Buy-to-let has been a hot topic since ex-Chancellor George Osborne announced significant tax changes from April 2016. (1) However, property experts believe that buy-to-let still offers an excellent way of supplementing income or even providing full-time employment. (2)

If you’re looking to move into the buy-to-let market, it’s essential to get things right from the outset, which starts with investing in the right property.

Here are some house-buying tips for buy-to-let properties. 

Who Do You Want as Tenants?

Start by considering the type of tenants you want to target, as this will impact what you’re looking for in a property.

Students may want easy access to their university or college, along with good nightlife and cheap eats. Families may be looking for proximity to good schools and properties with storage space and a garden, while young professionals may want good transport links to work.

Location, Location, Location

Choose a promising location for your buy-to-let property, by considering where your preferred tenants would like to live. Your aim is to find a property within your price range in the desired location for your ideal tenants.

Many first-time landlords prefer to buy close to home when starting out, so they are familiar with the area and are nearby if there are any problems.

Capital Growth or Rental Yields?

Ideally you want to capitalise on both, but this depends on your finances. If you have to choose, decide whether you’re relying on capital growth (overall increase in the property value in the medium to long-term) or solid rental returns.

If you have high initial costs you may not attract a great rental yield, so aim for a property with potential for high capital growth. But if you’re buying cheap property to rent to students, rental yield will be your main focus.

Financing Your Property

If you’re unable to purchase the property outright, you need to apply for a buy-to-let mortgage, which differs from a standard residential mortgage.

Buy-to-let mortgages usually demand a deposit of 25%, with many deals requiring a 40% deposit, and interest rates are usually higher too. Because buy-to-let is regarded as a greater risk, you also have to meet strict eligibility criteria and take into account your rental income, allowing for periods when the property could be vacant. (3)

Haggle Over the Price

Buy-to-let buyers have the same advantage as first-time buyers – there is no chain to consider from your own perspective. This may put you in an excellent negotiating position when it comes to property price.

Take note of the current market. If properties are generally slow to sell, your bargaining position may be even stronger.

Consider Your Costs

It’s not just the cost of the property you need to consider. You have to account for solicitor’s fees, stamp duty, and survey fees. In addition, there will be costs for running and maintaining the property, such as repairs, advertising costs, agents, and insurance to keep your investment secure.


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Quotes from a panel of UK Insurers