Buy to let property investments in York – an introduction
At Redmove, we aren’t only York’s premier estate agency offering a house buying and selling service that is second to none – we also offer an unbeatable lettings service to help landlords enjoy their investment.
The boom in buy to let investment shows no sign of abating across the country and that’s also true for investors in York.
There are now more than 2million landlords in the UK who own a rental property to make the sector worth more than £1 trillion.
There are several reasons why investors are pouring into the sector, the main one being that buy to let property generally offers better returns than many other investment classes.
Indeed, one study found that buy to let investments have managed to outperform all other mainstream investments for the past 18 years.
Buy to let can generate annual returns of 16%
Many of these buy to let investors have enjoyed annual returns of more than 16%, says former economist Rob Thomas.
He looked into how much £1,000 would be worth now if the investor had made their investment at the end of 1996 – when buy to let mortgages first appeared.
Mr Thomas found that a buy to let property bought with a 75% loan to value mortgage had a compound annual return of 16.3%. Or, put simply, the investor would have made more than £13,000 profit.
Someone investing £1,000 over the same period in a bank account will have seen a return of just £949.
It’s these sort of returns that are encouraging more people to invest in buy to let property to enjoy a better yield than they would otherwise enjoy on other investments.
Buy to let financial products – new ones appear daily
To help support this, there are lots of buy to let financial products on the market with more being introduced every day.
However, it should be noted that simply buying an investment property isn’t an automatic route to financial success and potential investors need to do their homework first.
Firstly, and this cannot be stressed enough, anyone looking to invest in buy to let property should choose their location carefully.
Just as if you are buying a property, the location of a rental property is vital for its success.
This means that a buy to let investor should research very carefully where the demand from tenants is, what rents are being charged in that area and what type of tenants are likely to want to live in the property.
Buy to let property investment – it’s about location, location, location
In addition, many buy to let investors do not appreciate that buying and renting out property is a business and should be approached in a professional manner.
This means that careful consideration should be given to the income stream that will come from the property and any potential outgoings including the letting agent’s fees and regular bills.
In addition, investors should look at the likely capital growth since this is where the best long-term yield will come from and whether there is room to grow their income from the property.
There’s a lot of help and advice available online and from various investment websites and companies, though here at Redmove we would be happy to offer our expertise and experience on this subject.
The aim of any buy to let investment is to see a very good return on capital without risking the investment itself.
York property has enjoyed very good returns
To that end, we would recommend investing in the York property market as an investor since it has performed strongly in recent years and has proved to be a worthwhile – and lucrative – investment.
According to one of the big players in buy to let mortgages, Paragon, around one in five homes in the UK is now owned by a landlord.
And of the 5million new homes that were built between 1986 and 2012, more than half are now owned by private landlords for letting.
To help anyone interested in making a buy to let investment – whether it’s in York or not – here are the 10 top Redmove tips for making their venture a success:
- Research is key: look past the benefits and analyse the risks carefully
- Location, location, location: don’t just buy a cheap house with a view to renting it out – you need to buy a property where tenants are plentiful
- Location 2: when deciding on where to invest in property it may be that your local area is not the best choice – look further afield for better returns though remember you will have to probably utilise a lettings agent to look after the property
- Finding tenants: as part of deciding where to invest in property, careful consideration should be given to the type of tenant likely to be living in it
- Calculate carefully: most buy to let lenders will be looking for the rent to cover 125% of the mortgage repayment and some will need a sizeable deposit, many demand at least 25%
- Find the best mortgage: shop around the various providers, particularly buy to let mortgage brokers, to find the product that best suits your needs
- Be realistic: don’t be fooled into believing that huge returns are likely to be made since most of the profits come from the increase in the property’s value so invest for income which means investors should aim for rental yield
- Haggle!: As a property buyer you can probably haggle for a discount since you are not part of a chain and are a better prospect to the vendors
- Research: as part of the research be aware of future changes to the market, such as interest rates rising or what would happen if you cannot remortgage?
- Use a letting agent: if you’re new to property investment then utilising the experience and expertise of a letting agent will be money well spent. Many investors do not appreciate how time-consuming owning a rental property can be – there are legal obligations to fulfil and tenant complaints must be acted upon quickly.
Redmove is the premium lettings service in York
As the premium lettings service in York, we cannot stress enough the final point.
We know that many investors believe they can manage the property themselves and carry out any repairs. The reality is very often different.
As our list of top tips for becoming a buy to let landlord makes clear, there are legal obligations to fulfil (for instance the tenant deposit must be protected in a legally approved scheme) and it’s always wise to respond quickly to a tenant complaint.
In addition, the finding and referencing of tenants can be a time-consuming exercise as can chasing up late rent payments.
There are many letting agencies around the country who offer a fully managed service which will do all of this and more and many of whom, including Redmove, can offer elements of a fully managed lettings service.
So while investing in a buy to let property can be a financially rewarding exercise, it’s also one that should be done in a professional manner and with an appreciation of what being a landlord really means.
If you have any questions about buying an investment property in York or becoming a buy to let landlord in the city, then contact Redmove and we will be happy to discuss your needs on 01904 488444 or you could drop York’s award winning estate and letting agents a line using the form below.