Buy-to-let Property Investments
Buy-to-let is a property you buy to in order to rent it out to tenants. Most people would consider this a medium to long-term investment.
Is buy-to-let property investment right for you?
If you prefer investments that feel more tangible than stocks and shares, and you are willing to tie up your money for a long period of time than it may be worth considering. You need to understand that property prices can go down as well as up and to understand and accept the additional risks that go along with borrowing money to buy a property. You will need to accept the costs and time involved in owning and running a property, and this could impact your potential return. There may also be periods when the property is unlet, so there will be no income for those periods, but there could still be outgoings, for example Council Tax.
You can potentially earn a profit in two ways from a buy-to-let property.
- Rental income – This is what your tenant(s) pay in rent, minus any maintenance and associated running costs, such as like repairs and agent fees.
- Capital growth – This is the profit you earn if you sell your property for more than you paid for it.
Think about Tax:
When you purchase a buy-to-let property there are Stamp Duty implications resulting in an increased Stamp Duty band, these are different from when you buy a residential property as your home. You will likely need to pay income tax on rental income as well, and capital gains tax maybe payable on any profit you make on the resale of the property. Make sure you fully understand the tax implications of buying an investment property, both the immediate stamp duty costs, and long term tax liabilities.
Differences between Investment and Residential:
Buy-to-let investment is very different from owning your own home. Commonly people buy investment properties with Houses in Multiple Occupancy, these are known as HMO’s. These HMO’s often offer higher gross rental income but the downside is, they can often suffer from more frequent tenant changes and usually incur higher fees. HMOs can sometimes require a specific type of licence, and those at higher occupancy levels (five or more tenants) will need to be registered.
Repairs at the property is your sole responsibility so anything that needs repairing, maintaining etc. will come down to you. You need to make sure you’re easily contactable via phone and email, and it’ll be your job to find the right people to fix the problem, whether that be a plumber, electrician etc. You will also have to maintain up to date and satisfactory gas and electric certificates.
Edwards Duthie Shamash Solicitors have an excellent Property Department that can help you:
When you become a landlord, this is very different to owning your home. We at Edwards Duthie Shamash understand your legal responsibilities, and are experts in the conveyancing process of buying buy-to-let properties,. We can help in all areas of property transactions as established local Solicitors we help many people with their buy-to-let properties, or with any other property matters. Contact us for more information and advice.