Future-proofing buy-to-let investment properties in London
When you are in real estate investment you want to be sure of a favourable return on investment when building a property portfolio.
Buy-to-let investors have had a rigid few years, to say the least. Rental controls following the Labours defeat in the 2015 general election were scarcely escaped. Shortly after the then Conservative Chancellor George Osborne announced the first reduced mortgage relief and then extra stamp duty. Landlords were blamed for hiking property prices to deter first time buyers from entering the property ladder.
In 2019 the number of buy-to-let landlords hit an all-time low. This was no surprise, as the financial penalties were accompanied by a pile of regulation.
To add to a load of government interference, institutional investors poured billions into creating purpose-built rental housing. They did this to secure steady long-term income to help match liabilities. This was in response to the United Kingdoms' demand-supply imbalance of rental housing.
The overall UK rental market is made only with a fraction of build-to-rent, but this number is likely to grow. Investors and their agents could learn a great deal from this breed of corporate landlords. Particularly around serving tenants as customers.
As 2020 dawned, the world was hit with a pandemic that shook the entire economy. Property occupancy in London became unnecessary, an adaptation to working from home and shopping online, left properties empty. Affordability and the non-eviction policy during Covid19 resulted in substantial rental arrears.
Fast forward one year and Britain’s split from the European Union is in full effect. Society still rattling amidst the pandemic, a large chunk of foreign Nationals exits creating another wave of real estate sector challenges.
Property investment is not for the faint hearted as the housing market sector is constantly changing. The property market is affected by politics, economic factors, interest rates and even the weather. Property investors require some level of certainty that their investments are future-proof and that it will create good property yield.
It is possible to withstand chancy market fluctuations. With some forward thinking you could secure yourself peace of mind.
Ways to best set yourself up for future gains
1) Become eco-conscious Second to the Brexit, the international climate change emergency is on everybody's lips. The world is going green, in reaction the housing market seems to be jumping on board. The current minimum EPC standard is likely to be raised as the issue becomes increasingly important. Going green benefits for landlords
favourable mortgage rates
extra selling point
low utility bills
Therefor investing in a new property with a high EPC rating is a good future-proofing mechanism.
2) Disregard Brexit?
House prices are unlikely to be affected by Brexit in the long term. Some areas are more affected than others, but buyers should not be put off. Although value might drop in the short term, the market will correct itself by the time you want to sell or move.
Political uncertainty should not be ignored completely but looking beyond the now is important when considering investment opportunities.
3) Research investable locations
Explore different areas by monitor trends and price changes. Long-term trends are usually more trustworthy than weekly or monthly adjustments that could be deceptive.
Keep an eye on where there is planned future investment and growth. Residents will be attracted to these areas.
4) Adjust to modern living
People's work-life balances are evolving. Working from home is a norm, internet connection and providing workspaces are key to all property investments.
Another element to consider is that when people look for rentals, they seem to favour short commutes. Great transport links in the area will be advantageous for your buy-to-let investment.
More people are renting for longer, which is the result of both necessity and choice.
5) Use a rent guarantee scheme
Guaranteed rent schemes are a great way of relieving the burdens of finding tenants. The landlord signs a contract with the estate agency, who becomes the professional tenant. This ensures guaranteed rent for landlords (and mortgage payment) every month for up to five years without hassles. There are no management fees or commission to pay, which makes it a mutually beneficial partnership.
They will take care of tenant screenings as well. You are guaranteed tenants and usually they can occupy the property within 48 hours! This is a great way to avoid eviction.
Rental guarantee scheme agents can assist with renovation quotes at competitive rates if needed. Options of spreading the costs at 0% interest are available.
Guaranteed rental for buy-to-let mortgages is the futureproofing you need.
6) Know your taxes
Another uncertain factor is tax, as different measures are regularly implemented. Keep up to date with all taxes affecting your buy-to-let income tax, capital gains tax, inheritance tax and stamp duty.
There are ways to make a huge difference to the gainfulness of your investment property by understanding your taxes. An example of this is that currently, many buy-to-let landlords are operating their investment properties through a limited company.
Aston Pearl Real Estate is situated at 74 Southbridge Road, Croydon, CR0 1AE and serves Croydon, Southwark, Lambeth, and Richmond. A Croydon Estate agent specializing in guaranteed rent property management.
For more information about rental guarantee and real estate investment UK, contact us.