Buy-to-let is a hot topic at the moment. According to the Council of Mortgage Lenders, buy-to- let lending rose by 5% in the second quarter and in August alone mortgage lenders saw a 15% increase in deals with landlords.
After all, it’s an attractive proposition. While the house sales market is flat, the rental sector has grown strongly over the past decade. Buy-to-let continues to fill the gap and if the right approach is taken it can be a secure investment with an average gross rental yield of 6.2%. Try finding that return from a savings account!
In light of the buy-to-let boom, Northwood has launched its own buy-to-let mortgage service: an on-line tool that enables landlords to research and compare a comprehensive range of products and quotes from across the mortgage market and submit an application. It’s an independent service and (unlike many mortgage brokers) the service is completely free-of-charge and as Northwood is not tied to any one particular lender, landlords can be sure that they are accessing the best offers, based on their needs.
So, if you have decided that buy-to-let is for you: how can you maximise your buy-to-let potential?
Always research the market: Check local rental conditions and determine the types of renting in your area. Look for tell-tale signs that there’s a healthy rental market, like large company relocations, the opening of young/upmarket bars and shops. Don’t forget to consider the proximity of good schools and choose property with features that will appeal to the general market. Your local Northwood office should be able to help to identify the types of tenants that are looking for property in the area.
Look for bargains: You may be able to get a discount on a property if you can promise a quick sale or if you can pay in cash. Auctions can also be a prime place for property bargains too.
Ensure that the property is in sound condition: It seems obvious but it’s worth a reminder: Buyers should always visit all properties, pay for an independent survey and get a solicitor to check the paperwork.
Account for every penny: Before you buy, make sure that the sums add up and don’t forget any extra ‘hidden’ costs. As well as mortgage repayments, think about landlord insurance, gas safety certificates, maintenance fees etc. Look ahead too and don’t just look at the present and near future. Try to calculate projections for 5, 10, 20 years’ time. Find out your true rental income potential with the Northwood Rental Income Calculator: http://www.northwooduk.com/landlords/rental-income-calculator.html
Embrace the benefits of Guaranteed Rent: The most common day-to-day risk to the landlord is having a vacant property or a tenant who stops paying. The most recent statistics from the National Landlord Association revealed that 49% of landlords have experienced rental arrears in the last 12 months with the average void period lasting for 69 days – more than two months rent. It’s a minimum 12 month contract whereby Northwood effectively becomes the tenant: it guarantees fixed monthly payments to the landlord, regardless of whether the property is vacant or whether the tenant stops paying.
Take your time: Investing in several properties can spread risk, but invest in too many of the same type, in the same area and you may risk oversupplying the demand. If your first buy-to-let investment has gone well and you’ve caught the property bug, keep a level head about investing in more. Remember the points above, think carefully about your next investment and reap the rewards of buy-to-let investment.
For more information about Northwood’s Buy-to-Let Mortgage Service please visit http://www.northwooduk.com/mortgages or call 029 2069 5443.