Buy-to-Let: Your Essential Guide

Buying a property to let can be an excellent idea for increasing your investments when interest rates are low, and there’s uncertainty in the stock markets. As local property experts, we know the sale and rental values of London property inside out. As a trusted letting agent, we also have access to thousands of potential tenants.

We have put together answers to several frequently asked questions to help you, the Buy-to-Let Landlord, make informed and practical decisions.

FAQs

What is Buy-to-Let?

Buy-to-Let is a type of mortgage that enables you to invest in let property without being penalised by mortgage surcharges or commercial rates of interest.

What are the returns from letting a property?

The average rental return in Britain is around 3%-6% before taking into account any of the variable running costs or capital appreciation of property. In the current market, we feel you should take a long-term view to benefit from capital appreciation, probably 7-10 years.

How do I go about Buying-to-Let?

Start by talking to an ARLA Propertymark registered letting agent. We can help you find appropriate properties, advise on your property’s letting potential, the sort of rental income you could expect and what you might need to do to attract good tenants. At Samuel Estates, we also offer a tailored ‘Landlord Acquisition Service’ where, for a modest fee, we can assist in finding you the ideal investment property.

How are Buy-to-Let mortgages arranged?

The process is very similar to buying your own home. Buy-to-Let mortgages are subject to the usual status checks and can be arranged for terms of between 5 and 45 years; and for up to 80% of the value of the property. We have several Independent Financial advisors (IFA’s). They will be able to advise and assist you in finding the most suitable mortgage for you and they all offer a fee-free service.

What does a letting agent do?

As experienced agents, we know the local market, what type of property there is a demand for and the standard of decoration, furnishing, fixtures and fittings required.

Furthermore, if you trust a professional agent to manage your property, your status will be enhanced with mortgage lenders. We will:

  • Vet prospective tenants
  • Prepare the tenancy agreements
  • Collect rent
  • Pay balances into your account
  • Advise on and arrange inventory and property condition reports
  • Action changes to utility accounts and Council Tax
  • Pay bills on your behalf
  • Regularly inspect the property
  • Recommend, oversee and account for any necessary maintenance, repair and re-decoration

Are there special conditions I should know about?

Generally, lenders will expect you to use an ARLA Propertymark member to let and manage the property. Your rental agreement should also be drawn up as an Assured Shorthold Tenancy or another clearly defined contract.

Can a Buy-to-Let investment be protected?

Insurance cover is now available to protect your rental and provide for legal expenses. Please ask one of our friendly lettings team for more details.

How much rent should I charge?

As a general guide, the total monthly rent you receive should be between 110% and 130% of your monthly mortgage payment.

What costs should I take into account?

  • Your letting agent’s commission and management fees
  • Insurance (Building/Contents/Rental and Legal Expenses Cover)
  • General maintenance costs
  • Service charges and ground rents on leasehold properties

What happens if my I can't let my property?

There will almost certainly be ‘voids’ when the property is unoccupied, or rent goes unpaid. In these situations, you’ll need to have a financial ‘cushion’ to meet your mortgage payments.

You might also need savings for significant repair bills. For example, the boiler might break down, or there might be a blocked drain.

What is the Capital Gains Tax rate?

If you’re a basic rate taxpayer, Capital Gains Tax (CGT) on buy to let second property is charged at 18%. If you’re a higher or additional rate taxpayer, it’s charged at 28%. With other assets, the basic-rate of CGT is 10%, and the higher-rate is 20%.

Information correct as of 04/20.

What if I sell my Buy-to-Let property?

If you sell your buy-to-let property for profit, you will usually pay CGT if your gain is higher than the annual threshold of £12,000 (for the 2019/20 tax year). Couples who jointly own assets can combine this allowance.

Any profit from the sale of your property should be declared on your Self Assessment tax return for that tax year and will be included when working out your tax status for the year which push you into a higher bracket.

For more help and advice on managing your Buy-to-Let property, get in touch with our local expert team.

Our latest properties

What our customers think

  • Shameem Bhyat

    Paul at Samuel Estates has been exceptional. His no-nonsense attitude helped enormously with the sale of my house. At a time when good conveyancers are hard to come by, Paul made great recommendations and facilitated communications with all parties with speed and efficiency, always keeping me in the loop at every stage of the process. It can certainly be challenging when it comes to selling your home but Paul really made the process easy. Thank you so much.

  • Kayley Donnelly

    This was the smoothest experience I've had moving to a new flat. Daniel was really helpful and very accommodating when we tried to arrange a second viewing. He was very responsive to emails which I really appreciated, and unlike other agencies I was not harassed with lots of phone calls! Very happy with the flat and the service received.

  • Bel Vita

    The worst agency I've ever rented in, they don't care about the tenant's welfare, no repairs are done, they want to hold the tenant responsible for everything, I do not recommend it!

  • David Evans

    We had a great experience with Samuel Estates. Bilal was our estate agent and he was a great asset to us getting the property we loved. Thanks so much and we would definitely use these guys again!

  • raj kumar

    special thanks to Daniel. he has been very kind and helpful. he made that whole thing very easy. very professional and friendly agent.
    Lina Svegzdaite is an AMAZING property manager. very professional and very friendly. Highly experienced. i am very happy and thank her for giving the wonderful experience when it comes maintenance issues.

    thanks SAMUEL ESTATES management team for having Daniel and Lina.

  • Bilge Gündüz

    Top real estate agency. Special thanks to Daniel for finding us a perfect flat that meets all our needs! Highly recommended!

  • Charlie

    I’m not someone to usually write a review, but I was highly impressed with the service I received from Samuel Estates. I would highly recommend Jessica to anyone looking for a new home. I have had to move a few times over the last few years and she was the best estate agent I have ever dealt with. She was helpful, professional and answered any questions we had promptly and efficiently. She made the process stress-free and took care to make sure we was happy every step of the way. I highly recommend.

  • Conor MacLeay

    Jessica was very helpful throughout the process. Would recommend Samuel Estates.

  • Lucy Robinson

    Highly recommend Samuel Estates.Sold & bought properties with them & experienced expertise & efficiency from start to finish.Competitive pricing, highly knowledgeable & know the properties inside & out, providing confidence to both seller & purchaser.

  • David

    Good service no pressure from agent professional and helpful.

Our office locations

Balham

45 Bedford Hill
London
SW12 9EY

Colliers Wood

30 Watermill Way
London
SW19 2RT

Streatham Common

432-434 Streatham High Rd
London
SW16 3PX