The Explosion of Let to Buy – Can you become a landlord?

The Explosion of Let to Buy – Can you become a landlord?
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Let-to-buy is simply a business model that involves renting out your current home to buy a new one. Although many people in the UK still prefer to invest in buy-to-let properties, there is a growing trend of people doing let-to-buy that is worth investigating.

Treating your home as a future buy to let can be a little strange to think about at first. You will need to run it as a business and so it should be treated as such. Consider what matters most to your clients (tenants) and what they seek in a rental property.

Ask yourself: Would tenants like to be in that area? How much rent could I charge per month? What are the tax implications of doing this? Some may think their property is “too good” to rent out – but remember, being in a desirable neighborhood that you once lived in could bring in a generous monthly income stream. 

Rising demand and slow supply growth are driving up house prices, not just in the UK, but globally. As the economy undergoes a steady improvement people start to think about moving house. Tenant demand has skyrocketed during the lockdowns, especially for detached houses and semi-detached properties. City center apartments have been hit the hardest when the pandemic began as office workers retreated. Landlords are now looking to improve rental profitability after the downward pressure in the last 2-3 years and the market is there to be able to increase rents for certain types of properties. London and parts of the southeast had become hotspots for homebuyers in the years since the financial crisis in 2007. According to research by property agent Savills, house prices in London increased by 78 percent in the ten years since 2007, while they have fallen by 9 percent in Northeast England.

The buyer appetite from house hunters remains strong as covid continues to push a once-in-a-lifetime reassessment of housing needs, aided by a last-minute stamp duty deadline rush. This can be attributed to a significantly higher number of people saving money as a result of covid-19 and the various lockdowns. According to a survey conducted by Zoopla, Britain’s most holistic real estate itinerary, 12 percent of the UK population believe it is the cost savings associated with not commuting to work that has been the root cause of pushing up property prices.

There is other bullish evidence for UK property prices – according to The Guardian, as buyers continue to grapple with the economic fallout from the Covid-19 crisis, nearly one in every four home purchases this year will be backed by the “bank of mum and dad,” up from one in every five in 2019.

With a chronic shortage of properties for sale, those who can keep their existing property and rent it out make them chain-free buyers and put them in a great position. Many folks are going this route and thus can get their hands on their next onward purchase.   Statista’s research shows that 10-year fixed mortgage rates were at their lowest in March 2020, at 2.36 percent. However, there was a slight increase in the consequent months, and the 10-year mortgage rate was 2.58 percent in April 2021. This is excellent news if you’re looking to rent your property out and become a landlord – working towards creating a regular income stream each month. Retaining and renting out your property has proven that if you take a longer-term view on the property – it could be one of the best investments you ever make.

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