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.

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What our customers think

  • Nisha Patel

    I had a great experience with Samuel Estates. Daniel was very helpful in getting me a viewing of the property I was interested in and very quick to respond to any questions I had!

  • Daniel Neves

    I wanted to extend my thanks to the team of Samuel estate. I have dealt with them in many occasion in the past 10 years and they have been mostly consistent with their personal approach. Thx to Nick , Lars, Paul and yohana.

  • Valentin Mocho Rodriguez

    Fantastic experience, Bilal was super helpful, responsive & very patient with me constantly pestering him for updates. Smoothest experience I’ve had with a letting agent for sure!

  • Adrian Agho

    Excellent service, very helpful staff.

  • ELENA ZO

    5 stars for Stefano Basciu​, letting consultant. He made the process of securing the flat we liked quick and straightforward. He was there to answer questions : )

  • jeffin paul

    Stefano was very helpful and efficient in dealing with all enquiries from start to finish of my rental property hunt.

  • Paul V

    I'm leaving one amazing property managed by Samuel Estates not only because their staff believe they can trespass the property in my absence as they give the keys away to third parties / service providers without any supervision. I did my best to fix this issue but they just lied to me (in written). The maintenance is also poor: for one year they failed to fix an issue with the boiler / water pressure so it's impossible to have a shower at constant temperature.

  • Maheen Nasir

    Very straightforward process to rent out a property with Samuel Estates. Stefano was great to deal with and responded to any queries we had promptly

  • Ayanna Griffith

    Stefano was my estate agent and he was great. Whenever I had a question he would take the time to find an answer, and was always available to speak to. I recommend Samuel Estates agency!

  • Zoha Desmukh

    Great experience so far! Stefano gave me loads of help and support! I recommend this agency

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