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For many landlords, experienced or first-timers, knowing how to invest in property can be overwhelming. Here, we look at what you need to consider when investing.  

How do I invest in property? It’s a question we hear frequently from first-time landlords, but even more experienced investors seek guidance in knowing where to turn for the next property purchase.

With every property investment, there are a few factors you need to consider. Making an informed decision is essential to a successful property investment journey, so here’s what you need to remember when planning your investment property purchase.

Six Things to Consider When Investing in Property

1. Personal vs Limited Company Investment

How you choose to invest is crucial for your property investment journey. There are several benefits to investing both personally and via a Limited Company structure, so choosing the investment type that best suits your finances and your property plans is essential.

Landlords typically opt to invest via a Limited Company, as it can be more tax efficient. However, this depends on your circumstances.

Please speak to a professional tax advisor before making any property investment decisions.


2. Mortgage Rates

Finding the best mortgage rate doesn’t necessarily mean finding the cheapest deal on the market! With so many banks and specialist lenders in the buy to let space, it can be difficult to know which to approach and what rate best suits your needs.

Online tools such as buy to let mortgage calculators can help you search the available rates on the market, but it’s best to work with a whole-of-market mortgage broker (like us) to ensure you secure the best deal for your circumstances.

Not only can we help secure you the best deal on the market, but we’ll compare all the rates you could access to help you choose the most cost-effective option.

We also have access to intermediary-only lenders, meaning we can secure you a rate you would not be able to access otherwise. Furthermore, our brokers can review your property portfolio to see if you could save money on your current mortgages.

Speak to one of our experts here.


3. Rental Yields

When you’re looking for a property, finding one that gives you the best return on your investment will undoubtedly be at the forefront of your mind. Rental yields are key to a successful property portfolio and will vary depending on property type, region, and local competition, to name but a few factors.

More complex property types, like HMOs and Multi-Unit Freehold Blocks (MUFBs), will likely generate higher rental yields. Lenders typically want to see at least one year’s experience as a landlord on mortgage applications for these properties. For first-time property investors, we recommend looking for regions with low property prices and high tenant demand to access the highest yields possible.


4. Property types

As previously mentioned, more complex property types typically earn you higher rental yields. Holiday lets, HMOs, MUFBs and Semi-Commercial properties all generate highly competitive yields for more experienced property investors and can be a great way to diversify your property portfolio.

If you’re starting on your property investment journey, you may not be able to secure a mortgage for these properties. This is because the complex nature of the property means lenders require you to have previous experience as a landlord as some reassurance of the stability of the deal. Choosing a standard property in a sought-after location with low prices will also allow you to earn more from your investments. 


5. Location

Choosing where to invest will be key in your property investment journey. Some landlords invest locally, particularly if they plan to manage the properties themselves rather than through a letting agent. On the other hand, many landlords will invest in property nationwide, selecting the top properties in the most sought-after areas to boost rental yields.

Zoopla and Halifax often publish rental market reports with the latest regional performance data, which will give you some ideas on where is best for you to invest. Typically, university towns or areas popular amongst young professionals will be the hotspots to focus on.


6. Stamp Duty Land Tax (SDLT)

When planning your property investment purchase, you must account for the Stamp Duty charge on the property.

Stamp Duty is charged on all property purchases throughout the UK on a banding system. Buy to let properties are classed as additional residential properties, meaning you will need to account for a 3% additional property surcharge in your purchase costs.

Use our FREE calculator here to calculate how much Stamp Duty you will pay on your property purchase.


How to get started

To discuss your property finance plans, please do not hesitate to get in touch with our expert team.

Our buy to let mortgage consultants have the expertise and experience to support you through your property investment journey. We can answer any questions and offer guidance to ensure you make informed investment decisions.

Call our team on 0345 345 6788 to get started or submit an enquiry here

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