London is the hottest letting market in the UK. An astounding 45 percent of housing is let in London, according to Rightmove, a company that churns out data on letting. The average let payment is now at £1,102 per month, which is a 1 percent jump from October, according to LSL Property Services.
Data shows that let property is booming in the big cities of the UK. For example, four of every 10 homes in Westminster are not owned by the occupier but are rented.
Studies show that, on average, buy to let properties yield a 7 percent return annually for investors. That beats interest payments from High Street savings accounts by a mile.
As a result of these numbers, more people are seeing buy to let property as a good investment in a slow economy. The question that arises for first-time buyers to let investors is this: What kind of property should I buy?
Phil Spencer, the host of the popular reality show “Location, Location, Location,” says that he follows two rules:
1. Buy in a place you’re familiar with.
2. Know the tenant you want.
Spencer said that you’re more likely to make a wise decision if you buy in an area that you’re familiar with. People understand the housing market better in an area they know well.
The next decision involves choosing the type of person you want to rent the property. Families, couples and professionals are all good choices. These people are stable and pay their bills.
Spencer said that he targets young professionals in London. Hundreds of thousands of new graduates make their way to London each year to seek out employment. During their university studies, these people live together with other friends and have a desire to continue that living arrangement, Spencer said. For that reason, he buys Victorian houses with three bedrooms. Then he remodels an additional room and turns it into a bedroom. Now the home can be let to four sharers.
Tommy Walsh, the peppy builder in “Ground Force,” has been involved in buy to let schemes for nearly 25 years. He said that modern homes tend to let more quickly and with higher rents than older properties.
He urged investors to stay away from property that has structural problems because fixing those defects can eat into investment cash. Walsh said that he manages his own investment portfolio and avoids letting managers.
He advised let property owners to deal with tenants efficiently. Arrange with the tenant a direct debit deposit on the due date, maintain credit checks and return deposits only when all details of the let are met.
Finally, he suggested that let owners charge a tad less for rent than the established rate. This acts as leverage to secure long-term leases that provides financial security to the property owner.
By Furkat Elmirzaev