UK Top Tips for Buy to Let Beginners
We know that property investment can feel daunting, especially if it’s your first time. However, knowledge is power, so we’ve put together our top tips to help you choose a UK buy to let property.
At Lujo Investments, we aim to make property investors’ lives as stress-free as possible, with hands-free property investment.
First things first, what’s your budget?
Unless you can make a cash purchase, you’ll have to put down a substantial deposit when getting a mortgage for a buy to let property in the UK. Make sure you do your sums properly to work out how much you can afford.
It’s important to factor in a few things here:
- Buy to let mortgages have higher interest rates than standard mortgages, and usually require a deposit of at least 30% of the property’s value.
- How much rent you’re likely to get? It should typically cover between 125% and 145% of your mortgage payments. For example, if your monthly mortgage payment is £500, you should ideally receive rent of between £625 and £725 per month.
- Make sure you also set aside money for maintenance, or times when the property might be empty. Obviously, this won’t be necessary if you take advantage of the developer’s property management service (see point 3).
- No mortgages are available if investing in student accommodation and hotel investments. If you’re planning to invest in these, you’ll have to buy outright.
- If you plan to take out a mortgage on the property, bear in mind that the valuation will depend on when the purchase is made and when the property is completed. For example, a completed development will have a different mortgage valuation from an off-plan project, which may not be due for completion for twelve months or so. Speaking of which…Off-Plan or Completed?
Off Plan Vs Completed Property Investment
There are two choices in property investment; these are off-plan and completed.
Off-plan means that the property is being sold on the market before it has been completed. Sometimes it can be sold before work is even underway! It might be a new build, still a few months off completion. Alternatively, it might be an apartment that has been completed but located in a building that isn’t yet ready for tenants to move in.
Off-plan properties can be great investments as the price tends to increase substantially once the development is completed.
Investors can, therefore, expect a good level of capital growth from such investments.
The advantage of buying a completed property is that you get to see it in its finished state. However, the cost is likely to be much more.
Use the Developer’s Hands-Free Property Investment Management Service
Want to make the leap to being a landlord but worried that you don’t have the time? A hands-free property investment means that your investment will have a guaranteed rental return for a set period. This period will be different for each development. Your property will be fully managed, so you’ll have no concerns regarding occupancy or dealing with tenants or property maintenance.
It’s definitely something we recommend, but if you don’t want to take advantage of the property investment management service for any reason, that’s absolutely fine. Obviously, without it, we cannot guarantee the rate of return, but you’re under no obligation to use it.
Take a look at some of our buy to let properties in the UK.
This property, located at the gateway of Salford Quays and Media City has only recently been completed. It comprises 30 boutique studio and one-bedroom apartments and is perfect for young professionals.
The Silk Works is, as you might guess, a former historic textiles factory, which has been transformed into 58 stylish one- and two-bedroom apartments. Only a short distance from Coventry city centre, this property is ideally suited for those looking for luxury and comfort in a city of innovation.
This iconic Grade II listed building is within walking distance of Lime Street Station, as well as business and retail districts. It comprises a mix of stunning studio, one-, two- and three-bedroom apartments and duplexes. This makes it perfect for professional couples and families alike.
To speak to us about any of our investment properties, call us on 0333 3034 767 or send us a message today.
