The Pitfalls of Buy-to-Let

9th May 2019

The Pitfalls of Buy-to-Let

You may remember last month we published an article on buying-to-let and what you need to know. There are many positives to buy-to-let and we have a great number of landlords in our portfolio. We are always happy to advise and guide people through their property options and as the leading independent estate agent in Beaconsfield we are often the first port of call for people looking to take their first steps in buy-to-let.

In the interests of balance we always make sure we highlight the potential pitfalls of such decisions and so, while this article may seem a little negative, it is essential knowledge to have if you are thinking of taking the plunge and becoming a landlord.

Staying informed - As always, when it comes to any big decisions it is important to thoroughly research what you are about to do. This shouldn’t be a spontaneous decision or one to be taken without proper forethought and research. It is just as important to know about the negative aspects of buy-to-let as it is the potential benefits of owning a rental property.

House Prices - While house prices are starting to show an upward turn, the last 18 months has shown that there can be fluctuations based on political and economic events out of your control. If house prices start to dip will you be able to continue holding your investment?

Mortgage rates – If you are buying with a mortgage there are some great fixed-rate products to be had right now. This means that you could buy your property and the rent is likely to comfortably cover the mortgage payments. But what happens when your fixed term ends and you are faced with an increase in the mortgage payments; or worse, you’re unable to remortgage? Your affordability plan needs to factor in the worst case scenario.

Occupancy – While demand for rental properties is high across the UK it is a very real possibility that your property could be empty for a period of time. Whether it’s short or long term, you need to ensure that you can afford to pay your mortgage should your rental income cease. This is one of the most common pitfalls for landlords new to buy-to-let. Even the most popular areas can experience empty properties so, make sure you can pay the mortgage for three months should you be without a tenant - this gives you a buffer.

Maintenance –Homes often need repairs and maintenance and as the landlord they are your responsibility. Minor repairs or improvements are easily affordable but should something major go wrong you need to be able to cover the cost. One of the more common and costly events we see is the replacement of a property’s boiler, this can cost a few thousand pounds.

Tax – This is where is gets complicated. Make sure you read up about the tax on buy-to-let. With legislation coming in you will need to make sure you have a good understanding of things like the extra stamp duty surcharge.  Soon it will not be possible to set all mortgage interest against rental income before income tax is calculated.  Speak to our Lettings team if you need more information.

Property Management – If you decide not to be a ‘hands on’ landlord, make sure you choose a trustworthy property manager to look after your property. Look for the Arla Property Mark logo on their site and interview them as you would any person charged with looking after a valuable asset. If you are looking to buy-to-let in Beaconsfield, make sure you speak to our Lettings Team who will explain exactly what you should expect from a property management service.

Get in Touch

If you are interested in buying an investment property or looking to buy or sell a property in Beaconsfield and the surrounding areas, make sure you give us a call and speak to one of our experts about your options. You can call our office on 01494 680018 or email us, you can also follow us on Facebook, Twitter, Instagram and LinkedIn.