Buy to Let Investment Remains Strong
3 minute read
As with any property purchase, ‘Location, Location, Location’ is the key to a good Buy to Let investment, and landlords are capitalising on opportunities despite possible tax changes. In the last year, over 40,000 Buy to Let limited companies were formed.
The pandemic may have triggered a city exodus by families and older people, prompted to plan for a future retirement, but major conurbations remain attractive to the young, drawn by all the amenities which, under normal circumstances, are essential to their social lives. For many, including essential workers, homeworking is not an option, and they are confident that pubs, cinemas, sports clubs and retail will revive.
Many tenants are looking for more long-term security, rather than short lets, which also benefits landlords. According to Hometrack, rents outside London have risen by an average of 2.3% in the last year, however, reliable tenants on agreements for a year or more, who look after their properties, can usually negotiate lower rents than transient occupants because landlords’ costs are lower whilst their income is guaranteed for a set period.
The majority of private landlords own just one or two properties, acquired as a way of maximising savings and income when interest rates are low; sometimes they are inherited and retained for the same reason. Letting and management must be compliant with legal and safety requirements, so it is always wise to seek professional advice, and keep accurate records.
Anyone considering a Buy to Let purchase should do their research, and draw up a business plan – clearly identifying which tenants to target in what areas, and whether to provide furnished or unfurnished accommodation – to ensure their investment provides the right level of return in the short and long term. Check out local authority websites to see how they are addressing future growth, with new development and infrastructure improvements to support and encourage inward investment and creating jobs.
Tenant demand will vary from location to location, but there are some good deals to be done in areas where employment remains consistent, and councils are ambitious. However, pay heed to temptation by the poor quality, cramped, conversions of empty shops and redundant offices, now providing tiny flats with inadequate natural light, in some areas, which are deemed to be ‘reviving the spectre of slum housing’!
High Streets will have to adapt to changes in the retail sector, but that means well planned schemes, with appropriate outside space, meeting local and regional demand, to benefit the economy; inferior schemes can only have a negative, instead of a positive impact.
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