Discussing Buy to Let
There have been a number of news stories recently reporting on the rise in house prices, growing confidence in the economy and the modest drops in the rate of unemployment. In a recent conversation with a landlord who is considering investing in property in Loughborough for the first time we discussed some of the indicators - so what are they?
Interest rates are still very low and only last week the new Governor of the Bank of England, Mark Carney, stated the Banks intention to keep interest rates low for the present in his determination not to hinder the recovery. Additionally sources of lending for what is traditionally called ‘Buy to Let’ mortgages are more readily available again. If you have money in the bank that you would like to see make a better return then a good option could be investing in a property. With a 25% deposit and money to cover legal costs you could be earning over 6% on your capital employed, well above what many of us can earn in the bank.
An investment property must be handled carefully though and a rise in interest rates at some time should be allowed for. Selecting the right type of property is vital; get good local advice. House or flat, furnished or unfurnished, modern or older, in town or in a village, parking off road or not, high yield on low purchase price/resale price or the other way around? Other factors to consider are structuring the financing and ownership of the property correctly taking into account long term plans and your eventual exit strategy and making the most of the generous tax allowances landlords enjoy. Ask yourself how many years will you be in it? Is it a nest egg for you or your children?
In this area we're quite fortunate. Loughborough and its satellite villages are a thriving area with unrivalled road, rail and air transport links via East Midlands Airport, a new inner relief road, a vibrant University (one of the leading Universities in the country), well established technology companies and now the possibilities of a new technology park or other investment in the old AstraZeneca site on the horizon.
All the indications are that prices are moving this year and every forecast is for a larger and larger rented sector - all good if you get it right and the amount of information available now means you should get it right.