If you have savings likely to cover the cost of the deposit and can fund the remainder of the purchase with a purpose-designed mortgage, a profitable investment might be found in buy to let property.
Just as the term suggests, “buy to let” is simply a way of describing the purchase of a property with the express intention of then letting it out to tenants. The property may be for residential or commercial use, of course, but either way any mortgage lender needs to know in advance that you are buying to let – different deals and rates of interest are likely to be offered for buy to let mortgages than those for owner-occupiers.
- So, what are some of the factors likely to make buying to let an attractive proposition?
- One of the few bright things to emerge from the recent slump in the housing market is that the prices of all properties – including buy to let – are currently relatively low;
- Yet with many potential purchasers unable to afford even these lower prices, and existing owners waiting for prices to pick up before attempting to sell, there is an especially buoyant rental market;
- In many locations, the fact that demand for rented accommodation continues to outstrip supply helps to keep rental values strong;
- As with practically any other investment, of course, buy to let can offer no guarantee of financial success – it can lead to your making money, but it can also lead to your losing it;
- There are a number of reasons why things might go wrong;
- Critical to the success of your investment, for example, is likely to be the location you have chosen – finding just the right area or neighbourhood can be critical to the business of buying to let;
- Making the figures stack up is likely to rely on your keeping the property tenanted – and not empty – throughout most of the year. Non rental-earning vacancies, for instance, are likely to make your mortgage repayments even more expensive;
The apparent security of investing in “bricks and mortar” and the historical trend for steadily rising property values may have been one of the principal attractions of a buy to let purchase. It is worth remembering – and being forewarned – however, that any future increase in the value of your buy to let property is by no means assured. Buy wisely!