Property management

Whether you are purchasing your first buy-to-let investment or expanding an existing portfolio there are many aspects to consider, to ensure you maximise the potential return on your investment. You may wish to seek guidance from a letting agent when choosing the location of your investment, deciding on the right market to target, fully understanding UK legislation and how to protect your investment.

Arranging a second mortgage for a rental property is often more expensive than a typical residential mortgage. These mortgages are called buy-to-let mortgages.
Buy-to-let mortgage products require different criteria than a typical residential home mortgage.
If the property you intend to let is a second property and you are not buying it outright, you will require a buy-to-let mortgage.

Lenders usually charge higher administration fees and the interest is also generally higher. Buy-to-let mortgages also typically require a larger deposit, often around 25% – 40%.

If you are looking to buy a second home to live in, and let the one you move out of, a residential mortgage will be required for your new home, and your previous home’s mortgage will need to be changed to a buy-to-let mortgage, unless you are buying the properties outright.

The property market moves at a fast pace and there are generally intermittent periods where prices rise or fall. When you buy a property and it appreciates in value, the profit is referred to as the capital growth. If the money received in rent is greater than the cost of owning and
managing the property, a profit can also be made through rental income. Rental income is subject to income tax, and any profit from capital growth made on the sale of a second property may be subject to capital gains tax.

The ratio of property value to rental value is inconsistent and the highest valued properties do not necessarily command the highest rental yields, so you should speak to a property investment expert to get suitable recommendations based on whether you hope to get a high rental income, a high capital growth, or a balance of both.

Letting and managing a residential investment property requires knowledge, time and maintenance in order to maximise its full market potential and ultimately attract a healthy return. So, if you are intending to manage your own property and tenants, you may need to consider the proximity of your rental property. This is important, as you will need to make yourself easily available to your tenants and be able to quickly and efficiently deal with any necessary maintenance and upkeep that may be required to your property. However, if you engage a letting agent to manage your property it will not be essential for you to live nearby – your managing agent will take care of the maintenance works, rent collect, carry out yearly property inspections and handle all the administration surrounding the property and tenancy.

Different properties appeal to different tenants, so if you are buying to let, you may want to begin a search for a property with your ideal tenant in mind. Whether the property is furnished or not will help determine the rental value and if furnished, the quality of furniture and fittings should reflect the expectations of the target tenant.

Once the property is ready for occupancy and the rental value has been determined, it is ready to be marketed to a suitable audience, and any prospective tenants should be vetted. This is another area where a letting agent will be able to help.

Letting and managing a residential investment property requires knowledge, time and maintenance in order to maximise its full market potential and ultimately attract a healthy return. So, if you are intending to manage your own property and tenants, you may need to consider the proximity of your rental property. This is important, as you will need to make yourself easily available to your tenants and be able to quickly and efficiently deal with any necessary maintenance and upkeep that may be required to your property. However, if you engage a letting agent to manage your property it will not be essential for you to live nearby – your managing agent will take care of the maintenance works, rent collect, carry out yearly property inspections and handle all the administration surrounding the property and tenancy.

Different properties appeal to different tenants, so if you are buying to let, you may want to begin a search for a property with your ideal tenant in mind. Whether the property is furnished or not will help determine the rental value and if furnished, the quality of furniture and fittings should reflect the expectations of the target tenant.

Once the property is ready for occupancy and the rental value has been determined, it is ready to be marketed to a suitable audience, and any prospective tenants should be vetted. This is another area where a letting agent will be able to help.