Is buy-to-let property still a good investment? In broad terms, the answer is yes. The lettings market in London and certain regional cities is likely to remain very strong over the next five years. But though investors can achieve a good rental yield and capital growth, it’s not a given.
Savills Letting Director, Monika Scott, says:
“As a rule, higher-yielding properties are typically at the lower end of the housing market. As rents increase, the number of potential tenants narrows and yields begin to fall away. In contrast, for capital growth, values at the lower end of the market generally do not rise as rapidly for higher priced properties in desirable areas.
“The biggest challenge is the potential ‘void period’, the time when a property is untenanted during any given year. It is imperative to leave a cushion for at least some empty periods, for changeovers between tenants, and to cover costs if applicant demand temporarily slows down.”
Knowledge is key
Talk to the experts. Knowing which property will deliver the income and capital growth you require takes years of experience. The experts will also know what sort of property lets most easily in any given location. They can also help you with the other essential services you will need when purchasing a buy-to-let property, such as preparing property investment business plans, securing investment finance, letting legal essentials and bespoke insurance for prime residential lets.
Present your property in the best light
People prepared to pay thousands of pounds a month to rent privately expect a property in perfect condition. Everything, from decor and furnishings to lighting and furniture, must be pristine.
Great property, fantastic tenants
It might sound obvious, but the right property, in the right location, marketed at a fair price, really will attract the very best tenants.
Maximising and protecting your assets
Buying a property and letting it is not the difficult part. Making money is where it gets trickier. The skill comes in working out how to maximise your rent through maintaining and updating property, without it having a negative impact on your investment returns.
Changes to property investment returns
While legislation over the last 10 years has substantially improved the safety of rental property for tenants, it has increased costs for landlords. Securing appropriate safety certificates, complying with third-party deposit schemes and potentially having to update properties in the future to meet required Energy Performance Certificate ratings, can add thousands of pounds to your costs.
Savills lettings professionals are well-placed to guide you through the buy-to-let process, from the location of your property to its style, the services tenants are looking for, competition from other landlords and how best to present the property once you have purchased it. In addition, Savills Research has comprehensive five-year forecasts which help indicate potential future returns on your investment.
Contact Savills letting team for more information on investing in a buy-to-let property.