Is 2012 the time to invest in property?
No-one needs to consult a Lawyer or an Accountant to know that the last few years have been difficult in financial terms. The current financial climate with stock market volatility and continuing low interest rates makes traditional investment advice even more tricky than usual and may encourage some to look at alternative investment options. One of those options could well be the purchase of a "buy to let" property.
As a buy to let investor, you enjoy the same advantages as a first time buyer when it comes to negotiating a discount from the published price. If you are not relying on the sale of another property to fund this transaction, and you have your specialist buy to let mortgage in place, then you represent an attractive option to a seller. It is important to always keep at the forefront of your decision making the fact that you are purchasing this property for investment purposes only - buy with your head, not your heart. Be a tough negotiator, and be prepared to walk away if the figures don't stack up.
Funding such a purchase more tricky than ever - no surprises there then! Most specialist buy to let lenders are now looking for a minimum 25% deposit, and their interest rates are considerably above residential mortgage deals. The best rates also come with hefty arrangement fees, which obviously have to be taken into account when you start out. An alternative option, if you have built up a sizeable pot of capital in your own home, is to borrow against that, rather than the rented property, to fund the purchase. Interest rates may be lower, but you may feel less comfortable about borrowing against the family home.
Detailed discussions on the method of funding should be had with your specialist financial advisor before you start browsing the ESPC website in earnest! Obtaining information doesn't commit you to anything, but entering the market properly informed can greatly enhance your opportunities for income and capital return.
When calculating your investment returns, you will need to remember that your rental income may be subject to income tax, maintenance costs, and other landlord expenses. On sale, buy to let properties are also subject to Capital Gains Tax at either 18% or 28%, on gains above the annual exemption when sold.
Careful consideration of all these points should be made before entering the market, but with good demand for tenanted properties at present, and rental yields substantially in excess of anything which can be obtained from a traditional High Street savings account, the attractions are obvious. If you would like to discuss such a property acquisition, or speak to a specialist mortgage broker for advice on loans, please contact Anne Pacey on 0131 270 8020 or email@example.com or one of her colleagues.