Check before letting
Prospective buy-to-let investors have been warned to do their homework before buying property to let, by the Consumers Association, which says that you might be better off putting your money in the bank in its Renting and Letting guide.
Buying to let is increasingly popular with borrowing setting new UK records in the first half of this year, with lenders advancing 152,500 loans, worth £17.5 billion.
The Renting and Letting guide points out that buying-to-let it isn’t all plain sailing and would-be landlords need to weigh up the pros and cons carefully.
The key is to think in terms of running a business. Basically, turnover in the form of rent needs to exceed the costs of buying and maintaining the property by around 25-30 per cent. This profit will cover the owner for times when the property is not rented out, any large expenses such as a broken boiler, and costs such as tax on the rental income.
Kate Faulkner, author, Renting and Letting, says: “Budding property entrepreneurs should remember there are lots of ways of investing, and buying property can be risky. You must be sure at the outset that buying-to-let will give you better returns than putting your money in the bank for the same period of time.”