT residential property is exclude from these reductions as Mr Osbourne said in the new rules
“There will be an eight percentage point surcharge on residential property. This will ensure that CGT provides an incentive to invest in companies over property.”
Which demonstrates the war on Buy to Let landlords – but how can investors invest in UK property, help buyers and avoid all these problems the answer is Joint Equity Bonds
Buying a property is only the first step. Will you rent it out yourself or will you use an agent?
- Agents will charge you a management fee, but will deal with any problems and have a good network of plumbers, electricians and other workers if things go wrong.
- You can make more money by renting the property out yourself but be prepared to give up weekends and evenings on viewings, advertising and repairs.
- If you choose an agent you do not have to go for a High Street presence, many independent agents offer an excellent and personal service.
- Select a shortlist of agents big and small and ask them what they can offer you.
- If you are considering going it alone look at where you will advertise your property and where you will get documents, such as tenancy agreements from.
- It really pays to look after your tenants. Do this and they will look after you. However be prepared for damage and redecoration costs however, good they are.
- The biggest drag on many buy-to-let landlord’s investment returns is the void period. A time when you don’t have anyone in the property. Good tenants who want to stay help avoid this – and if they move on they may even recommend your property to someone they know, but how do you find the best tenants?
- Keep up with maintenance, make sure your property is a nice place to live and try and build a good personal relationship with your tenants.