In that case , the tenant will be responsible for paying repairs. As a landlord, you will want to maximise your rental income. With rent averages increasing month by month and UK rent already 6. First and foremost, rent increases are part of your tenancy agreement, which should include how and when you can review the rent. For those on a periodic tenancy one that rolls on a month-by-month or even a week-by-week basis , you can only increase rent once a year.
On the other hand, for a fixed-term tenancy one that runs for a given period , you can only increase rent upon agreement with your tenant. If there is no agreement, you can only increase the rent after the term ends. Generally, for any tenancy, you must get permission from your tenants to increase rent. So, how do you actually go about increasing rent? Conversely, if the tenant has a yearly tenancy, you need to give a minimum of six months notice. There are a few methods for a landlord to propose a rent increase.
Whether being a landlord is your primary job or a side option for extra money, missing out on rental income can be a headache. No landlord enjoys missing out on their income when their tenant is unable to pay, and you can evict your tenants if they fall behind on their rent. T he rules have slightly changed due to coronavirus, but a landlord can still evict.
For a full breakdown of the rules and advice from the government during the pandemic, be sure to read official publications.
The final thing to know if you want to be a good landlord is understanding the rights of tenants and their responsibilities to you and your property. According to the government, a tenants rights are:. But tenants also have responsibilities for their home. Not only do they need to allow you access to the property although you need to give 24 hours notice and visit at a reasonable time , they also have a host of responsibilities to your property.
With all these factors and laws in mind, you may not feel like being a landlord is for you. The reality is you do not need to become a landlord. Instead , you can use the services of a property management company. In actuality, not everyone investing in rental properties is a buy to let landlord. Many investors choose to make a hands-off investment rather than take on a more hands-on landlord role.
Property management companies, also known as rental management companies, manage everything from finding tenants for your property to chasing up rental payments or dealing with any issues your tenants may experience. For investors interested in buying an income propert y to make some extra money alongside their day-to-day career, using a property management company is a perfect solution.
This is vital if you have a full-time job or live away from your property. At RWinvest, we collaborate with several excellent property management companies who will be recommended to our investors, all of which have a n excellen t reputation and plenty of industry experience. As already established, the price of purchasing a property is just one small part of the entire investment process. One of the first things you should do before you buy a rental property is to do the maths for your real estate investment, working out all the costs involved while also thinking about the rental income you will receive.
The additional expenses you need to think about are buy to let mortgage repayments something we will discuss in greater detail later , taxes such as stamp duty tax , and property management fees if applicable. Stamp duty can be a demanding fee, and many first-time investors have never heard about it before. Stamp duty is a tax paid by those purchasing property in England. The tax rate depends on how expensive the property is and the type of purchase being made. Stamp duty has changed a lot in the past 12 months, with a holiday announced by the government in July to help promote ongoing market activity during the covid pandemic.
In this holiday, tax rates have drastically been reduced for those buying to live and those buying a second property for buy -to- let purposes. The holiday is set to last until June , after already being extended from its original finish date of March. So, what does the stamp duty tax holiday mean for you? Well, if you buy a property before the end of June , you will be able to make considerable savings on property purchases.
For those buying more expensive properties, here are the current tax rates in England and Northern Ireland. From July to September , you can expect different tax rates for your investment property purchases.
Now, to make this even more confusing, stamp duty tax rates will change again come October , where rates will return to normal. So, if you intend to purchase a property in those countries, be sure to research the appropriate tax rates. As you can see, the most significan t changes come to the lower end of the price spectrum. We will talk about why you should get insurance later on, but if you do get insurance, you need to factor in the costs for this, too.
Overall, you can expect the following costs. Once you have a good idea of all of the costs and potential earnings that will come from owning a rental property, you can set yourself a budget for your venture. The amount of money you can borrow when buying a rental property with the help of a buy to let mortgage depends on the amount of rental income you expect to generate. Whether you should buy a rental property instead of paying off an existing mortgage depends on your personal circumstances.
You can own as many rental properties as you like, as long as you have the sufficient funds to purchase them. Investors with a larger budget will often purchase multiple lower-cost properties rather than one higher-priced investment. A good example of how to buy rental property with a larger budget is purchasing rental properties in an affordable city like Liverpool.
Hopefully , you now feel more prepared and equipped to deal with buying an investment property. You might already have a particular property in mind, but have you considered its location? Location is vital to consider when buying investment property. It can dictate the rent you will earn, how affordable the propert ie s are, future growth rates, and demand.
Ideally, you will want to target cities or towns that offer high growth rates, affordable prices, high rent , and high rental demand. Perhaps the most crucial aspect if you are planning for retirement is high capital growth rates.
Capital growth is vital for an investor, as it represents the increase in value of your property over time. Recently, property experts Savills released their latest property price predictions for UK regions.
The results may surprise you. Currently, the North West region is expected to see the highest level of growth by , with a The second highest is Yorkshire and The Humber , with a sizeable At the bottom of the table is London, with just a These areas are integral to consider, as they are typically valued as some of the best places to buy property UK.
