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BUY TO LET INVESTMENT GUIDE
Red Apple has over ten years experience advising people on investment opportunities and has experienced the market in good times and bad. We have extensive local knowledge.

We can offer investment landlords the following crucial services:

• Buy to Let advice
• Property Valuation
• Full Buy to Let service
• Off Plan purchases

Could you become a property landlord?
Anyone who likes a game of Monopoly knows how rewarding it can be to invest in property. The joy of receiving rent when someone lands on your Mayfair hotel can give you a taste for life as a landlord.

Unfortunately, in real life it's rarely a simple matter of buying a house and watching the rent roll in. There are tenants to vet, a property to maintain and accounts to manage. And before you can pass Go, there's a property to finance.


First things first

Before you start looking at suitable properties, take the time to consider whether you're in the position to become a landlord.

Can you afford to tie up money in a property? If the worst comes to the worst, can you afford to lose that money?

This is a long-term investment and you need to take the same approach to ploughing money into a house or flat as you would to buying into the stock market.


Borrowing to invest

However, unlike other forms of investment, a lot of the money you put into a buy-to-let property is likely to be borrowed. In recent years, the market in buy-to-let mortgages has boomed, and borrowing money to invest in this way has become easier than ever.

A number of lenders are even prepared to offer buy-to-let mortgages to first-time buyers, although it usually makes sense to buy somewhere to live first.

The sale of any property other than your main residence attracts capital gains tax (CGT) so with a buy-to-let property some of your profit will go to the tax man. More on this later.


Deposits

How much?
Most lenders ask for a considerable deposit on buy-to-let mortgages. Almost all cap their lending somewhere between 75 and 85% loan-to-value (LTV) and the widest choice of deals is available to borrowers with at least 25% to put down.

In most areas around the UK, you'll need several thousands of pounds before you can apply for a buy-to-let mortgage - and that's before the other costs associated with buying are taken into account.

Additional costs
As well as having cash to cover the upfront costs of a buy-to-let property, you'll need a fund to cover any void tenancy periods later on.

Even the most successful landlords experience periods where they have no tenants, and with no rent coming in you'll need to find funds to cover the mortgage payments.

You may also need cash for emergency maintenance on the property.

How much can you borrow?
How much you can borrow for the property will usually be worked out in a different way to how much you can borrow to buy your main home.

Lenders operate different policies: some base the amount they will lend you on how much you earn, others on the rental income you can expect on the property, others on a combination of the two.

If you have a relatively small mortgage you may be able to raise enough to buy a property using your salary. But if your mortgage represents a substantial commitment each month, you may need a deal where the rent will be taken into account.

Lenders who offer these deals generally ask that the rental income each month represents at least 130% of the monthly mortgage payment. This gives you a cushion to cover the letting agent's fees and any other associated costs - and, hopefully, your profit.


How much rent will you make?

The lender will usually ask the surveyor who visits the property to give an assessment of the expected rent alongside the value if the property. Before you get this far, though, you need an idea how much rent you can expect to achieve.

A Red Apple Letting Agent is the best person to approach for this information, and we would be happy to market your property to let when you buy.

Using a letting agent
A local letting agent should be able to tell you what kind of rents are being paid on different types of properties in the area and what kinds of homes are in demand. If you want to make sure your property is never short of prospective tenants, it's worth listening to what they have to say.

Most lenders won't insist on you using an agent to manage the property, but some do and there are advantages to putting someone else in charge of the day-to-day running. For example, you won't be hassled by questions from tenants or have to chase up overdue rent.


Choosing the right mortgage
To ensure your mortgage repayments don't begin to eat into your profits, you could consider a fixed-rate deal on the mortgage. This type of mortgage allows you to plan ahead because you can be sure how much your outgoings will be each month.

However, if you think rates are unlikely to rise - and you won't be too financially distressed if they do - you may prefer a discount mortgage. These generally offer lower rates than fixed-rate deals. As with a normal mortgage, when your special-offer rate comes to an end you can remortgage to a new deal.

Flexible mortgages are a popular choice with landlords. You can overpay when the property is let and underpay during voids or when work is needed on the property.

With flexible buy-to-let loans, as with flexible residential deals, you need to read the small print about restrictions on overpayments and underpayments.

Tax on rental income
And financial matters don't stop once you've arranged the money to buy the property either. The taxman is also likely to be very interested in your purchase. If you let the property, any rental income will be added to your annual income and taxed accordingly. You can, however, offset this income against expenses, including the mortgage interest, to reduce the bill. Even if you remortgage to raise the capital, it's possible to show an element of your mortgage is for the purpose of a buy-to-let arrangement. An accountant would be able to ensure this is valid.


Capital gains tax

Capital gains tax (CGT) is another consideration. When you sell a property that's not your main residence, the taxman will want his slice of any growth - at the profit-diminishing rate of 40%.


Specialist insurance advice

As well as thinking about mortgages, rents and tax, you may also need to take specialist advice on insurance.

Standard household insurance only allows a property to be empty for a maximum of 30 days at a time, although with a holiday home the property may be empty for longer.

Speack to us at Red Apple and we got it covered.


Removals Once a date has been set for you to move into your new home you need to start planning your move.

It is usually best to leave all the packing to the removal company. (Anything you pack yourself will not be covered by insurance, but your removal company can offer insurance cover.) Most companies supply free packing cases and wardrobes.

The removal company will advise how best to deal with fine art, antiques and pianos; in fact, some companies specialise in their removal.


Why choose us?
Choosing Red Apple means excellent customer service with knowledgable and well trained staff who are driven to provide a superior level of service at all times.



Your property needs to be seen to be sold - so with an High Street office, means that your property has a 100% success rate of being seen.

Free sales marketing advice. Sound professional advice is essential - members of the NAEA .

The fee is inclusive of extensive advertising, advertising in the local paper ensuring that your property is reaching the correct target market and maximum exposure on leading Uk property websites.
Accompanied Viewings - Red Apple happily conduct accompanied viewings on properties either empty or occupied.