Many types of people become first time landlords and for a variety of different reasons. Some acquire a second property through family inheritance or they might look to purchase a buy to let for the first time for future income. Either way, there’s a business opportunity for intermediaries working with clients who are considering their mortgage options as part of planning for their future. Even more so after the Chancellor announced on 8 July that with immediate effect until 31 March 2021, stamp duty on a buy to let property would be reduced down to 3% up to a property value of £500k. This provides a great opportunity for landlords to take advantage of the current competitive interest rates and stamp duty holiday.
We’ve had cases where customers have bought a new property that suits them better for their retirement, but held on to their existing home to rent out. We’ve seen cases where customers have acquired an additional property through inheritance and this becomes part of their future financial planning when they could decide to rent it out.
It’s not uncommon for customers to buy a property for a close family member when they go to university or to use part of the growing equity in their own home to help with the purchase of a rental property for a family member.
For purchases that are planned, these customers look for a property that is likely to grow in value, such as a property near good transport links or local amenities e.g. schools, colleges, shops, doctor surgeries etc.
As well as the asset value hopefully rising over time, there is also the goal of the buy to let to generate income over and above the cost of the mortgage and other monthly outgoings. Again, a good location with a local demand for quality rental stock and a well presented and appointed unit will give the best chance for a better monthly net income.
The property could be either a new build house or flat, or it could be a renovation project. It comes down to cost of refurbishment and whether it works out in the longer term financially with refurbishment costs factored in to projected income and ongoing affordability. At Leek United, we do ask for properties to be immediately lettable.
Remember also, if the customer is letting the property then the tenants will need to be put on a Shorthold Tenancy Agreement (AST), an energy performance certificate will need to be in place, a standing order or direct debit for the rental payments, a gas safety certificate and from 1 July, landlords will be required to provide all new tenancies with an Electrical Installation Condition Report (EICR). So, for a buy to let property there are additional upfront costs and legal paperwork.
At Leek United, we have products and criteria to help with your first time landlord cases. We also have regulated buy to let products available if the house or flat is being purchased for a family member. With such options available, we aim to cater for a wide variety of enquiries and help you complete more buy to let business.
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