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

  • Joanne McCarthy

    What can I say?! Samuel Estates sold my house, fuss free, in a pandemic!

    As an estate agent of 15 years I can have overly fussy, high standards but Paul and team dealt with what could have been a total nightmare swiftly and got it over the line. Highly recommend. Thank you all so much for making it so easy. Happy Christmas!!! Jo.

  • Dani Villanueva

    We are happy to have dealt with this company. Our agent was always very friendly, attentive, professional and efficient. This helped make the move as smooth as possible.

  • Mary Cooke

    I rarely submit a review but my recent experience with Samuel Estates compelled me to make an exception. I have contracted with Samuel Estate for some 20 years now on a tenant find basis for my rental properties and have never been disappointed. The process is fully managed to sourcing new tenants, arranging agreements and vetting potential tenants. Each member of the team strives to understand your requirements in an honest and professional manner. Utmost to the fore is their communication, accessibility and support resulting in the placing of exceptional tenants for me over these years.
    Recently as a result of the pandemic, we decided to relocate and our obvious choice was Samuel Estate to handle the sale of our home. An extremely stressful time considering that we were also moving abroad. The initial advice given was let the professionals do their job and advice well given as we secured a quick sale which would not have been possible without Paul Ahern. Everything went smoothly from the outset including a high standard of brochure/website photographs, showings and feedback. Once the sale was agreed Paul’s efforts did not cease and managed the full process, liaising with solicitors and buyers to the final steps needed to complete.
    Thank you Paul and your amazing team for your care, concern, support and efficiency.

  • Ross Reid

    We were very pleased with Yohana as our Property Manager who was prompt and professional in dealing with any queries or issues as tenants we had during our tenancy and in corresponding with the Landlord.

  • Zenon Zeniou

    Samuel Estate was perhaps the best experience I had in the last 10 years with an agency. They were very helpful throughout our tenancy and very prompt in dealing with our enquiries.I would choose this agency again!

  • Adam

    We have been clients of Samuel Estaes for over 10 years now, they have always provided excellent advice followed up by good results.
    I highly recommend.

  • the Villager hair salon

    I have been letting my property through Samuel Estates for many years now. The team are professional, friendly and always make you feel like you are being properly looked after. Highly recommended!

  • Harriet Freer-Smith

    As a private Landlord I have instructed Samuel Estates over many years
    to let my flats in Clapham and Balham. I have always found them to be highly professional, fast to react and extremely helpful.
    I would have no hesitation in recommending Samuel Estates to other landlords.
    I would add that their virtual tour of the properties has been fantastic through covid and resulted in top rents being achieved.
    regards Chris Freer-Smith

  • Steve Humphrey

    I feel compelled to write a review for my lettings agent, Samuel Estates.
    I have been using Samuel Estates for over 16 years now, on a fully managed/ tenant find basis for my buy to let flats in London and I can honestly say they have never let me down.
    They are always friendly, honest, helpful, polite and highly professional in their lettings management business.
    They treat both myself and my tenants with respect and empathy and are very responsive whenever there is an issue to be dealt with.
    This approach leads to happy tenants, many of whom have been in my flats for years at a time.
    Samuel Estates vetting process in sourcing me new tenants whenever necessary is also excellent and in 16 or so years I've never been let down by any of my tenants.
    I cannot fault Samuel Estates for their honesty and professionalism and they always go the extra mile to help me.
    As a customer I feel valued and supported. Both of these things are so important in this day and age.
    Thank you Paul, Chi, Ryan, Stefano and the rest of the team for your care, concern, support and efficiency.

  • Robert Whitwam

    I've been with Samuel Estates for over 15 years now and I have nothing but high praise for them; as a non-resident landlord they have made the task of being a landlord incredibly easy! They are most professional, incredibly useful when called upon and generally just very pleasant to deal with. I can highly recommend them to anyone.

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