Be sure to target regions with high growth potential in both property prices and rent to make the best investment possible. Using tools like the UK House Price Index, you can see past house prices by month for each region, borough, or city and compare it to current house prices to see growth levels. The UK House Price Index does a lot of the work for you and gives you percentages for how prices changed year-on-year or month-by-month.
So, what does all this data mean for you? It seems like London is one of the worst locations for capital growth at the moment. In fact, in alone, prices dropped by Manchester, in particular, has seen some staggering growth over the years and has outperformed every city over a five, 10, and year period.
Plus, with anticipated growth of Liverpool has also performed incredibly well. And in , the Liverpool housing market exploded, rising by a staggering The North West is likely the best location for investment for the foreseeable future.
Another crucial factor to a location and buying an investment property is affordability. To find current average house prices, you can go to the UK House Price Index, or use the latest data from property portals Zoopla or Rightmove to find the average house prices on their books. Property prices can differ heavily between property type s , so we have compiled a list of property price data for popular property types by city. Again, the best cities seem to be Manchester and Liverpool.
While Manchester prices are higher than some other cities, the level of capital growth in the city makes the price tag worth the entry price.
Of course, these are just averages, and you can get significantly low er prices than this. Naturally, average rent in a location is vital for prospective investors and landlords thinking of buying homes to rent. This is because the average rent in an area dictates how much you will charge for your property. If you care just about rental income, there are some obvious cities that offer the highest monthly earnings.
Using Zoopla data, you can find the average rent by city. Of course, the caveat is that it will require a fortune to tap into this market. On the flip side, locations like Liverpool are more affordable but offer smaller rent in comparison.
While on the surface , this looks bad, it can be misleading. This is because you could buy multiple properties in Liverpool for the price of just one in London. In fact, you can buy six properties in Liverpool with change left over for just one in London. Likewise, you should also consider rental growth. Using the Homelet Rental Index, you can find current rent and rental growth rates by region.
As a whole, UK rent has increased by 2. Looking at particular regions, and these numbers change dramatically. Homelet ha s recorded a 5.
On the other hand, the North West has increased by 6. Instead, you should focus heavily on rental yields, a measurement we will discuss in detail in a later section. Finally, when evaluating a location, it is vital to consider rental demand and the type of tenant you will expect to see.
Now, rental demand is a complex factor to measure directly , but prominent signifiers are how fast properties sell, the number of property enquiries , population growth, a nd the increase in house prices and rent.
These measurements are likely to increase the more demand for property there is. Take Manchester, for instance. A report by Zoopla in found that the current ratio between the available supply for property and the demand for it is currently This means that for every single property, five buyers are interested. Not only will this signify what type of tenant you are likely to see, but it will also show if the city is on the rise with growth levels.
Using Manchester as an example again, you can evaluate a cities investment potential based on the population. According to reports , Manchester has seen a Meanwhile, the Greater Manchester population increased by 7. This is significant as it shows more and more people are choosing to live in the city. And perhaps even more significant for investors, a bulk of this population are young people.
Manchester also has a considerable student population, making it one of the biggest student cities in all of Europe. Over , students live in the Manchester region across five universities. Well, young people are more likely to rent as they are typically unable to afford to buy their own properties. This age group is typically referred to as Generation Rent and should be your target tenant when investing in property. Rental yields are paramount when it comes to an investment as they signify the return on your investment.
Return on investment shows how long it will be before you start making a profit on your initi al cash injection. T he higher the yield , the better the investment opportunity.
Rental yield is displayed as a percentage and is calculated by dividing your yearly rental income by the original purchase price and multiplying by Using these figures, the average rental yield in the UK is about 4. That means every year, you will see a 4. Not to fear, though, as depending on location you can see much higher yields. Like rent, these rental yields are also an average , and you can find them higher.
Take our properties in RWinvest, for instance. Would they want to live here? Considering the liveability of an area is vital, and you need to understand precise ly what the local neighbourhood offers.
For young families, the quality and availability of local schools are paramou nt, so you should aim to buy a property with these local facilities if you are targeting this tenant group. Likewise, you need to consider factors like local crime rates, job opportunities, health care, transport, education like universities, and nearby amenities like restaurants and bars. Here at RWinvest, we have several key guides on various areas so you can learn what investing in the area entails. You can find guides to Liverpool property investment , Manchester property investment , and more on our website.
Recently, Liverpool and Manchester were voted in the top 10 global locations for business start-ups. Manchester h as also been deemed the best place to live in the UK by the Global Liveability Survey, which ranks cities on factors like education, culture, and health care. Figuring out how to buy property can be hard, and f inding a house to rent can be even harder. This is because so many buy to let investment strategies are out there, each having considerable differences and its own pros and cons.
To help clear the fog, here are six top-rated buy to let investment strategies to consider on your investment journey. Residential buy to let is when you purchase a residential property like a home or flat and rent it to a tenant of any age. This means you can rent to both young people and retirees, but not necessarily to students, which is typically classed as student buy to let. In fact, research has predicted about a third of over 60s will be renting privately by So, what are the pros and cons of residential property?
Residential buy to let shares a lot of the characteristics of buy to let in general. Similar to residential property, student buy to let is the idea of purchasing a property and renting to students.
