ENTERING THE BUY TO LET MARKET

Patrick Ennis, John Simmons, Nigel Bull and Mark Gregory, financial advisers from Mortgage Advice Bureau (MAB) based at Besley Hill Estate Agents’ offices throughout Bristol and Gloucestershire, comment on entering the Buy to Let market
Buy to Let – should I or shouldn’t I? In the recent economic climate many potential investors question whether to enter the Buy to Let market.
When house prices first started to fall, many experts warned that Buy to Let investors might run scared, potentially prompting a house price crash. This didn’t happen – in fact, just a few months ago some reports suggested Buy to Let was booming, benefiting from larger numbers of people renting and cheaper property prices.
The National Landlords Association (NLA), the leading representative body for private-residential landlords across the UK, represents almost 20,000 individual landlords. According to Simon Gordon of the NLA, research shows that renting is no longer the ugly sister of the property market.
”Increasing numbers are attracted to renting, as a simpler, more flexible alternative to home ownership. Gone is the view that renting is the only option for those who can’t afford to get on the property ladder. Nowadays there are property savvy renters who prefer not having to worry about home repairs or concerns about making ends meet with potentially volatile interest rates,” he said.
Buy to Let loans are based on the property’s value and its rental potential and, although the market for Buy to Let Mortgages is not as good as it once was, there are still deals available.
Q. Is it the right time?
A. Despite uncertainties over the future of the Property Market in the UK, the Buy to Let sector is predicted to grow, a marked turnaround from early last year. The three key reasons for an increase are:
1. More opportunities for people seeking flexibility and mobility with rented properties
2. Younger generations finding it more socially acceptable to rent rather than buy
3. A rise in the traditional rental market
Q. What benefits are there to become a landlord?
A. Now may not be a good time to sell so why not turn it around and let your property out? There are a number of benefits. Here are some key ones:
1. Long term investment
2. A steady sum of income, depending on where your property is and rental charges
3. Considerable tax advantages (tax breaks offered to landlords who rent out their property)
Q. Should I self manage or get a letting agent to manage?
A. There are pros and cons of self managing. Self managing allows you to keep your variable costs down; if you find tenants and manage the property yourself you could save money. Bearing this in mind, you will need to find suitable tenants, draft up an appropriate tenancy agreement, ensure it’s signed properly, and check references. In addition to doing all this, you will need to be first in line for any maintenance problems.
However, if a letting agent managed your property it will save you all the hassle of running around, as the agency will do all the leg -work on your behalf.
Helpful Information
Landlord Association
Landlord Associations are a good place to start as the advice and information will be invaluable. Three of the more well-known Landlord Associations to join are:
• National Federation of Residential Landlords
• National Landlords Association
• Residential Landlords Association
Landlord and Buy- to- Let Show
The Landlord and Buy- to- Let Show is the largest and longest established private rented sector show with shows at London Olympia in March and September and also in mid November at Birmingham NEC. You can visit the following link to view more information http://www.landlordshow.com/home.asp
Buy to Let Mortgages
Buy to Let Mortgages are specifically designed for investors to borrow money to purchase property in the private rented sector in order to let it out to tenants.
Typically, the interest rates that are offered on Buy to Let mortgages are fairly close to residential mortgage rates but will on average be higher and you will typically be charged higher fees. This is due to the perception amongst banks and other lending institutions that Buy to Let mortgages represent a greater risk than residential owner-occupier mortgages. It is therefore essential that potential investors seek independent mortgage advice to ensure they secure the most suitable deal for their circumstances.
For further information on Buy to Let mortgages, contact Patrick Ennis (Fishponds, Downend, Easton and Kingswood), John Simmons (Bedminster, Bishopston, Bishopsworth and Whitchurch), Nigel Bull (Longwell Green, Chipping Sodbury and Knowle) and Mark Gregory (Dursley, Stroud, Thornbury and Wotton-Under-Edge) at your local Besley Hill Estate Agents office, www.besleyhill.co.uk
Note:
Your property may be repossessed if you do not keep up repayments on your mortgage.
There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.
A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances. A typical fee is £95.