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Buying to Let

Last
week our article looked at the benefits of buying to let in principle. Here we
consider some practical elements:

Attitude: Buying to let is a long-term
investment, so don’t stretch yourself, because if you had to sell in the short
term you would almost certainly lose money.

Choose
well:
Follow your head not your heart. So take
advice as to which property would represent a sound letting proposition. Is
there a strong market in your area? And always buy within a few miles of your
home so you can keep an eye on the property.

The right
mortgage:
It can be
worth increasing the mortgage on your own property rather than taking out a
separate one on the rental property. Definitely worth speaking to a specialist
here.

Hidden costs:
Remember insurance,
rates, maintenance and long-term improvements. The biggest unforeseen
cost could be a period of vacancy. Nationally, the average vacancy period is
reported as 21 days a year*.

Management: You could manage the property yourself
or appoint a letting agent who will also find tenants, ensure the agreement is
watertight, and collect references and rent.

Insurance:You may require special insurance, and
as a landlord you also have certain responsibilities such as compliance with
fire regulations.

Tax: Rental income is taxable but mortgage
payments may be deductible. Any profit you make when you sell the property
might also be liable to Capital Gains Tax, so it may be worth putting the
property in joint names to take advantage of two personal allowances.

Please feel free
to call us for a chat if you would like to investigate buy-to-let opportunities
in this area.

·
Source: Association of Residential
Letting Agents (ARLA)

©
Copyright 2012 Richard Rawlings
except as excluded under licence.

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