The Ultimate Buy-To-Let Guide For Savvy Investors
The team at Sterling Woodrow believe that keeping our clients well-informed is the key to a profitable and successful investment. That is why, in our buy-to-let guide, we strongly recommend that clients should opt for a fully-managed property investment rather than becoming a traditional landlord.
Buy-To-Let has been a sure favourite for UK property investors for decades. Throughout the years there have been a lot of changes to government legislation that have made it more difficult for buy-to-let landlords to make a significant profit from a buy-to-let investment property.
Despite the significant changes to the buy-to-let sector, which includes higher Stamp Duty, the abolishment of tax relief, tighter mortgage lending criteria and the unpredictable residential market, buy-to-let remains a popular choice for UK and overseas investors. Ludlow Thompson, a London estate agency reported that there were a record-breaking 2.5 million buy-to-let investors in the latest tax year (2017-18), which is 5% more than the tax year before (2016-17). Data from the London Estate Agency also showed that each UK landlord owns an average of 1.8 buy-to-let properties, and this figure has continued to rise for five straight years.
What Is Buy To Let Investment? Can It Be Fully-Managed?
A fully-managed buy-to-let investment is the natural solution to all the headaches involved with traditional buy-to-let investing, where you have to become a landlord in order to get a rental income. Whilst there are many who enjoy taking up the role of a landlord, it takes a lot of commitment and responsibility. What was once a method for passive income has become a full-time job. This is all down to the new restrictions and laws that prevent landlords from earning the highest profit from their properties.
Fortunately, modern-day investors can avoid all the difficulty and skip straight to what matters the most – the passive rental income. Our fully-managed service allows our clients to focus on the profit they will get out of their investment rather than having to worry about losing out from all the extra expenses and maintenance. All the management involved with a buy-to-let property is done for the investor by a reputable management company, and the yields are contractually assured NET yields, with no deductions for void periods or management expenses! This allows new investors and clients with less time on their hands to be an investor and get their promised returns without dealing with any of the traditional landlord tasks.
Can Extra Buy To Let Costs Be Avoided?
Buy-to-let investments are eligible for mortgages and this allows you, the investor, to leverage your capital if you aren’t a cash-buyer. However, purchasing the property outright will be a better option as you won’t need to pay back any money, and the overall purchase process is easier. Lenders will have their own rates, so if you need a mortgage shop around before choosing a provider.
Traditional buy-to-let costs will require you to pay a management team (if you aren’t managing the property yourself), cover any repairs and maintenance costs, pay any renovation costs and generally be quite hands-on.
Another negative change that has impacted UK property investors is the elimination of tax relief on buy-to-lets. This means that buy-to-let landlords who used to be able to deduct business expenses before filing their tax return in order to claim the highest profit, now can’t. That change can easily force 20% tax-payers into the 40% bracket. Devoted property investor, Robert Hughes from Sussex told The Telegraph that the tax relief changes put in place from April 2018 may cost him up to £20,000 a year. Regardless of this, he is still determined to keep his large portfolio and shares how he plans to reduce some of his expenses.
Research by Platinum Property Partners has shown that UK landlords may be putting themselves at jeopardy by not taking into account the likely key running costs associated with owning a buy-to-let property. A large number of buy-to-let landlords may be overestimating their profits because of this, which could leave them out of pocket. Their report shows that the average buy-to-let costs each year are £8,359 and around 1 in 8 landlords do not take these costs into account. The main running costs of a buy-to-let property portfolio include letting agent, mortgage, marketing and maintenance fees.
Sterling Woodrow are experts in identifying the most lucrative buy-to-let opportunities, which is why our clients are able to get high returns. Choosing our fully-managed option will allow you to make a significant profit from your contractually assured NET yield. The beauty of a NET yield is that all costs are already considered and deducted, so you don’t have to worry about calculating the annual return of your buy-to-let investment. You can rest assured knowing that you will always get that NET yield each year.
Best Areas For Buy To Let
London is a popular choice among UK investors, as well as overseas. However, for individuals who don’t have the capital or experience to invest in an expensive London property, there are many options throughout the UK. Remember that a fully-managed investment doesn’t require any work from the investor, so you don’t need to invest in a property close to your residence. After all, why invest in a local property when you can get higher yields elsewhere?
The best areas for buy-to-let in the UK for high-yielding properties include Liverpool and Manchester. Over recent years, we have noticed a significant return from properties located in the North of England. The market in the North of England differs from the South, and yields can be as high as 10% compared to 3 – 4% in the South. That is why many investors are taking advantage of the higher yields in the North.
We have a variety of buy-to-let investments across the UK, that meets the needs of many investors. We can help you find the investment best suited to your goals.
Is Buy To Let A Good Idea When It Is Fully-Managed?
We believe it is! We get many people asking us, “is buy to let a good idea? And what are the risks?” Fully-Managed Buy-To-Let is the alternative for many first-time investors as well as busy investors with large portfolios. The fully-managed aspect allows you to invest in any location – all you need to focus on is the financials of the investment and select the investment that fits your budget and goals most closely. Feel free to browse our properties before giving us a call. We are happy to help investors of any calibre find an investment property for their needs. We do our own due diligence before putting a property investment on our website, so count on us and our property experts for peace of mind.
We also work with experienced investors to help them increase the value and profitability of their portfolios.
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