The Housing Act of 1988 and 1996 allowed letting to be considered as an investment.
One of the schemes for investment in property is the Buy to Let scheme. It is a joint incentive of ARLA (Association of Letting Agents) and the mortgage lenders. The main idea is to help private landlords to invest in property they intend to let without paying commercial rates of interest as in the past. The view of many professionals is that Buy to Let makes the private rented sector to develop and grow which is good for the other advancement economies.
There are many Buy To Let schemes available. In general they allow the landlord to borrow a part of the sum required for the purchase of the property (usually 75%). Buy to Let mortgages are subject to standard status checks. Their terms are between 5 and 45 years.
The Buy to Let investment should be concerned as a medium to long term investment. The returns from letting property are gross. The average rental return in Britain is around the 10% mark, the capital appreciation is likely to match if not exceed inflation in the near future. When buying to let the landlord are guaranteed a stable and reasonable return on investment, the capital growth is the main attraction. Ex-local authority properties can bring a good rental return but this sort of property you will not have capital growth as much as other properties.
More information can be found at Her Majesty's Stationery Office (HMSO)
Popular Property
When investing in property, as with all other areas of business, it's important that all purchasing decisions are properly considered. Dingy flats in tower blocks on run-down estates aren't going to be easy to either let or re-sell.
Buy-to-let property investors should look for flats in low-rise blocks (less than 5 floors) with large bright room, plenty of storage space and with shops, restaurants, and a possibly even a gym within walking distance. The property should preferably have three bedrooms in order for it to be used as a shared let. If the property is in London, it should also be within 8 minutes walk of the nearest tube station. Other areas should preferably have a rail link within 3 miles of the property. A balcony is a bonus but not an absolute necessity.
Property investors looking for short-term investments through renovation projects should look for starter sized homes on clean, friendly estates. To maximise profits from property, houses are preferable to flats and should include plenty of storage space, off-road parking and a manageable garden. Ideally there should be very little through traffic and a good primary school, shops and buses should all be found within walking distance.
Obviously, if the property is being bought as an owner-occupied long-term investment, personal preference is the important consideration when it comes to location and size. It's still important to bear in mind that to profit from property, the property needs to be a 'desired property' when the time comes to sell so forward thinking is what's needed when investing in property to sell at a much later date.
Several useful services are available to help you assess the area where you're considering buying property.
While houses are mostly sold on a freehold basis, when buying flats it's important to consider any future maintenance charges that could occur. Contact the council and ask what plans they have for the flats. Although they aren't duty-bound to inform you, most will be happy to oblige. Avoid flats that have major repairs or improvements needed as work such as new roofs and lift replacements are very expensive and as a leaseholder you'll be liable for your percentage of the bill.
There's no doubt that investing in property that was once part of the council housing stock can be very lucrative for smart property investors. Whether interesting in buy-to-let property investment, short-term investments or long-term occupier investments, the right property in the right area can yield excellent profits from property investments that will keep investors very happy indeed.
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