Buying and letting property
The demand for rental properties has led to an increase in the number of investors who are now looking to acquire properties to let.
The growing demand for rental properties in the UK is currently driving the so-called 'buy-to-let' sector, a trend that is boosting figures for the buy-to-let market.
According to research by property financial firm Octane Capital (as of March 2022), the UK rental property market is the fourth largest in the world after the US, Germany, and Japan, with approximately 8.5 million properties rented. In the UK, owning a home tends to be the goal, whereas in Germany, for example, renting is not an uncommon option even in retirement. In the UK, it is also said that if property prices rise further in the future and it becomes more difficult to buy, demand for renting will become even stronger.
Buying and letting property
The demand for rental properties has led to an increase in the number of investors who are now looking to acquire properties to let. Residential property investment is a long-term investment, and there are many costs involved in letting a property, so unless you are a cash buyer, you need to make sure that you can cover the repayment costs of a buy-to-let loan, considering the current high-interest rate situation.
If you are a landlord and let your property, you are obliged to insure the property by taking out building insurance and landlord insurance. The content of these policies varies, but usually, if you take out landlord insurance, you will be covered for the following.
- Loss of rental income
- Accidental damage
- Eviction charges
- Assistance for tenant re-occupation
- Legal cover
- Owner's liability
When letting a property, landlords are also responsible for general maintenance and repairs. This may involve additional costs such as repairs to electrical appliances (if provided as part of the tenancy agreement). It is a good idea to set aside up to 10% of your monthly rental income for maintenance and repairs.
If a letting agent is hired to manage the property and find tenants, the cost of this should also be considered. Landlords must also follow regulations to keep tenants safe and reduce the risk of accidents and injuries. Examples include gas and electricity safety checks. It may also be necessary to install smoke detectors and carbon monoxide detectors.
Investing in rental property in the UK is said to be profitable, but it is important to check the running and maintenance costs before buying a property. The costs of buying a rental property, including insurance, letting agency fees, safety checks, maintenance, and repairs, can add up quickly.
For further guidance on the costs of buying a property, please contact Kens Estate.
Contact Kens Estate: firstname.lastname@example.org