Thinking about investing in Buy to Let in the UK? Read this…

Buy to let is an investment strategy where you purchase a property to rent it out for passive income and its potential for capital appreciation over time. Of course, there are other investments such as stocks and shares that you could also consider, and probably already have in your portfolio, but the availability of mortgage finance, the security of asset as collateral, and its returns make property a popular choice. Indeed, the UK property market is renowned for its stability so you should see a steady income, with average yields around 5.6% in 2024. Meanwhile, capital appreciation over the past decade has averaged at 73% and, in some areas, even doubling.

So, here are some pointers to consider before taking the step towards becoming a landlord.

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Choosing your property and location

Check the ROI (Return on Investment). There is a lot more than the purchase price and expected rent to consider when determining the ROI. These include legal fees, stamp duty land tax, ground rent, maintenance fees, income tax, mortgage payments and letting agent fees to name a few. Comparing the ROI will help you to decide between properties.

Some investors make the mistake of thinking they won’t buy in area’s they wouldn’t personally want to live in, however, to get the maximum ROI, you should look for areas with the greatest yields, regardless of whether you would personally live there. Where to invest can also vary depending on the type of property you want, whether you have long-term or short-term goals, or if you’re choosing long-term tenancies over holiday lets. Take a look at our locations page to find out more about the different areas we operate in.

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Landlord regulations

Local authority licencing rules may differ from one authority to another, so make sure you investigate this. If you have three or four occupants where one (or more) is not related, then your property is legally an HMO (House in Multiple Occupation) and may require an HMO Licence. If you have an HMO, you are required under the Housing Act 2004 to comply fully with the Management of Houses in Multiple Occupation Regulations (2006).

From 2025, all rental properties will need to have an EPC rating of C or above. New build properties already tend to have good high EPC ratings due to everything being new and it being up to current regulations, however pre-existing builds may require improvement works to bring it up to standard.

As a landlord, you are responsible for keeping your rented properties safe and free from health hazards. This includes making sure all gas equipment and electrical equipment is safely installed and maintained, fitting and testing smoke and carbon monoxide alarms, and following fire safety regulations for property in a purpose-built block of flats.

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Financing your investment

There are various methods of financing: a Buy To Let mortgage; cash; or a Bridge to let Loan, which is a short-term loan used to secure a property before refinancing on a longer term mortgage. You can also invest through a Joint Venture (JV) where two or more parties put their resources together to purchase a property investment. It may sound complicated, but JVs can be accessed relatively easily via specialist investment partners and online investment platforms. Reach out to us if you would like to speak to our mortgage brokers.

Important to note, changes brought in by the government mean you can no longer write off your mortgage interest payments as expenditures unless you purchase the property through a limited company. Contact us for information on how to set a limited company up.

Of course, there is lots more to consider but we hope this blog helps to get you started. If you’re interested in investing in a Buy To Let property, contact us today to speak to one of our investment consultants.