Lockhart Grey Financial Planning Ltd

Buying a house to rent out can be an attractive proposition. In today’s property market many people are attracted by the potential for capital growth in the value of properties, whilst earning a monthly income.

Lockhart Grey Financial Planning Ltd are Whole of Market mortgage brokers, therefore we can offer you the best mortgage deals and advice from the whole of the market place and have exclusive products that are not even available to the general public

If you are interested in becoming a landlord, wish to raise finance on an existing investment property, or wish to rent out your current home in order to purchase a new one, we can offer the following benefits:

•    Adverse Credit Considered
•    No proof of income required
•    Mortgages up to 80% of the property value
•    Mortgage lending based on achievable rental income.

Buy to let mortgages can make sound investments and there are many buy to let mortgage types available to and Lockhart Grey Financial Planning will be able to advise you on the best available to suit your own individual circumstances

Why Buy to Let Mortgages are Popular

•  Property is a good longer-term investment, especially in a volatile stock market.
•  With UK interest rates so low,  buy to let mortgages offer an attractive alternative investment.
•  With the overall UK population rising, a high divorce rate plus growing student numbers, migrant workers and increasing house prices there is plenty of demand for rental accommodation.
•  Buy to Let mortgage lenders are offering competitive, specifically-designed, accessible buy to let mortgages based on flexible criteria.

Three main differences in buy to let mortgages:

• Larger Deposit – typically a minimum of 25% of the property’s value is required as a deposit. However at Lockhart Grey Financial Planning we can offer Buy to Let mortgages from as little as 20% deposit.
• Interest Rate – buy to let mortgages have slightly higher interest rates than most residential mortgages.
• Rent Potential – In many cases your income is not ever considered. The mortgage may be offered on potential rental income alone.

When taking out a buy to let mortgage the lender will typically expect a monthly rental income of up to 130% of the monthly mortgage payment on an interest only basis.  At Lockhart Grey Financial Planning we have access to buy to let mortgages at much lower projected rental income, many looking for only 100%of the monthly rent.

Lockhart Grey Financial Planning are able to independently source source buy to let mortgages for all types of different investment property including; residential buy to let, commercial buy to let, student buy to let, converted property, blocks of flats, auction property, Ex Local Authority, off-plan property, etc.

When buying a buy to let  property you will need to decide whether your primary objective is income or capital growth. Are you looking to make a monthly profit or are you looking to make a profit through capital growth on the value of the property as it increases in value over time? This may affect the type of property you purchase and the location.

Buy to Let is not free of risk and can be more complicated. Becoming a private landlord should not be viewed as a way of making easy money. It may be very time consuming, more than most forms of investment with no guarantee that house prices will continue to rise. You will have additional costs other than the monthly mortgage repayments.  Deductions against tax on any rent received may be claimed for the costs of maintenance, any insurances, cleaning, gardening, wear and tear, agent’s commission and other reasonable management expenses (but not improvements).  That said, having a buy to let property to let to tenants could reap considerable financial rewards over time.

Additional Costs

As a guide, you should be aiming to achieve a gross rent of about 130 -140% of the rental property’s  on an interest only basis. This protects both you and the lender against rental voids,  periods when the property is un-tenanted.

Additional costs include:

• Property upkeep – maintenance costs for the property.
• Letting agent’s fees – letting agents may charge around 10% of the monthly rent for getting and vetting tenants on your behalf.  The may charge in the region of a further 5% for a full management service.
• Ground rent / service charges – applicable to leasehold properties.
• Legal insurance – to cover costs from evicting tenants in the event of non-payment, very important, as this can be very expensive.
• Legal Costs – For drawing up rental agreements etc.
• Insurance – building insurance and landlords contents insurance
• Furnishings – the purchase of any furniture. If the property is to be let furnished
• Gas / electrical appliances – cost of maintaining appliances and ensuring they comply with any regulations such as safety tests.
• Decorating costs – from time to time the property may require upgrading

The Association of Residential Letting Agents (ARLA)

When looking for a property to let it you may wish to take advice from local letting agents to determine a number of areas that you will want addressed such as what are the potential rental yields, what type of properties are tenants looking for, what your market should be, what are the most desirable parts of the town, the best or most wanted, is there a university in town and if so students what the students preferred.  They will help you meet your buy to let goal.The Association of Residential Letting Agents (ARLA) state that a property needs to be in the right area, in good condition, close to transport and other facilities.  All members of the ARLA are part of a bond scheme to protect rent and tenant’s deposits. The bond provides total compensation of up to £2 million a year.  This is another good reason to choose a letting agent that is a member of ARLA.

Do’s and Don’ts

Do’s
•    Do your market research, speak with an ARLA affiliated letting agent to find out local needs and demands.
•    Use an ARLA member as your letting agent. They are trained to ARLA’s competency standards and keep up to date with the latest legal and regulatory requirements in the buy to let market, are bonded and hold Professional Indemnity Insurance to required standards
•    Will the rent cover the monthly mortgage payment and other associated costs, after allowing for void periods.
•    To attract the best quality tenants and let the property out quickly, make sure the fixtures and fittings, décor and furniture are to a high quality standard, especially kitchens and bathrooms.
•    Successful buy to let is a  medium to long term investment.

Don’ts

•    Let personal taste cloud your judgement.   You will not be living there.  The buy to let property you choose should meet market requirements.
•    Simplicity is the key.  Avoid potential costly maintenance problems such as large gardens or properties with lifts (although in some properties this cannot be avoided). Such things add nothing to the rental value and can increase costs.
•    Think that the running of buy to let is not a business, it is.  Your tenants require a full management service.
•    Use off-the-shelf tenancy agreements from HMSO or law stationers, leave all documentation to a professional buy to let agent.
•    Furnish with property with furniture that will contravene the Furniture and Furnishing Regulations.

Please fill in our quick enquiry form, or call us for a free, no obligation, consultation. You may also find our mortgages glossary useful to explain some of these terms.

Remember it is in lenders’ interest to provide you with a mortgage, as long as they do not feel you are stretching yourself.  They want your business.  A mortgage is generally a lower risk to them, compared to a personal loan, or a credit card, as they always have the house to “secure” the loan against if you are unable to make your payments.