Why Buy-to-let

Residential | 23/10/19  

A Buy-to-let investment involves an investor buying a property to let out to tenants in order to create an income stream, property presents a unique opportunity to generate two sources of profit one from rental returns and the second from possible capital growth.

The current Buy-To-let market is powered by high tenant demand and low levels of supply. The demand for quality long-term rental properties in good locations, in accessible areas for local amenities, schools and good transport links within the private rented sector is still growing at an extraordinary rate. As a regular income, property investment remains an attractive option and can be a good opportunity to grow your income ready for retirement, even after retirement it can assure a monthly income from rental or a lump sum from sales. It was stated in 2017 by Andrew Bailey, the boss of the Financial Conduct Authority  “Fifteen million people aren't saving for retirement and state pensions are not enough. While the state pension is a hugely important part of retirement provision in this country, for many people it is not enough to maintain living standards,” does this mean investing in property would make a better option as a nest egg for retirement plans? Andy Halsane, chief economist and Executive Director of Monetary Analysis and Statistics at the Bank of England has suggested it could be, in 2016 he raised eyebrows when he suggested pensions are too complicated and property is a better way to save for retirement. Whilst all investments incur a level of risk, the rental market has remained fairly resilient. Whilst rental yields increase and equity is built it would seem bricks and mortar still provides investors with a relatively good investment and as an asset class property can enhance a pension or retirement savings! Steeping into the buy-to-let market is an exciting prospect and can be a very rewarding investment compared with other options, however it’s vital to carry out in-depth research into the subject as there are a number of new rules which have come into effect, Such as Stamp duty on second property ownerships affecting the overall purchase price of the property, 3% is chargeable on the first £125,000, 5% on £125,001 up to £250,000 and 8% on the amount above £250,001. Dependent on other income investors may have, profits made on renting out property will be taxed at the appropriate rate and if the property is sold, the profit could be subject to capital gains tax.

For further information on Buy-to-Let Mortgages contact our independent mortgage advisor Caroline Fox on 07730 115 759 email