Buy To Let and HMOs

*Not all buy-to-let mortgages are regulated by the Financial Conduct Authority.

Financing your purchase

• Have you accounted for all your upfront costs? These include a deposit for the house, legal fees, stamp duty, and survey fees.
• What can you comfortably afford to borrow? Make an appointment with us to discuss what you can afford to pay back each month before you go house hunting.
• What do you earn? You will need to confirm this, typically with your last three months’ pay slips and your P60 tax certificate for the last year. If you are self-employed, we need to see your trading accounts for the last three years.
• How much rent do you expect to earn through the letting of the property?
• How much will you be able to borrow? When we fully understand your current income and expenditure, we will be able to tell you, based on the repayments you can afford to make.
• Which mortgage suits your present and future needs? Your mortgage adviser will spend time discussing this with you before providing you with full advice and recommendation of a suitable mortgage for you.

Calculating your costs

As well as your mortgage payments, you may need to cover some of the following costs:

• Buildings insurance
• Contents insurance (if your property is furnished)
• Maintenance costs
• Periods when you are receiving no rental income because the property is empty, or the tenants have fallen behind with their payments
• Increases in your mortgage repayments due to a rise in interest rates, which you may not be able to recover immediately from rent increases
• The profits from renting property are taxable but you may be able to offset some of the costs you incur as a landlord against tax

You will also have to pay the following taxes: income tax, stamp duty (when you buy your property) and capital gains tax (when you sell it). There may also be the liability of inheritance tax when you die.

For more information about the tax treatment of income from rented property you should consider seeking professional guidance from a qualified tax specialist. Plus, you can also visit www.gov.uk/browse/tax.*

* You are now moving to a new site that is not regulated by the Financial Conduct Authority. We give no endorsement and accept no responsibility for the accuracy or content of any sites linked to this site. Click only if you wish to proceed.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes that cannot be foreseen.

Is this the right property for you?

Great! So now you know just how much you can afford, looking for your new property can begin. Here again we’re on hand to help. With our years of experience in the property market, Akers Pritchett will be happy to recommend a trusted property agent to help you in the search. In the meantime, here are some important things to consider before looking for a specific property:

• Carefully research the area where you want to buy your property. You can either do this yourself or employ a specialist letting agent to help. If you decide to do it yourself, you will need to speak to local estate agents, employers and the local authority.
• Everyone has particular needs. Families, couples and single people all require different things when looking for somewhere to live. The majority of tenants are working professionals, on company or overseas relocations. You need to make sure they are fully referenced. If you are using an agent, make sure you know the profile of the type of person that you wish to let your property to. At the same time, you need to be mindful that the more specific you are with your requirements the longer it can take to find a tenant.
• Many desirable properties are those conveniently located to public transport, shops, bars, schools, and so on, and have parking facilities close by. When you are looking for a property, try to remember that it is not you who is going to be living there. Be objective and look at the property from a tenant’s point of view.
• Know your area and research what people are looking for and the size of rented properties that are attractive in that area.

A property that is well maintained will be much more in demand than one that is run down. So, consider a newer property, which may be more suitable if you have limited time or no interest in DIY.

A well-managed property can be a gold mine

Having found a suitable property, you’ll will need to decide who’s going to manage it for you. Talk to the team at Akers Pritchett, we’ll be happy to introduce you to one of our recommended lettings specialists to help your letting experience run as smoothly as possible.

You will be looking to cover your costs and make a profit as well. So, it’s a good idea to talk to a member of our team before you look for properties, as lending criteria will differ and rental charges are a key factor. Research the market conditions thoroughly, as charging too high a rent will put off prospective tenants.

If you decide to manage the new property yourself, just remember you’ll be responsible for:

• Finding tenants
• Checking tenants’ references
• Writing a tenancy agreement
• Collecting the rent
• Maintaining the property and any furniture provided
• Dealing with any problems
• Carrying out repairs to the property
• Ensuring the safety of gas and electrical appliances
• Ensuring that any of the furniture and furnishings meet fire safety requirements

If you have any questions about buying a property to let, then just ask. The team at Akers Pritchett are always on hand to help.