The benefits of buy to let
PUBLISHED: 09:51 03 May 2016 | UPDATED: 09:51 03 May 2016
Steven Bond from Beresfords’ residential lettings division looks at the benefits of buying to let
Steven Bond is the managing director of Beresfords’ residential lettings division and has more than 30 years of experience in residential sales, lettings and property investment. Steven also oversees Beresfords’ specialist buy to let department, which helps hundreds of potential investors every year source suitable property to purchase with the intention of renting them out.
A better way to buy to let
Despite recent increases in Stamp Duty for buy to let purchases and changes to how a landlord can claim interest relief on their mortgage, there is still a high demand from investors for properties which they can buy and then rent out. For many, it is not just about the annual yield an investment property can produce, but also the additional returns that can be achieved from capital growth as prices rise the longer a property is retained.
You only have to look at the latest statistics to see how property prices have increased across Essex over the last 20 years. Had you purchased something in Essex during 1995, the average price you would have paid would have been £66,496. Had you retained it for 20 years, the average price of all properties sold in 2015 was £231,823 – an increase of 248%!
Although none of us have a crystal ball to predict the future, it is realistic to assume that average property prices will continue to rise and, as time moves on, it’s just a question of by how much.
The UK is an island with a limited supply of housing, yet is one of the most popular places to live in the world. So with demand outweighing supply, it’s no surprise that many investors believe that buying a property as an investment is still a better option than the potential returns offered by other asset classes.
High Street, Brentwood
This one, double-bedroom apartment located in the heart of Brentwood town centre is within easy reach of Brentwood Railway Station offering excellent rail links into London, and with Crossrail due to arrive in Brentwood during 2017, there is strong potential for capital growth!
Guide price is £230,000 with a projected rent of £14,400 p/a (£1,200pcm) and an anticipated gross yield of 6.23%. Call Beresfords in Brentwood on 01277 218151 for details
• Do your research. Speak to an agent who has a specific department that specialises in buy to let. They should be able to offer advice on how to get started, what to buy and where.
• Location, location, location. It is absolutely essential that you source a property in the right place, which will always be popular with prospective tenants.
• Consider how hands on you want to be. Do you wish to deal with tenants directly and manage the property yourself? Instead you could use a reputable letting agent who can deal with almost everything on your behalf.
• If dealing with an agent, pick one who is regulated and a member of the Association of Residential Lettings Agents (ARLA). Such agents have to adhere to a strict code of professional conduct. Furthermore any rent or deposits paid to them by tenants are automatically protected. Unregulated agents will offer no such guarantees.
• It’s a big investment decision so don’t dive in. Seek appropriate advice from the experts at the outset and make sure the concept works for you.
• Don’t let your heart rule your head. Buy a property that will always be popular with tenants and not because it is the sort of property you would like to live yourself.
• Go over budget. Stick to the plan and try to focus on a particular area, otherwise you could just be going around in circles and get know where.
• Underestimate a landlord’s involvement. Letting and then managing a tenancy can be very time consuming. For those leading busy lives and careers its worth involving a good letting agent who can deal with everything on your behalf.