Before making an investment, it’s important to decide on your strategy. For example, deciding your target rental market, as this will determine the nature of your investment.
2020 has continued to be a good year for UK property investors with demand for UK property up 34% compared to the same point last year.
In Part 2 of Liquid Expat Mortgages’ buy-to-let guide, Stuart Marshall discusses how to decide on an investment strategy and what costs to be aware of.
“Despite many fears, 2020 has continued to be a very good year for buy-to-let investors in the UK property market. Whilst demand has eased slightly in recent months, it remains 34% higher than last year, whilst a recent Nationwide Building Society report stated that house prices were 0.9% higher in November than in October, with the average property valued at £229,721.” It is no surprise that, with such consistent good news, UK property is highly sought after. However, one of the key areas many people ignore is how potential investors approach building their buy-to-let investments, whether it’s one property or a portfolio of units.
Decide on Your Strategy.
“Thinking about your strategy before buying your investment property is vital,” advises Stuart Marshall. “This will wildly affect both where you buy and what type of property you buy. A lot of investors look toward student properties when investing in the UK. There is a readymade market of 2.3 million students for this type of property but choosing the right property will be important – many students are now favouring luxury accommodation while studying so make sure your investment matches the needs of your target market.”
“Similarly, with residential investments, you need to make sure you’re matching the needs of your potential tenants. Imagine the type of tenant you will be looking to rent to and find the property that best fits this individual. For example, looking to rent to young professionals will necessitate a vibrant social scene around your investment as well as proximity to probable workplaces, good transport links and amenities.”
As well as deciding what type of tenant you want to rent to, you should also consider whether you want to manage the investment yourself or hire a property manager to do this for you. It’s important to be realistic when thinking about the constraints on your ability to manage the property yourself. For many UK expats and overseas investors, allocating the day-to-day management of the investment to a property management company is a necessary requirement as it removes the potential pressure of landlord duties such as finding tenants, dealing with queries and issues of your tenants, and repairing/maintaining the property.
“Over the years, many of our investors have been able to benefit from our advice. This ranges from advice on buy-to-let mortgage products, to insights into which investment strategies are best suited to their objectives.”
Before taking the plunge on a buy-to-let property, it’s important to be aware of all the associated costs to make sure you can comfortably afford your new investment venture. Talking to a mortgage broker will often highlight many of these associated purchase costs; a specialist mortgage broker can even find ways to mitigate some of them. Here are a few of the main associated costs of buying an investment property:
– Survey fees: when buying a property, you may choose to have the property surveyed to make sure you are buying a property that is in good condition. These surveys can range anywhere between £300 and £600.
– Solicitor fees: solicitors are used to negotiate the legal conveyancing process as well as helping investors with other documents such as contracts. These fees can vary massively but generally conveyancing fees are between £850-£1500. Some mortgage products offer free legal and free surveys. Again, these are things which a specialist expat broker can always guide you and advise you on.
– Management costs: using a management company can add an extra cost for investors. These are typically 10%-15% of the rental income.
– Maintenance: Maintenance costs come with any property. But, if something goes wrong with an appliance or with the property itself, it will be your obligation – and cost – to fix it.
– Leasehold costs: Many investments are leasehold ownership. What this means is that the investor doesn’t own the building itself or the land the property is built on. This is true of many apartments and this type of property adds other costs. These are usually service charges on the property which collects costs like ground rent or bills for communal areas.
Despite there being a good number of factors to consider, buy-to-let investment in UK property seems to remain popular and offers many investors an alternative long-term investment strategy. Whether you’re taking your first steps onto the investment ladder or are an experienced investor, where you invest can be critical. Start Marshall adds that, “The UK housing market is diverse and buy-to-let hot spots vary across the country. By speaking with a specialist expat buy-to-let broker like Liquid, we can help you stay one step ahead of the market and get a solid start on your buy-to-let property. And, if you’re an experienced landlord, we can help you to maximise your investments.”
Disclaimer: Please note that Liquid Expat Mortgages has no direct control over the timescales relating to either the processing of mortgage applications or mortgage offers being issued by lenders. Liquid Expat Mortgages has no control of the legal process and CANNOT accept any responsibility nor liability should your application not be processed prior to current Stamp Duty Land Tax rules expiring on 31st March 2021 or any extension of that date.
Liquid Expat Mortgages
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Bury BL9 7BR
Phone: 0161 871 1216
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