The UK student market is thriving at the moment, with a record number of international students attending UK universities. And with predictions for , more students by , the market is only going to get better. There are plenty of student cities to choose from , and you can invest in both purpose-built student accommodation and HMOs which will be mentioned later. The key to student buy to let is understanding student populations and investing in cities with excellent universities, a strong job market, and top nightlife opportunities.
A good indicator of this is researching the graduate retention rate of cities, with the likes of Liverpool, London, and Manchester, having some of the highest. Whatever city you choose, student buy to let can be a wise choice due to its affordability and high rental yields. As purpose-built student accommodation apartments are usually smaller and more compact, prices are traditionally far cheaper than normal apartments, giving an even bigger scope for a successful investment.
When many start their investment journey and want to know how to buy property, many opt for HMOs. A house of multiple occupancy is a residential build that features more than one tenant. It is an increasingly popular investment type in cities like Liverpool. Often, these buildings are split into different rooms , with each room rented out within the property. Similarly, there are talks of local councils banning or limiting the creation of HMOs , with many locals unhappy with the practice.
This is worth keeping in mind if you do opt for this buy to let investment strategy. A more obscure investment strategy, hotel buy to lets can be incredibly profitable but come with some high risks. The way it works is that an investor can purchase a room within a hotel build, with the investor taking a cut of the cash of any guests that stay in the room. I nstead , you will be relying on those travel l ing for holidays or business purposes.
Hotel lets are also very hands-off, with no need to oversee tenant acquisition. There are some serious drawbacks, though. Here, investors can purchase a property to rent on a short-term basis to holiday — goers. Typically, you can advertise these properties on websites like Airbnb, which is becoming a trendy platform for those letting out properties to tourists.
Property values here could benefit if commuting links provide quicker journeys for those going to London. Barring Manchester, there is actually little signs that at the current rate of knots the North is set to catch up with the South. Therefore, those strongholds with high property values in the South, such as Oxford and Cambridge, remain king when it comes to rental investment.
What Oxford and Cambridge have over anywhere else in the country is a rich educational history. Whilst the likes of Manchester and Leeds in the North have Russell Group universities, there are no two more famous than Cambridge and Oxford.
Along with the constituent colleges, and as a result, tenants may wish to indulge in the rich intellectual history of the respective cities. Still, maintenance costs with student-lets need to be considered with regards to profitability levels.
The two infamous university towns also have rich swathes of the countryside surrounding them, making them ideal for those landlords who need stable investments. For example, just outside of Oxford comes the small market town of Bicester that has seen some major investment works.
Within the last fifteen years, it has brought a designer shopping village to the town, with brands such as Michael Kors, Gucci, Stella McCartney and Vivienne Westwood, among others. Areas like this should remain popular for those looking to move outside of London.
RENT P. Earn rental income right up until completion. Sell your property tenanted to other investors. Investing in the buy to let market is popular with investors looking for great return on investment.
What makes property a good investment? Rental demand A study conducted in predicts that nearly one in four households will be in the Private Rented Sector by Rental income This is without doubt the main reason that most people become landlords.
Right up your street. Portfolios We have great links with portfolio landlords looking to exit. Your tenants are the life and blood of your business. Benefits of buying a property with tenants in situ.
Stay savvy with our property investor newsletter Get insightful content to your inbox with recent buy-to-let investment opportunities, articles and industry news! Latest from our blogs. June 18, Buy to let - Back to basics part 4. June 7, Buy to let - Back to basics part 3. May 21, Buy to let - Back to basics part 2.
May 12, Buy to let - Back to basics part 1. About Us. Property Alerts. Financial Analysis Calculator. Manchester continues to be the northern powerhouse it was originally hyped to be — establishing itself as one of the most exciting locations for investment. With some of the best capital appreciation returns on this list over the last five years — including a huge rise between and — Manchester has led the way for price growth in the North.
Across the lettings sector, Manchester remains a clear alternative to London. In terms of future development, the Great North Rail project is expected to come into effect by and will allow 40, more passengers to travel throughout key cities in the North — increasing tourism for Manchester significantly.
The HS2 interchange will only drive this connectivity further, putting Derby within an hours catchment of the capital, while reducing the commutes to Birmingham, Leeds and York to 35 minutes or under. Not only have the past three years seen 4, jobs created across the professional and manufacturing industries, but the ambitious Derby City Master Plan is set to introduce at least 4, more.
Find out more about the East Midlands. Register today and get exclusive early access to our upcoming developments in the UK property market:. Driven by two major UK universities located relatively close to the city centre, there is a huge amount of tenant demand supporting these yields, alongside a booming creative quarter that is serving the growing graduate pool. The 8th largest city in the UK by population, Newcastle is one of the most affordable locations on this list and thus, driving some of the best rental yields in the UK.
That said, Newcastle has one of the best graduate retention rates in the country and is recognised as one of the fastest growing regions for new start-up businesses. This will likely boost demand from young professionals, which will in turn increase rental prices and thus, yields. Hosting a variety of corporate headquarters, as well as strong education and digital sectors, there is an established standard of career opportunities that assist with driving this demand while supporting the entrepreneurial side of the city.
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