Buy to let in the UK

Buy to let - an investment strategy where you buy a property with the intention of letting it for profit rather than living in it yourself - became very popular over the last decade following the many buy to let mortgages and buy to let remortgages that became available in recent years.

The economic downturn has restricted choice somewhat, but letting fees for property remain strong in many areas and numerous buy to let loans are available.

The amount lenders will provide is dependent on a number of factors. The rental valuation of the property is more important than the applicant’s income, but other criteria are often taken into account also. Lenders will normally expect the rental income to cover the mortgage payments, maintenance of the property and void periods - the times when there are no tenants renting the property.

Following the recent banking crisis and recession, most self-certification mortgages have been withdrawn. When a buy to let self cert mortgage is available, usually this means that rental income is not being taken into account for assessing the borrower’s repayment capability. Applicants may be required to certify that their income can match the monthly repayments on the mortgage.

There are numerous financial websites displaying up-to-date buy to let mortgage rates and it is important to obtain a number of quotes in order to find the best buy to let mortgages.

Whilst many buy to let investors have built up very lucrative and successful portfolios, there is always an element of risk in such a venture, and some investors have got into problems obtaining tenants at the rental amounts required, and in maintaining and retaining their properties.

Therefore, it is imperative to thoroughly research any buy to let possibility. Although the property may benefit from a buoyant rental market and rising property prices, there is also the possibility of the value of the property reducing, lending rates increasing, repair and maintenance costs being greater than when first envisaged, and problems finding tenants.

By Ben West