Judging the right time to acquire a buy to let property is tricky but with the Government’s new pension reforms that come into effect this month, savers will have unprecedented access to their nest egg. There will be the freedom to seek out alternatives to conventional pension plans. One of these alternatives could be the purchase of a buy to let property.
By investing in property, pension savers can avoid fund fees and commissions and secure income and growth from solid ‘bricks and mortar’ assets over the longer term. Partner Oonagh McKinney says, “Savings invested in property can provide a regular income in the form of rent whilst retaining their value for when the time comes to sell them on. Demand for rental properties is very high at the moment as first time buyers are still struggling to get a step on the property ladder.”
There are steps that a buy to let investor needs to take before committing to buying a property. The Gross and Net Rental Yield of the property should be calculated and while this is not totally accurate it can provide a good yardstick for comparison and increases the likelihood of a successful venture. Gross rental yield is the expected annual rental income of a property expressed as a percentage of the total property value. Net rental yield is the calculation of the total rent received minus the expenses that the property incurs expressed as a percentage of the total property value. Providing your expense costs are accurate this is an easy way to monitor the profitability of your purchase. As part of the buying process you would have to find out as much as possible about matters such as service charges and likely capital costs such as repairs.
Whilst Frettens are unable to advise on the Investment aspect, we are able to assist with any purchase of a buy to let property and the drafting of a tenancy agreement.
We have offices in Christchurch and the New Forest. Our Conveyancing team also cover Bournemouth and Poole. For a free initial chat, please call 01202 499255 and Oonagh or a member of the team will be happy to discuss any questions that you may have.