Building a successful buy-to-let (BTL) portfolio won’t happen overnight – it’s more of a long term strategy to accumulate wealth slowly and steadily.  Following these simple rules should help the speed at which you gain a profitable BTL portfolio.

1. Research is key

Find the best location for BTL Investment. You may be tempted to invest locally as you feel you know your own area, but the most lucrative places are rarely close by.

London in particular has seen a massive rise in property values recently but could you fare better in other less expensive areas?

Consider areas where the fundamentals support long term demand from renters and home buyers. People are attracted to areas supported by shops, schools, medical centres, universities, major employers and good transport links. 

Search for properties below market value to increase your profit and give yourself a cushion should there be a temporary blip in property values.

2. Calculate your costs

Plan to raise a 20-30% deposit required by the lender, by means of own savings and/or investments held or remortgage if necessary. The lender in turn providing the additional funding required. The financial underwriting differs from a conventional mortgage because the loan is generally based upon the monthly rental potential and not the applicant’s income (although some lenders may take this into consideration).

Costs to consider include:

• Survey fees
• Monthly mortgage payments payable
• Maintenance and upkeep of the property
• Stamp duty costs
• Void periods – even the most organised set up could potentially lead to months when you’re between tenants. A special insurance can cover you for this eventuality.
• Ground rent and service charges

Awareness of obligations as a responsible landlord

• Ensuring electrical equipment is safe to use
• An up to date gas safety certificate exists
• Smoke alarms are installed and in working order
• Carbon monoxide alarms are installed where there are solid fuel burning appliances – coal or wood burning
• Deposit protection scheme, authorised by government and designed to protect tenants and landlords in the event of dispute at the end of a tenancy
• Building insurance – you could be responsible for covering contents insurance and liability insurance
• ESW1 certificate (flat purchase). See below.
• Investment and property management fees: Could becoming a DIY landlord simply add more work to your already hectic life? If this sounds like you, it’s possible to outsource the management of your BTL investments to take the legwork out of chasing rent, inspecting properties, repairs and maintenance work.

Income tax could be due on any rental property depending on how your investment and tax rates are structured. As the current tax treatment is completely different either purchasing in your own name or through a limited company you may want to take tax advice to determine which works best for you.

3. Discuss with friends and family

With interest rates being at an all time low your friends and family may well be frustrated at the amount they are earning but sometimes reluctant to discuss this. Grouping funds together can result in a considerable and powerful strength, reduce your exposure to potential high risk and supplement retirement income.

A client recently approached us with a dilemma as within their family they had suffered a bereavement of a much loved parent. Having sold the deceased’s home they were sitting on an inheritance with no idea where to go next. 

Discussing a possible plan moving forward, it was discovered the other members of the family felt the same way with regards to investing in property. So instead of each benefactor taking a quarter of the proceeds and going their separate ways, they decided to look at a BTL venture together where they could all take part instead of their money depreciating in low yield deposit accounts.

Agreements such as these can be drawn up legally and simply through qualified and experienced professionals. 

Finally consider taking tax advice before taking the plunge.

Just get in touch to talk it through and discuss strategies.

EWS1 form and high rise buildings – information flat owners should know

Following the Grenfell tragedy in 2017, new rules have been adopted across the industry to check the safety of cladding on blocks of flats, this includes new and established high rise flats and recently on all blocks, irrespective of height. This comes in the form of an external wall survey EWS1.

Although RICS (Royal Society of Chartered Surveyors) don’t envisage most residential buildings 1-3 storeys high would require an EWS1 form, there may be exceptions such as care homes where the elderly could not be evacuated quickly.

Each EWS1 form is valid for an entire block/building for five years.

It is vital to check a valid certificate is in place before attempting to sell a property.