By Martin Williamson, Head of Residential Property, Latimer Hinks Solicitors www.latimerhinks.co.uk.
Investing in bricks and mortar used to be a viable alternative to more traditional investment opportunities, such as playing the stock market or investing in shares; and then the bubble burst. Many investors who bought in the midst of a boom, found themselves struggling when mortgage rates rose. However, while buy-to-let may no longer be the hot property it once was, it can still be an attractive option for those with enough money set aside to raise a sizable deposit, especially compared to low savings rates and stock market volatility.
In addition, lower house prices, rising rents and improving mortgage deals are enticing a growing number of investors into this market once again. If you are considering investing in a buy-to-let property, or just want to find out more, here are some tips on how to safeguard your investment in bricks and mortar.
Research the area in which you are planning to buy, even if you live there already and think you know it well. What are the latest sale prices for the type of house you want to buy? Are prices holding up well? Or, have they dipped in recent months? If so - is this purely economic or is there another reason? Consult local authority planning portals for any planning applications in your area that may have an impact on the property or area in which you are planning to buy.
The times have long gone when investing property could be viewed as a way to get rich quick. You will need to consider whether, in the first instance, you have the spare cash to tie up in property. Also, even though deposit interest rates are at an historic low, could a high-rate savings account be more suitable for you?
Many buy-to-let lenders are now demanding 25% deposits, or even larger, for rates considerably above residential mortgage deals. The best rate buy-to-let mortgages also come with large arrangement fees.
You need to consider whether you want to tie up your money in a more long-term investment or whether youre likely to need access to your money sooner rather than later. The important point to remember is to always be realistic invest in property for income and hopefully long term growth rather than a quick profit.
Before buying your property (and perhaps refurbishing it), you need to consider what type of tenant youd like. Are you looking for a student(s), young professional couple or individual, a growing family or an older couple? This decision will affect the type of property you buy, even down to the basic consideration of whether youd like a flat or a house.
As a buy-to-let-ter, you are in an enviable position as a purchaser as you are not generally part of a chain. Like a first-time buyer, you can haggle over the price and are more likely to get your own way because of the enviable position you are in. Exploit your bargaining power!
In summary, it is critical that you weigh up your options before investing in a buy-to-let property. It is important to view buy-to let as an additional income stream rather than as a means to get rich quick. Also, consider your options is some other form of investment going to be a better and more sensible option? And always maintain good communication with your solicitor during the conveyancing process and aim to seek specific buy-to-let advice at the outset.