What to think about with a buy to let purchase
You’ll need to know your numbers. Take some time to work out how much properties cost in the areas you’re considering and what you can realistically charge tenants. Asking for too much will likely result in prospective tenants being put off, while pricing too low will mean you lose out on potential income. You’ll also have to factor in Stamp Duty costs for buy to let homes, which are higher than the amount paid by owner-occupiers.
Know what the best areas for your potential tenants are. Think about regions with a lot of demand for housing, such as university towns. Look at areas with good transport links, schools and other features tenants look for.
- Choose the right buy to let solicitor
With so many rules to adhere to, knowing you have the most knowledgeable legal representation will be a weight off your mind. A specialist buy to let conveyancer will make sure your purchase is done properly and efficiently.
- Get the best mortgage deal
Shop around for the most attractive mortgage rate. If you’re paying less in mortgage repayments, you can keep your rent at competitive rates and see more profit. Don’t just go straight to your bank for a mortgage – survey the whole of the market. It can pay to work with a specialist buy to let mortgage broker to make sure you find the best deal.
Make sure you know what the possible risks are with buy to let. If house prices, and therefore rental prices, fall you could be left with a mortgage you’ll struggle to repay. In the worst case, this could then lead to repossession. You’ll also need to think about the property sitting empty between tenants or major repairs being needed – both of which will cost you money.
- Understand tenants’ rights
Your tenants will have rights and it’s up to you to understand what these are. For example, tenants have the right to challenge excessively high charges, to live in the property undisturbed and to be protected from unfair evictions and rent. When visiting the property, you also have to give your tenants at least 24 hours’ notice and it must be done at a reasonable time of day. But they also have certain responsibilities, so make sure you understand everyone’s position.
What should I do if I want to rent out my home?
If you already own a property and are thinking about letting it, you’ll need to consider several factors:
- If you have a leasehold property, you must make sure that your lease allows you to rent it out. If it doesn't, you may first have to obtain permission from the freeholder.
- Do you have an existing mortgage on the property? If so, you must seek the permission from your current mortgage provider to rent out your property – and receive this consent in writing before you let it.
- You’ll have to draw up a tenancy agreement in writing. Assured Shorthold Tenancies are the most common type, but your circumstances may require unusual clauses that you’ll need the help of a solicitor with in order to draw up.
- Be aware that you may have to pay income tax on rent and capital gains tax if and when you sell your property.
How can I get into the buy to let market?
After you’ve worked out your finances and made an offer on a property, you should instruct a conveyancing solicitor who understands the law around buy to let. They’ll be able to deal with and advise you on any of the required actions you’ll need to take.
You will also need legal assistance when drawing up tenancy agreements and, if relevant, obtaining permission from your mortgage lender or the freeholder to let the property.
First4Lawyers can put you in touch with specialist buy to let conveyancing solicitors, who will help manage the process.
Get in touch today or make an enquiry here and we’ll take it from there.