When it comes to financial investments there can be few as secure as property and with the market in turmoil in recent months, now could be the right time to invest before interest rates crash through the roof. In the UK, buy-to-let properties remain one of the most active and profitable and stable real estate ventures.
The size of the market is worth upwards of £8.5 billion, which equates to 42,980 homes purchased by landlords in the first quarter of 2022, according to Buyassociation. So, is it the right time to invest? And if so, how should you set about starting your buy-to-let empire?
Inflation and the rental market
Of course, if you’ve been keeping an eye on the news recently you’ll have noticed that inflation is on the rise and is forecast to peak at over 13% in the autumn. But what does this mean for prospective buy-to-let landlords? On one hand, it can have several benefits.
For example, high inflation means your properties will inherently rise in value, so they will be worth more if you eventually come to sell them. In times of high inflation, people will also generally hold off on buying homes which means there will be a higher demand for rental properties. These are all factors that can lead to increased yields for landlords.
On the other hand, inflation can also lead to higher costs for maintenance and could also adversely affect tenants, leaving them unable to pay their rent. These are the kind of issues that put immense pressure on landlords. In essence, however, we feel the positives and the negatives balance each other out to the extent that it shouldn’t make a considerable impact on your decision to invest if you see a property that interests you for a good price.
Starting a buy-to-let business
Before putting your name to the deeds, start by settling on an area that interests you. You’ll want to focus on a location that’s familiar to you and that you know on a more intimate level. Next, shop around for your ideal first property. It doesn’t need to be perfect if it’s within your budget.
Of course, you’re also going to require a decent amount of seed capital to start your new venture. A secured loan can be one of the best options for landlords wishing to start investing in buy-to-let businesses. They can be taken for up to 30 years and a loan can be secured for up to 85% loan to value.
If you don’t have enough or can’t generate enough to buy the house outright you might want to consider applying for a buy-to-let mortgage. Though note that to apply, your rental income will need to be at least 25% higher than your mortgage payment.
