The recent tax crackdown on buy-to-let has meant that it isn't as attractive as it once was, however many still see it as being a good investment, especially in a time of volatile stock markets and low interest rates.
For those who have enough money for a decent deposit, property is a good way to gain an extra stream of income, and at times of property prices rising, it can be sold for a profit. The changes that are going to hit those who have or wish to purchase buy-to-let properties mean extra stamp duties (on buy-to-let) and the end of the ability to offset mortgage interest against income tax.
With interest rates uncertain going forward (although likely to rise in time) it is worth really knowing the housing market and getting an idea of the best practices when buying to let. Just like with any business venture, know the risks and benefits. We’ve put together some top buy to let tips that should help you.
Choose a promising area
Think about how certain parts of the country or your city in particular are likely to change in the coming years. Are new transport links popping up? What is employment likely to be like going forward? Are there new, good school appearing in the area?
When looking at the benefits of a certain area, look at the types of properties on offer. If the one benefit of an area is that there are great schools, then it would be more beneficial to purchase a family home to rent out, rather than a 1 bedroom flat.
Do the maths
Before looking around, sit down and work out the type of property you can afford and research into the average rent in the area for that sort of house or flat. Then take into account whether you’ll need to do repairs and what sort of income you’ll have after tax. It’s worth also doing this when thinking about the future tax changes too.
Look into the best buy-to-let mortgage for you
Rather than just going to the first bank you see, look at the options for your mortgage. Speak to a mortgage adviser and see what they can offer you.
Look further afield
You may not find something suitable in your local area. In which case, have a look at properties further afield in suitable locations. If you stay on the forefront of property news as well as the local area news for other cities, you will be able to get an idea of whether that city is a good place for investment.
Consider fixing up a property
If you are willing to put in the time and money to fix up a property, then you may be able to get a better deal in terms of mortgage payments. Fixing up a house can be a great way to make a profit in general, so you can rent it out and if you decide you no longer wish to be a landlord, you may (depending on the market) be able to make a profit on the sale.