property investment

Investing in UK Property can be very rewarding for British Nationals and non-nationals. When buying a property, you can consider paying cash or obtain a mortgage. 

Taking a mortgage to buy may be a good idea for tax purposes.

When obtaining a mortgage, the lender will consider your income. However, given you are buying the property as an investment, the potential rental income will help you get a mortgage. 

Rental income will need to meet at least 125% of the monthly interest payments on the loan, a view known as ‘rental cover’. So, if you’re mortgage interest payments equal £1,000 a month, you’ll need to be earning £1,250 in anticipated rental income.

At the same time, a deposit on a Buy-to-Let mortgage is typically more significant than the one on a standard mortgage. Most Buy to Let lenders expect a deposit of 25%. Still, there are examples of 45% deposits for those investing in Buy-to-Let property.

Some things to consider when buying in the UK:

1 What is involved in investing in UK property?

You need to understand what is involved when buying a property in the UK. The tax requirements and the legal implications of being a landlord.

UK landlords have several legal obligations when letting residential property. You need to know what they are. 

Free landlords’ associations like the British Landlords association (The BLA) are a great help. The BLA is free to join, and they have a free legal advice line, Landlord Forum where you can ask questions. 

2 What can you afford? 

You need to consider what is your budget, what you can afford to pay for a property. Then you can look for a property.

3 Your Investment “yield” 

It is essential to look at the return on your investment. You should be looking for a return of about 10%. The return-on-investment property in the UK is much better in the north than in the south. Areas like Liverpool and Grimsby can give returns between 10 to 14%. 

4 Location is important.

Where to buy your property is worth considering. Seek advice from other investors, ask a question on the BLA landlord Forum. The Forum is free to join, so use it.

5 Know your prospective tenant. 

When you take a tenant on, make sure you have carried out a credit check to ensure they do not have debt and bad credit history. 

6 Buy at a good price. 

In an ideal world, you want to pick up a bargain. You can do this by buying from a property auction list of property auctions.  

7 Get the right mortgage. 

Suppose you are going to take a mortgage shop around using an independent mortgage adviser. In that case, they will look at the best deal most suitable for you. 

8 Building Insurances 

When you ensure the building, your investment shop online for the best quote, you can get. You will be able to save if you do this online. 

9 Stamp Duty

When buying in the UK, you have to pay stamp duty; that tax rate depends on the are you are buying and the property’s value. Some areas are exempt from stamp duty.